Australia: The Coming Challenges for Aukus

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The recently announced "Aukus" agreement for the US and the UK to share nuclear-powered submarine technology with Australia unleashed geopolitical shockwaves, but it may take more than the 18 months agreed to finalize the deal before even its basic practical implications are known. The pieces of this puzzle — whether related to technology, precedents or regional knock-on effects — are interconnected, and it's not clear which ones can or will fall into place first, particularly given how embryonic the agreement is.

"Australia now has no new submarine program at all," former Australian Prime Minister Malcolm Turnbull, who negotiated the now defunct $66 billion submarine deal with France, said this week in an impassioned Sep. 29 address to Canberra's National Press Club. "We have canceled the one we had with France and have a statement of intent with the UK and the US to examine the prospect of acquiring nuclear-powered submarines."

Scott Morrison, who succeeded Turnbull as prime minister following an intra-party coup in 2018, outlined a relatively straightforward arrangement. A considerable supply chain will be in Australia. "We intend to build these submarines in Adelaide, Australia," he said during the Sep. 15 announcement of the deal, telling Australians the following day that work should commence "within the decade." But he emphasized this would not include producing the high-enriched uranium (HEU) reactors that power the ships. "This doesn't require the development of Australia's civil nuclear capability," Morrison said on Sep. 17, as the "reactors on these vessels are able to be there for the whole life of the vessel."

There is no commercial deal yet, however, and much could change in Canberra's thinking in the 20 years ahead of expected delivery of the first nuclear-powered submarine. The same is true in the US and UK, which like Australia are subject to the political gyrations of democratically elected governments and shifting geopolitical priorities. This opens the prospect that the Aukus effort may damage nonproliferation interests even without delivering commercial benefits for its parties. Some say it already has by virtue of setting a lower bar for sensitive nuclear technology transfers.

The US has transferred its nuclear submarine technology only once — to the UK — in 1958, and the UK by then was a nuclear power. Australia would be the first non-nuclear weapon state (NNWS) to acquire such technology, along with HEU. Crossing this Rubicon may prompt China and India to accelerate their indigenous nuclear-powered submarine programs, and fuel arguments in South Korea and Japan that these nations should themselves pursue nuclear-powered submarines. Meanwhile Brazil remains committed to its own nuclear submarine ambitions, alongside indigenous uranium enrichment, and as a NNWS its path forward now looks less lonely.

"The Aukus deal resembles the US-India nuclear deal of 2005 — done by a handful of self-confident officials in secrecy, precluding interagency vetting that might have revealed flaws and hurdles to the deal," tweeted the Carnegie Endowment's George Perkovich. That nuclear deal promised huge nuclear contracts for US industry in exchange for Washington's efforts to let India import uranium and nuclear technology, and it was promoted as "the beginning of a new, deep strategic partnership between the US and India, with an eye toward balancing China’s power." Yet 16 years later, Perkovich pointed out, "no US reactors are being built in India."

The next 18 months should provide more clarity on whether Aukus will share a similar fate. Here are the things to watch:

  • Supply Chain — Turnbull says that the biggest question now is "whether the new submarine should be based on the UK Astute submarine or the larger US Virginia class." But just as important is the question of Australia's scope in what would be a multi-billion dollar construction project. If Australia has no nuclear fuel cycle but pushes to build the submarines in Adelaide, said Turnbull, "that must mean the submarine hulls will be transported to the US or the UK to have the reactor installed together with all of the safety and other systems connected to it. You don’t need to be especially cynical to see it won’t be long before someone argues it looks much simpler to have the first submarine built in the US or the UK, and then the second, third and so on." Assuming he's right, will pressure for Australian-built submarines grow alongside efforts to construct an Australian enrichment plant using the indigenous Silex laser enrichment technology? "If I was a Silex person this would be a perfect rationale for me," Tariq Rauf, former International Atomic Energy Agency (IAEA) head of verification and security policy, told Energy Intelligence. And "if Silex can get a facility built" Australia "could become a full service provider."

  • Safeguards — While an Australian front-end nuclear fuel cycle might have commercial attractions for Canberra, it would make a safeguards arrangement with the IAEA more difficult. The agency's existing bilateral agreements prohibit the transfer of fissile material for military purposes to a NNWS, although the IAEA can exempt a country from the prohibition under guidelines laid out in Infcirc 153, Paragraph 14. That paragraph allows both for the transfer of nuclear material for a "non-proscribed military activity" so long as it does not involve the production of nuclear weapons or other nuclear explosive devices, and for the lifting of safeguards "while the nuclear material is in such an activity."

"If Australia is producing fuel (enriching and fabricating), and refueling the subs, then the IAEA has to apply nuclear accountancy — this would be complicated because of secrecy aspects but methods could be developed," John Carlson, the former head of Canberra's Australian Safeguards and Non-Proliferation Office, told Energy Intelligence. But if the submarines are supplied already fueled, as Morrison envisions, then because the reactors do not require refueling for the entirety of their operating lives, "the fuel will be inaccessible to Australia unless we disable the sub by cutting into its hull — a highly unlikely scenario. At the end of the sub's service life it will be returned to the US or UK, obviously with the reactor and its fuel intact."

A trilateral or quadrilateral safeguards arrangement between the Aukus countries and the IAEA would be relatively straightforward in the above scenario, according to Carlson. "It will certainly not be a situation where the fuel 'disappears' from IAEA purview and could be diverted to weapons by Australia." The "broader conclusions" that the IAEA draws about the Australian program's peaceful intent under Canberra's Additional Protocol with the agency "will not be affected," he argued. Less clear is how bilateral safeguards deals between Australia and the US and UK would be redrawn.

  • Politics — While the Aukus deal has met with receptive audiences in Canberra, London and Washington, caught in the political cyclone of anti-Chinese rhetoric, this could shift in the coming years and decades. Once the real haggling begins over dollars, delivery schedules, and who gets what, the ground could shift, especially in Canberra. In Washington it's not at all clear how read in the US government and military was before the Aukus deal was announced, and any opposition from the US Navy could complicate the situation.

After all, it was the US Navy that previously nixed UK plans to supply nuclear-powered submarine technology to Canada, and if support for the deal within the Navy exists now, it's not clear how widespread it is or if skepticism over sharing the crown jewels might grow, irrespective of the White House position.

Eighteen months might deliver more clarity on the direction of the Aukus deal but a final reading will take a lot longer.

Morrison argues that Aukus is about "contested space" and "keeping Australia safe, keeping our region secure and stable, so we can continue to be the country we want to be." A safer bet is that two decades hence that contested space, and the broader geopolitical order, could look vastly different.

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