AUKUS. Australian nuclear submarines.
Image by David Mark from Pixabay
The news last week portrayed this event as though it was imminent and that nuclear war, or at least proliferation of nuclear weapons, was going to happen in the Indo Pacific shortly.
Hardly.
First of all, there are serious doubts that this will even happen at all. I am not talking about the bickering that is going on within the western alliance(s) ie, NATO, Five Eyes, Quad and now AUKUS. The last and latest alliance has diminished the rest of the alliances that were formed before it, the most important of which is of course NATO. You don’t need to hear my views on this, as every news channel and newspaper is going on and on about duplicity and amateurish diplomacy. I have nothing valuable to add to that debate, even as I agree with all the political pundits.
Where I think there can be value-add in this interesting debate is the economics of this AUKUS deal because the motivation behind these types of deals is always money. Follow the money, as conventional wisdom goes. I did and now have lots to say.
To those of our readers who are afraid the world is now closer to conventional or even nuclear war, between America and its allies on one side and China on the other, I would say that there is nothing of that sort to worry about.
The United States won the first Cold War - the one with the USSR. I humbly think that the way to interpret the AUKUS and the nuclear sub deal is not that the strategy is to confront China with an actual military threat but to initiate an arms race that would derail its economic growth. It is a “cost imposition” strategy – weaken your opponent with an expensive arms race that will bankrupt their economy. The US succeeded with that strategy imposed on the former Soviet Union.
A definition of this “cost imposition” strategy can be found in the following article in a journal called Strategic Studies Quarterly, written by Colonel Kenneth P. Ekman of the USAF.
“Cost imposition strategies focus on eliciting an adversary response
that creates a hardship differential favoring the initiating nation. There
is new interest in cost-imposing strategies as the most beneficial element
of the competitive spectrum. If applied against China, cost-imposing
strategies can succeed when based on correct predictions of Chinese responses
and accurate accounting for the monetary and other security
costs involved.”
And because America can no longer afford to do it financially on its own, the Biden Administration looked to bring in partners to help pay for such an arms race on its side. That pressure is probably thought to lead to Beijing building more submarines or carriers or fighters or whatever, and hence divert precious resources away from its otherwise inevitable rise to become a leading military power matching the United States.
The Australians got sucked (or shall we say, suckered) into this hastily and ill-conceived alliance called AUKUS, based on this cost imposition strategy. It is a bad idea for Australia and it will likely fail.
First of all, let us examine why AUKUS is not a military threat to China, which explains why the Chinese reacted to the announcement with nonchalance, almost a ho-hum, and after some minor demonstration of irritation, basically did nothing. From the military point of view, eight submarines for the Australian navy would be a drop in the proverbial ocean that is the Pacific. One should know that it is NOT a major step up in the Australian capability for naval action. After all, Australia already has six submarines in its fleet, and this new capability is a replacement for the old ships, so an addition of two more does not make a lot of difference in the vastness of the Pacific.
Secondly, the first such submarine will only be deliverable around 2034 (as announced by the AUKUS Alliance), and as military procurement goes, the bulk of the submarine fleet will be operational probably only in the 2040’s. Honestly, if the US and China are going to fight a war, it will not be in the 2040s because by then, the Chinese and the American militaries (especially in naval capabilities) will be on par and there cannot be a possibility of conflict at that time to be started by a country, with a clamorous public opinion, that only launches war against those who cannot inflict substantial human casualties on it. Any outbreak of hostilities will happen within this decade when the war-mongers in the US still consider themselves to be superior to the PLA.
As a dispassionate observer weighing in on the realities, the military mission of AUKUS is totally meaningless. And everyone who should know, already knows this.
We can therefore conclude that this is not about military confrontation but simply an effort to start an arms race, a race that will cost a lot of money, and if the American success in Cold War 1 against the USSR, is any indication, then the Americans hope that it will bankrupt China, or at least, derail and dent, its growth apparatus. They think this strategy will work again.
That was exactly how the Chinese seemed to have reacted to the news on AUKUS. They decry the start of a new arms race.
