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AUKUS - Untangling the Issues

Notes for Presentation to Melbourne Rotary, Online, 18 November 2021


We need to draw breath, and focus a little more clearly and systematically than most of the commentary so far on what is perfectly defensible about the announced AUKUS agreement, what is problematic, and what demands further clarification before it can be completely accepted. There are both technical and political risk issues involved, some of them quite serious, and it is important to keep them disentangled.

The starting point must be that it is clearly defensible for Australia, like any other country, to prepare as best it can for all plausible threat contingencies that might conceivably rise in the decades ahead, and in doing so get the best possible bang for its defence buck. We are an island continent with a massive coastline to defend – at least in the north – against threats that, however unlikely now, could arise in the future, as they did in the past with the bombing of Darwin, and torpedoing of Sydney Harbour and shelling of Newcastle by Japanese submarines, in World War II. In an age where surface vessels are ever more vulnerable to missile attack, it is almost universally accepted that highly capable submarines continue to be an indispensable part of our armoury. The big issue is - what kind of submarines?

Nuclear-Propelled Submarines: Fit for Purpose?

There are still respected analysts who argue that conventionally powered submarines are all we need, and Paul Keating – at the National Press Club last week- seems to be clearly in this camp. The ANU’s Hugh White, e.g, argues strongly that Australia would be better off overall with a much larger number of small, quiet and more manoeuvrable conventionally powered submarines with more limited range. Such views are in a minority among specialists, but they have credibility – particularly if one takes into account White’s argument that, in defending our own shoreline, additional numbers would amply compensate for lesser capability in individual boats – and that for the expected price of 8 SSNs (nuclear powered submarines) we could buy 25 SSKs (conventionally powered. Certainly this position should be exhaustively tested before Australia becomes finally and irrevocably committed to going nuclear: it is reasonable to demand that the public be told whether it has been, and with what result.

I’ve personally always believed – though I’m not a Defence tragic and don’t claim to be any kind of expert on these matters – that technically, a very strong case can be made that the submarines most fit for our purposes are, and always have been, nuclear rather than conventionally propelled. They are much faster in getting to station, and away from trouble; they can loiter, completely underwater, for periods basically only limited by crew endurance; and with the latest technology are said to be more silent as well (although this is contested by some, because they can never turn off their reactor water cooling pumps).

In an Australian context, the huge distances involved in travelling from any home port to potential maritime trouble spots in the archipelago to our north and beyond do clearly mean a great advantage for nuclear-propelled submarines. It has been estimated that, operating out of Perth, our present six Swedish designed Collins-class boats, deploying for a maximum of around fifty days, could spend only eleven days on station as far away as the South China Sea, whereas a nuclear-powered boat could stay there many times as long.

Some will argue that this capacity to seriously patrol such sensitive locations is inherently more provocative, and dangerously so, than anything the Australian navy might presently be up to. But no power in our region is naïve enough to believe that our present boats, in the twenty-five years we have had them, and limited in range and endurance though they may be, have spent all their sea-time circumnavigating Tasmania. Any operational change will be in degree, not in kind.

Just a ‘handful of toothpicks’?

I can’t compete with Paul Keating’s rhetoric – who can? – but if he is right about submarines, he should also be making the point that the whole of our defence capability looks like a row of toothpicks when matched against China’s: 60.000 active military personnel v 2.3 million; 450 military aircraft v 3,000; 60 naval assets v. 800; 59 tanks v 3,500; not to mention no nuclear weapons v. around 350.

One way of responding to our vulnerability if we were ever attacked by a major power is to retreat to a position of complete unarmed neutrality, and hope for that no one will ever take any interest in us. Another is to hope for alliance protection against attack by another major power without bringing anything at all to the table ourselves. The other – always the position of both major sides of politics, and clearly publicly supported - is doing the best we possibly can to be self-reliant against all conceivable defence contingencies, while recognising that if it ever comes to a really existential crisis we would be vulnerable and need support from another major player.

In building that maximum possible self-reliance the new submarines will on any view be a formidable new asset. Submarines are the most effective weapons systems ever devised for attacking and destroying opposing submarines and ships; nuclear-propelled subs are individually significantly more effective than conventionally powered ones; and if we ever find ourselves alone facing a major adversary, we will need all the effective firepower we can get.

Capability Gap?

