February 9, 2015

Abbott's "Open Tender" Future Submarine Call Doesn't Go Far Enough

Prime Minister Abbott seems to be the main advocate for "Buy Soryu and Built it in Japan" however his hold on the position of Prime Minister (PM) is still threatened. Yesterday (February 8, 2015) PM Abbott appeared to say that the future submarine issue should go to open tender But Abbott was not definite in stating what he meant. He did not say "Build the submarines in Adelaide". It was unclear whether the government owned Australian Submarine Corporations (ASC) would be ordered to ally itself with the Japanese Soryu (KHI and MHI) "bid". It remains likely the Soryus would mostly be built in Japan but as is already anticipated the US-Australian developed combat system might be mostly fitted in Adelaide by ASC.
The extract in that article "It is understood that France, Germany, Sweden and Japan were to be named in a selective tender process that would allow Australia to solicit bids from other governments, rather than just corporations."  is ambiguous. It may be aimed at the US Government providing the combat system. It may also suggest there will be much weight given in choosing the winning "bid" on what bidding governments have to offer. This would favor Japan in the context of the Japan-Australia free trade agreement . The Japan-Australia strategic alliance issue I wrote about in my previous article would also favor Japan. The other contenders (Germany, France, Sweden) do not bring such economic and strategic benefits to the table.

On February 8, rather than making a serious effort to plan the future submarine build Abbott appeared to be just securing votes from Federal Liberal Party politicians from South Australia to support him in a No-confidence meeting on February 9, 2015.

Although Abbott won enough votes (at the 9am February 9, 2015 meeting in Canberra) from his Liberal Party to stay PM Abbott's survival as PM remains unresolved. This is because there was a split vote, 61 votes he should stay on and a substantial minority of 39 votes that he should stand down. This reflects continuing unhappiness at Abbott's non-consultative leadership style. More no-confidence votes are likely in the months to come.

Now that the immediatte threat to Abbott's PM job is over continuing submarine discontent of politicians in Adelaide is being heard. This more recent article (February 9, 2015) from Australia's ABC indicates: The South Australia State Defence Minister, Martin Hamilton-Smith, believes the newly promised shift to an open tender process for future submarines falls short of the Federal Government's promise that ASC would build the submarines in Adelaide. He believed the open tender process could still result in the ships being built overseas. So he believes that Build 12 submarines in Adelaide should be a definite condition of the tender.
Independent Federal Senator Nick Xenophon said he was also deeply sceptical about Mr Abbott's new promise for an open tender process. Mr Xenophon said the PM should have announced that the tender process would lead to the subs being built in Australia.
- Federal Defence Minister Kevin Andrews urges caution and patience

Overall Abbott needs to be more explicit that he now supports a truly open tender with most of the build in Adelaide - not a rigged tender that favors a build in Japan. If Abbott remains vague, without Prime Ministerial OR Defence Ministerial Media Releases, Abbott may easily renege-backtrack as his 2014 broken promise of "Build in South Australia". 

In terms of what submarines should be built I think the cost of a totally new or heavily modified 3,000-4,000 ton (surfaced) submarines would be too expensive and involve overly long lead-times. Also since the end of Australia's mining boom, 2 years ago, Australia doesn't have the $20-$25 Billions for 10 to 12 large, possibly orphan, subs. More money towards other voter-popular causes (health, education, welfare) would keep Abbott in his job as PM and the Coalition in power.

Large, heavily modified submarines, built in Australia or overseas, are such a tough choice I think Abbott would describe it as a lose-lose decision. 

If I had my way I'd just buy 6 medium size (Scorpene, HDW 214, Dolphin 2, or Kockums A26) from France, Germany or Sweden for $5 Billion TOTAL price (ie. just over A$800 million per submarine).

Odds on Abbott makes no major decision till 2017 - that is AFTER the next election. - even if the US is applying pressure. Regarding US pressure, note this timely scholarly comment of MIT’s Jonathan D. Caverley “The thumb on the scales that has Australia leaning towards Japan for its submarines has an American fingerprint.” (page 19 of Running Faster to Stay in Place: U.S. Defence Exports in 2030 within RSIS’s  http://www.rsis.edu.sg/rsis-publication/idss/the-global-arms-industry-in-2030-and-beyond/#.VNhLU_mUen8 )



Anonymous said...