Historically, it has been disastrous for any large and capable military to depend on lesser partners to shoulder actual combat. The world saw what happened, when the Germans in WW1 depended on Austria in the Balkans, or again in WW2, on Italians, Romanians etc on the Eastern Front. Or when the Americans, in depending on South Vietnam in that war, or when building up an Iraqi army and an Afghan army to extricate themselves from the front lines, experienced the same sorry outcome. Unlike the British in both World Wars, who cleverly sought out a stronger partner (the US), the strategy of roping in weaker nations into a military alliance is always a losing strategy.
Australia is by no means a naval power - it never was, even at the height of the Second World War in the Pacific. It would certainly not be a central part of any American strategy to make them one capable of fighting in a Pacific war with China, if it were not conveniently located in the neighbourhood. Geographical convenience is a poor reason for forming alliances because history shows that the weaker members of such alliances bow out early for various reasons, including defeat on the battlefield, economic destitution and suffering the consequences of having been involved at all, including conquest by the winner of the war.
In other words, this arms race to bankrupt the adversary may work if the Americans had chosen a better partner than Australia.
The Chinese know that the Australians are not capable of running a submarine fleet. The Australian’s existing fleet of 6 diesel-electric old Swedish submarines, named the Collins class, is always undermanned and can field only 3-4 boats at a time. The US also knows this, if the following op-ed by an American expert can be relied upon to give us an insight:
“US-UK-Australia submarine deal is a dangerous joke which will only worsen geopolitical crisis with China
Scott Ritter
is a former US Marine Corps intelligence officer and author of 'SCORPION KING: America's Suicidal Embrace of Nuclear Weapons from FDR to Trump.' He served in the Soviet Union as an inspector implementing the INF Treaty, in General Schwarzkopf’s staff during the Gulf War, and from 1991-1998 as a UN weapons inspector. Follow him on Twitter @RealScottRitter
18 Sep, 2021 11:05
Australia struggles to keep its current six diesel-powered submarines operational; it now wants to build eight nuclear-powered submarines, despite having neither the trained manpower nor the nuclear infrastructure necessary.
This is a story of geopolitically driven military procurement gone mad.
Australia is an island nation whose very survival is dependent upon its ability to access strategic sea lines of communication (SLOCs) so that critical commerce links can operate on a sustained basis. In short, if any nation or group of nations were to cut off Australia’s sea links to the rest of the world, the country would eventually wither away and die.
Despite its impressive land mass, Australia is a relatively small nation, with a population of just under 26 million (making it 55th in world rankings) with a GDP of US$1.3 trillion (13th in the world.) The 2021 defense budget had Australia spending 2.1% of its GDP, or around AU$44.6 billion. Just under AU$16 billion of this was spent on the Australian Navy, which is comprised of nearly 50 commissioned vessels and over 16,000 personnel.
Among the types of vessels Australia relies upon for its naval defense is the Collins-class guided missile submarine, a modification of the Swedish Vastergotland class of diesel-electric submarines. Australia purchased six of the Collins-class submarines between 1996 and 2003. The Collins-class submarine uses three diesel engines to charge giant batteries that enable the submarine to operate in near-silence, a dangerous advantage in modern naval warfare. Indeed, a Collins-class submarine was able to penetrate the defenses of a US aircraft carrier during an exercise in 2000, positioning itself for a ‘kill’. This incident was not a unique occurrence for the Collins-class submarine, whose silent operations make it one of the most dangerous classes of submarines in terms of naval warfare deployed today.
There are many problems with the Collins-class submarine, however. Design flaws and a shortage of spare parts impacted the operational availability of the submarines, costing Australians hundreds of millions of dollars in maintenance costs per year. And while each submarine was crewed by a force of some 60 specially trained personnel, there were only enough crew to operate three to four of the submarines at one time.
The Collins-class submarines are expected to end their service lives prior to 2030. The Australian government opted for a replacement submarine based upon an existing French nuclear submarine but replacing the nuclear propulsion system with a quieter diesel configuration.