There are multiple issues still to be resolved over the next 18 months about cost, delivery time, bridging the potential capability gap, and the extent to which these submarines can be locally built – with plenty of reason for doubt, given our past history with major defence contracts in general, and submarine contracts in particular, whether we can get any of this right. A lot more questions are now being asked about all these issues since my Fin Review article, and the jury is still out on a lot of them.

As to their buildability in Australia within any kind of reasonable time frame, it has to be appreciated that the proposed new subs are much bigger and more sophisticated beasts than the Collins class boats (3,100 tonnes, with crew less than 60). By comparison, the UK Astute class weigh 7000 tonnes with a crew of 98, and the US Virginia class weigh7900 tonnes, with 134 crew.

The nuclear power units will obviously be built and sealed in the US or UK, not here, but there is a very real question as to whether even the final assembly can be credibly done in Adelaide. I don’t usually agree with anything my successor Alexander Downer say, any more than he agrees with me, but I think his AFR piece this week (Monday 15 Nov) opens a debate we have to have: does pork-barrelling South Australia, which both sides of politics have gone along with, trump our national defence needs?

There are obviously also huge issues to be resolved as to whether the Collins class boats can go on having their life extended into the 2040s, or whether there are other credible options available – including decommissioned nuclear-propelled subs from the US on which we can do some serious training for the later acquisitions.

Another question not answered yet by the Morrison Govt is whether going back to the original nuclear-propelled design of the French boats was ever considered, as a way of better meeting both operational and cost requirements. It needs to be answered before the final cost of extracting Australia from our contractual obligations – in addition to the $A2.4 billion already now mostly wasted – is determined. That said, one strong reason for not returning to the original French Barracuda nuclear-propelled design is its LEU-refuelling requirement, with all the proliferation and related issues this raises.

A Nuclear Proliferation Risk?

If I thought these submarines would undermine the crucial global non-proliferation regime, I would be vigorously opposing them. But they won’t. These claims have been absurdly overstated. Acquiring nuclear weapons of our own has been ruled out as completely unconscionable by all sides of Australian politics and has no community support. So too has been producing our own fissile material. There is a theoretical diversion risk when naval reactors need refuelling, but the Australian Prime Minister has already said – and he needs to be formally held to this before any deal is finally concluded - that ‘next generation nuclear power submarines will use reactors that do not need refuelling during the life of the boat’. He was no doubt pointing to the fact that Highly Enriched Uranium (HEU)-fuelled naval reactors can indeed operate, as extraordinary as this sounds to the layperson, for thirty years with no new fuel (and with access to their existing fuel physically sealed). Unlike their Low Enriched (LEU) counterparts, including French boats, which need two or more new cores during their lifetime, providing a conceivable diversion path.

There are those who argue that, disclaimers notwithstanding, Australia will need to build major new civilian nuclear infrastructure to support these boats, and this will necessarily tempt us to go down various nuclear fuel cycle paths in the future, with all the proliferation and other issues this would raise. The short answer is that, if lifetime-fuelled sealed naval reactors are used, as they should be, with no fissile material domestically produced or even handled, the supporting nuclear infrastructure required is minimal. We will certainly need a significant number of fully trained and qualified specialists to operate these reactors, and monitor their safety, but that will be readily achievable in the long lead-time available, and carries with it no larger implications. The sealed-unit reactors themselves require no technical maintenance, and with their excellent reliability and safety record are unlikely to generate problems of the kind that would require US or UK attention: building a facility ourselves to cope with remote contingencies of this kind would not appear to make much sense.

[There is a remaining proliferation issue that needs to be addressed: that the International Atomic Energy Agency (IAEA) has not yet developed (as it should) oversighting arrangements for naval propulsion programs. A question has been raised in this context whether the AUKUS deal will create a discomfiting precedent, including for the US in meeting demands from other allies in good standing, in particular from South Korea, to which it has so far been reluctant to agree. But provided that, like Australia, any such recipient is in good proliferation standing, forswears domestic enrichment – and any reactor it receives has, again, a built in lifetime fuel supply – it is difficult to see any proliferation-related reason (whatever other reasons there may be) for refusal, certainly in the case of South Korea.]

A Safety Risk?

