"Fine! We'll make our own subs" AUS responds
Can Australia trust Congress?
Washington DC 11 Jan 2023
“There’s been a lot of talk about well, the Australians would just buy a US submarine. That’s not going to happen,” Rep. Rob Wittman, who was the top Republican on the House Armed Services Committee’s seapower subcommittee, told Breaking Defense last month. The issue, he said, is that the US cannot afford to interrupt its own submarine buy: “I just don’t see how we’re going to build a submarine and sell it to Australia during that time.”
The Australian Government has responded to the SASC letter on the sale of SSNs by asserting they will build SSNs in Australia. This is rhetoric. The reality, as they know all too well, is much more complicated. The subtext is Australia is experiencing an increasingly fickle alliance partner that may penalize Australia far more than it has already lost in constantly changing sub plans.
Coequal enemies
The story caught the Australian government off guard. This often happens to allies who are not briefed before decisions are made about them in DC. Allies tend not to like being told through the global media what America is going to do to them. They tend to prefer some prior consultation.
The reason is often because American domestic political considerations override everything else. Congress and the Administration are equal but competing parts of the US Government. Even when there is uniparty control of both branches (not currently the case), each likes to assert their power over the other. Although not the case here, this often includes surprise public humiliations when either side changes the terms of past agreements. Rest assured, congress has the whip hand ($) in all decisions short of crisis decision making. Should you ever be in doubt, google ‘Woodrow Wilson and Versailles’.
In short, it’s not easy being an ally of the US. Especially if you are not steeped in how American domestic politics can play out if some rando from Indiana decides your country is going to be a football between coequal branches of government because she needs a bridge built in her district.
Fine! We’ll build them ourselves!
American politics to one side, the Australian response to the SASC letter gave away the game. They clearly want the Virginias. This is not at all a surprise and it’s the right choice.
Caught unprepared, they said they are studying the new information. Thats code for “thanks for dropping us in it and making us your political plaything”. Being unprepared can also cause unforced errors in strategic messaging. In order to give the appearance this was not a surprise and in fact, all part of the usual back and forth among friends, the Australian’s were forced to say something interesting when pressed by reporters. The Defense Minister (who is also deputy PM) standing next to the PM, quickly followed up by saying Australia will simply build the industrial base to make the SSNs themselves.
“People are going to need to wait until we announce the optimal pathway, which will not be too far away,” Marles said. “But the point that we’ve made is that we will need to develop an industrial base in this country to build a nuclear powered submarine, and we seek to do that as quickly as we can.”
Maybe this a politician thinking on his feet. Or it maybe backroom policy discussions prematurely being forced to the surface (yep, a depth charge pun).1
The defense minister kept adding 'the UK' to his comments. This is a red herring and/or being diplomatic. Australia has a deep strategic cultural preference for US systems particularly for major projects. The commonality between the Virginias and Astutes do not make the latter cutting edge US tech. The UK does exceptional defense science and technology development, as does Australia, but no country can compete with the R&D to which the Pentagon has access, the money, and sheer scale of the US military-industrial-complex. The whole point of AUKUS is to share highly classified American defense tech that normally would never be shared even with America’s closest allies.2 In the end, Australia might be forced to buy/build Astutes but this is not their preference and itself maybe impossible for reasons outlined below.
The SASC notes US shipyards are delivering 1.2 units per year despite industry claims production has already ramped up to 2 (and some analysts claiming 3 is possible).
If Australia could ramp up its industrial base and successfully deliver nuclear power hunter killer submarines on time and on budget to meet the retirement date of the Collins class, it absolutely should mount a national effort to do so. Along the way, it might grow its capacity to sell units to the self-admittedly under underperforming US market.
The Australian government needs to show its homework to prove why it believes it can achieve nuclear submarine production targets when the US cannot. Australia and the US are not an apples to apples comparison in the submarine making stakes.
For comparison, the US is a superpower with 320m people, a $25 Trillion economy, an $858bn defense budget, and a 71 year track record of building over 200 nuclear powered submarines.
Australia has 25m people, a GDP of $1.7T, and a defense budget of US$34bn.3 Prior to the 1990s Australia had no domestic submarine manufacturing capability. Since that time, with extraordinary effort and some difficulty, it has built 6 conventional powered submarines. Australia has no nuclear power industry.
For the reasons stated in all of Thirdoffsets pieces on this issue, Australia could eventually get its industrial base up to SSN production capacity but it is hard to see how it can do so in a strategically relevant timeframe while avoiding phenomenal over-costs.4 Any rational cost benefit analysis suggests the juice is not worth the squeeze when the Australian industrial base is taken into consideration.
A major problem for the Australian government is successive governments have completely botched all submarine programs since the Oberons that were bought from the UK. The history is available elsewhere. Suffice to say the massive sunk costs (sorry, another pun) on the broken French deal is the rule, not the exception. While well intended, and possibly necessary given offshore options appear to be sinking rapidly (I cant help it), the Australian government can’t hand waive away concerns about manufacturing at home vice buying off the shelf.
