Editors, East Asia Forum. Australia’s fraught decision on submarines

The submarine deal would fundamentally change the Australia-Japan security relationship.

Australia is about to embark on its single biggest ever military acquisition. The Future Submarine Program (SEA1000) will see Australia purchase 12 submarines to replace its ageing Collins-class fleet.

The SEA1000 has been a source of ongoing controversy with criticism over the lack of transparency of the process, debate about its strategic implications amidst the shifting regional geopolitical landscape, and questions about Australian economic interests and the creation of jobs in the local shipbuilding industry.

The Australian government under prime minister Tony Abbott initially ruled out a tender process. As Yuki Tatsumi explains in our lead this week, Abbott ‘clearly preferred Japan’s Soryu-class submarines regardless of the amount of workshare or technology transfer to Australia’, ostensibly prioritising capability and cost factors ahead of Australia’s shipbuilding industry.

Abbott was not the first to look to Japan — Labor Defence Minister Stephen Smith also considered Japanese submarine technology as a way of minimising the cost blowouts and sustainment problems that have mired Australia’s existing Collins-class submarines.

But Abbott’s decision, in reality, was driven by the conception of a United States–Japan–Australia quasi-alliance framework.

There was little regard for canvassing alternatives publicly. As the pressure of a looming leadership spill came to bear, Tatsumi notes: ‘Abbott reversed his government’s initial position’ and installed a competitive tender process which has delivered bids from France and Germany as well as Japan. France’s state-controlled naval contractor is offering a conventional-powered version of the nuclear-powered Barracuda-class submarine and Germany’s ThyssenKrupp Marine Systems (TKMS) are proposing a Type 216 Class submarine, an up-sized version of the popular Type 214 submarine. The Japanese government has a proposal based on the existing Soryu class.

Japan is still considered the frontrunner because of the gathering security relationship. ‘Without doubt’, David Envall reckons, the Australia–Japan ‘relationship has deepened substantially since the historic 2007 Joint Declaration “affirming” the partnership…upgraded, first to a “comprehensive” partnership in 2008 and then to a “special” partnership in 2014’.

Some in the United States, notably hard-line Japan defence-analyst Mike Green, as well as ex-prime minister Abbott and his former national security advisor, Andrew Shearer, are pushing the Japan option. They argue the US Navy is unwilling to provide its most advanced combat systems to Australian submarines if they are built by France or Germany, although the existing close Australian technology partnership with the United States suggests otherwise.

Abbott penned an essay lauding Japan for building ‘the world’s best large conventional submarine’. And Shearer, in a paper for CSIS, explicitly invokes the case ‘for significantly deeper trilateral maritime cooperation between Australia, Japan, and the United States’ to respond to ‘the evolving threat environment in Asia and the Pacific, including increasing Chinese assertiveness in the South China Sea and East China Sea’.

There are hazardous strategic implications in a potential deal with Japan. On the one hand, Hugh White argues that partnering with Japan would incur a strategic as well as financial cost. ‘Tokyo expects that in return for its help to build [Australian] submarines, it would receive … clear understandings that Australia will support Japan politically, strategically and even militarily against China’. On the other hand, a minor swarm of commentators have rushed to counter White. Stephan Fruehling argues that ‘[h]istorically, defence acquisition has done little to support strategic relationships, so cost and capability considerations should remain central [to Australia’s submarine choice]’.

Unlike other arms transactions, the SEA1000 will have a 40 year lifespan and ongoing service requirements; this fact alone makes it a relational deal not a transactional deal. In a project of this dimension and longevity, each of the potential vendors stakes a claim of some sort in Australia’s security territory.

A submarine deal would fundamentally change the Australia-Japan security relationship. Even a casual examination of Japanese thinking behind their bid reveals that, in the Japan defence establishment, the deal now has deep strategic undertones, even though it initially reluctantly came to the idea of selling submarines to Australia. As Tatsumi explains ‘the bid for SEA1000 is important for Japan in the overall context of deepening security ties with Australia’. Japan’s ‘2013 National Security Strategy identified Australia as an important security partner not only as a fellow US ally, but also as a regional partner that shares Japan’s key strategic interest in upholding an international order based on the fundamental norms that have underpinned the post-WWII world. Such norms include the rule of law, freedom of navigation and the non-use of coercive measures to assert diplomatic positions’.

The Japanese Ministry of Foreign Affairs placed the deal within the context of the elevated status of the Japan-Australia ‘Special Strategic Partnership for the 21st Century’ noting it would: strengthen Japan-Australia bilateral maritime security cooperation in the Asia Pacific, deepen US-Japan-Australia trilateral cooperation, as well as contribute to Japan’s own security by improving its domestic submarine capabilities.

A critical question for Australia is whether it can or should sign up to the current Japanese administration’s defence aspirations and its particular expectations of the partnership with it.

These strategic questions put Australia at the centre of a seismic contest of political forces in Japan.

The fallout from and outcome of this contest is highly uncertain. The submarine deal could represent a tipping point in its outcome.

On one side of the fault-line there is the Abe government’s desire to take defence reforms further, with a formal revision of the constitution. The security-related bills passed in September 2015 were the tortured result of the Abe government’s ambition to expand the roles and missions of the Self-Defence Force, to strengthen its alliance relations with the United States, and to build new security partnerships with other US allies and partners. But they were tempered by a deep domestic discomfort and distrust of Abe’s intentions towards the Article 9 peace clause of Japan’s constitution.

On the other side, most Japanese are still, quite correctly, concerned about what removal of the anchor of the peace clause in their constitution might do to attenuate, not strengthen, regional security circumstances.

Then there is the US ambition to elevate Japan’s defence role, around the realistic assessment that Americans are less and less willing to finance a pivot to anywhere (including Asia), while keeping Japan locked tightly down to prevent military adventures. Linking Japan with trusted alliance partner Australia through the submarine purchase is seen as a useful tool to achieve this goal. But what is Australia’s interest in being the midwife to this arrangement?

Germany and France also have long-term skin in Australia’s security space, but it’s very different from that of Japan — less complicated and potentially more complementary to the economics of Australian interests in the submarine deal. They have hinted at the potential to develop Australia as a hub for submarine building to serve other clients in the wider Asia Pacific region, an incentive for the long-term production base in Australia to which Japan cannot pretend.

With the Turnbull government poised to announce the winner of the competitive evaluation process in the coming months, the Australian government faces a major dilemma. If the Japan bid is chosen, a clear articulation of the future strategic relationship with Japan and where it might be taken will be demanded in Australia but also by China, among others. If the German or French bid is chosen, Australia’s partnership with Japan and its surrogate role in the US alliance framework will be under a shadow.

It will require careful management to clean up the mess that Abbott has left on the submarine deal — a lose-lose game in which none of Australia’s key partners will end up happy. It need not have been thus. And the Japan bid, succeed or fail — despite Tatsumi’s brave hopes otherwise in this week’s lead essay — will vastly complicate Australia’s otherwise benign and well-established enmeshment with Japan.

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