22 March 2023

Thunder Down Under – AUKUS will fundamentally alter the balance of power in the Indo-Pacific

By Leo A Keay

Last week’s AUKUS summit in San Diego marked a profound shift in the Indo-Pacific balance of power. For the past two decades, the West has struggled to address the growing size and assertiveness of Beijing’s naval forces. As of 2020, China possesses the world’s largest navy, which it has been using to threaten and coerce its neighbours, especially in the Taiwan Straits and the East China Sea. 

Washington, Canberra and London have now taken a major step towards deterring Chinese aggression in the region. The pact aims to provide Australia with a new generation of nuclear-powered attack submarines (SSNs) in three phases. To begin with, US and UK submarines will increase port visits to Australia and accelerate joint training of Australian personnel from this year. They will then establish a rotational presence, ‘Submarine Rotational Force-West’ (SRF-West), at HMAS Stirling, as early as 2027. From 2032, Washington will sell up to five Virginia-class submarines to Canberra to fill the capability gap that will emerge when its current fleet of diesel-powered Collins-class vessels is retired. Finally, the UK and Australia will jointly develop and construct a hybrid vessel, SSN-AUKUS, due to enter service by the late 2030s and early 2040s respectively. 

This programme has the potential to provide the allies with a major strategic advantage. Compared to diesel-fuelled vessels, nuclear-powered SSNs have a clear superiority in terms of range and stealth, making it easier for the allies to project power in the Taiwan Straits and East China Sea, as well as to target choke points in the Indian Ocean. Moreover, the joint training of crews, along with the joint design of the new SSN-AUKUS vessels, will ensure a high level of interoperability between US, UK and Australian navies, thereby enhancing the force multiplier effect of their combined submarine fleets. 

Nevertheless, three challenges remain if AUKUS is to restore a favourable balance of power in the Indo-Pacific. The most pressing priority is to coordinate SSN operations as well as deployments in phase 1 of the agreement. Washington and London have asserted that their vessels will operate as sovereign assets under the control of American and British commanders, but that there will be ‘a significant degree of coordination in their activities’. However, this fails to define how SRF-West would respond in the event of hostilities between Beijing and one of the allies.

To establish effective deterrence, the allies need to set clear red lines, clearly communicating to Beijing the escalation risks that a conflict with any one of them could potentially trigger. The readiest solution would be a trilateral anti-aggression pact akin to Nato’s Article V, treating an attack against one ally as an attack against all. As with Nato, political commitments would require an institutional structure, including an integrated military command, joint planning and maintenance arrangements, as well as ammunition stockpiles. 

Defence-Industrial capacity will prove vital to the second and third phases of the agreement. All three governments have agreed to make investments to increase their defence industrial bases: Australia is building a new yard at the Osborne facility in Adelaide to drastically increase naval construction; Washington and London have respectively committed an additional $2.4bn and £2bn in submarine delivery. 

Nevertheless, workforce constraints could significantly impair these efforts. Australia estimates that it will need to almost double the workforce previously forecast for its SSN programme; meanwhile, the US Navy anticipates having to hire 100,000 additional workers and the UK is planning to increase its workforce from 10,000 to 17,000 just to fulfil their existing construction and maintenance programmes. If the US Navy fails to expand its own SSN fleet from 49 to 66, it may decide that it has no spare ships to sell to Australia in phase 2; meanwhile, if Australia and the UK struggle to develop their own manufacturing capacities, Canberra may have to buy more Virginia-class submarines rather than developing a hybrid vessel in phase 3.

Allied governments should adopt at least two measures to maximise the efficiency of their construction programmes. Firstly, conducting schedule risk analysis of production plans would help them to minimise delays and cost overruns: the Government Accountability Office found that the US Navy’s failure to do so for its Columbia-class submarines resulted in borrowing personnel from the Virginia-class programme, increasing the strain on an already overstretched workforce. Technological innovation could also prove crucial: 3D printing has the potential to reduce delivery times by up to 80% and could go a long way to compensating for shortfalls in human capital. The US Navy began to put printed parts on submarines began in November 2022 and are prioritising a list of ‘trouble components’ consistently unavailable at the public shipyards.

Information-sharing is fundamental to all three phases of the programme. British, American and Australian crews working and training alongside each other in phase 1 will need to have access to each other’s security briefings, and the technology transfers in the second and third phases will require export controls to be streamlined. 

The so-called ‘second pillar’ of AUKUS includes a generalised proviso for information-sharing (along with the joint development of advances technologies such as quantum, hypersonic, AI, undersea and electronic warfare), but no further progress on this workstream was announced at San Diego last week. In practice, Washington’s reluctance to transfer sensitive intelligence and technologies even to close allies remains a significant obstacle. In particular, the Pentagon often classifies information as Not Releasable to Foreign Nationals (NOFORN), while the State Department’s International Traffic in Arms Regulations (ITAR) requires licences to be issued for all sales of defence items and services, resulting in months of paperwork for most transactions. 

Better information-sharing within the alliance can only be achieved by institutional change from Washington. The DoD could introduce additional approval requirements from senior officials necessary for NOFORN designations, making it the exception rather than the default classification for AUKUS matters. Moreover, the State Department could create ITAR exemptions for items relevant to the AUKUS project, as is already the case for the transfer of certain low sensitivity materials to Canada. In return, Canberra and London would have to provide assurances that any shared information would remain secure and that its distribution would be tightly regulated.

AUKUS has the potential to fundamentally alter the balance of power in the Indo-Pacific, but only if the allies maintain the political will to achieve their common objectives. To succeed, they need to remain focused on deterring China by integrating SSN operations, along with maximising the productivity of their defence industrial bases and enhancing information-sharing for technologies and intelligence. Acting together over the coming decades, Canberra, Washington and London can form a bulwark against Chinese aggression and foster the development of a free, open and prosperous Indo-Pacific region.  

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Leo A Keay is a parliamentary researcher.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.