AUKUS, EXPLAINED

SECURITY PACT BETWEEN AUSTRALIA, US and UK

November 3, 2024

AUKUS is a security agreement between Australia, the UK and the US, signed in September 2021.

Goal: to “promote a free and open Indo-Pacific that is secure and stable”.

First step: supporting Australia in getting nuclear-powered submarines.

It is the largest defence project in Australian history, expected to cost it up to US$246 billion between now and 2055.

Nuclear-powered attack submarines (capable of shooting missiles) are some of the most influential weapon systems. They can stay undetected and fire a missile from any location in the ocean, making them a tool for deterrence.

Deterrence is the idea that a threat of punishment will prevent aggression by other countries.

Nuclear-powered submarines are not necessarily carrying nuclear weapons but are using nuclear reactor energy to move and sustain themselves.

Why is the Indo-Pacific important?

  • Size of economy. 4 out of the world’s 5 largest economies by GDP are located here: China, India, Japan and the US.

  • Volume of trade. The Strait of Malacca, between Malaysia and Indonesia, hosts over 25% of all global trade, as well as two-thirds of China’s trade by sea, including 60% of its oil supply.

  • China’s military pressure. The island of Taiwan, as well as multiple regions of contested territorial waters, are the areas of military tensions between China and its neighbours.

  • Geopolitical scale. The Indo-Pacific is home to around 5.9 billion people out of 8.2 billion globally. The region hosts four nuclear powers - China, India, North Korea and the US.​

AUKUS countries see that their influence in the Indo-Pacific is falling as China's military and financial influence grows.

China is the main trading partner for most countries in the region. However, it is becoming more assertive both politically and militarily.

How AUKUS works?

The agreement has two parts, called pillars.

Pillar 1: to support Australia in getting its first fleet of nuclear-powered submarines. It will eventually see Australia and the UK manufacture their own new-generation nuclear submarines for use in the Indo-Pacific.

Pillar 2: to set up mechanisms for broader information and technology sharing, conducting joint military research on key technologies, including underwater drones, AI, cyber warfare, and hypersonic missiles.

In 2003, Australia stopped building new submarines of its current class and started looking for a replacement.

In 2009, Australia decided against nuclear-powered options. Some of the reasons were:

  • Legal: in Australia, nuclear power generation is forbidden by law. This is due to environmental concerns as well as anti-nuclear movement starting in the 70s to prevent uranium mining, despite Australia holding 33% of global proven uranium reserves.

  • No nuclear infrastructure: largely due to legal status, there are no active nuclear power generators, any related industries, or specialists, which is also contributing to high costs.

  • Strategy: Australia hoped that diesel-powered submarines, which are cheaper and could be maintained by the country itself, would be enough for any regional operations.

  • Politics: there was no broad public support for legalisation of nuclear power and adopting nuclear technologies, including nuclear power plants for civil use.

In 2016, Australia signed a $90 billion deal with a French company to build a fleet of diesel-electric submarines based on an existing nuclear-powered design. The project experienced cost overruns and delays.

There were growing concerns that Australia should not be buying any diesel-electric submarines, as they are outdated compared to modern nuclear-powered submarines, capable of staying out of port for months and carry heavier loads at quicker speeds.

In 2021, Australia cancelled the deal in favour of AUKUS, with only a few hours notice. This was described by the French officials as a "stab in the back" and “subservient” to the US.

France temporarily recalled its ambassadors from Australia and the US.

Australia agreed to pay $584 million in compensation to the French contractor firm.

AUKUS is seen as a counter to China’s expanding influence in the Indo-Pacific, and reactions to the treaty have been mixed.

The pact sees China as a competitor and a threat. This drew criticism, describing AUKUS as a return to Cold War thinking, a breach of nuclear disarmament agreements and an escalation of the arms race.

AUKUS does not involve the transfer of nuclear weapons to Australia, only the technology for nuclear-powered submarine engines (nuclear propulsion). The United Nations confirmed that the partnership meets transparency standards.

Malaysia initially also expressed concerns of AUKUS triggering an arms race in the region, but softened its rhetoric after talks with Australia, now calling both AUKUS and China for de-escalation.

Japan, Taiwan and the Philippines immediately supported the agreement. Indonesia and Fiji also expressed support after consultations with Australia.

Many Indo-Pacific nations remained neutral, likely to avoid upsetting the balance in their relations between the US and China.

South Korea's neutrality was notable given its strong military alliance with the US and growing tensions with North Korea.

India reacted cautiously but supportively towards AUKUS.

Australia, India, Japan and the US are members of another security pact – the Quad.

The Quad was re-started in 2017 and, like AUKUS, advocates for a "free and open Indo-Pacific".

Pillar 1: Next-generation submarines

  1. Buying nuclear submarines. Australia will buy three Virginia-class nuclear submarines from the US in the 2030s, replacing its current fleet of diesel-electric subs. This may increase to five with US Congress approval.

