Friday, September 17, 2021

PERMANENT WAR ECONOMY


'Great power rivalry' fuels Pacific arms race frenzy

AFP - 1h ago

A quick barrage of missile tests and bumper defence deals in the Pacific have highlighted a regional arms race that is intensifying as the China-US rivalry grows.

"There's a little frenzy in the Indo-Pacific of arming up," said Yonsei University professor John Delury. "There's a sense of everyone's doing it."

Within 24 hours this week, North Korea fired off two railway-borne weapons, South Korea successfully tested its first submarine-launched ballistic missile, and Australia announced the unprecedented purchase of state-of-the-art US nuclear-powered submarines and cruise missiles.


© STRExperts say defence spending increases across the Pacific are a reaction to China's military expenditure

A remarkable flurry, but indicative of a region spending apace on the latest wonders of modern weaponry, experts say.

Last year alone, the Asia and Oceania region lavished more than half a trillion US dollars on its militaries, according to data from the Stockholm International Peace Research Institute.


© John SAEKIGraphic on nuclear submarines around the world

"You've really seen an upward trend for the last 20 years," the institute's Lucie Beraud-Sudreau told AFP. "Asia is really the region where the uptick trend is the most noticeable."

She points to a perfect storm of rapid economic growth -- which puts more money in the government kitties -- and changing "threat perceptions" in the region.

- Big brothers -

China accounts for about half of Asia's total and has increased defence spending every year for the last 26 years, turning the People's Liberation Army into a modern fighting force.


Beijing now spends an estimated $252 billion a year -- up 76 percent since 2011 -- allowing it to project power across the region and directly challenge US primacy.

But defence spending in Australia, India, Japan, South Korea and elsewhere is also gathering pace.

Michael Shoebridge, a former Australian defence intelligence official, now with the Australia Strategic Policy Institute, believes that spending is a direct reaction to China.

"The actual military competition is between China and other partners that are wanting to deter China from using force," he said.

"That reaction has just grown, particularly since Xi (Jinping) has become leader. He's clearly interested in using all the power that China gains fairly coercively and aggressively."

Today around 20 percent of the region's defence spending is on procurement, notably on maritime assets and long-range deterrence designed to convince Beijing -- or any other adversary -- that the cost of attack is too high.

Shoebridge points to Australia's landmark decision Thursday to acquire at least eight US nuclear-powered submarines and an unspecified number of Tomahawk cruise missiles.

"They're all focused on raising the cost to China of engaging in military conflict. They're a pretty effective counter to the kinds of capabilities the PLA has been building."

But even South Korean spending "is as much driven by China as North Korea," he said. "There's no explanation for (Seoul's decision to build) an aircraft carrier that involves North Korea."

Similarly, "India's military modernisation is clearly driven by China's growing military power," Shoebridge added.

For its part China -- fond of describing its relationship with the United States as "great power rivalry" -- accuses the United States of fuelling the arms race.

In the words of state-backed tabloid the Global Times, Washington is "hysterically polarising its alliance system."

If fear of China is the driving force behind regional defence spending, then the United States has appeared happy to speed the process along, actively helping regional allies to beef up.

As China and Japan were "blazing forward" with defence programmes, Delury says Washington has been "aiding and abetting" allies "in the name of deterring China."

"We're not seeing arms control here, we're seeing the opposite," he said.

seb-arb/jfx/mtp


Australia shrugs off China anger on nuclear subs

Issued on: 17/09/2021 - 
The deal extends US nuclear submarine technology to Australia as well as cyber defence, applied artificial intelligence and undersea capabilities
 Jamica Johnson US NAVY/AFP/File

Sydney (AFP)

Australia on Friday shrugged off Chinese anger over its decision to acquire US nuclear-powered submarines, while vowing to defend the rule of law in airspace and waters where Beijing has staked hotly contested claims.

US President Joe Biden announced the new Australia-US-Britain defence alliance on Wednesday, extending US nuclear submarine technology to Australia as well as cyber defence, applied artificial intelligence and undersea capabilities.