The Greens’ ‘floating Chernobyl’ claim is manifestly nonsensical. Apart from an unparalleled past record – with not a single US reactor accident in fifty years of operating hundreds of boats across millions of sea miles – naval reactors are only a fraction of the size of civil energy reactors, and are usually shut down in port, with a worst-case potential radiation release of less than 1 per cent of a typical commercial reactor. Maybe it is time for New Zealand, while making no other concessions to its determined nuclear-free status, to at least consider relaxing its blanket ban on visits from nuclear-propelled vessels.

Handling France

There is obviously something going wrong with our diplomacy when we have a Prime Minister able to be described – by journalist Nikki Savva, nobody’s idea of a left-wing zealot – as having performed the extraordinary diplomatic feat of somehow managing to have three major world powers offside simultaneously: ‘It’s an outstanding trifecta, when the Chinese refuse to talk to you, the American President thinks you are a boofhead and the French President calls you a liar.’

It is hard to argue that the breakup with France – which does seem to have been left by the US for Australia to handle – was badly mismanaged. It has not only generated French outrage – not all of it synthetic – but clearly put at risk Australia’s interests in a strong future partnership in the Indo-Pacific, not to mention EU trade deals.

It is true that the writing has been on the wall for some time, although until now denied by the government, that the five-year old deal with the French Naval Group to supply twelve redesigned Barracuda submarines was in serious trouble. Arguably misconceived from the outset, its cost had already blown out from $A50 billion to an eye-watering $A90 billion, delivery timelines were also blowing out, and expectations about domestic build and job-creation were clearly not being met, all with little evident French contrition. And it was likely that despite continuing public statements from the Australian side that all was on track France was beginning to get the message that the whole contract was under very close review.

But it’s also clear that the French were given no hint at all about the US-UK deal until immediately before it was actually announced – and seem to have been very explicitly misled about the extent of the trouble the French contract was in in the Payne-Dutton ministerial talks just two weeks before, and pretty clearly by Morrison himself.

I don’t buy the argument that giving the French some real advance notice of the AUKUS announcement would have run the risk of it being derailed by furious French lobbying of Washington: of course the US (and UK) knew that France would be profoundly unhappy at the actual decision and would have factored that into their decision. It defies belief that the US commitment was so weak it could have been relatively easily overturned by an entirely predictable Paris rearguard action.

Of course managing the sequence of communications was always going to be delicate and difficult, but that’s what competent diplomacy is all about. Having a chronically invisible foreign minister, and a newly appointed head of her department with no previous diplomatic experience at all, cannot have helped. There is a larger issue here about the overall state of our professional diplomatic establishment, currently lacking both effectiveness and influence on a scale I can never previously recall. While I know there are many hugely capable officers still within the system at all levels, their morale and confidence have for too many years taken a battering as a result of Australian foreign policy, and its most capable practitioners, being in recent years more than ever being driven by domestic politics, subordinated to the defence and security establishment, under-resourced and generally unappreciated.

Handling regional diplomacy

The anxious initial response from Indonesia and Malaysia to the AUKUS announcement – with the Malaysian Prime Minister saying that it would be a ‘catalyst for a nuclear arms race in the Indo-Pacific region’ – also suggests a failure of effective diplomatic preparation by Australia, with an inability to explain both the negligible proliferation risks of the new deal, and the military legitimacy of Australia improving, with a very long lead time, its longer-term capability to handle possible future threat contingencies.

Australia’s storytelling task was probably not helped by the ‘Anglosphere’ character of our new three-way partnership. In a neighbourhood where we have been claiming for years to be Asia-focused and committed – and Labor governments at least have said, and believed, that our future depends on our geography rather than our history – a triumphalist new link-up of Australia with not only the US but the UK was always calculated to jangle nerves.

The only consolation is that, whatever is said publicly by the region’s leadership, there seems to have been some private appreciation of this as a development which is likely to help concentrate China’s mind on the scale of the pushback it is likely to face if it continues to over-reach in its behaviour in South East Asia.

US Relations: maintaining our sovereign independence

It is reasonable for Australians to be concerned about the risks of becoming so closely enmeshed with the US in security matters that we lose all effective capacity for independent judgment and action. We have too often, above all in Vietnam and Iraq in 2003, joined the US in fighting wars that were justified neither in international law nor morality, but because Washington wanted us to, or we thought they wanted us to, or because we wanted them to want us to.

It is simply naïve to believe that the terms of the ANZUS treaty, all those past down-payments in blood, or a ‘century of mateship’, mean that the US will be there for us militarily in any circumstance where it does not also see its own immediate interests being under threat. Going to war must always be a matter of considered national judgment, not blind loyalty to what our prime minister now calls a ‘forever partnership’– or the price of acquiring technology we need for our own defence.