  2. Hosting US and UK ships in Australia. Starting in 2027, the US and the UK will send nuclear subs to Australia, where Australian Navy will begin training on those, in preparation for receiving their own.

  3. Developing a next-generation sub. The pact also includes developing “SSN AUKUS” submarines, based on UK nuclear-powered designs with US technology, fitted to fire conventional cruise missiles.

The UK will deliver the first SSN AUKUS to its own fleet by the late 2030s, and Australia plans to get its own by the early 2040s. Both countries’ fleets will use these submarines for intelligence, surveillance and strike missions.

The British government has not set a specific cost estimate for the initiative but has allocated £3 billion to support the SSN AUKUS programme and related initiatives for the next two years.

Pillar 2: Research in key technologies, and information sharing 

Technological focus of Pillar 2 is on:

  • Underwater drones

  • Hypersonic and counter-hypersonic missiles

  • Electronic warfare

  • Artificial Intelligence

  • Quantum Technologies

Pillar 2 focuses on developing advanced military capabilities through collaboration and technology-sharing.

Over the last decade, China has achieved a research advantage in most critical technologies.

China is close to a technological monopoly in 24 out of 64 critical technologies, according to Critical Technologies Tracker.

This means that a country is producing most of the influential research on that technology and hosts the most advanced research institutes in the field.

China is seen as a near-monopolist in two of the three technologies relevant uniquely to AUKUS: underwater drones and electronic warfare, while also being the world leader in the third: air-independent propulsion.

Improvements in manufacturing processes and supply chain logistics are expected to be a welcome by-product of the technological collaboration.

AUKUS states introduced import and export tariffs reforms to help the exchange of technologies and goods related to Pillar 2.

What success has AUKUS had so far?

Industry, training and legal

The US and Australia finalised a deal for submarine training devices in 2023, including simulators for the upcoming joint exercises.

Australia's Navy has already started its training programmes to prepare for future SSN operations.

In August 2024, Australia has for the first time been involved in repair and maintenance of a nuclear submarine at a local port. The US aims to improve its capability for repairing ships in the Indo-Pacific by involving its strategic partners, like Australia.

This year, US Congress passed the law allowing the sale of submarines to Australia.

Meanwhile, Australian passed its own laws to set up safety frameworks for managing these new technologies.

Advancements in research

Pillar 2 allows AUKUS to grow its military power quicker than the longer-term goals of Pillar 1.

Some progress has already been made, for example in AI-powered analysis of sonobuoy data that improves submarine detection capabilities.

AUKUS achieved a major milestone in August when autonomous drones from all three nations completed military training with real munitions.

The drones successfully helped human operators to find and destroy targets. The collected data is used to re-train the algorithms, improving their effectiveness.

In December 2023, AUKUS began work on an advanced radar system to track and identify objects in deep space. The first site should be completed in 2026 in Australia, with one each to follow in the US and UK by 2030.

Expansion

AUKUS nations have suggested they are open to welcoming other members, especially to contribute to Pillar 2.

Japan, New Zealand, South Korea and Canada are all said to be considering the possibility of joining AUKUS.

US official described Japan as AUKUS’ “first partner” in October 2024, especially on “undersea capabilities and cyber-related initiatives”.

What challenges is AUKUS facing?

Submarine manufacturing

Three years into the pact, there are concerns if the US shipyards can keep up with the demands of AUKUS on top of the growing US demand for its nuclear submarines.

Fewer than 1.5 nuclear subs are currently being built in the US per year – this would need to increase to a rate of 1.9-2.6 per year to meet the pact’s goals.

The US Navy currently has 50 attack submarines, despite planning to have had 66-72 by 2021.

The US recently invested $5 billion in domestic submarine production to keep AUKUS on track.

Chinese Navy modernisation

China continues the quick modernisation of its Navy.

The US Navy is still larger by tonnage and infrastructure, but China now has the world’s largest naval force by ship count.

A 2023 US Department of Defence report estimated that China will add around 20 new submarines by 2035, including nuclear-powered.

However, in September 2024, satellite images showed that China’s latest nuclear submarine, planned to be the country’s first, sank during construction. The extent to which the sub was damaged is unknown.

Three aircraft carriers, eight guided missile cruisers and dozens of destroyers are also currently under construction in China.

Closing remarks

AUKUS needs continued political support within Australia to support the project’s aims in the next 20 years.

Meeting the timelines for both pillars remains ambitious, especially considering cost overruns and delays in similar defence projects.

Recent examples include a £2.5 billion overspend on two British aircraft carriers and a seven-year delay in delivering Britain’s Vanguard-Class submarines.

A big test for AUKUS will likely be achieving the construction pace required to meet Pillar 1 milestones.

Externally, AUKUS signatories' ability to manage relations with other key nations and regional collectives in the Indo-Pacific will be crucial to its success in shaping the broader strategic landscape.

It is possible that future governments may change some aspects of the pact, especially to acquire submarines more cheaply and increase the economic and defence industry benefits for Australia.

Author Billy Barham

Editor David Averre

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