The AUKUS deal: a moment of truth for Europe and for security in the Indo-Pacific region

The announcement of a new security and defence pact between the United States, United Kingdom and Australia (AUKUS) on 15 September took everyone by surprise, including diplomats and defence experts. It had been negotiated in secret for several months, and curiously was announced on the same day that the Australian defence ministry sent Paris a letter confirming Australia’s intention to continue its contract with France for the delivery of 12 electric-diesel submarines to be built by France’s Naval Group.

The cancellation of the French contract predictably provoked outrage in Paris. President Macron was informed only a few hours before the announcement, thereby giving once again the lie to President Biden’s commitment at the NATO summit in June to consult the allies in advance on all key US strategic decisions.

Moreover, the Australian submarine deal was the biggest contract ever for France’s defence industry, worth over €30bn euros for the initial procurement, and a similar amount again for cost overruns, operations and maintenance over the 30-year life cycle of the submarine programme. As with France’s recent sales of its Rafale aircraft to Greece and India, Paris would have been hopeful that a major foreign arms contract, like the one with Canberra, would encourage other countries in Asia, the Middle East or Europe to buy French submarine technology as well.

Much of the media focus on AUKUS since the pact was announced has focused on the heated French reaction, as well as the consequences for NATO and the transatlantic security relationship. The French foreign minister, Jean-Yves Le Drian, spoke of “a stab in the back”.  The economy minister, Bruno Le Maire, declared that the Europeans needed to build their own defence because AUKUS clearly showed that Europe could no longer rely on the US.

Macron’s sharp reaction was also undoubtedly influenced by the upcoming French presidential elections next May and his need to avoid being outflanked on his right by nationalist voices like those of the conservative Les Républicains party’s Xavier Bertrand and the populist National Rally’s Marine Le Pen. Yet French anger has been genuine. France had worked long and hard to develop its defence relationship with Australia, sending frigates to the southern Pacific to exercise with the Australian navy. Macron had recently visited France’s territories in the region – Tahiti, New Caledonia and Polynesia – to reaffirm Paris’ ambition to remain an Indo-Pacific power. Finally, Macron had welcomed Australian Prime Minister Scott Morrison to the Élysée last June.

Moreover, the AUKUS pact was announced on the very day that in Brussels the EU published its Indo-Pacific Strategy, stating the bloc’s ambition to increase its profile and activity in the region. The unfortunate timing of the AUKUS pact, with its wholly military focus, suggested that Washington was ignoring the EU’s broad and balanced approach in favour of a new Cold War style deterrence and nuclear competition with China.

Paris withdrew its ambassadors from Washington and Canberra, which was the first time it has ever taken such a step. French political figures on the right and the left called for France to withdraw from NATO’s integrated military command, into which it re-integrated in 2009 after a 40-year absence. Paris announced that it would be seeking significant financial compensation from Canberra for the cancellation of the submarine deal. It received firm backing from the EU in Brussels with the EU Council President Charles Michel and High Representative Josep Borrell, both reprising the French theme that this was a major breach of trust in relations between the US and its European allies, particularly coming so soon after the chaotic withdrawal from Afghanistan and at a time when the Europeans were expecting more diplomatic sensitivity from Washington.

Borrell also strongly supported the French call for EU strategic autonomy and, particularly, the creation of an EU rapid intervention force of some 5,000 troops which would give the bloc more independent options in crisis situations. This idea was already discussed by EU foreign and defence ministers when they met in early September to discuss Afghanistan in Kranj, Slovenia. The transatlantic rift that rapidly developed after the announcement of AUKUS seemed sufficiently serious to induce NATO Secretary General Jens Stoltenberg to call repeatedly for allies to put the higher values and interests of the alliance over their bilateral disputes and differences.

A few weeks on, threats to NATO and to the transatlantic security relationship seem overplayed. Biden has spoken to Macron, and Paris is returning its ambassador to Washington. Rather than withdraw from NATO’s integrated command, France has nominated a new Supreme Allied Commander for Transformation, General Philippe Lavigne, who took over from his predecessor, General André Lanata, in Norfolk, Virginia on 22 September.