The AUKUS agreement will unquestionably bind us even closer than we have been in security terms to the US – not just its submarine component, but with the other highly sophisticated technology, including AI, quantum computing and guided missile related, that also seems to be on offer. But that said, it needs to be frankly acknowledged that the principal benefit Australia has always derived from the US alliance is access to advanced technology, and intelligence, otherwise beyond our reach – and the new arrangement is again, a difference only in degree, not in kind, to what has gone before. Similarly, the involvement here of the UK is not only a function of its Astute-class submarines being, along with the US Virginia-class boats, one of the two possible models for our own acquisition, but decades of close engagement through, in particular, the Five Eyes intelligence agreement.

The bottom line is that Australia’s political leaders in the years ahead have to be absolutely tough-minded in taking totally at their word the clear American assurances, at Secretary of State and Defence level, that the AUKUS deal will involve ‘no follow-on reciprocal requirements of any kind’, ‘no quid pro quo’. We are a sovereign independent nation, and must behave like it. Every future contingency, and every future request for our military involvement, has to be addressed completely on its own merits. We win no respect or credibility anywhere being anyone’s taken-for-granted ‘deputy sheriff’.

Relations with China

The AUKUS agreement does not mean, as some commentators have breathlessly asserted, that we have now finally ‘taken sides’ against China. Having our primary security relationship with the United States and our primary economic relationship with China is the position which has clearly evolved for Australia in recent years, just as it has for a number of our Asian neighbours. There is absolutely no reason for us now to change it, or for the AUKUS agreement to be seen as having done so. It is possible for us to keep our balance.

The AUKUS agreement won’t in itself irrevocably further damage our relations with China. The proposed submarine and other defence technology programs can be seen – and should be sold – as designed, like every intelligent procurement should be, to improve Australia’s capability to respond to any future threat contingency that might arise in future from anywhere in the region, and not based on any state’s assumed hostile intent. It involves, as I have already said, just a new layer of alliance cooperation, not a quantum shift.

The announcement was bound to generate a negative Chinese reaction, though that reaction has been more muted than many expected. Certainly it will not help in the short run to restore our currently fraught bilateral relationship, which has a number of causes, some at least of Australia’s own making. But it will come as no great surprise to China, which has always assumed our security relationship with the US to be firm and unchallengeable, and will not inhibit its willingness to deal with us in other areas – as with iron ore purchases – if that is in its own interest.

That said, the Morrison Government is not making it any easier – repeatedly saying that the context of the decision is a changed and uncertain regional environment, doubling down on rejection of every one of China’s ’14 points’ of complaint with us although by no means all of them are completely devoid of substance, and now with Defence Minister Dutton’s unequivocal statement that if it comes to a fight over Taiwan we will be part of it.

As US relations with China inch back to something more resembling traditional cautious engagement than outright confrontation – with the bilateral climate pact announced for Glasgow, and this week’s virtual Biden-Xi summit being important developments – Australia runs a real risk of being isolated like a shag on a rock. The stridency of our political and now military rhetoric is putting us at the front of the pack, and generating trade retaliation from China from which our democratic friends in the US and elsewhere are benefiting – and doing absolutely nothing to protect us.

From one point of view, it is no bad thing that Beijing gets the message – as it no doubt also has from the emergence of the Quad – that there is a will among other significant players in the region to build strong defence capability and cooperation, and that it cannot assume that over-reach will be accepted without pushback.

But it is also critical that there should not be an over-reaction to recent Chinese behaviour, as problematic as some of that may have been in the South China Sea and elsewhere. And China should not be seen as some kind of existential threat to other sovereign states in the region, which it is not now and may never even begin to be. It may pose a challenge to the hitherto undisputed primacy of the US in the region, and maybe ultimately in the wider world, but that is a different story. But assuming the inevitability of violent conflict, and beating the drums of potential war, has been, and will remain, stupidly counterproductive, with a dangerous risk of being self-fulfilling.

War Drums over Taiwan

We should be super-cautious about beating war drums over Taiwan. China’s new assertiveness under President Xi Jinping is a given, with China making no secret of its ambition to match the United States as a global player, to carve out its own strategic space in the Western Pacific, and to become a regional hegemon to which all its neighbours pay deference.