Althogh Japan has spent huge amount of resources such as money, time and manpower for submarine development, Japan is trying to be best a friend of Australia. But some people dose not understand this, I feel. As Australia is going to develop new subs without well defined submarine defence strategy based on national consensus, she entangles Japan in trouble such as Australia’s domestic conflict and Japan’s security risk. Should Australia give up Soryu technology and select other options?

Peter Coates said...

Hi Anonymous

Friendliness should not be part of a business decision. No-one would take seriously that Australia should buy from France, Sweden or Germany because of friendliness.

The extra-ordinary 2 to 2.5 US$Billion is too high when Australia should be paying less than $1 Billion per submarine.

Japan and Australia have potential common enemies in China and Russia. Neither Japan or Australia should drag each other into confrontations with China over economic disputes.

There seems to be no discussion of Japan strategically aiding Australia in Australia's nearby region - partly because we don't need Japan's help.

If China were to occupy East Timor things may be different?

Australia should be buying just 6 medium size SSKs for far less than $7 Billion Total or perhaps 4 SSNs from the US.



Anonymous said...


Japan helped Australia in East Timor by
1. Witholding loans to Jakarta until Interfet had been given permission to intervene, and
2. Sending personnel and sharing the aid burden.


Peter Coates said...

Thankyou Anonymous

I appreciate Japan's help in Australia's and East Timor's hour of need (in 1999).

What was later concerning was China's December 2007 request to the East Timorese (ET) government to to build a radar station (near Baucau I think). http://www.smh.com.au/technology/technology-news/chinese-bid-to-set-up-east-timor-spy-base-20110509-1efwo.html . Now that request was rejected by ET which was far-seeing by ET.

A hypothetical - what if increasingly influential China asked again. A radar station would probably need a Chinese built airstrip to service it. That airstrip might always need hardening and lengthening to take ever larger aircraft.

So maybe we are then talking Chinese airbase.

The political, economic and other influence of Australia new Japanese ally would then probably be welcome? Short of that and much more likely Chinese ship visits just off Dili Harbour?

These are all future hypotheticals of course.



Anonymous said...

Thanks Pete.

You're correct to draw attention to PRC ambition in E.Timor.The radar offer was rejected after consultation with Jakarta, which now feels it has a veto over developments. Jakarta doesn't want an expansion of PRC military interests in Timor, but playing with a veto gives them more leverage with the US and Australia. Gusmao has used the China card while attempting to extract concessions from Australia in the Timor Sea - so long as Gusmao remains Jakarta will feel their veto power is intact. It should surprise nobody that intersts opposed to Gusmao's hardline position on the Timor Sea should want him to retire from politics.

Hyptheticals are fun, so here's another. The Timor-Arafura is increasing in strategic importance as competition for resources, especially energy, between the PRC Japan ROK and others continues to grow. Having acquired natural resources, buyers have a pretext for providing military security. Japan's purchase of the Abadi Masela gas block in Maluku is an important part of their future energy security. This resource is capable of doing for an independent Maluku what Bayu Undan has done for E.Timor. To put it mildly, some in Maluku aren't wild about the prospect of Jakarta and Japan profiting at their expense.

Should the PRC decide to increase support for the Melanesia Spearhead, and Papua's push for independence make progress, Maluku cannot remain unaffected.

Peter Coates said...

Hi Anonymous (of Feb 12, 2015)

Thanks for your insights on some major flashpoints of energy politics north of Australia.

I was wondering why Xanan Gusmao has resigned as PM at 68 years old. Your description of oil-gas international policy tensions seems a valid reason. He has also been a heavy smoker all his life - so health may be an additional reason. Maybe going to Melbourne, Australia with his Australian wife, Kirsty.

The Australian media is full of stories on East China and South China Sea energy disputes but very little close to Australia (other than Timor Gap).

Thanks for raising the Timor-Arafura, Abadi Masela gas block, Maluku and Melanesia Spearhead issues. Looks like the Australian media needs to focus on them more.



Peter Coates said...

As I expected there has been movement of Xanana and Kirsty to Melbourne. Her health may be one reason but there is another unexpected http://www.smh.com.au/world/xanana-gusmao-and-kirsty-sword-gusmao-announce-separation-20150321-1m4q88.html .