Neither Japan or Australia "chose" to fight in New Guinea -- instead both were compelled to fight there by a unique set of circumstances that confronted both nations in the first months of 1942.
Japan had a won a stunning series of victories in early 1942 and had conquered all of Southeast Asia. To protect these conquests Japan went on to try and establish a defensive "'wall"' of island outposts running through the Central and South Pacific oceans. By capturing New Guinea Japan hoped to isolate Australia and prevent it being used as a launching pad for Allied counterattacks against Japanese-held Indonesia and the Philippines. This isolation would be achieved by building air and naval bases in Rabaul and Port Moresby from which Japanese planes and warships could dominate the Coral Sea and disrupt the supply lines connecting the eastern seaboard of Australia with the west coast of the United States. The first part of this plan was put into effect when the Japanese seized Rabaul after destroying its small Australian garrison on 23 January 1942. Six weeks later Japanese forces landed on the northern coast of Papua and began to prepare the way for the attack against Port Moresby.
For Australia the conquest of Southeast Asia by Japan meant that New Guinea became the new front line against the Japanese Empire. Indeed many Australians were convinced that Japan intended to invade Australia after capturing New Guinea. While this was not the case the real Japanese aim of isolating Australia was still a very serious threat to Australia's security and the Australian government was determined to prevent Port Moresby falling into Japanese hands. The problem for Australia was that much of its Army had to be transported back to Australia from Egypt where it had been fighting the Germans and Italians while another 18,000 Australian soldiers had been lost fighting the Japanese in Malaya and Indonesia. Nevertheless by May 1942 Port Moresby had been reinforced with 6,000 Australian troops tasked with defending it at all costs. The stage was now set for a major confrontation between Japanese and Australian forces in New Guinea.
By the end of September 1942 Japanese hopes of taking Port Moresby had been dashed by major defeats at Kokoda and the Battle of Milne Bay. The Australians were joined by American forces under General Douglas MacArthur who wanted to use Australia as the base for an eventual attack against the Philippines -- just as the Japanese had feared. To do this MacArthur needed to push the Japanese out of New Guinea to set up his own air and naval bases within range of the Philippines. Now the roles were reversed and it was the turn of the Japanese to cling tenaciously to New Guinea in order to deny the enemy the bases he needed. Thus for the next three years New Guinea remained a battlefield as Australian and American forces fought to clear the area of Japanese troops.
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