Pearls and Irritations

Britain is the greatest beneficiary of the nuclear submarine deal for an array of reasons – the gains for the US are minor while the benefits for Australia are debatable.

At a low-key signing ceremony in Canberra on November 22 involving the Australian defence minister, the British high commissioner and the US chargé d’affaires, AUKUS formally came into existence. This was some two months after the agreement was dramatically and publicly announced by the leaders of the three countries concerned. The avalanche of analysis in the intervening period has overwhelmingly concentrated on the strategic and geopolitical aspects for Australia and the US. The role, and place, of the United Kingdom has largely gone unexamined. How can this lacuna be explained? A conceptual reason is that much analysis on questions of security tends to downplay domestic political dynamics and economic motivations.

My concern here is not with the domestic imperatives in Australia that contributed, in part at least, to the AUKUS announcement. However, it should be noted that, according to recent polls, Prime Minister Scott Morrison and his centre-right Liberal-National Party Coalition are facing defeat in the federal election due between March and May. Given the low level of trust in the Australian government’s leadership, setting up what Australian’s call a “khaki election” environment, in which ostensible tests of patriotism eclipse serious policy debate, is certainly in its interest. Hence the attempt by Defence Minister Peter Dutton — an erstwhile political rival to Morrison — to depict any questioning of AUKUS as a form of appeasement of China.

For the US, the strategic benefits of the AUKUS agreement are symbolically important but otherwise modest. On the occasion of celebrating the 70 years of the ANZUS alliance with Australia and New Zealand, the US has enrolled Australia, its historic partner, completely on its side in its rivalry with China. Australia is the only country that has been involved in every war — from the justified to the ill-considered — with the US since 1917. Also having a fellow member of the Five Eyes intelligence sharing arrangement (dating from World War II) and, more recently, a member of the Quad as an even closer ally in the Indo-Pacific is certainly a plus for Washington. More concretely, having an Australian submarine force of some eight vessels as an auxiliary fleet to the US Navy in the South China Sea in the 2040s makes good, if marginal, strategic sense for the Pentagon.

As for the economic benefits for the US, it is unlikely the submarines will be built in the US for two reasons. On the one hand, as things stand today, the specialised US shipyards already have their order books full over the next decades in producing vessels in much larger numbers — and in absolute priority — for the US Navy. On the other, Australian requirements would seem to be for a smaller hunter-killer submarine than those produced for the US Navy, and, rather, for something akin to the existing Astute class in the Royal Navy. The latter requires smaller crews (100 submariners) compared to the 130-plus crews in the present Virginia class of the US Navy. Above all, the Virginia class submarines with a unit cost of US$3.34 billion are one third more expensive than the British Astute subs (US$2.19 billion).

Moreover, US manufacturers such as Lockheed Martin were already to provide the weapons systems for the 12 submarines under the aborted project with the French Naval Group. They will now most probably do so for the eight vessels planned under AUKUS. US companies will, however, more fully benefit from other aspects of the AUKUS arrangement with the development and manufacture of high-technology weaponry. However, these cooperative arrangements were already in train prior to the AUKUS announcement and foreshadowed in numerous bilateral AUSMIN meetings. For example, the emblematically named Loyal Wingman state-of-the art unmanned aerial vehicle developed by a subsidiary of Boeing in Australia had its first flight in February this year.

So, if in economic terms the US is not the major beneficiary of AUKUS, this leaves the UK. Somewhat surprisingly the role and, above all, the economic interests of the United Kingdom have been left unexamined. Britain has largely not suffered any of the diplomatic repercussions from the AUKUS deal. For example, while Paris recalled its ambassadors from Canberra and Washington, its ambassador in London remained in place. At the time this was interpreted as a subtle way of pooh-poohing the importance of the UK. Perhaps, also, given the parlous state of relations across the Channel as the unfortunate but predictable consequences of Brexit are worked through, it may have seemed unhelpful to add to an already long list of contentious subjects.

Most commentators have, essentially, highlighted the symbolic value of AUKUS for London. At worst this means reviving a kind of Anglosphere with echoes of the Churchill and Roosevelt comradery or, even, shades of a return of empire in the Indo-Pacific. At best it involves giving some substance to the post-Brexit trope of a “global Britain” returning as a major actor in the region almost 60 years after the withdrawal from east of Suez.