As so often in the past, calls for more EU military capabilities have been met with scepticism by NATO allies in central and eastern Europe and have been rebuffed also vocally by Danish Prime Minister Mette Frederiksen. These EU countries believe that Paris, although poorly treated, has been exaggerating the depth of the crisis. For Europeans, this is the time to lock the US in rather than pretend that they can live without Washington. Yet it is undeniable that, after the initial shock, France has played its hand well.

Following the Biden-Macron call, Washington and Paris issued a joint statement in which the US, trying to limit the damage in its relationship with its oldest ally, indicated its support for a number of core French policy objectives. The US acknowledged that there had been a lack of consultation with allies, and again promised to do better in the future. It undertook to provide France (and the EU) with more support in the Sahel. France was perplexed when Washington withdrew its special forces, drones and some intelligence assets from Niger in the waning months of the Trump administration. These assets cost Washington only $60mn a year but gave Paris invaluable support in its Barkhane and Takuba missions in Mali, Burkina Faso and the Lake Chad region. The French defence minister, Florence Parly, had lobbied hard but unsuccessfully in Washington for these US assets to be restored. So far, Pentagon officials have intimated that the additional US support to France in the Sahel will come in the form of logistics rather than new troop deployments. The US also acknowledged the important strategic role that France plays in the Asia-Pacific and committed to a series of high-level talks with Paris to restore trust and predictability in their bilateral relationship.

Perhaps most significantly, the Biden administration explicitly recognised the need for the EU to have its own military structures and forces and the important contributions that these make to transatlantic security and the NATO alliance. This ringing endorsement will undercut the view of the eastern European allies, which hold that European strategic autonomy only alienates Washington, as well as the repeated arguments of the NATO Secretary General that EU defence efforts duplicate military planning in NATO and detract from the primacy of NATO’s collective defence mission.

We can now expect France to seize on this major concession from the US and work with its European allies to ensure pride of place for EU strategic autonomy in NATO’s new Strategic Concept. We will need to wait and see if this somewhat paradoxical conjuncture of transatlantic disillusionment and more overt encouragement from Washington really does now push the EU countries to unite around the goal of EU strategic autonomy and produce the military investments and capabilities that they are always discussing but rarely implementing.

Moreover, in a separate phone call with UK Prime Minister Boris Johnson, Macron got Johnson to agree to revive Anglo-French defence cooperation. This had made great strides at the time of the Tony Blair government, most notably with the 1997 Saint Malo accords, and the David Cameron government with the 2010 Lancaster House agreement. Anglo-French advances had subsided since Brexit and the UK’s departure from the EU however. Initial threats to cancel this week’s inaugural meeting of the new US-EU Trade and Technology Council in Pittsburgh also faded, although a final preparatory meeting of ambassadors was called off at the last minute. Here the issues for both sides, ranging from digital economy, data regulation, trading rules and standards, to supply chain autonomy, are simply too important to put this new transatlantic initiative in jeopardy before it has truly got off the ground.

The easing of the spat between Paris and Washington has now refocused the attention on the AUKUS pact itself and its ramifications for stability and security in the Indo-Pacific.

The US and UK drawing closer to Australia in Indo-Pacific security should hardly come as a surprise. Both Washington and London have longstanding defence relationships with Australia, and the latter has also become the only Asian Enhanced Opportunities Partner (EOP) of NATO, reflecting the fact that Canberra, in recent years, has sent its forces to join NATO operations in Bosnia, Afghanistan, Iraq and the Gulf of Aden. The US and UK cooperate intensively with Australia in the Five Eyes intelligence sharing arrangement; the other partners are New Zealand and Canada. These five countries, bound by close historical ties and a common Anglo-Saxon heritage, have kept the Five Eyes for themselves and resisted attempts in recent years by outsiders, such as Germany, to join the arrangement. Interestingly the UK now appears keen to give the Five Eyes a military dimension beyond intelligence sharing. Last week, military chiefs of the Five Eyes countries met in London to assess the potential terrorist threat from Taliban-ruled Afghanistan. We will need to watch to see if these military exchanges become more routine and lead to joint planning and the pooling of assets.

For decades, the US has had a defence pact with Australia and New Zealand through ANZUS. This wobbled a little in the 1980s when the Lange government in Wellington refused to allow US nuclear powered ships to visit New Zealand ports, a rule that the country still applies. Accordingly, when the AUKUS pact was announced, the current New Zealand premier, Jacinda Ardern, welcomed it for contributing to security in the Indo-Pacific but made clear that the Australian nuclear submarines, when they eventually become operational, will not be allowed into New Zealand ports. New Zealand’s anti-nuclear stance led Washington to revoke its ANZUS commitments to Wellington.