Beijing described the new alliance as an "extremely irresponsible" threat to regional stability, questioning Australia's commitment to nuclear non-proliferation and warning the Western allies that they risked "shooting themselves in the foot".

China has its own "very substantive programme of nuclear submarine building", Australian Prime Minister Scott Morrison argued Friday in an interview with radio station 2GB.

"They have every right to take decisions in their national interests for their defence arrangements and of course so does Australia and all other countries," he said.

In a series of media interviews, the Australian leader said his government was reacting to changing dynamics in the Asia-Pacific region where territory is increasingly contested and competition is rising.

Australia is "very aware" of China's nuclear submarine capabilities and growing military investment, he told Channel Seven television.

"We are interested in ensuring that international waters are always international waters and international skies are international skies, and that the rule of law applies equally in all of these places," he said.

The first contingent of US Marines to be deployed in Australia arrived in Darwin in 2012
 Christopher Dickson AUSTRALIAN DEPARTMENT OF DEFENCE/AFP/File

Australia wanted to ensure that there were no "no-go zones" in areas governed by international law, the prime minister said.

"That's very important whether it is for trade, whether it is for things like undersea cables, for planes and where they can fly. I mean that is the order that we need to preserve. That is what peace and stability provides for and that is what we are seeking to achieve."

- 'Stab in the back' -


The Australian move also infuriated France, aghast at losing a contract to supply conventional submarines to Australia that was worth Aus$50 billion (31 billion euros, $36.5 billion) when signed in 2016.

Foreign Minister Jean-Yves Le Drian said it was a "stab in the back" from Australia.

But the main backdrop to the alliance is China's rise.

China claims almost all of the resource-rich South China Sea, through which trillions of dollars in shipping trade passes annually, rejecting competing claims from Brunei, Malaysia, the Philippines, Taiwan and Vietnam.

Beijing has been accused of deploying a range of military hardware including anti-ship missiles and surface-to-air missiles there, and ignored a 2016 international tribunal decision that declared its historical claim over most of the waters to be without basis.

An aerial shot of Chinese development on the disputed Subi reef in the Spratlys 
TED ALJIBE AFP/File

China has also imposed tough trade sanctions on a range of Australian products, widely seen in Australia as a reaction to Canberra's opposition to Chinese investment in sensitive areas and to its questioning of the origins of the coronavirus pandemic.

- 'The forever partnership' -


Morrison said the new defence alliance, prepared in 18 months of discussions with the United States and Britain, will be permanent.

"It involves a very significant commitment not just today but forever. That is why I refer to it as the forever partnership. It is one that will see Australia kept secure and safe into the future," he said.

Australia's defence spending will rise, Morrison said, as the new alliance also requires greater investment in cyber capabilities, artificial intelligence, quantum technologies and undersea capabilities.

Morrison told Australian media that the defence alliance had been "well received" in his discussions so far with leaders in Japan, India, Singapore, New Zealand, Fiji, and Papua New Guinea.

Indonesia's government said it took note "cautiously" of the agreement. "Indonesia is deeply concerned over the continuing arms race and power projection in the region," the foreign ministry added in a statement.

Dutton said Australia was willing to host more US Marines on rotation through the northern city of Darwin and wanted to see air capability enhanced.

© 2021 AFP



Australian submarine deal boosts Ultra Electronics takeover prospects


James Titcomb
Thu, 16 September 2021

Submarine - PA/PA Wire

A new security pact between Britain, America and Australia has weakened the rationale for blocking the US private equity takeover of Ultra Electronics, which supplies kit for Britain's nuclear submarines, experts have said.

Advent International's pursuit of Ultra is thought to be more likely to succeed after the three countries agreed to share sensitive data under the so-called Aukus agreement.

Ministers last month ordered a national security review into the £2.6bn takeover of Ultra amid concerns over top-secret technology developed by Ultra for the Royal Navy falling into another country's hands.

Ultra makes electronic equipment which is so vital for Britain's Trident nuclear deterrent that it was feared security could be endangered even if the company was owned by a business in a close ally such as the US.

