How many nations’ interests can you fit into a submarine?
20 Dec 2016|

If you can fit your own nation’s interests into a submarine without it sinking, you’re doing well. But try to fit in the interests of a second and even a third nation and there’s danger that the submarine could sink you.

Australia isn’t alone in having an interest in expanding sovereign shipbuilding capability. Australia’s choice of French company DCNS to design and construct the submarines, and US defence materiel provider Lockheed Martin to integrate the combat system shows confidence in the companies’ expertise and their parent nations’ compatibility with Australian strategic interests. However, dividing responsibility in this way risks subjecting the project to local economic pressures beyond our control. We need to take care and to know more about what our partners want.

France views DCNS’s win as both a commercial opportunity and an opportunity boost to bilateral strategic cooperation. DCNS is majority-owned by the French government and Australia’s decision to award it the submarine contract plays into a larger French economic strategy. A Defence Ministry report tabled in the French Parliament in May 2016 declares that the State’s advocacy of French armament exports is a guarantee of their quality, while also emphasising that the State is at the service of French armament businesses’ returns.

Such declarations indicate that France’s attitude to the future submarine project is conditioned by a military–industrial complex. The relationship between government and military manufacturers is institutionalised to the point where it’s not solely defence strategy that determines materiel production. Instead, there’s a mutual understanding that both state and industry will profit from armaments.

It’d be a mistake to believe that France’s sole intention is to manipulate the submarine project for profit. That’d be contrary to France’s interests, and would undermine the entire premise of the strategic partnership with Australia, which embraces a far wider range of mutual interests than many Australians realise. The relationship deepened last month with a significant treaty to share classified information.

However, France’s present economic difficulties mean that the DCNS submarine contract could become an instrument of leverage as well as cooperation. A time may come when France’s motives favour profit over partnership, and if so, its institutional arrangements will allow it to act quickly. Understanding France’s economic motivations is therefore essential if Australia is to uphold its strategic interest in effective future submarines by exercising good old-fashioned business sense.

DCNS’s fulfilment of Australia’s future submarine contract will contribute billions of euros over several decades to a French armaments industry that doubled its annual income to €16 billion in 2015 alone. The numbers are impressive, but the fact is that armaments manufacturing is the only booming industry in France. The OECD reports that the French economy is all but stagnant. Growth is constrained by mass unemployment and a low tax take, with the State having to spend billions to keep essential public services running. In this context, France’s shares in international armaments contracts are a precious resource, to be capitalised upon wherever possible.

The announcement of the DCNS submarine contract this April was greeted with jubilation by the French government, with Defence Minister Jean-Yves Le Drian characterising it as an exceptional contribution to long-term economic security. The Minister declared that the contract would secure ‘thousands’ of French jobs and that France would be ‘married’ to Australia for 50 years.

While winning the SEA1000 contract was a major success, it isn’t an isolated one. France has been prioritising global armaments exports for years. It has shown particular skill in securing deals in the Asia–Pacific, making intelligent use of long-term engineering contracts to cement its strategic presence in a region where it holds large territories but has struggled to find acceptance as a local power. By securing rights to rolling builds and gradual technology transfers, France ensured its role in Asia–Pacific economies for decades.

France has pursued armaments sales as a pragmatic and legitimate way to stimulate economic growth in difficult times. But what will France’s high expectations of the Australian submarine contract mean for Australian policymakers? How do we ensure that the project remains focused on building strategically effective submarines, rather than yielding to military–industrial profit motives?

Above all, this will require a protocol that sets the submarines’ credible deterrence capability as the top priority for both parties. That’s possible: both Australia and France have a strategic interest in 12 advanced RAN submarines patrolling Asia–Pacific waters. While the program is still in its infancy, it’s possible to plan meaningful transfer of expertise to Australia, minimising the expense to the French economy while maximising returns for both sides.

It’s easy to overstate the risks to major defence acquisition projects, given their scale, complexity and cost. But the risk of entering into a project under-informed can’t be overstated. Presidential elections in 2017 may see France take a more assertive approach to maximising the profits of national enterprises. So it’s vital that Australia enters contract negotiations with as much a commercial eye as a strategic one, so as to protect our interests after the paperwork is signed. France has both commercial and strategic motivations, and we should too.