One Suboptimal Outcome Won't Sink Japan-Australia Ties

In the final week of April 2016, Malcolm Turnbull, Australia's prime minister, announced in Adelaide, South Australia, that the French consortium DCNS would be awarded the A$50 billion contract to build the submarines that will go on to replace the Australian Navy's aging Collins-class. DCNS will build 12 conventional variants of its nuclear attack Barracuda-class submarines in what will be Australia's most expensive defense project ever. The announcement wasn't entirely surprising. Leaks had emerged in the days leading up to Turnbull's speech in Adelaide that Japan's joint bid by Mitsubishi Heavy Industries and Kawasaki Shipbuilding Corporation had been ruled out. The third competitor, Germany multinational ThyssenKrupp AG, also fell short of fulfilling Canberra's requirements.

Turnbull, flanked by his defense minister, Marise Payne, said that DCNS's Shortfin Barracuda offering best met the unique requirements Australia had set out. In technical terms, the Shortfin Barracuda has a lot going for it. With a 90 meter-long hull and a submerged displacement of 4,000 tons, it will be larger than the 72 meter-long and 3,100 ton Collins. Its on-board quarters should improve the durability of Australian submarine crews. Finally, given that the Shortfin will be a variant of the nuclear-powered Barracuda, Canberra, in theory, can keep the door open to acquire a nuclear attack submarine in the future. Current political realities in Australia precluded the procurement of a nuclear propulsion submarine, but with the possibility of a change in public attitudes toward nuclear energy, the Shortfin Barracuda provided an opportunity that neither the Japanese nor German proposals did.

Additionally, of the three offerings, it was the sole submarine design that would have required shrinking an existing design. Japan's Soryu would have had to be expanded and the German Type 216 design concept, based on the Type 212/214, also involved an expansion of the hull. Australia's experience with the construction of the Collins-class, which also involved hull expansion, left a bad taste in Canberra's mouth. A final feature that may have been appealing for Canberra is the fact that the French Navy itself will take delivery of its first Barracuda soon; the submarine is set to replace its existing Rubis-class submarines and become the backbone of the French nuclear attack sub-surface force. Any technical and design glitches will become apparent before the submarines go into service with the Australian Navy. (The first Shortfin Barracudas will likely sail out of Adelaide in the mid-2020s.)

The technical explanation for why the Shortfin Barracuda triumphed where the other two bids failed only goes so far. Like many large defense deals, Australia's Collins-class replacement project always had heavy political and diplomatic baggage attached. Consequently, Japan's elimination was surprising to some regional observers. Through most of 2015, the Kawasaki-Mitsubishi Soryu offering was seen as the front-runner and a relative shoo-in for the Australian award. Australian Prime Minister Tony Abbott had struck up a strong personal rapport with his Japanese counterpart, Shinzo Abe, who'd long stated an interest in having Japan become a "normal" defense exporter. For Abe's government, the Kawasaki-Mitsubishi Soryu snapping up the  A$50 award would have represented a major coup. Reports in 2014 appeared confident that Abbott had functionally promised that Japan would build Australia's submarines, leading, in part, to the Soryu's perception as a front-runner.

Compounding the Soryu's appeal was the implicit backing of the United States, an important ally to both Australia and Japan. Washington's policy in the Asia-Pacific has of late focused on encouraging intra-regional networking between like-minded states. There is little doubt that the Obama administration would have liked to have seen the award go to Japan in 2014 and early 2015. Awarding Kawasaki and Mitsubishi the contract, the thinking went, would seal in closer bilateral cooperation between Canberra and Tokyo on other issues, spurring Abe and Abbott to join hands in a U.S.-led regional concert opposing Chinese unilateralism in the South and East China Seas. U.S. officials had reportedly told the Abbott government that it would not permit U.S. advanced weapons systems to be installed on a European submarine.

The event that most clearly brought the Soryu's house of cards tumbling down was an unexpected September 2015 leadership spill within Abbott's Liberal Party that saw him ousted and replaced by Malcolm Turnbull, who was initially seen as a centrist, pro-business, no-nonsense sort of Liberal prime minister. With Turnbull in the driver's seat, Japan's Soryu guarantees were out the window and the Soryu's technical shortcomings came under additional scrutiny. A 2014 report by an Australian Senate committee had already outlined serious doubts regarding the Japanese offer, but had largely flown under the radar amid Abbott's personal chumminess with the Japanese premier.

National interest aside, the Turnbull government may have ultimately seen an important political opportunity in going with DCNS as well. With federal elections anticipated in Australia in early July, Turnbull's Liberal-National coalition needs all the help it can get (as Grant Wyeth details elsewhere in this issue). With DCNS, the government can guarantee that the 12 Collins-replacement Shortfin Barracudas will be built in Adelaide, South Australia. In his speech announcing the award, Turnbull suggested that the deal would result in 2,800 jobs – a lifeline for an Australian region undergoing acute deindustrialization. “Australian built, Australian jobs, Australian steel," Turnbull noted, making sure it was unmistakable that this submarine deal would long support Australian industry.

Despite Tokyo's misfortune with the outcome of Canberra's submarine replacement project, there is little reason to fret about the longer term trajectory of bilateral ties between Japan and Australia, which remain decisively on an upward trajectory. Moreover, losing the Australian bid may turn out to be a blessing in disguise – not for the Abe government, but certainly for Kawasaki and Mitsubishi, who may have been unable to meet their existing domestic shipbuilding commitments on top of managing a massive overseas project. Finally, Turnbull's political maneuvering in ensuring that South Australia receives dividends for years to come from this deal should erase any concern in Tokyo's head that Australia decided against the Soryu to show deference to Chinese preferences. China may well be content with the outcome, but for Turnbull, this was equally about the Shortfin Barracuda's technical flourishes and the benefits of a content South Australian electorate.

In the end, while this submarine episode may produce some short-term friction in their bilateral relationship, Tokyo and Canberra will continue on a path of steady convergence, no doubt abetted by Washington. For instance, last year, for the first time ever, Japan sent a small contingent of troops to the U.S.-Australia Talisman Saber exercise. In early April 2016, a Soryu entered Sydney Harbor – a first since World War II. A week before Turnbull announced the Collins-replacement award, Australian and Japanese warships joined U.S. Navy ships for trilateral naval exercises in the Java Sea, an anteroom to the South China Sea, where both Tokyo and Canberra have stressed support for the freedom of navigation.

No doubt had the Japanese Soryu triumphed over the French Shortfin Barracuda, the upward trend-line in the Australia-Japan bilateral may have lifted even higher. But one suboptimal outcome shouldn't sour Tokyo on the promise of longer-term cooperation with Canberra. In diplomacy, deep and enduring interests often overcome the temporary drag of specific incidents. The United States alone may be unable to provide the ballast necessary to hold Asia's post-World War II regional architecture in place amid an increasingly assertive China. Tokyo and Canberra – each with considerable equity in the persistence of this status quo in the 21st century – will continue to find ample space for cooperation.