Key Points
- While Ukraine, Gaza, and climate change will feature heavily on the agenda during Australian Prime Minister Anthony Albanese’s visit to Washington, DC, the most important and enduring issue between the two countries is progressing AUKUS (Australia–United Kingdom–United States) as the key ANZUS (Australia–New Zealand–United States) contemporary alliance initiative.
- If the AUKUS arrangement stalls and fails to have a meaningful impact on the strategic and military balance of power, then America’s regional allies and partners will lose faith that a reinvigorated American-led alliance system can serve as a check on Chinese power.
- America’s slow progress to reform the International Traffic in Arms Regulations (ITAR) is an immense frustration for Australian and American proponents of AUKUS. However, concerns regarding inadequate investment in the American military industrial base are reasonable and legitimate.
- Australian defense policy is underfunded and lacks urgency despite defense analysts’ assessment that the strategic environment is rapidly deteriorating. Australian underperformance will increase skepticism of AUKUS in both countries.
- Both countries need to undertake much more detailed scenario planning and commit to the agreed sharing of burdens and responsibilities to deter or defeat China.
Background
Australian Prime Minister Anthony Albanese landed in the United States on Sunday for a four-day visit. Albanese is here a fortnight after launching and supporting a national referendum to change the Australian Constitution by inserting a groups-rights body based on indigenous ancestry. The proposed addition—known as the Indigenous Voice to Parliament or the “Voice”—was soundly defeated, with around 61 percent of Australians voting no. A majority of voters in all six states rejected the proposal.
In this context, Albanese’s visit to the US is a welcome relief from domestic affairs. Even so, Albanese and Joe Biden are likely to have some uncomfortable conversations about the lack of progress from both the Australian and American sides on the landmark AUKUS agreement. Australia, the US, and the UK signed AUKUS in September 2021. It gives effect to Washington’s 2017 decision to admit Australia and the UK into the American National Technology and Industrial Base (NTIB). Both the 2017 NTIB decision and the AUKUS agreement intend to allow the three countries to share military technology and further integrate their military industrial bases.
On the Agenda
President Biden and PM Albanese have flagged that the situations in Ukraine and Gaza will feature prominently on the agenda. Bear in mind that while they will make special efforts to agree on a mutual position regarding these two issues, Australia is not heavily involved in either conflict.
Australia has also been eager to announce closer cooperation with the US on green technologies. This would help address some domestic criticism of the Albanese government, particularly that it gave disproportionate attention to supporting the insertion of the Voice at the expense of issues related to climate change and the environment.
As important as the above issues are, a large part of Albanese and Biden’s public and private discussions will be about the strategic environment in the Indo-Pacific and making progress on AUKUS. The most prominent AUKUS initiatives are Australia’s plan to purchase up to five American Virginia-class nuclear-powered submarines in the 2030s, and Britain’s cooperation with the other two countries to develop a new class of nuclear-powered submarines that will replace the UK’s Astute class.
The so-called AUKUS Pillar Two initiatives involve the three countries working together to develop and deploy asymmetrical and innovative military weapons and capabilities. This includes longer-range and supersonic missiles, unmanned vehicles, offensive cyber assets, and military applications for technological advances in areas like artificial intelligence and quantum computing.
Credibility at Stake
Both the US and Australia attribute the uncertain and dangerous strategic environment to China’s expansionist and revisionist policies and its opaque peacetime military buildup, which has been the most rapid in history. Key documents such as America’s 2022 National Security Strategy and Australia’s 2023 Defence Strategic Review affirm that China poses the gravest and most comprehensive threat to American and Australian interests.
AUKUS will largely determine America’s strategic credibility in Asia. The rationale behind AUKUS is the deteriorating strategic environment in the Indo-Pacific. AUKUS is the major contemporary strategic initiative of an American-led pushback against China in the Indo-Pacific. If the arrangement stalls or does not make a meaningful impact on the regional military balance of power, then America’s regional allies and partners will lose faith in the promise that a reinvigorated American-led alliance system can serve as a check on Chinese power.
Behind Closed Doors
Congress needs to take several steps to enable the success of AUKUS. One would be for lawmakers to approve a blanket exemption to America’s ITAR for Australia and the UK. Without broad exemptions, it is doubtful that the US could find a pathway to enable Australia to purchase American nuclear-powered submarines or engage in the joint development of sensitive weapons under the AUKUS Pillar Two provisions.
The necessary ITAR reform has faced opposition from some officials in the State Department. Some key congressmen are also reluctant to change relevant ITAR provisions allowing the sale of submarines to Australia until they are assured that America can meet its own future defense requirements—including building enough new submarines to maintain American undersea dominance. Congressmen such as Senator Roger Wicker, the ranking Republican on the Senate Armed Services Committee, argue that both the Biden administration and the Australian government need to invest more money in the American military industrial base to reassure Congress that the sale of submarines to Australia will not negatively affect future American defense requirements. Democratic Senators such as Jeanne Shaheen, Richard Blumenthal, and Tim Kaine agree with this position.
Congress’s slowness to reform ITAR has created frustration on the Australian side. For example, Kevin Rudd, the former prime minister and current ambassador to America, has publicly expressed annoyance at America’s slow progress in changing export control provisions to enable the sale of submarines to Australia and fast-track the joint development of weapons as part of the Pillar Two vision.
