Is Australia's AUKUS submarine deal in trouble? | 7.30

Key Concepts

• Orcus Deal: A nuclear-powered submarine and technology deal between Australia, the US, and the UK.
• Virginia Class Submarines: The type of submarines Australia is slated to receive under the Orcus deal.
• Optimal Pathway: The plan for Australia to acquire nuclear-powered submarines.
• Defense Spending: The amount of money Australia allocates to its military.
• US Production Capacity: The ability of the US to produce Virginia class submarines at the required rate.
• Sustainment: The maintenance and upkeep of submarines.
• America First: The principle of prioritizing American interests above all else.
• Plan B: An alternative strategy for Australia to acquire submarine capabilities if the Orcus deal falls through.

Orcus Deal Review and US Concerns

• The Pentagon is undertaking a review of the Orcus deal, driven by concerns within the Trump administration.
• Under Secretary of Defense Bridge Colby has expressed doubts about the US's ability to produce enough submarines to service both the US Navy and Australia.
• These concerns center on the production and sustainment of Virginia class submarines.
• The challenges in relation to the production and sustainment of Virginia class submarines in America has been well understood from the outset.
• Malcolm Turnbull states that the US Navy's latest numbers (March 11th) show a production rate of 1.1 submarines per year, while they need to reach 2 by 2028 to meet their own requirements and 2.33 to meet their own plus Australia's.
• Colby's point is that the legislation clearly states that no submarine can be transferred to Australia unless the president certifies that it will not degrade the undersea capabilities of the US Navy.

Australia's Response and Contribution

• The Australian government welcomes the review and is confident in the process.
• Australia is making a financial contribution to the US industrial base for both production and sustainment.
• Approximately 120-130 Australian tradespeople are working in Pearl Harbor on Virginia class submarines.
• The establishment of the Submarine Rotational Force-West at HMAS Stirling will facilitate sustainment and maintenance of US submarines.
• Australia's contribution is seen as significantly helping to increase production and sustainment rates.

Production Capacity and Timelines

• The goal is to reach a production rate of two Virginia class submarines per year by the early 2030s.
• The Australian government is confident that this target can be met.
• The agreement with the US, part of a treaty between the US and the UK, outlines these production and sustainment goals.

US Pressure on Defense Spending

• US Defense Secretary Pete Hegseth has asked Australia to increase defense spending by tens of billions of dollars a year, potentially reaching up to $100 billion annually.
• The Australian government states that defense spending is a function of Australia's national interest, the strategic landscape, and the strategic threats it faces.
• The government asserts that it has been increasing defense spending since coming into office.
• Angus Houston, co-author of the defense review, stated that Orcus must be a net addition to Australia's military capability, not draw from it.

Political Implications and Potential Meeting with Trump

• Prime Minister Albanese is expected to meet with President Trump at the G7 summit in Canada.
• The meeting's purpose is to discuss national security and economic relations.
• The US is putting pressure on the Prime Minister to increase spending commitments.
• The timing of the Orcus review and the US demands is seen as an attempt to "flush out" Albanese on spending commitments.
• There is speculation about why Albanese is not having a meeting with Trump in the White House.
• Albanese is expected to push back against the idea of "bowing" to Trump and will likely not beg for special favors.

Alternative Submarine Acquisition and Plan B

• Malcolm Turnbull suggests that the Orcus deal may result in Australia having no submarines.
• He argues that Australia should acknowledge this risk and plan for an alternative.
• Alternatives include acquiring submarines from another source or investing in long-range strike capabilities like bombers and missiles.
• Turnbull criticizes the current deal as "dumb" and suggests that Trump will exploit it to extract more from Australia.
• He claims that the previous deal for French submarines would have delivered the first submarine in 2032, based on the latest French nuclear-powered submarine design, and would have used the same Lockheed Martin combat management system as the Virginia class.
• The key question is whether it is too late for Australia to acquire a submarine fleet outside of Orcus.
• If Orcus fails, Australia could focus on providing a submarine base and maintenance for the US while investing in other military capabilities.

Jacob Grieber's Analysis

• The Americans are frustrated by Albanese's reluctance to increase defense spending.
• The Orcus review and US demands are putting pressure on Albanese to make spending commitments.
• There is a contest between funding Orcus and funding other defense priorities.
• Albanese will have to explain why Australia's defense spending is not at the same level as other G7 nations.

Conclusion

The Orcus deal is under review due to concerns about US production capacity. Australia is contributing financially and logistically to support US submarine production and sustainment. The US is pressuring Australia to increase defense spending, and the Prime Minister is facing political pressure to address these concerns. There is a growing debate about the viability of the Orcus deal and the need for Australia to have a Plan B in case the deal falls through.