But while Xi’s commitment to reunification with Taiwan is absolute, and he would no doubt want to achieve this in some form during his tenure – and certainly by the 2049 anniversary of the founding of the People’s Republic – no Chinese political or military preparations suggest an invasion is remotely imminent. Beijing fully understands, and wants to avoid, the catastrophic horror and misery its people would suffer in any major modern war, over Taiwan or anything else. It also fully understands the international revulsion an attack on Taiwan would generate – and we are seeing a number of signs recently that Beijing is becoming more conscious again of the utility of soft power, and the extent to which that has been.

If Xi’s patience does run out and he chooses to force the issue, which I don’t think he will unless Taiwan declares its independence, it is far more likely — given the difficulties of mounting any cross-water invasion and the risks of triggering wider war – that it will be by ‘all measures short of war’, blockades, cyber-sabotage and the like. Bad enough, but not the full kinetic repertoire.

If that prediction proves too optimistic, and it did come to a fight – and one unprovoked by Taiwan – it would be a tough call for Australia, if pressed hard by Washington, not to join in the defence of a fellow thriving democracy. But on the other side of the equation:

  • Taiwan is a special case. Whether comfortable to acknowledge or not, the One China policy that we and most of the rest of the world have embraced, means that it is not a sovereign independent state like any other. the issues involved in an invasion, as repugnant as this would be, are not, and will not seem to most of the world, identical to those involved in, say, Iraq’s invasion of sovereign Kuwait.
  • Alexander Downer, as Australian foreign minister in 2004, was right to say – not a concession I often make – that on Taiwan the ANZUS Treaty does not apply. Australia has little or no capacity to influence the outcome, but a great capacity to suffer if drawn into war at any level.
  • There is a particularly compelling imperative to being drawn into a war that may not be at all easily won. China’s close-in military and cyber capability means that it could probably now neutralise any attempted localised US intervention. If that conflict escalated to all-out war, the United States would likely ultimately prevail, but at incalculably horrendous cost.

The crucial thing to appreciate is that diplomacy still has a chance. It is not to be assumed that China’s patience — which has long been legendary — will run out any time soon. The ‘delicate balance of ambiguities’ of the One-China policy has long served everyone’s interests and, if cooler heads prevail, can do so for a long while yet. Various formulae are available which could inch forward the unification objective in ways that both sides could live with — objectively, if not now politically or emotionally. After Beijing’s treatment of Hong Kong it is not possible to contemplate ‘one country, two systems’. But viable alternatives include the essentially symbolic concept of ‘Greater Chinese Union’, which Linda Jakobson and I proposed in a 2004 International Crisis Group report.

Every country must give primacy to its own national interests — which include not only security and prosperity, but being and been seen to be a good international citizen (and I’m publishing a book on that subject – subtitled ‘The Case for Decency’ – early next year). For Australia, making clear a willingness to fight for democratic Taiwan in its hour of need might be seen as advancing that third national interest, but would manifestly put at risk the first two. As being Foreign Minister constantly taught me, sometimes idealists have no choice but to be pragmatic.

The AUKUS agreement in wider political context

I’ve been saying for some time that our foreign policy posture should be built around four basic themes: Less America; More Self-Reliance; More Asia; and More Global Engagement. For me:

  • Australia’s future security depends on us being honest about both the strengths and limitations of our traditional alliance dependence on the United States, balancing appreciation with strong independent judgement.
  • It means being willing to be much more genuinely self-reliant, which will require us to spend more than our traditional 2 per cent of GDP on defence.
  • It means being clear sighted and balanced in our approach to China, accepting the legitimacy of some of its ambitions but being prepared to push back against others. It also means, in Asia, being much more actively engaged than we have been traditionally in defence terms not just with the US but with other key players like Japan, India, South Korea, Indonesia and Vietnam, who can make an important collective contribution to maintaining regional peace and stability.
  • And it means enhancing our general credibility by becoming once again a more committed player than we have been in recent years in helping solve global and regional public goods problems requiring collective action.

There is nothing in AUKUS which is inherently inconsistent with this approach, and much that it will assist, not least Australia’s defence self-reliance. Nor, properly understood and implemented, is there anything in it which should generate enduring hostility or anxiety from any other player in the region. The agreement has its risks, but none that cannot be countered by intelligent political leadership. Not a commodity in abundant recent supply, but we live in hope.