Congress has just added to Australia’s dilemma by suggesting off the shelf is now off the table (I am out of control). Given the state of US domestic politics, it is not hard to imagine congress (or a future Administration) reneging on the technology transfer to Australia in the future.
Put another way, the political and strategic risk of relying on an increasingly fickle American political establishment to keep to past agreements seems exceptionally high, especially in light of the fact the congress appears to have already closed the door on option 1 - off the shelf sales.
What to do?
The key requirement in any decision is ‘on time and on budget with a robust state of the art undersea warfare capability being made operational in a strategic relevant period of time’. Thirdoffset.
UK
The UK would likely be excited to get the sale. But can they meet the requirement? Do they have spare subs to lease as they ramp up manufacturing? Will they take the Trafalgar class out of mothballs (1 is about to retire, the rest “await disposal”), revamp them, and lease them, along with the provision of training crews and maintenance capabilities as more Astutes are added to the production line? The final 2 Astutes of the original order of 7 are on the BAE production line. However, the MOD has already funded a study into a successor boat. The next class is not due to hit the water until the 2040s which is out of the question for Australia. It should be noted that as in all complex programs, there have been substantial cost and time overruns in the Astute program. In February 2020, James Heappey, parliamentary under secretary of state for defense, confirmed that the in-service date for the final SSN, HMS Agincourt, had slipped to 2026.
Thirdoffset does not have deep insight into the UK side of things but prima facie, it does not look promising. The Trafalgar’s were retired and replaced for a reason. Their technology, particularly in sensors and other warfighting systems will presumably be of little value compared to state of the art Astutes. One or two might make a good training platform offered for free as an incentive in the sale of additional Astutes. Having said that, BAE systems Australia, sister company to the Astute manufacturers in the UK, have successfully completed substantial naval construction projects. Then again, timelines and industrial base for nuclear powered subs will be the issue. How Astutes compare in shallow water operations (geographically important) compared to the Virginia’s is unknown to Thirdoffset.
France
France did a deal to convert their latest SSN to a conventional boat for sale to Australia. Perhaps the French might be lured back into a new deal with a straight up SSN build? Thirdoffset has even less knowledge on French programs but given the sunk costs and effrontery, perhaps this might be smart play for Australia if AUKUS partners will not, or cannot, sell or construct the boats in time? This idea has not been floated (I am terrible) elsewhere so presumably it is out of the question. If I were advising the French, I would suggest they get on this and push it hard. Not only might they make a sale, they might also gain access to US advanced technology in the process.
Realistically, Australia will likely continue to be caught in a very costly bind and be bounced around from pillar to post by America only to get caught short.
If the Brits or the French can deliver on an Australian built program the Aus government should think very seriously about it. Again, the industry base issue is huge.
The entire question is still being studied. No decision has been made. Once it has been announced, any change will be politically explosive in Australia given past failures due to chopping and changing decisions. Some additional time to study innovative solutions - a hybrid unmanned (Australia is a leader) and manned solution, or other nations (France) etc - might be worth the upfront delay to get a really viable option that can outlast decades of political turmoil to completion.
US
The hulls the SASC is so concerned about (all of a sudden) will almost certainly be deployed to the Pacific. Who cares who operates them? If we work with the Australians we can jointly operate the same hulls and get them to pay for it.
The US needs to get more creative about the strategic issues in play. US leased boats, or dual-crewed permanently stationed USN SSNs in Australia, as bridging solutions to follow on sales, is providing hulls closer to the threat and spreading the cost with an ally. These same hulls would be in the same AOR anyway.
Working with, instead of against, Australia, would also crucially enhance the USNs SSN/SSBN maintenance footprint in the only location to provide strategic depth anywhere in the Asia-Pacific region. Guam, Japan and the Philippines are all sitting ducks.5
Australia is a natural partner, for geographical, political, industrial, logistical, intelligence-sharing, systems interoperability, and strategic reasons.
Congress is going to be congress. We cant change that. But we can work around it. Together we must. It’s a win-win for Australia and the US.
Update
Australia just lost nuclear material. 🫣
For the reporters who will like the imagery suggesting they were depth charging the minister. AUS reporters can be a feral bunch. ;-)
For example, when selling fighter aircraft, each foreign buyer gets varying degrees of lesser capable technology than is sold to the USAF. The variation is based on a variety of factors, including (but not exclusively) whether the buyer is a treaty ally or a partner of the US, the threat of counterintelligence and espionage, and into whose hands a shot down aircraft might fall. These considerations apply to all FMS.
The US is ranked first in GDP and Australia 14th - which is in fact exceptional when the population and arable land (4% v 17% in the US - Australia is roughly the same size as CONUS) is factored into the calculation.
Australian car industry ceased production years ago because domestic manufacturing could not keep up with imports. Australia can make cars, it just makes no sense to do so.
The Philippines and Japan also have complex political issues not presented by Australia.