Going Nuclear: Australia Joins U.S.-U.K. for Future Submarine Solution

In a surprise move, Australia has opted to cancel its plans for 12 French-designed conventional submarines and instead utilize American and British nuclear-powered technology for its future fleet as part of a trilateral security pact referred to as AUKUS.

The larger AUKUS treaty covers diplomatic, security and defense cooperation in the contested South China Sea, as well as joint work on cybersecurity, artificial intelligence, quantum technologies, and undersea capabilities.

But it is the multibillion-dollar submarine project that has captured global attention.

The decision to scrap the AUD90 billion ($66 billion) deal with France and go for the nuclear option comes down to two issues: mounting frustration with French shipbuilder Naval Group and a regional security environment that continues to shift at rapid pace.

While Australia’s decision will incur diplomatic fallout with Paris, the move toward ever-closer security alignment with Washington and London signals like-minded views among the three partners regarding China.

All three parties perceive China under Xi Jinping to be a significant threat across the near and far security horizons. Whether it is China’s military buildup, naval expansion, and bullying presence in the South China Sea; its debt diplomacy, intellectual theft, and economic and diplomatic coercion campaigns; or its cyber-aggression, all three nations are attempting to move in accordance against a gathering concern.

Meanwhile, the defense acquisition project at the center of the AUKUS pact – the Royal Australian Navy’s SEA 1000 Future Submarine requirement to replace its existing fleet of Swedish-designed Collins-class conventional subs – once again faces a revision with an altered timeline.

The Future Submarine program finally appeared to be underway in April 2016, when Australia downselected a bid by France’s Naval Group to meet the 12-ship requirement via a diesel-electric variant – the Shortfin Barracuda Block 1A – of its nuclear-powered Barracuda attack submarine built for the French Navy.  That inter-governmental deal was to provide significant momentum to Australia’s naval shipbuilding sector, with all 12 submarines to be built at ASC’s Osborne shipyards in Adelaide under a transfer-of-technology arrangement.

But instead, Australian frustration steadily mounted over a variety of issues, including warranties for defects, penalty clauses for cost overruns, design changes, schedule slippage, localized industrial content, and concerns over the level of French technology transfer to Australian industry.

Over the years, reports continued to percolate in the Australian press regarding officials reconsidering the French bid.

Yet after months of tense negotiations between Australia and Naval Group over future costs and local industry content in the program, an in-principle agreement was reached in late March 2021. This amended the extant Strategic Partnering Agreement to include a commitment by the French shipbuilder to spend a minimum of 60 percent of the contract value in Australia through the life of the project.

Behind the scenes, however, Australia remained uneasy.  Per a report by ABC, the Australian government started examining a nuclear-powered submarine option around March 2020 when Linda Reynolds served as defense minister.

The nuclear-powered option – once it was determined to be feasible in an Australian context – ultimately won out, with Australian naval submarine reach and stealth set to take a large capability leap under the trilateral security agreement.

The deal is significant in that the U.S. has not shared its nuclear propulsion know-how with an ally since 1958, when it agreed to do so under the U.S.-U.K. Mutual Defense Agreement.

In other words, Australia now enters rarified territory as a most-trusted allied partner.

An added strategic benefit for Washington is that localized nuclear-powered submarine capability could mean U.S. Navy submarines making future port calls in Australia for maintenance purposes.

Yet substantial questions remain.

One is cost. Australia already pumped AUD2.4 billion ($1.76 billion) into the French submarine project, with extra penalty payments for scuttling the deal likely. An eight-submarine procurement – as has initially been reported to be pursued by Canberra – will involve a next-level price tag leap from the original French plan, with early estimates ranging upwards above AUD100 billion ($73 billion).

A second consideration is domestic politics. While the center-right Liberal-National Coalition government led by Prime Minister Scott Morrison is busy touting the new arrangement, concerns are emerging that Australian dependence upon American nuclear technology and military hardware will only deepen and thereby erode Australian sovereignty.

Further, the majority opposition Labor Party will insist on three conditions for supporting the nuclear-powered submarine option: that it is made with no parallel requirement for a domestic civil nuclear industry, that the submarines are not armed with nuclear weapons and none procured, and that any arrangement be compatible with Australia’s obligations as a non-nuclear weapons state under the non-proliferation treaty.

The Morrison government, however, appears like-minded regarding those conditions, and U.S. President Joe Biden emphasized at a press conference that the submarines will only be conventionally armed, therefore likely nullifying the threat of significant political pushback.

Another concern is diplomacy. While much is being made today about the growing Australian commitment to the geopolitical tussle between China and the U.S., Canberra must deal with the fallout with Paris and assuage worries in New Zealand, a Five Eyes intelligence partner (along with the U.S., the United Kingdom and Canada) and one of Australia’s closest allies. New Zealand’s strict anti-nuclear stance has already tested the ANZUS (Australia-New Zealand-U.S.) Treaty in the past, with a nuclear-free zone established in New Zealand waters in 1986 leading to strains with Washington.

Morrison’s first call after the National Security Committee of Cabinet signed off on the nuclear option was to New Zealand’s Prime Minister Jacinda Ardern.  Ardern’s government has remained wary of upsetting China’s leadership and has maintained a delicate tightrope walk between Beijing on the one side and U.S.-Australia-U.K. concerns on the other. But it will not budge regarding its prohibitions on nuclear-powered warships entering national waters.

As for Australia’s increasingly sour relations with China, the immediate reaction out of Beijing was predictable: outrage and pushback, as well as claims that the trilateral arrangement undermines regional peace.

Finally, there are questions concerning delivery timelines and avoidance of a capability gap.

Under the former Future Submarine program timeline, delivery of the first new Shortfin Barracuda submarine to the RAN was planned for the mid-2030s, with full mission capability to be reached around 2035-2036. The remaining deliveries and in-service entry were to wrap up in 2054.

Now everything returns to square one. Australia has announced that a Future Nuclear Submarine Task Force will work with British and American partners over the coming 18 months to determine the optimal procurement options, be it the British Astute class model, U.S. Virginia class vessel, or another type. Once a determination is made and an agreement in place, production work will be undertaken at the ASC Osborne shipyard in South Australia. But the likelihood is that the first new submarine will not be delivered until the early 2040s.

Therefore, a Service Life Extension Program (SLEP) for the current Collins submarines will ultimately need to take place in order to prevent a capability gap from emerging by then.

Meanwhile, the question of whether to preposition U.S. Navy Virginia-class nuclear-powered fast attack submarines at naval base HMAS Stirling in Perth or potentially lease Australia such submarines remains largely fuel for the Internet rumor mill rather than the focus of a concrete plan for now.

 

The end state will be Australia joining a limited club of countries operating nuclear-powered submarines. Only six – the U.S., Britain, China, France, India and Russia – currently do so. Such a capability will enable RAN submarines to venture farther beyond territorial waters, remain on operational deployment longer, and be more undetectable than conventional models.

This will help in reorienting American, Australian and British naval capabilities to counter China’s growing maritime reach and strength – and to do so in concert with each other.

With a U.S. agreement to impart its sensitive nuclear submarine technology to Canberra, Australia’s role in the Asia-Pacific Great Game just became larger and deeper. There is no longer a question of Canberra hedging between Washington and Beijing, as in fact there hasn’t since the release of the Australian government’s 2020 Defence Strategic Update. Australia is pushing its chips to the middle of the table and betting on the U.S. side in the event of a future dispute with China.

About Daniel Darling

Dan Darling is a senior analyst covering both the Europe and Asia-Pacific regions for Forecast International's International Military Markets group.

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