Yet in recent times the US has doubled down on its security relationship with Australia. As the role of China in the region has expanded, Washington has set up early warning and tracking radars in the country and US marine units have established a training base in Darwin. Australia has become closely involved in US maritime exercises such as RIMPAC. The US has found Canberra to be a good client for its fighter aircraft and ships. For Washington, drawing closer to Canberra offers the priceless advantage of having a massive country as a military base and a major Pacific territory from which to project US power throughout the region. Up to now the US has had only the use of small islands such as Guam, Hawaii and Okinawa. Indeed, the day after the AUKUS pact was made public, the US announced that it was sending more troops to Australia for training and rotational deployments.

In similar fashion, the UK has used its Integrated Review of foreign policy, security and defence to draw closer to Canberra and to be more present in the Indo-Pacific. London is also sending its Royal Marines and expeditionary units to train alongside Australian and US forces in the Northern Territory. It plans to establish a permanent planning and coordination mini-HQ in Darwin, along with keeping at any time one or two frigates on station in the Indo-Pacific, probably in Singapore.

Yet notwithstanding these antecedents, the US, UK and Australia still see AUKUS as a game changer. In Canberra, Australian Prime Minister Scott Morrison stated repeatedly that the decision to abandon the French Shortfin Barracuda submarine contract and instead acquire US and UK technologies to build eight nuclear submarines was dictated exclusively by strategic factors – notably a rapidly deteriorating security environment in the Indo-Pacific. Australia was not terminating the contract for the usual reasons, such as financial shortfalls, under-performance by Naval Group, technical difficulties or arguments over production sharing, although it seems that there were problems in these areas according to media leaks.

Although China has not been explicitly mentioned in the announcements coming from Canberra, London or Washington, there is no commentator who sees this pact as being dictated by anything other than a desire to thwart attempts by Beijing to achieve strategic hegemony in the Indo-Pacific. All three capitals made clear that AUKUS is far more than just a submarine procurement deal. It is a full-fledged and permanent military alliance which will also include diplomatic coordination, cyber-security, artificial intelligence (AI), quantum computing development, training and exercises, joint planning and base sharing.

Yet unsurprisingly it is the nuclear submarines that have monopolised the attention. Canberra is convinced that the current threat level in the Indo-Pacific requires submarines that can cover strategic distance, stay submerged for months at a time, deliver concentrated missile firepower, gather intelligence and deploy special forces. A nuclear submarine east of the Philippines can strike the Chinese mainland. Australian planners believe that this extra capability will complicate Beijing’s strategic planning in the region and boost deterrence for at least a few decades into the future.

As this is now a long-term strategy, Canberra is prepared to wait until the late 2030s for the first submarines to be delivered. This is because it is not yet clear on which submarine design the Australian ships will be based: the US Virginia-class or the UK Astute-class, or perhaps a fusion of the two into a new design. Moreover, complicated issues regarding sensitive nuclear technology transfer, cyber-security, intellectual property protection and work-sharing among three partners will need to be negotiated. Australian crews and maintenance teams will also need to undergo extensive training. Even among allies these issues can be delicate and take time. Australia will also probably need to pay $60bn plus for the eight nuclear submarines, around double what it would have paid for 12 French conventional submarines.

We must now turn to the longer-term strategic implications of the AUKUS pact and the nuclear submarine deal. These revolve around four major issues.

The first is nuclear proliferation in the Indo-Pacific and beyond. The submarine deal means that the US and UK will be sharing advanced nuclear technology, materials and know-how with Australia. Both Washington and London have made clear that they will not give Canberra nuclear weapons. Indeed the current US nuclear warheads cannot be used in Virginia-class submarines. Yet the highly enriched uranium that fuels nuclear reactors in submarines is the same that makes nuclear warheads. So not only Beijing but the International Atomic Energy Agency (IAEA) in Vienna will be on its guard to ensure that the submarine deal does not violate the 1975 Nuclear Non-Proliferation Treaty. Washington and London insist that it does not, but eyes will be on how much nuclear autonomy Australia acquires, particularly in things like the reprocessing of nuclear fuel rods or home-based reactor development and maintenance.

