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Japan, Australia Deal Poses Tech Issues

Jun. 15, 2014 - 02:12PM   |  
Australia wants to replace its six Collins-class submarines. Here, the submarine Rankin enters Pearl Harbor.
Australia wants to replace its six Collins-class submarines. Here, the submarine Rankin enters Pearl Harbor. (US Navy)
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TOKYO AND MELBOURNE — Last week’s agreement between Japan and Australia to jointly develop stealth submarine technology represents a major, perhaps even breakthrough, step for Japan as it seeks to normalize its defense posture, forging ever closer ties with Australia as both countries seek to balance Chinese expansionism.

The question now is how, or how far, can Japan capitalize on the intriguing potential the deal poses.

The June 11 agreement, following extensive talks between Japanese Defense Minister Itsunori Onodera, Foreign Minister Fumio Kishida and their Australian counterparts, Julie Bishop and David Johnston, will see the two countries jointly develop a range of submarine technologies based mainly on Japan’s highly advanced air-independent propulsion (AIP) systems.

In a joint press conference, Onodera stressed that the deal would be applicable to more than submarines and said he had “high expectations for successful results.”

The reality is that Australia will probably deploy some form of AIP technology that Japan uses in its Soryu-class submarines as the Royal Australian Navy, in a March 2015 review, embarks on an AUS $35 billion (US $33 billion) program to replace its six aging, maintenance-heavy Collins-class diesel-electric submarines.

The goal is to replace them with a new fleet of larger boats better able to protect vital shipping routes around disputed waters in the South and East China seas. The new subs could feature submarine-launched cruise missiles and be capable of deploying special operations forces and represent a major regional enhancement of Australia’s capabilities.

Johnston said that while Australia and Japan are looking at a technology exchange, all options for Australia’s Future Submarine program are still on the table.

Project Sea 1000 will build up to 12 large conventionally powered submarines to replace six Collins-class boats, with options previously narrowed to a choice between an evolved Collins-class boat, which will benchmark current capabilities and add a technology refresh; and a new design.

Johnston has said the new submarines must be in the water by 2030 if a further and costly Collins service-life extension program (SLEP) is to be avoided.

While the deal stopped short of Australia actually committing to buy Soryus or modified versions, it’s something of a triple play for Japan. Since 2011, Tokyo has relaxed a five-decade-old ban on weapons exports, deciding this April that it could export arms and defense technologies to countries not actually involved in conflicts or subject to UN embargoes.

First, the deal presages a new strategic relationship between Japan and Australia, which have also agreed on new defense ties as part of the deal, said Fumio Ota, retired vice admiral of the Marine Self-Defense Force and former director of Japan’s Defense Intelligence Headquarters.

“Japan and Australia are becoming close friends,” he said. “Australia is the only country to have signed an acquisition and cross-servicing agreement with Japan. With AIP, Australian submarines would be able to deploy into South China Sea and beyond. Since few countries can deploy submarines in those areas, this could restrict the operational capabilities of China’s nuclear-capable ballistic missile submarines homeported in Hainan Island.”

Second, Ota said the deal makes Japan a potentially bigger player in regional security, validating the diplomacy of Prime Minister Shinzo Abe, who is seeking to balance China diplomatically.

“It is clear that Abe has been extremely active, consistent in message, and has racked up many achievements, particularly in reaching out to [Southeast] Asia, India and Australia,” said Corey Wallace, a Japan security policy expert at New Zealand’s University of Auckland.

Third, the deal offers the potential — as yet unrealized — of Japan spreading its wings and becoming a bigger player in the global defense market, said Satoshi Tsuzukibashi, director of the Office of Defense Production Committee at Nippon Keidanren, Japan’s most powerful business lobby.

“[This agreement] is a trigger to change the mind and view of Japanese companies to do business in the global defense market.”

Questions Raised

However, somewhat ironically, the deal actually poses a series of tough questions for Japan’s defense industry, sources said.

