Dr.Rajaram Panda , C3S Paper No. 2042 dated 17 September 2014
After Abe Shinzo became Japan’s Prime Minister in December 2012, there has been a perceptible shift in Japan’s security profile. Abe has moved swiftly to reorient Japan’s security focus by a series of policy initiatives, such as increasing the defence budget, relaxing restrictions on weapon exports and reinterpret the war-renouncing Constitution, thereby allowing Japan the exercise of the right to collective defence, which meant that Japan’s defence forces can come in aid of an ally even if Japan itself is not under attack and use force, if necessary. Following these, the Abe administration has been making efforts to strengthen defence ties with countries friendly to Japan such as India, Australia and Vietnam. And in all these initiatives, Japan seems to enjoy the tacit approval of the US, its major allay.
Why such sudden shift in Japan’s policy? Basically there could be two reasons: one, the inability or unwillingness of the US to shoulder the security burden in the Asia-Pacific region, and two, China’s rise and its assertiveness in territorial issues in which more than one Asian nation has disputes and China wants to unilaterally determine the outcome. This essay will discuss the initiatives of the Abe government to build security ties with Australia and the controversy surrounding this decision.
During his visit to Australia in July 2014, Abe signed a defence technology cooperation deal with his counterpart Tony Abbott and shared regional security issues. Such an agreement was Japan’s first with a country in the Asia-Pacific region, facilitating Japan to play a key role in the construction of a fleet of Australian submarines. This defence equipment deal was possible because Japan had already lifted restrictions on weapons export. Though Japan’s neighbours condemned such a massive policy shift by Japan, Australia happily endorsed Japan’s policy. Critics of Abe’s policies felt it was a departure from Japan’s post-War commitment to pacifism and that Japan was now set about building a well-equipped, but strictly defence-oriented, military.
For Australia, the shift in Japan’s policy came at an appropriate time when it was looking for partners to build a fleet of 4,000 ton-class quiet-running diesel-electric subs to help extend its maritime surveillance deep into the Indian Ocean. When Australia expressed interest in acquiring submarine technology from Japan, the Maritime Self-Defense Force resisted this. Abe overcame this reluctance by agreeing to hydrodynamics as an initial area of joint research instead. This first step opens door for trade in defence technology.
Even when Japan and Australia lean toward a multibillion-dollar sale by Tokyo of a fleet of stealth submarines to Canberra’s military, the move could rile an increasingly assertive China. Though an agreement will take some time, the unprecedented sale of off-the-shelf vessels based on the Maritime Self-Defense Force’s Soryu class sub is emerging as the likeliest option. When the deal materializes, this will be the first such active military drive by Japan after decades of pacifism. Both Japan and China are major importers of Australian resources and this move is going to impact China’s relationship with both Japan and Australia.
By taking this decision to get the quiet-running diesel-engine subs from Japan, the Abbott government is likely to face political backlash because of abandoning the earlier government pledge to build the vessels at home. Both Abe and Abbott had agreed in July to enhance security and defense cooperation, including the transfer of military equipment and technology. Instead of mere engine-technology transfer, Australia has a goal to acquire fully build subs from Japan and replace its six outdated Collins-class boats with 12 scaled-down versions of the 4,000-ton Soryu, the world’s biggest non-nuclear subs. The locally made and outdated Collins-class subs have become noisy and could be easily detected. The Abbott government wants to decommission them by 2030s and thus time to retire.
If Japan is able to clinch the deal by January as expected, it would have inched a step closer towards becoming a ‘normal’ state and not constrained by the Constitution any more. The Abe government has already loosened curbs on arms exports, ended a ban on defending friendly nations and reversed a decade of military-spending cuts. If finally Japan is able to sell the subs to Australia, it would mark the first time since the end of World War II that Japan sold a complete weapons platform overseas. The deal will be mutually beneficial. While bulk orders for Japanese arms makers would help bring down weapons-procurement costs for Tokyo, which has the biggest debt burden in the industrial world, for Canberra, the sale would avoid the costs and risks of developing a homegrown champion from scratch. “A state-owned shipyard in the South Australian capital of Adelaide would handle maintenance and overhaul, which can cost as much as the purchase price over the life of the fleet.”