Will Australia start its own nuclear weapons research programme in due course? Will the US and UK exert a high degree of local control and repatriate spent fuel rods for reprocessing? Will there be black box technology made inaccessible to Canberra? At the same time non-proliferation specialists will be looking for the impact on the broader region. South Korea, for instance, has conventional submarines which can fire ballistic missiles. Will it now see the door opening for it to acquire nuclear powered submarines as well as part of its alliance with the US? At a minimum the Board of Governors of the IAEA will likely want to establish an enhanced inspection and verification regime and stringent safeguards for the Australian nuclear programme.

A second issue is whether other countries will seek to join AUKUS. In fending off French criticism, Boris Johnson and White House spokesperson, Jan Psaki, both insisted that AUKUS is not an exclusive arrangement. Yet this seems to be disingenuous. AUKUS has been justified by the very close historical, cultural and strategic links between its three founding members. It is difficult to think that other members would enjoy the same trust, access and status. France is certainly not going to apply given its rebuff from Canberra and seems instead to be giving priority to its defence partnership with India. Paris has sold the Rafale aircraft to New Delhi and there is speculation that it will try to sell some of the Barracuda submarines from the defunct Australia deal there too. This recalls the time a decade ago when France was unable to sell its Mistral coastal assault ship to Russia, because of US and NATO pressure, and had to go to Egypt instead.

Certainly, many Indo-Pacific countries have welcomed the formation of AUKUS, notably Japan, South Korea, Singapore, Indonesia and the Philippines. The latter has veered back towards the US after disputes with China regarding territorial jurisdiction and access to islands in the South China Sea. By contrast Malaysia has been critical, fearing a growing militarisation of relations in the Indo-Pacific, and Vietnam has so far adopted a low profile. Unsurprisingly the reaction in Beijing, where AUKUS is clearly seen as an exercise to contain and challenge China, has been outright hostility.

Yet even the pro-US countries in the region are unlikely to want to be directly implicated in a defence pact that will only put them on a collision course with Beijing, a vital trading and investment partner. Therefore, although these countries will privately welcome a larger US and, to a lesser extent, UK military presence in the region as a counter-weight to China, they are likely to hedge their bets.

This raises the issue of the relationship between AUKUS and the Quad, the forum bringing together the US, Japan, India and Australia, which has existed for 16 years already and was recently revived by the Biden administration. The ostensible purpose of this grouping is to work for a free, open and navigable Indo-Pacific region. The Quad has already organised a series of maritime exercises to demonstrate resolve, but also practice procedures to counter piracy, prevent incidents at sea, coordinate freedom of navigation patrols, and provide humanitarian and disaster relief.

The Quad met at summit level at the White House last Friday with a broad agenda that included the 5G telecoms roll out, aligning technology standards and the distribution of COVID-19 vaccines. Indian Prime Minister Narendra Modi announced the resumption of Indian vaccine exports from the Serum Institute after a six-month hiatus. With its broad socio-economic agenda and emphasis on cooperative security, the Quad seems to destined to become the overarching, soft power strategic umbrella for the Indo-Pacific into which the smaller, hard power deterrence force of AUKUS will fit. Perhaps there will be some kind of articulation between the two bodies in the future – possibly advanced naval, air and special forces training and exercises involving India, Japan, South Korea, France or Germany – but it is now too early to tell. What is likely is that the UK and France will be associated with the Quad in a +2 format. Paris after all governs 2mn French subjects and permanently stations 7,000 soldiers in the Pacific region, so it has every right to be regarded as a Pacific power.

Meanwhile Australia is pursuing a trade agreement with India to compensate for its trade losses in beef, wine, cereals and timber following embargoes imposed on Canberra by Beijing. Other Indo-Pacific countries may also be invited to Quad meetings in the future around topics of common interest, such as climate change, disaster response, cyber-security and the protection of dwindling fish stocks at risk from over-fishing. The Quad could well evolve into an international organisation with its own bureaucracy and seek to foster democratic norms and standards throughout the Indo-Pacific in technology, foreign investment, disease and pandemic response, and labour standards.