If, and it’s a big if, Japan actually sells Soryu-based or derived submarines, it would be a big win for both sides, Ota said, with production driving down costs for Japan.

“Japan’s defense industry will have a good opportunity to reduce submarine costs because the Japan Maritime Self-Defense Forces orders submarines almost only once every five years,” he said. “Mitsubishi and Kawasaki Heavy Industries will be able to maintain superb submarine technicians if Japan exports her submarines.”

Exporting subs potentially offers Australia better value for money, particularly as Collins-class subs are costing Australia upwards of $800 million each year just for maintenance, Wallace said.

“Maintaining core industry capabilities while getting more value for money from Japan’s defense budget were the main motivations for the recent changes to the arms export restrictions. Japan produces its Soryu at around [US] $540 million per year, so even if Japan and Australia designed and built a modified version together, then the full complement of 12 boats will only cost a fraction of the original budget. With the drive train in the pocket, this will ensure the Australian government against significant budgetary risk and against the risk of platform failure,” he said.

Bob Nugent, with AMI International, was less upbeat. Any deal could help Japanese makers compete in an emerging $250 billion global naval market for up to 300 new hulls to be built over the next 20 years, challenging traditional leaders in submarine export such as ThyssenKrupp in Germany, Russian builders and DCNS in France.

But the size of Soryu-class boats — 3,000 tons fully loaded — probably makes them too large for the emerging and highly competitive export market for small- medium-sized conventional diesel electric and AIP vessels of 1,500-2,500-tons, he said.

“A larger hull is attractive to future customers like Australia whose requirements for endurance and embarked weapons (missiles, underwater vehicles) push for hulls of 3,000 tons or larger to accommodate, but are not looking at nuclear-powered hulls,” Nugent said. “There are some other prospective submarine buyers over the next 10 years whose requirements for a larger submarine are similar — Canada comes to mind. This could favor a Japanese design.”

In particular, Japan faces stiff competition from European hull designs such as German-maker Howaldtswerke-Deutsche Werft’s Type 416, which are conceived around Australian requirements, rather than purchases of entire Soryu submarines.

Further, a senior source familiar with Japan’s defense industry said local makers already felt Abe was moving too fast, as Japan is still working out its export control regimes and is inexperienced in technology transfer agreements outside of familiar negotiations as part of the US-Japan alliance.

Following a tentative UK-Japan defense technology agreement last year, Japan is figuring out a ShinMaywa US-2i short-takeoff-and-landing amphibious aircraft export contract with India, which will likely see 13 units assembled locally, as well as figuring out a welter of potential deals with the Philippines, Turkey, Southeast Asian and Middle Eastern countries.

“Abe and others have been going around the world making promises and shaking hands, but government officers are wondering how to deal with them because we haven’t worked out standards for technology transfers,” the source said. “Industry needs and is waiting for concrete standards. We are asking, ‘how do we do this? How do we get good deals without giving our technologies away?’”

Added Nugent: “Internal fears of losing technical and tactical advantages via submarine exports are reasonable. Some of the established submarine builders who once ‘owned’ the global export market have seen customers like Korea and Turkey become competitors — enabled in part by technology transfer from past submarine export and cooperative construction programs.”

Johnston was careful to point out that Australia still has options as to what, specifically, will replace the Collins boats.

“What we’re looking at initially is a defense, science and technology exchange. We are working towards an agreement to that. Submarine technology is very sensitive for both countries,” he said from Japan on June 12. “We are taking very small steps. Japan is one of several countries we are talking to actively about our new submarine program.”

Johnston also pointed out that Australia is also talking with the US, UK, France and Germany on technology-related matters.

However, while any technology transfer agreement with Japan could put another horse in the proverbial submarine race, it is purely speculative at this point, said Andrew Davies, a senior analyst with Australia’s Strategic Policy Institute in Canberra.

“It’s not clear what Australia’s expectations are and what Japan’s readiness is, in terms of technology transfer,” he said. ■


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