Twelve of these submarines were planned to be built at a cost of between AU$40 billion and AU$50 billion. By 2021, however, these cost projections had exploded to over AU$90 billion to build and another AU$145 billion to maintain over their life cycle. Moreover, the first submarine would not be available until around 2034, requiring the Australian Navy to undertake a costly life-extension program for its existing Collins-class submarines.
Enter the United States. The US is currently fixated on the need to militarily confront China in the Pacific region but finds itself at a disadvantage when it comes to capability and regional support. While the US has leaned on the United Kingdom to increase its naval commitment to the Pacific, resulting in the high-profile deployment of major warships, getting Australia on board the counter-China campaign is seen as a major plus in terms of the credibility of any US-led naval deterrent.
Recognizing the potential afforded by Australia’s procurement debacle regarding the follow-on to the Collins-class submarine, President Joe Biden, together with British Prime Minister Boris Johnston, threw Australian Prime Minister Scott Morrison a political lifeline, enabling Australia to cancel its expensive Collins-class follow-on project, and instead replace it with a yet-undetermined nuclear-powered submarine design to be developed with the US and UK over the course of the next 18 months. Australia was quick to accept the offer.
The beauty of the US-UK proposal is that there are no messy details attached – how much the program will cost, how Australia will operate advanced nuclear power systems when it has no indigenous nuclear power experience to draw upon, and, perhaps most importantly, how Australia plans on manning eight large submarines when it can barely field four crews for its existing Collins-class fleet?
Moreover, beyond the US-dictated operational premise of “challenging the Chinese,” the record is silent on how the acquisition of large nuclear-powered submarines will advance Australian national security. It is the silence and maneuverability which made the Collins-class submarine such a potentially lethal weapon. Any Australian fleet equipped with nuclear submarines will find it difficult to operate in the shallow waters that define the majority of the SLOCs they will be required to defend. Moreover, the noise and bulkier configuration of a nuclear-powered submarine will mean any future Australian force will be far less capable when it comes to killing a modern naval opponent, and far more likely to be detected and destroyed.
The reality is the US-UK offer to provide Australia with nuclear submarines is little more than domestic politics projected onto a theoretical geopolitical map of the US’ making. Australia was facing a fiscal crisis due to the exploding budget associated with the French-designed replacement for the Collins-class submarine, one that could threaten to bring down the government of Scott Morrison. Boris Johnston remains desperate for a platform from which he can project an image of UK geopolitical relevance. And Biden is in desperate need of being able to do the same for an American constituency reeling after the humiliation of losing a 20-year conflict in Afghanistan.”
Unfortunately for Australia, the above failure to run a small submarine force has not led to any eye opening about their own shortcomings, particularly in the lack of a shipbuilding and repair industry or an industrial base in an economy that is basically earning its keep from agriculture and mineral mining. Instead, the Morrison government prefers to gloss over current problems in actual operations to enter the fairy land of being the 7th country in the world to run a force of nuclear submarines, even when they lack not just a nuclear industrial base, but an ordinary industrial base in the first place.
Finally, submarines in this day and age, like aircraft carriers, are already a dinosaur. Using these weapons are like fighting WW2 all over again. That world has moved on. By the 2040’s, the war that may be fought would be based on rockets and drones. Today, besides drone aircraft, there are all kinds of drone submarines, which cost a tiny fraction of a nuclear submarine, and which can be rolled out in far greater numbers than eight and made operational in a far shorter period of time. Fans of military technology, like this writer, will find plenty of published information on Chinese submarine drones capable of carrying nuclear or conventional weapons to be detonated at great distances from a target, such as a carrier group or another submarine, and still destroy it. Or on hypersonic anti-ship missiles which look nothing as majestic as a carrier or a nuclear submarine, but probably able to do the same job at a millionth of the cost. That seems a potent weapon in a war of the future.
China is already well known to develop advanced rocketry that flies at hypersonic speeds (defined as 5 to 10 times the speed of sound) and undetectable (by being able to change flight paths). The PLA is acknowledged by its foe, the Americans, as leading in this area of potential offence. The front lines of arms races are not in submarines.
