The last time the US came together with Britain and Australia to fight aggression in the Pacific was more than 70 years ago when the three countries went to war against Japan.
When US President Joe Biden meets with British Prime Minister Rishi Sunak and Anthony Albanese, Australia’s prime minister, at a naval base in San Diego on Monday, he will do so with a new potential adversary in mind: China.
The three leaders will unveil the results of 18 months of negotiations under the Aukus defense pact to supply Canberra with nuclear-powered submarines as part of a wider push to counter Beijing’s growing military might.
The submarine deal
Australia, which currently operates a fleet of six Collins-class ships powered by diesel-electric generators, will become only the seventh country in the world to operate nuclear submarines.
The plan, which will have three main stages, will attempt to bridge the capability gap for Australia in the 2030s after the Collins ships are out of service and before the deployment of the Aukus ships around 2040.
The agreement promises projects and technology sharing in the three countries for decades. Independent estimates put the cost of building and supplying at least eight submarines over 30 years at up to A$125bn.
But the industrial and operational challenges of delivering the pact are many.
Production capacity
The three countries need to invest heavily in upgrading their defense industrial base. US and UK shipyards are already working on domestic orders. Labor shortages and strained capacity are a big concern for Aukus.
“It’s not about any country buying another weapons platform, it’s about building the industrial capabilities of all three countries,” Pat Conroy, Australia’s procurement minister, told the Financial Times last month after visiting the Barrow-in-Furness shipyard in England where BAE is based. Royal Navy submarine building system.
Britain has invested heavily in the submarine business just to meet the existing demand. Barrow’s workforce has increased from 10,000 to 17,000 to complete the Dreadnought programme, which carries the UK’s nuclear deterrent, and the next generation of attack submarines.
In the US, General Dynamics Electric Boat, which makes the nuclear-powered Columbia and Virginia class submarines, employs fewer than 20,000 people. The US group has 17 Virginia-class submarines in its delivery backlog until 2032.
Submarine design and propulsion
The next generation of Aukus submarines will be developed and built between Britain and Australia, according to people familiar with the deal.
It will be a “hybrid platform” with a “pragmatic design” based on a variant of Britain’s next-generation nuclear submarine, called the SSN(R), as it replaces Britain’s current Astute-class submarines.
British industrial design work remains at a stage where Australian input could still be included in developing the ship. The Aukus variant has been dubbed SSN Aukus.
BAE Systems and Rolls-Royce, which builds reactors for all Royal Navy submarines, have joined the talks on the UK side, while General Dynamics and Westinghouse have joined from the US.
Rolls-Royce appears to be in a prime position to provide propulsion systems. The company is building advanced PWR3 reactors to be installed on Britain’s Dreadnought submarines, which carry nuclear deterrents.
US content in the form of weapons and combat systems will be plentiful, including Lockheed Martin-made Tomahawk cruise missiles and MK48 torpedoes.
Investment costs
Estimates by analysts at the London Consultancy Agency Partners suggest that if Aukus is based on modified Astute or Virginia class submarines, the average cost of each new vessel could be between A$5.5 billion and A$7 billion.
Adding the cost of weapons and combat systems, support and training through life, as well as the investment required in production facilities in Australia, could see the total cost of the program rise to A$125bn.
A “large part of the cost of Australia building this boat itself, besides the investment in production facilities, is the learning curve”, said Nick Cunningham, Analyst at Agency Partners.
Because of the long lead times, analysts say any potential bonanza for defense contractors will go a long way, depending on which company gets the lead position.
However, Aukus could provide a lifeline for British submarine companies, which have historically been plagued by cost overruns and delays. Some experts believe that it could have as big an impact as Britain’s agreement with Italy and Japan to build Tempest fighter jets. “It gives 25-plus years of visibility,” said Francis Tusa, editor at Defense Analysis.
Technology transfer issues
America’s closely guarded secret of nuclear propulsion is at the heart of the first pillar of Aukus, which governs the submarine treaty. US officials are optimistic that there is a way to share this with Australia.
But concerns remain in the second pillar of Aukus – which envisages co-operation in Artificial Intelligence, hypersonic weapons and undersea capabilities.
The hurdles are related to technology transfer requirements under the International Traffic in Arms Regulations, and a classification called NoForn that prohibits sharing information with non-US citizens.
Australia’s skills gap
With Aukus not expected to enter service before 2040, the three countries have agreed on a two-stage process to address the capability gap.
Washington has agreed to send several Virginia-class submarines to Australia, manned by American crews, to help with training.
The US will also sell Canberra up to five Virginia-class submarines as a stop-gap. Concerns remain about the capacity of U.S. yards to take on the extra work.