There can be various options in the deal. One can be both works jointly to develop the technology. The other can be Australia imports the engine and builds the rest. The third could be Australia builds the fleet under license from Australia. The last, and the most controversial, could be Australia buys the finished subs designed and built by Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd. When representatives of the two Japanese companies visited in the last week of August 2014 the Adelaide shipyards of government-owned ASC Pty Ltd, formerly Australian Submarine Corp, it sparked a lot of speculations. Though neither side is coming out clearly what is transpiring in the negotiation process, it seems that both sides are exploring various options with an overall move towards strengthening bilateral defence cooperation.
When Australia acknowledged in July 2014 for the first time that it might allow the subs to be built overseas, probably the cost factor determined such a decision. If Australia opts for homegrown option, it would cost an estimated A$40 billion. If the subs are built overseas, each Soryu subs would cost $A500 million, plus maintenance and overhaul, and therefore would work out to be cheaper for Australia. The Abbott government is going to face difficulty in handling the domestic opposition if it opts for the subs to be built overseas. South Australia’s defence and trade minister Martin Hamilton-Smith fears that “any decision to build the submarine overseas would have a broader impact on the economy than the recent decisions by Ford Motor Co., Toyota Motor Corp. and General Motors Co. to cease manufacturing in Australia”. The jobs in the defence sector in South Australia accounts for 27,000 jobs, of which 3,000 are in the shipbuilding industry. If the submarine project is to be developed locally, it is estimated that it would generate industry activity worth $A250 billion over 30 years.
While both Japan and Australia sort out the modalities of their defence relationship, the US with strong military ties with both Japan and Australia, would welcome if Canberra enhances its naval capabilities, which could enable Australia to monitor China’s underwater activity as its own fleet shrinks. Given the technological edge that Japan enjoys, the US will be too happy if Japan and Australia can sort out the modalities on the sub production issue in a mutually agreeable manner so that the Japan-Australia defence partnership contributes to the peace and stability in the region.
Abbott has indicated that he would go by the cost factor in arriving at a decision. The Soryu class is estimated to cost about half the price of an Australia-built submarine and since Abbott wants to boost defense cooperation with Japan, the cost factor could be a major determinant in taking the final decision. Abbott does not want to give priority to protecting the domestic shipbuilding industry and maintaining employment at home; his decision on the new fleet of submarines would be based on defense requirements and therefore more pragmatic. Yet, Japan has not yet been informed by Australia of any plan to purchase submarines. The Soryu class submarine uses highly-confidential technologies, including an air-independent propulsion system that allows it to remain submerged for long periods. Even if Australia wants to take a decision to purchase it outright fully built from Japan, it is not clear if Japan will not be able to decide quickly whether it can export it.
In the meantime, opposition politicians and industry groups in Australia seek clear answer from the government on this issue whether to buy a new submarine fleet from Japan or build them at home. The current fleet of diesel and electric-powered subs dating back to the 1990s are due to retire and before coming to power the government had announced to construct 12 new vessels in South Australia with Japanese technology. Now there seems to be a reversal of that policy and the contract is likely to go to Japan owing to the cost factor. Opposition leader Bill Shorten voiced that allowing the subs to be built elsewhere could “irresponsibly put our national security at risk as a maritime nation”. He further argued that “submarine and shipbuilding is a strategic asset that we can’t let wither and die”. As is usual, the trade unions fear that purchase of submarines from overseas would deal a potentially fatal blow to naval shipbuilding in Australia, whose ripple effect on associated industries will be debilitating. Thousands of jobs in the shipbuilding sector will be at stake.