However, the new pact means that the UK and US are now committed to sharing even more information than before. The three countries will be collaborating on nuclear propulsion technology to help the Royal Australian Navy build attack submarines.

Peter Sandeman, an analyst at Navy Lookout, said: “The Aukus agreement shows we are getting closer militarily and that probably means that the ownership of Ultra by a business in an Allied nation is more acceptable.

“We are getting closer to Americans all the time selling industrial businesses to the US and it is obviously not as catastrophic as these businesses being taken over by the Chinese or even European owners.”

Henry Carver, an analyst at Peel Hunt, said: “It should allay some concerns around security in that it highlights how closely the US Department of Defence and UK Ministry of Defence work together.”

He said the Government may require intellectual property to be safeguarded in the takeover, but that will not necessarily mean the deal has to ne blocked.

Advent has agreed a £35.16-a-share offer with Ultra’s directors to buy the company through Cobham, the British defence contractor it took over last year for £4bn. It has committed to legally binding undertakings to assuage national security concerns, but has not yet revealed what these are.

The takeover is controversial since Advent has sold off much of Cobham’s operations since buying the company, raising fears that the same could happen to Ultra.

Kwasi Kwarteng, the Business Secretary, last month ordered the Competition and Markets Authority to conduct a national security review of the deal by January 18. He has the power to block it if significant concerns are raised.

Ultra’s shares were up 0.5pc on Thursday. Ultra and Advent declined to comment.

Separately, Babcock has landed the first export contract for its Arrowhead 140 lightweight frigate design from Indonesia, which will build the two of the ships in local yards.

The FTSE 250 defence company is selling five of the ships to the Royal Navy for £250m each. It has only provided the design to Indonesia and the new contract is understood to be worth less than £20m

Rolls-Royce and BAE set to benefit after Australia spurns French submarines

Alan Tovey
Thu, 16 September 2021, 

Astute

“These are the most complicated machines humans to have ever built,” said a senior officer of one of the Royal Navy's latest nuclear-powered submarines. “The space shuttle doesn’t even come close," he added, showing off the Western world’s most advanced attack vessel.


Not only are they the most complex, but also the most secret assets in a country’s arsenal, containing technology critical to national security.

Thursday's announcement of a pact between the UK, US and Australia to build nuclear-powered submarines, is, therefore, a landmark moment. The partnership will include sharing ultra-classified information to help Australia create at least eight such vessels, which are able to stay submerged and operational until food or the crew’s endurance runs out.

It marks an attempt to counter China's increasingly aggressive military prowess, highlighting the level of threat Western nations think they are up against and the need for co-operation to counter it. A mention of Beijing was, however, avoided in the formal announcement of the tie-up.

The "Aukus" agreement resulted in Australia abandoning a A$90bn (£48bn) contract agreed in 2016 with France for 12 diesel-electric submarines, to replace its ageing Collins class vessels. Deliveries were due to start in the 2030s.

That such an isolated nation, completely dependent on sea trade, was willing to tear up its contract with France's Naval Group and turn to far more expensive vessels shows just how dangerous it thinks China is.

“As a three-ocean nation, it is necessary to have access to the most capable submarine technology available,” the Canberra government said. “We are ready to take the step ... to defend Australia and its national interests.”

Geopolitics aside, the deal is a huge opportunity for British and US defence firms. But building submarines is an incredibly complicated business, even before nuclear power is thrown into the equation.

Under the agreement, Australia will lean on the UK and US navies and their suppliers for expertise needed to construct the submarines’ power systems, and likely also the other technology the vessels contain. The southern nation has no domestic infrastructure to support the nuclear technology, but will need to be able support the new submarines in ports on home soil.

Among British suppliers, BAE Systems is set to be a winner. The defence contractor is currently building the final three of seven nuclear-powered attack submarines, called the Astute class, for the Royal Navy, as well as the first of four Dreadnought submarines to replace the existing Trident nuclear missile models. Both are powered by reactors from engine maker Rolls-Royce.

The two London-listed companies are also involved in the planning of a successor to the Astute, expected to come in mid-to-late 2040s. Shares rose 4pc and 2pc, respectively, after they were namechecked by the Ministry of Defence as it announced the tie-up.