A third issue is the future of the EU’s role in the region and the EU-China relationship. The EU in its just-published Indo-Pacific strategy has tried to steer a middle course, mindful of the increasing security risks and China’s increasing assertiveness and strident ‘wolf warrior’ rhetoric, while also mindful that Beijing is now its largest trading partner. Access to the Chinese market and to Chinese investments is important for the EU’s post-COVID recovery. Yet AUKUS is a further sign that trying to steer a middle course in the growing US-China rivalry and confrontation is becoming more difficult.

A few days ago, Beijing refused to accept a port visit by the German frigate, Bavaria, which was on a deployment to the Indo-Pacific, along with French, Dutch and Belgian frigates, to demonstrate the EU’s growing interest in the region and desire to seek partnerships for cooperation. Yet Beijing’s message was that Berlin should be sending trade delegations rather than warships and that it would not welcome an EU military role, even a low level one. By taking a broad approach, the EU had hoped that it could bridge the gap between the US and China and nudge Washington towards multilateral trade deals and cooperation with Beijing, even while accepting increased competition in technology and standards, and a larger focus on military balancing.

Yet now the EU sees the cursor gravitating sharply towards the military end of the spectrum. Washington and Beijing are asking it to take sides. So does the EU try to form a partnership with the Quad and use this to moderate its approach to Beijing from the inside? Or does it go its own way as part of EU strategic autonomy and try to interact more with regional bodies like ASEAN that are inclusive of both democracies and authoritarian states, and thereby foster a comprehensive regional security architecture that embraces all Indo-Pacific countries?

The Organisation for Security and Co-operation in Europe (OSCE), with its military transparency and confidence building norms and procedures, has often been put forward as a model in this regard. Brussels will now need to have some significant debates as it determines how to implement its Indo-Pacific strategy in a less friendly regional context.  as an alternative to their traditional reliance on the US. France blocking the negotiations on an EU-Australia trade agreement because of its anger with Canberra will not help in this respect either. It will be interesting to see which messages emerge from the 11th EU-China Strategic Dialogue due to be held between EU High Representative Borrell and Chinese Foreign Minister Wang on 28 September.

Finally is the issue of regional trade structures as the indispensable complement to military alliances. In trying to bind the Indo-Pacific into a dense web of multilateral relationships reflecting democratic norms and standards, Washington is neglecting the essential trade dimension. It is the growth of trade and investment across the region which after all explains its spectacular rise to pre-eminence and the reason now why so many regional and outside powers are worried that this prosperity could be damaged by strategic rivalries.

The Obama administration negotiated a Transpacific Partnership (TTP) but this was abandoned without a follow up by Trump as the first act of his presidency. This trade pact involved 12 countries and would have covered in detail important issues like intellectual property protection and subsidies for state-owned companies. Since the demise of the TTP, the regional countries have gone ahead with an agreement of their own, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). China by contrast sponsored an alternative arrangement, the Regional Comprehensive Economic Partnership, involving 15 countries, but which did not include the same demanding standards when it comes to labour laws, environmental standards and checks on state owned enterprises. Yet China has now pushed for membership in the CPTPP, as has Taiwan.

Conversely, the US shows no interest in pursuing new regional trade pacts, fearing opposition from US labour and in Congress. No doubt the US believes that it can circumvent this problem by promoting other arrangements, such as cooperation between India and Japan and the AUKUS specialist groups working on AI, quantum computing, space communications and other cutting-edge areas of modern warfare. South Korea, Singapore or Taiwan could be added later. In the region, the US has more allies than China, which can only count on Pakistan. So the US view is that it can probably out-muscle Beijing when it comes to dominance in the evolving regional structures. Yet neglect of trade, where China has the key cards to play over the long term, would be a mistake.

If the Indo-Pacific countries pursue trade mainly with China while seeking security from the US, the institutional architecture for the region will remain weak and fragmented. The US will not establish the comprehensive rules-based system, governed by common technology, environmental and financial standards, that it seeks. The opportunity to bind Beijing into these open and democratic norms and foster cooperation in place of confrontation will be lost. Trade policy is therefore the big hole of American strategy for the Indo-Pacific.

General Charles de Gaulle liked to say that “when one wants to do something in politics, one has to upset the apple cart”. As far as the Indo-Pacific is concerned, the US, UK and Australia have certainly stirred up the situation with the intention that all this activity will solve the region’s more deep-rooted problems in the long run. They need now to demonstrate that as the pieces of the apple cart fall back to earth, they all land in a safe place.