Since coming to power in September 2013, Abbott has identified Japan as a major country with which his government is committed to deepen security and trade ties. Bestowing a “special” status to Japan, Abbott made Abe to address the Parliament when the latter made the first bilateral visit to Australia since 2002 in July 2014. The intention to strengthen closer defence ties was clearly known at that time and the sub issue is just a follow up from that understanding. While the industry waits what final decision the Abbott government would take on the matter on safeguarding the nation’s security interests while addressing at the same time concern of the industry on the economic consequences that would mean if the decision to procure the subs from overseas is final. A final clear picture is expected when the next Defense White Paper, due in June 2015, is released.
There seems to be a palpable shift in Australia’s defense doctrine, a clear return to forward defense, which was irrelevant during the Cold War days. With similar policy shift in Japan during the Abe administration, it is not difficult to decipher the common driver that has led to this policy change. That driver seems to be the emergence of China as a new ‘hegemon’ determined to rewrite the global rules on its own terms. Interestingly, the economies of both Japan and Australia are heavily connected with the Chinese economy. Does it mean that both Japan and Australia now put a premium on security matters over economic benefits? Basic common sense suggests that is the case.
While Japan continues to be at odds with China over history and territorial issue and has faced anti-Japanese riots in recent times in major Chinese cities, Japan now finds a new player in India with whom it can shift its business operations from China. During Modi’s visit to Japan in August-September 2014, Modi laid ‘red carpet’ for the Japanese corporations and promised to remove ‘red tapes’. As a result, many Japanese companies have started making a beeline to enter the Indian market. Personal bonhomie between Abe and Modi also helps, besides the absence of any historical irritant unlike Japan’s with China and South Korea. Such a policy shift by Japan from China towards India is likely to neutralise the economic loss that Japan might recur over the long term.
Similarly, Abbott’s India strategy seems to have a similar consideration. Notwithstanding a strong economic content in Australia’s relations with China, Abbott seems not wary to lose some of Australia’s market share in China for its resources and raw materials. Abbott now sees India as the new market where Australia can sell its raw materials as demands in India continues to grow. Abbott’s keenness to engage India economically was clear when he signed the civil nuclear cooperation act with India allowing the export of uranium during his visit to India in early September 2014. Here again, one cannot miss the China factor that drives Australia drawing closer towards India.
It transpires therefore that there is a real ‘fear’ of China’s rise and doubts remain if the rise is going to be peaceful, much to the contrary to what China has been professing. What is at stake is the securing the sea lanes of communication to facilitate maritime commerce as the economies of all the Asian nations are dependent on free flow of trade on sea. Therefore, maritime security has emerged as a priority concern in major sea faring nations. The drive by many nations in the region to build up their naval capabilities has thus this important economic consideration. The issue of Australia’s acquisition of submarines either to build indigenously or import from overseas and the domestic controversy as well as the reaction from some other nations, needs to be understood in the context of a response to the changing security situation in the Asia-Pacific region.
( The writer Dr. Rajaram Panda is The Japan Foundation Fellow at Reitaku University, Chiba Prefecture, JAPAN. E-mail: firstname.lastname@example.org)
 “Australia leaning toward buying Japan subs to upgrade fleet”, The Japan Times, 3 September 2014, http://www.japantimes.co.jp/news/2014/09/02/national/politics-diplomacy/australia-leaning-toward-buying-japan-subs-to-upgrade-fleet/#.VAWCICB8tjo
 Kaori Takahashi, “Australia may buy Japanese submarines”, Nikkei Shimbun, 9 September 2014, http://asia.nikkei.com/Politics-Economy/International-Relations/Australia-may-buy-Japanese-submarines
 “Growing concern in Australia over plan to buy Japanese submarine”, The Yomiuri Shimbun, 10 September 2014, http://www.japantoday.com/category/politics/view/concern-growing-in-australia-over-plan-to-buy-japanese-submarines