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22 September 2021

With Greg Earl

The subs deal

Australia’s decision to build a nuclear-powered submarine fleet was last week met with criticism from a spurned ally in France and a potential enemy in China.

Australia intends to use American and British technology to build the new fleet, scrapping plans to invest in up to twelve French-designed diesel-electric submarines.

The Morrison government has largely dismissed these criticisms, claiming that it gave advance warning of its decision to France and pointing out that China is building a far bigger military, which also includes nuclear-powered and armed submarines.

But the government appeared less prepared to address two concerns raised closer to home: Can Australia afford to make these boats in Adelaide – financially and strategically? And how will our closest neighbours view our deeper embrace of the United States and the United Kingdom?

Resolving these sensitive issues may prove more challenging, politically and diplomatically, than pulling off the much-vaunted restoration of old alliances.


Security choices

Former prime minister Paul Keating has attacked the new AUKUS partnership, saying it reduces Australia’s security choices by making it more vulnerable to a war between the United States and China.

But Scott Morrison says that AUKUS – the new defence pact between Australia, the United Kingdom and the United States – is a “forever partnership” between three already close allies that will bolster our national security.

France’s criticism of the pact – which resulted in the cancellation of the Australia–France submarine contract – has received mixed support from other EU countries, suggesting that they are still assessing the future of Europe’s relationship with the Biden administration and, in some cases, are keen to nurture their own defence business with Australia.

Asian countries have been mostly reserved in their comments. This is not surprising, since they are generally more understanding of the imperative to balance relations with China and the United States.

Japan welcomed the new AUKUS framework but pointedly did not mention the submarine deal. India has so far avoided commenting but quickly held a foreign ministerial meeting with France, with which it has shared Indian Ocean interests and defence contracts. Malaysia and Indonesia expressed concern that the agreement will contribute to a regional nuclear arms race, but the Philippines endorsed it.

However, the AUKUS pact could mean that Australia will be perceived by Europe and Asia as valuing its traditional Anglosphere links over other relationships.

The consequences of this are likely to play out in conventional diplomatic bargaining with the European Union over trade deals and, possibly, climate change. Australia may face a less friendly negotiating mood – but that won’t prevent deals from being cut.

In Asia, which is less institutionalised than Europe, Australia’s relationships with individual countries are more diffuse. This will make it challenging for the Morrison government to address any negative cultural perceptions about Australia.

In South-East Asia, the idea of Australia as a “deputy sheriff” to the United States lingers on. The formation of AUKUS may have reminded Japan that it was passed over for the French submarine deal in 2016. And in India, the recent COVID-19 evacuation has done nothing for Australia’s reputation on racism.

So, while repairing relations with France (and perhaps Europe more broadly) will call for some adroit diplomacy, maintaining security with Asia – rather than from Asia – will require more careful nurturing.


Boat choices

The Morrison government says that nuclear submarines can travel faster and further than diesel-electric alternatives, allowing them to stay on location longer without detection.

However, it admits that building eight nuclear submarines will cost significantly more than the $90 billion it would have paid for twelve French-designed models. The new submarines will also go into service later, in about 2040.

The expense and timing involved with the deal raises questions about how it will address the government’s security outlook, which says Australia will have less notice if a military threat arises.

The broader operational capacity of the nuclear submarines suggests the government is giving more weight to a containment strategy for potential aggressors such as China.

By contrast, if its primary focus was to defend Australia’s coastline and shipping routes during an actual war, a larger number of smaller submarines might be more practical.

Containment is undoubtedly better than war. But because tensions with China have increased, the government has a responsibility to secure new submarine capacity as quickly as possible.

The Morrison government has flagged its intention to lease vessels, which will be co-crewed by US and UK sailors. And various avenues for cooperation presented by the AUKUS agreement – such as hosting our partners’ military equipment – may also offset security risks associated with the submarine delays.

But the government should be buying more submarines directly. Making defence equipment in Australia, especially in Adelaide, has become bipartisan policy, and if managed well, it can contribute to national security. But buying submarines directly would scale up capacity more rapidly and keep costs down.

Having so publicly raised the national threat level, the government needs to fix its naval void as soon as possible and find a creative way to develop the longer term operational and maintenance skills it needs along the way.


China choices

Criticism of the AUKUS agreement from Chinese media and foreign ministry officials has overshadowed some other, more surprising, news.

Within hours of the submarine announcement, China formally sought to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the Asia-Pacific region’s most advanced trade group.

The eleven-member CPTPP was revived by Japan and Australia after the Trump administration withdrew US support. It is smaller than the parallel Regional Comprehensive Economic Partnership, of which China is already a member, but it has more advanced rules on issues such as electronic commerce.

Trade minister Dan Tehan warned that Australia will not endorse China’s membership unless Beijing ends its freeze on diplomatic contact with Canberra, noting that new membership requires extensive consultation with existing CPTPP members.

But China’s application to join the CPTPP is a reminder that its stature as the biggest economy in Asia – and soon the world – looms larger for many countries than its growing assertiveness, which is what prompted the AUKUS deal.


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