The Chinese have shown that they are capable, after being locked out of any international collaboration in space, of flying rockets to the dark side of the moon, putting rovers on Mars and operating a large space station. It already has a substitute for GPS in its Beidou navigation (hence targeting) system. China is in the lead in multiple military applications that has at this time seen no competition yet from the western powers while this AUKUS deal have led the Australians to brag about Tomahawk cruise missiles for their nuclear subs which were last flown in Desert Storm 30 years ago at touristy speeds of a couple of hundred miles per hour. Are we serious here?
For the two larger Anglophone partners in AUKUS not to know this is unimaginable. It is obvious, at least to this writer, that the AUKUS is a mere public relations and political propaganda exercise to cater to domestic audiences so that these may vote for Biden and Johnson in the next two to three years. This is to make those voters feel better about lower living standards when some other country can succeed to provide better livelihoods for their citizens without military adventures. It is another step to create a boogey-man.
The price tag for the Australians in this AUKUS deal is not known yet. The deal that the French lost is US$90 billion. There are estimates within Australia that puts the tag for the US-UK submarines at US$200 billion. That’s in 2021. By 2034, that bill may be another 50 percent higher due to cost overruns (that’s a given in Western military hardware development programs). When the cost of running the entire program is totalled, it may exceed future Australian taxpayers’ willingness to pay, especially when it becomes obvious that these submarines are unlikely to keep Chinese naval ambitions checked. But that is something Australian politicians will have to deal with.
For those familiar with military technology, this AUKUS deal is therefore not a serious effort to counter the Chinese military build-up to match the US military within the next decade. After that, the world will settle into peaceful coexistence. It is important for Biden to show to his constituents that he is doing something about it now, so that, to paraphrase him, the rise of China over the US will not happen on his watch, a Churchillian-type declaration that diminished the British leader’s otherwise legendary legacy.
It is also important for Johnson, because Brexit will prove his undoing in due course, that he engages in a deal in which he has nothing to lose. It is the next step to sending the Royal Navy’s pride, the Queen Elizabeth 2 aircraft carrier, on a pleasure cruise to nowhere in the Pacific a few months ago.
All in all, the biggest dunce in the room is Morrison, who has taken his country on a path that was started by Trump into an unwinnable economic tiff with China. He is now sinking deeper into the muck, as the Chinese retaliated on the economic front by cutting off Australian exports to China. Now, he has committed his country on this hugely expensive submarine project that will take 20 years to complete and with the guaranteed cost overruns in all these types of projects, will probably be abandoned halfway when it shows no results that lift the lives of ordinary Australians. He actually asked China to negotiate the trade restrictions just after AUKUS was announced. Highwaymen tactics? It’s totally amateurish to expect a response.
And during all this time (say 20 years or more), Australian politicians will suffer from a further deterioration of economic relationships with China, punishing Australian exports to the detriment of their economy. There is brave talk of finding substitutes for Chinese buyers of everything from iron ore to wines to barley and lobsters, but who else has 1.45 billion of middle-class spenders? There is no realism in Australian political thinking.
It is pertinent to note that iron ore (Australia’s largest export and mostly to China) prices have collapsed, and this has a huge impact on Australia in the current time, affecting the ability of the economy to take on a hugely expensive project that will stretch out long into the future. The economics just do not look right.
As far as the cost imposition strategy is concerned, the Americans make a lot of money, the British laugh all the way to the bank, and the Chinese are spending their money on cheaper and more effective drones and hypersonic missiles, not submarines. This will lead to an unusual outcome. The cost is going to be mostly imposed on the Australians. They face economic decline in biting the hand that feeds it, plus spending a lot of money they don’t have to help the Americans further their cause, and hence be the only ones at the receiving end of the US-led cost imposition strategy.
No wonder Biden could not even remember the name of the dunce in the room.
Wai Cheong
Investment Committee
The writer has been in financial services for more than forty years. He graduated with First Class Honours in Economics and Statistics, winning a prize in 1976 for being top student for the whole university in his year. He also holds an MBA with Honors from the University of Chicago. He is a Chartered Financial Analyst.
Recent Posts