BAE has said it “stands ready to support AUKUS discussions as they progress”, with Rolls adding it that “looks forward to supporting the UK Government in the initial scoping phase for this new endeavour”.

Thales UK - whose French parent owns 35pc of Naval Group - could also be a beneficiary. It supplies the Astute’s highly rated sonar which is able to hear and identify ships hundreds of miles away.

Technology already deployed in the Astute or even its successors could be tapped to go into Australia’s fleet.

Over in America, General Dynamics Electric Boat and Huntington Ingalls Industries - which both build submarines for the US Navy - are likely to do well from the deal. Both firms produce a class of nuclear-powered fast-attack vessels, named the Virgina, which compete with the UK's Astute for the title of the most capable Western submarine.

What sort of design Australia will actually choose, however, is unknown.

Industry sources say defence companies were caught off guard by the announcement, leaving them to conclude it was driven at the highest political level with little industrial involvement. As such, nothing beyond a broad concept has been decided on.


Virginia class submarine

Working out the requirements for the design is likely to last 18 months, according to the Ministry of Defence. Although details are unclear, insiders say that would not enough time to come up with an entirely new design.

“Building a submarine is mind-bogglingly complex. When you’ve got no nuclear infrastructure, it just adds another order of magnitude of difficulty,” says Pete Sandeman of a military expert at website Navy Lookout.

“What I’d expect to see is an ‘Australianised’ version of the Astute, or possibly a derivation of the US Virginia class. If they go for a blank sheet of paper, that’s going to add another five or ten years before they start to arrive.”

One thing that is certain is the new submarines will be built in Australia, despite expertise coming from abroad.

As the country makes its biggest-ever military purchase, it would not want to see such a vast sum spent entirely abroad. Australia's former contract with France stipulated that at least 60pc of the spend would be at home, with Adelaide chosen as the construction site.

Meanwhile, submarine facilities in the UK and US are full with existing orders. In this area Australia, however, is set for a challenging period ahead in setting up a new yard, which needs vital skills and experience.

The UK 's bitter experience building the first Astute boats is a prime example, resulting in it arriving four years late and £2bn over budget as British industry relearned how to build submarines.

Sandeman says the problem will be even more difficult if Australia tries to do something it has never done before.

“It’s hardly as if there are a load of submarine experts sitting around with nothing to do in the UK and US,” he says. “Abandoning Naval Group may mean that Australia is jumping out of the frying pan into the fire - and it’s worrying because it could be a British fire.”


Still, problems with the French deal may have contributed to Australia’s decision. Costs were spiralling - the project was meant to be about half the price - and delays were creeping in. Reports of disagreements about specifications, how much work would be carried out domestically and that Australia was ready to walk away may have influenced Canberra’s decision to turn to its close allies.

Sandeman says Naval Group’s design - a nuclear-powered vessel converted to diesel-electric - and a mixture of systems from around the world were other factors, possibly along with cultural differences.

“It sounds like it was an uphill struggle,” he says. “A converted French design, with a US command and control system, combined with differences between the Australians and French do things.

“It’s often missed but in something as complex as a submarine, talking the same language and doing things the same way are incredibly important.”

This cultural alignment extends to the deep links between the British and Australian navies, who work closely with their US counterparts.

With Australia having already bought the design for Britain's latest frigate combat ship, the Type 26. Nine are being built by BAE's local arm Down Under.

Sharing technology that makes their submarines more similar, and better able to work together, is perhaps only logical.

The French government, however, labelled the decision a stab in the back with the French ministers saying it was "regrettable, lacked coherence". They added that it "reinforces the need to raise the issue of European strategic autonomy loud and clear".

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Twisting the knife a bit deeper, France's ambassador to the US noted in a tweet the decision came “exactly 240 years [after] the French Navy defeated the British Navy in Chesapeake Bay, paving the way for the victory at Yorktown and the independence of the US”.

But with allies like that, and faced with a threat as great as China, perhaps Aukus was inevitable. The only surprise was that it took as long as it did.


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