One significant security aspect that has been totally neglected is how AUKUS provides a further incentive for Britain to remain intransigent on its contested claims to sovereignty over the Chagos Archipelago in the Indian Ocean. The islands have been constituted since 1965 as the British Indian Ocean Territory (BIOT). London derives some revenues from fishing licenses and royalties on selling the internet domain name “io”. The International Court of Justice ruled in February 2019 that the islands should be returned to Mauritius. However, the neighbouring Maldives is in dispute with Mauritius over the Exclusive Economic Zone and, above all, over fishing rights complicating the situation further.

Britain may not be a resident middle power in the Indo-Pacific but it is a resident landlord. In 1966 It gave a 50-year lease for the US to create an aviation and naval base on Diego Garcia, the largest and then only inhabited island in the BIOT. This lease has been extended till 2036. As the most important US strategic outpost in the Indian Ocean, Diego Garcia is of crucial importance for American great-power projection, justifying the investment of some US$3 billion in the base. Mauritius has proposed renting the island to the US on a 99-year lease at a cost to be determined. So maintaining the status quo would not only be cheaper and less constraining for the US, it would also enable the British within the AUKUS framework to deploy unhindered its own naval vessels.

From the perspective of British Prime Minister Boris Johnson’s “global Britain” strategy, timing is not inconsequential. The AUKUS announcement was made precisely the day before the presentation to the European Parliament by the President of the European Commission, Ursula Von der Leyen, of a Franco-German inspired major policy paper on the EU strategy for the Indo-Pacific. The AUKUS announcement eclipsed any attempt at European foreign policy grandstanding as the strategy report was largely ignored in the media din.

Yet beyond some strategic concerns and symbolism, the importance of AUKUS for Britain lies elsewhere. A September post from the International Institute for Strategic Studies in London places the genesis of AUKUS to a request made by the chief of the Royal Australian Navy to his British counterpart. This request is understandable: historically the Australian submarine fleet has been dependent on expertise from the Royal Navy from which a number of its senior officers are recruited. But other than questions of a shared naval ethos, for very rational reasons the British seemed to have seized the AUKUS opportunity. At a practical strategic level, AUKUS will enable Britain to have more permanent basing rights for its own nuclear-powered submarines in Australia. This would enable a more sustained naval presence in the Indo-Pacific rather than the fleeting deployment, as at the moment, of a naval group around the Royal Navy’s flagship, HMS Queen Elisabeth.

Nevertheless, the most important benefit of the AUKUS agreement for Britain is for its military-industrial complex. A mere two days after the AUKUS announcement, the British government awarded the first two contracts to BAE Systems and Rolls Royce for initial design work on a new generation of nuclear-powered hunter-killer submarines for the Royal Navy. It makes a great deal of industrial sense to share design costs with a reliable partner-client such as Australia, especially as BAE Systems already has a significant presence there.

Given the issues of technical specifications and industrial capacity mentioned above, it would appear, by default at least, that most of the production will occur in the UK. This would ostensibly involve a lower level of local production in Adelaide compared to that under the contract with the French. Moreover, the yet-to-be-designed class of submarines for Australia would enter service in the late 2030s-early 2040s, the same timeframe as that mooted for the new British subs. This is a decade after both the next generation of US nuclear-powered hunter-killer submarines and the planned entry into service of the conventionally-powered submarines envisaged in the contract with the French Naval Group. Thus, a major motivation for Britain is to be found in the industrial logic of economies of scale. Such economies would benefit the UK most of all.

Beyond this understandable industrial logic, there are also British electoral concerns that underpin the AUKUS announcement. In his short declaration on September 16 with the US President and Morrison, Boris Johnson insisted on the jobs that would be created in his country. As he somewhat heavy-handedly claimed, these industrial jobs would be created essentially in those poorer, pro-Brexit, constituencies in northern England that swung to the Conservatives in the 2019 election but which cannot be considered as permanently Tory territory.

This convergence of security, strategic, diplomatic, economic and electoral factors, therefore, would suggest that Britain is the greatest beneficiary of the AUKUS agreement. The additional benefits for the US are minor compared to those it already enjoys under its existing alliance arrangements with both countries. However, whether an agreement of such magnitude and cost is in Australia’s security interest remains a moot point.

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