German shipbuilder TKMS has significantly increased its chances in Canberra’s frigate competition by partnering with Saab, an entrenched supplier of crucial equipment for Australian warships. This challenges widespread assumptions that Mitsubishi Heavy Industries (MHI) is the favourite.
A German victory, if it occurs, will be a serious blow to what has been a revitalised security relationship between Australia and Japan.
TKMS on 26 May signed up Saab to ‘explore opportunities for collaboration on the MEKO A-200, with a focus on enhancing naval capabilities through joint innovation and integration.’
Australia shortlisted TKMS’s MEKO A-200 design and an improved version of MHI’s Mogami class in November for the competition, called Sea 3000, for up to 11 general-purpose frigates. The winner is expected to build the first three ships and support construction in Australia of the rest.
The TKMS-Saab memorandum of understanding, signed in Sydney, referred to Sea 3000 and covered collaboration on Saab’s AusCMS combat management system. This is hardware and software that knits a ship’s sensors, weapons and crews into an integrated fighting machine. Saab is involved in the combat management systems of most major Royal Australian Navy ships.
Until now, MHI has looked best placed in the frigate competition. Its design offers technical strengths and the advantages of Australia operating equipment also used by its most important regional friend. Moreover, choosing it would strengthen what Canberra and Tokyo call their special strategic partnership.
Crucially, TKMS’s bid has lacked what should have been an easily deployed advantage, participation by Saab, whose combat management system could be much preferred by the RAN over unfamiliar Japanese equipment. TKMS now has that advantage.
In another appealing move, Saab has said it is expanding its Western Australian operation that works on combat management systems.
If TKMS wins the frigate competition, Japan may recognise that Australia made its choice on sound naval-technical grounds, including ship performance and the lack of export experience on the part of MHI and the makers of systems in the Mogami design. Armed forces need confidence that their suppliers can adeptly help them get complex equipment into operation and keep it working.
Nonetheless, rejection of MHI’s bid would pose a risk to Australia’s defence partnership with Japan. A senior Australian official has described it as ‘the closest … we have with any other country except the United States’, adding that the two countries needed ‘to grow our cooperation not just directly in the military-to-military domain, but also in the industrial and technological fields.’
Japan’s government and defence industry have responded strongly to such signals, including at a navy-to-navy and leadership level.
Putting the Japanese bid in a winner-takes-all down-select process has been risky for a relationship that Australia’s defence leadership prizes so highly. Canberra has worked hard to revive Japan’s confidence in Australia since its disappointment in losing to France in 2016 in a competition (since cancelled) for 12 submarines for the RAN.
If Japan goes away empty handed again, it may conclude that Canberra’s promises of strategic partnership are hollow. If Canberra declines a second, serious offer from Japan within a decade to supply Australia with frontline naval vessels, it is hard to imagine Tokyo trying its luck a third time for the foreseeable future.
The potential hammer blow to momentum and confidence in the bilateral relationship matters much more than it did in 2016, when the threat from China to both countries was not so acutely appreciated as now. And Australia and Japan now face parallel political pressures and uncertainties in their alliances with the United States. The strategic logic for them to join forces in a common defence industrial project has never been stronger, as Washington readily accepts.
Australia has a history of burning through trusted international partnerships as a result of its decisions on major defence acquisitions. The costs, in terms of our reputation for reliability and lost opportunities, are never quantified but they are substantial. These non-financial costs must be weighed carefully in the final Sea 3000 decision, alongside local jobs and the value for money of the alternative German and Japanese programs.
Of course, Australia also has reasons for getting closer to Europe. Its response to the EU’s public proposal of a defence and security agreement last month was unnecessarily dismissive of a group of nations that are closely aligned to Australia’s democratic principles and values. But Japan is as close to an ally for Australia as two nations can be without a formal treaty. Both are allies of the US and are members of key minilateral partnerships, including the Quad.
Whatever the outcome, the Australian government must avoid the strategic blunder of needlessly damaging relations with Japan. History will look unkindly upon an unforced error at such a critical strategic juncture for Australia’s defence.