Australia's embrace of nuclear submarine technology cements role as regional foil against China

It's not called the nuclear option for nothing.

One single, momentous decision reconfigures Australia's relationship between its oldest ally, its key security partner and its biggest customer.

It will unnerve some of Australia's neighbours and require deft diplomacy.

It will likely corner Labor into acceptance, no matter how begrudging, because of a shared commitment to the US alliance.    

Australia's embrace of US-British nuclear submarine technology entrenches its role as a regional foil against Beijing's assertiveness.

Talk about picking sides — not that China would have had any doubt about where Australia's security allegiance lies. 

But this is a formal declaration by way of technological embrace.

Within a decade or so, the Royal Australian Navy's nuclear-powered submarine fleet will be a structural part of America's Indo-Pacific pivot. 

Its main task will be to counter increased militarisation of the crowded and highly contested seas to Australia's north, west and east. 

In this regard, the trilateral Australia-United Kingdom-United States security partnership, or AUKUS, is the realisation of the ANZUS pact, 70 years after it was signed.   

That Australia should see fit to tear up a $90 billion contract with the French to build up to 12 conventionally powered submarines demonstrates how significantly the security environment is considered to have changed in just the five years since the deal was inked.  

The allied attitude towards the Chinese President in the past decade has gone from trained curiosity at Xi Jinping's regional adventurism, to abhorrence at Beijing's outright militarism, its debt diplomacy and sanctioned cyberbullying. 

Plan in the works for months

The French President, Emmanuel Macron, is furious at the Naval Group's lucrative contract being sunk, but he must've known the subs deal was taking on water when Scott Morrison came to visit in mid-June.

The Prime Minister made clear Australia's concern about the project's drift. Morrison demanded a clear September deadline for its design work.

He informed Macron that as far as Australia was concerned, the strategic environment had changed.  

What the PM didn't tell Macron over that long dinner in Paris — and perhaps why the French President might be particularly miffed — is that Morrison had, just a day or so before, already reached an informal agreement with United States President Joe Biden and British PM Boris Johnson for an extension of a nuclear technology sharing agreement.

This revelation brings a new complexion to the tripartite meeting in Carbis Bay in Cornwall on June 12 between the two PMs and the US President.

Johnson was, by some observers, portrayed as the awkward peacemaker between Morrison and Biden over presumed differences on climate change.

It turns out this three-man meeting may be the most consequential in decades; it ended with an understanding that Australia might indeed be extended nuclear secrets previously kept the preserve of only Washington and London since 1958.

The ABC understands the federal government began exploring the nuclear-powered submarine option about 18 months ago when Linda Reynolds was still defence minister.

It was tentatively discussed at a "systems level" with the Brits and the Americans — that is, whether nuclear subs were feasible in an Australian context.

It was not raised with the Trump administration at a political level, even if there had been careful discussion at a military level.

No point raising it between leaders and ministers if there's no way it could be made to work, was the thinking.

The French deal always hinged on the answer. 

"This was not a change of mind, it's a change of need," is how one Australian government figure puts it.

Diplomatic challenges aside, the cost will be enormous

About $2.4 billion already sunk into the French build is lost. Some say it's more. The Naval Group will claim significant compensation in the hundreds of millions of dollars.

And going nuclear will be significantly more expensive, even if Australia only builds eight at Adelaide's Osborne shipyards, rather than 12 as planned under the French deal.

Sources say building eight nuclear subs will cost significantly more than $100 billion and this country's defence spending will be entrenched well above 2 per cent of GDP for decades to come, given the AUKUS agreement includes long-range strike capability, unmanned undersea drones, artificial intelligence and quantum technologies.

Regionally, Morrison's pressing task is reassuring New Zealand, a Five Eyes partner, whose anti-nuclear stance has long tested the ANZUS treaty, and Indonesia.

After the National Security Committee of Cabinet signed off on the nuclear option, Morrison's first call was to his Kiwi counterpart, Jacinda Ardern. 

Morrison wants Ardern to be a partner of reassurance of the Asia-Pacific and ASEAN nations. Whether she will play that role remains unclear.

Defence Minister Peter Dutton informed Indonesian Defence Minister Prabowo Subianto on Wednesday night.

Maintaining good relations with Indonesia has long been considered critical to Australia security.

Domestically, Morrison will face significant challenges, many of which will only be lessened if Labor extends political bipartisanship. 

On the score of manufacturing capability, domestic maintenance and sustainment, Labor offers firm support, even if some in ALP ranks will object to Australia becoming beholden to American nuclear reach, as former prime minister Paul Keating contends.

"This arrangement would witness a further dramatic loss of Australian sovereignty, as material dependency on the United States robbed Australia of any freedom or choice in any engagement Australia may deem appropriate," Keating said.

Morrison's reply to Keating was to refer to Australia's "forever relationship" with the United States and Britain.

"I prefer to be in the company of John Curtin and Robert Menzies when it comes to this issue," Morrison told reporters.  

But history is always in the writing and Australia's political authors come from two tribes.

Anthony Albanese says Labor has three conditions for supporting nuclear-powered subs: that there be no requirement of a domestic civil nuclear industry and no acquisition of nuclear weapons. 

Third, Labor wants absolute assurance that the agreement is compatible with Australia's obligations as a non-nuclear weapons state under the non-proliferation treaty. 

The government insists all three conditions will be adhered to. If so, Labor appears a lock.

Indeed, Biden and Johnson separately affirmed that the subs would not be nuclear-armed, although this was more geared at avoiding inflaming tensions with China.

That will come anyway.

The geostrategic wrestle between Washington and Beijing is one for the ages and Australia is now to play an even bigger role — in a stealthier and speedier bit of nuclear kit.