The position that American defense needs must be secured before Congress can grant an exception to ITAR provisions is reasonable. These lawmakers are not inherently opposed to selling submarines to Australia. Their insistence on new investment in the American domestic base to speed up the production of future submarines is a matter of finding adequate funds from both key stakeholders: the American and Australian administrations. If leaders cannot find new and adequate funding, then AUKUS is unlikely to meet its own objectives in any event.
The bigger problem for AUKUS is the intransigence of State Department officials unwilling to support ITAR reform or blanket exceptions for Australia and the UK. While it is possible to navigate specific exceptions through the ITAR process in some circumstances, only the defense primes—major legacy defense contractors—possess the resources and know-how to navigate the complex process.
In contrast, smaller firms in the defense and civilian space are unlikely to devote the resources and effort required to navigate through the existing ITAR regime. AUKUS envisages the development of new innovative defense industrial clusters and hubs in the three countries. But that is only possible with commercial buy-in from hundreds of smaller defense and non-defense firms. Without significant ITAR reform, these new and innovative defense clusters and hubs will not emerge. It is almost certain that Albanese will express Australian frustrations with ITAR to Biden behind closed doors.
Australia under Pressure
As the leader of the country that pushed for AUKUS in the first place, Albanese needs to take more responsibility to ensure the agreement’s success. And he has some explaining to do on this American visit. His government has declared that due to China’s rise and assertiveness, Australia is confronting the most difficult strategic circumstances since World War II. This assessment underpinned the urgency it expressed in its 2023 Defence Strategic Review.
Even so, Australian defense spending, in real terms and as a proportion of national output, will barely rise, if at all. Spending on actual military acquisition is lower than what the Australian government planned to invest from 2023–24. Progress on specific AUKUS commitments, such as investment in future Australian submarine infrastructure and bases and developing a domestic industrial and innovation base to accelerate Pillar Two initiatives, is painfully slow. The unyielding American export control regime is not a catch-all excuse for slow Australian action.
Indeed, the Albanese administration’s promised but delayed review of Australian surface fleet requirements only adds to the perception that Canberra lacks urgency. After coasting on the goodwill it gained through important but small contributions to American war efforts in the Middle East and Central Asia, Australia needs to take more seriously the possibility of war against an advanced foe in its own region. Australia’s lack of funding and urgency will only add to American lawmakers’ concerns that AUKUS will not on net improve security outcomes for America if allies such as Australia continue to “drag the chain.”
Moreover, conversation within the governing Labor Party will increase existing concerns that some American lawmakers have about AUKUS. At the party’s national conference in July, Albanese reassured his colleagues that AUKUS will deliver tens of thousands of well-paid, unionized jobs for Australians. Although not necessarily inconsistent with the intent of the agreement, Biden might well remind Albanese that AUKUS is there to advance security objectives for all signatories. Everything else, including the industrial policy objectives of the Australian Labor Party, is secondary.
An Inflection Point for AUKUS
AUKUS is at an inflection point. The agreement needs to enhance, on net, strategic and security outcomes for all signatories. Inadequate investment and a lack of urgency could lead to the pact’s lasting impotence or eventual unraveling.
Additionally, a failure to increase Australian capability will cause a lack of strategic ambition and resolve. For example, the 2023 Defence Strategic Review aims to ensure that Australia is kept secure through a deterrence-by-denial approach: employ anti-access and area denial capabilities to prevent an adversary from projecting power against Australia in the country’s north and northwestern approaches.
It is anticipated that many of the capabilities Australia needs and plans to develop unilaterally or jointly with allies will be usable against adversaries farther north—possibly in the South China Sea, Taiwan Strait, or parts of northeast Asia.
Yet if Australia does not invest adequately and urgently in these capabilities, it leaves itself vulnerable. More than that, Australia will have a limited ability to contribute to American security interests in the broader region and will play a negligible role in deterring China from contemplating military action. In this unhappy scenario, it is difficult to see how Australia, or more broadly AUKUS and the alliance, contributes to better security outcomes for America.
Additionally, if the intent of AUKUS is to shape the strategic environment and deter China, then Australia’s military planning, development, and deployment need to make a meaningful impact on the military balance of power in likely theaters of conflict such as the Taiwan Strait and the South China Sea.
This goal requires more detailed strategic and military scenario planning and ironclad commitments among the AUKUS allies to bear certain burdens and responsibilities. What capabilities does the alliance need to deter or defeat China in various theaters of conflict? And where should these assets be deployed? This is an uncomfortable but essential conversation between America and Australia.
AUKUS, and the ANZUS alliance more generally, needs to overcome the free-rider problem that concerns American lawmakers on both sides of the aisle. Many allies claim they are all-in with America when it comes to deterring revisionist and expansionist authoritarian powers like China. But these allies also know that the less prepared their militaries are and the farther these forces are positioned from the most likely theaters of conflict, the less support America might expect from them in the event of a crisis.
That might be a cunning strategy for allies to avoid making difficult decisions. But, to deter China, America needs allies in the region. Only steadfast commitments of blood and treasure, and the credible demonstration of common resolve, will change China’s calculations and the balance of power in the Indo-Pacific.