The AUKUS Wager

Charles Edel

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At the end of July, U.S. Secretary of State Antony Blinken and U.S. Defense Secretary Lloyd Austin traveled to Brisbane, Australia, for a series of high-level meetings with top Australian officials. It was the latest indication of the stepped-up security cooperation that has emerged since the 2021 signing of AUKUS, the tripartite defense collaboration among Australia, the United Kingdom, and the United States.

This spring, U.S. President Joe Biden met with his Australian and British counterparts, Anthony Albanese and Rishi Sunak to announce the way forward for AUKUS. At a U.S. naval base at the edge of the Pacific Ocean with the USS Missouri, an attack-class submarine, looming behind them, the three leaders detailed how they would work together to help Australia acquire, build, and maintain conventionally armed nuclear-powered submarines—a centerpiece of the AUKUS deal. In addition, the three leaders announced a series of other steps related to the deal: U.S. and British submarines are to begin showing up in Australian waters later this year and will establish a rotational presence there, the United States will sell three to five Virginia class submarines to Australia, marking the first time that Washington will transfer these boats to a foreign nation, and all three countries will invest in their own and one another’s submarine industrial capacities—an approach that has never been undertaken before.

Canberra, London, and Washington all have their own specific reasons for signing onto AUKUS, but concerns about Beijing are the common denominator. The accelerating and often nontransparent growth of China’s military, combined with Beijing’s increasingly assertive posture, has shifted the dynamics of regional security, diplomacy, and politics. Any effort by the United States and its partners to effectively compete with China must address the profound degradation in the Indo-Pacific security environment. Perhaps most important, however, they must address the unspoken but growing assumption in the region that China’s advantages are insurmountable and that smaller countries have no agency in their—or the region’s—fortunes.

Although AUKUS has not been the only move to restore strategic equilibrium in the region, it is the most dramatic. It also represents a significant change in the strategic calculation of each of its three member states. For the United Kingdom, it speaks to its ambitions to once again play a global security role; for Australia, it constitutes a decision to play a larger part in shaping its own region; and for the United States, it demonstrates a commitment to strengthen its most trusted allies in the service of collective, rather than unilateral, efforts to maintain a favorable balance of power. Indeed, as important as the initiative itself may be the larger strategic transformation that it ushers in.

AUKUS should be understood simultaneously as part of broader strategic shifts in the Indo-Pacific region, as an effort to spur other countries into action, as an indicator of evolving U.S. defense policy and architecture, and perhaps most important as a bet that shoring up deterrence will ultimately help stabilize the region. Few of these objectives are explicit, but that does not make them any less real. Bringing these ambitions into play will necessitate new efforts from the governments, legislatures, and industries of all three nations and will require confronting a range of challenging questions—several of which cannot currently be answered with any level of assurance.

WHEELS AND LATTICES

As much as it is a large-scale defense cooperation pact, AUKUS is also a harbinger of a new approach to U.S. defense policy and architecture. For much of the postwar period, the United States has pursued a policy of primacy or preeminence in the Indo-Pacific. The consistent and long-standing goal of U.S. policy has been to prevent the emergence of another power that can establish a sphere of influence in Asia and set the conditions for American access and influence. But AUKUS underscores how that policy goal is now unrealistic, potentially counterproductive, and probably unnecessary.

Moreover, primacy was built around a hub-and-spoke alliance model, according to which the United States dictated the terms of its security relationship with its allies. That model is no longer practical. As China has grown more powerful, and as American power has fallen in relative terms, Washington is now increasingly invested in allies who can pull their own weight and complement U.S. capabilities. At its core, AUKUS represents a fundamental decision to empower America’s key allies and, in doing so, give them increased capacity to play a larger role of their own in Indo-Pacific security.

At the same time, regional defense architecture is undergoing its own transformation. In the past, the hub-and-spoke model gave American forces access to several strategically located bases. That is now changing in three important ways. First, the hub-and-spoke model is evolving into a more flexible and multifaceted “latticework of alliances and partnerships.” In this updated model, the United States will play more of a supporting and enabling role for its allies. Second, because of the increasing reach of Chinese strike capabilities, regional defense architecture must now prioritize finding new locations to preposition assets, building support infrastructure, and rotating American and other forces. Finally, both Australia and Japan are now actively seeking to make themselves into harder targets by pursuing their own area-denial capabilities, including long-range strike capabilities, that have the potential to constrict Beijing’s ability to project power farther afield. Doing so will create mutually contested spaces that in war would put Beijing’s power projection at risk and in peace will reassure friends in the region that China cannot have its way with them.

As Canberra and Tokyo lead regional efforts to harden their own defenses, the U.S. must continue working to organize and knit together sometimes disparate efforts to ensure that the total is greater, more distributed, more networked, and more lethal than the sum of its parts. AUKUS will serve as a springboard to advance each of these efforts.

FROM THREE TO MANY

If AUKUS marks the beginning of a fundamentally new approach to defense architecture in the Indo-Pacific region, it also contains the promise of unleashing other investments and partnerships that can help bring stability to the region. For a variety of reasons, the submarine dimension of AUKUS will necessarily remain a limited partnership for the foreseeable future. The sensitivity of the technology being shared, the complexity of the logistical requirements, and the high level of strategic trust required pose serious constraints to any expansion.

But in other respects, AUKUS can act as a catalyst for investments, efforts, and collaborations by other countries similarly concerned by China’s increasingly assertive military. Since the deal was first announced in 2021, London and Washington have signaled their eagerness to extend collaborations with other countries. AUKUS investments can create space for other nations to undertake their own efforts and defense enhancements and work more closely with the three AUKUS governments.

Already, Australia and Japan have undertaken their largest defense transformations since World War II. AUKUS was, after all, an Australian-initiated idea, and in 2020, before its inception, Canberra had announced that it was significantly upgrading its defense capabilities, increasing the size of its defense budget, and pursuing a more forward-postured defense strategy—all decisions that the new Australian government has now promised to bring about at a faster rate. In late 2022, meanwhile, Japan committed to double its defense spending by 2027—giving Tokyo the world’s third-largest defense budget—acquire long-range strike capabilities, and shift missiles to its southwestern islands in a move intended to complicate any Chinese plans to attack Taiwan.

AUKUS could unleash investments and partnerships that can help bring stability to the region.

Other countries have followed suit. The United Kingdom has made significant boosts to its defense budget. India has increasingly shifted its strategic focus, acquisition strategy, and defense planning away from Pakistan and toward China. And South Korea’s new government has expressed a desire to move beyond its traditional focus on the Korean peninsula and play a larger security role in the region. Decisions across Southeast Asia have been more varied, but the Philippines, Singapore, Taiwan, and Vietnam have all demonstrated a willingness to strengthen their own defense capabilities and augment their defense partnerships. These changes have not been made collectively but rather as independent sovereign determinations in multiple capitals, which have each concluded that it is necessary to take action to address a deteriorating security environment. AUKUS has the potential to empower other countries that wish to do the same.

AUKUS has also raised expectations for Pillar 2—the still underdeveloped part of the agreement intended to drive cooperation on advanced technologies such as artificial intelligence, hypersonics, quantum computing, cyber, unmanned underwater vehicles, and electronic warfare. This is part of a broader effort to catalyze technological integration, industrial production, and strategic innovation. Given the significance of advanced and emerging technologies to the prosperity and security of nations in the twenty-first century, it is unsurprising that prominent voices in France, India, Japan, New Zealand, and South Korea have also signaled interest in finding ways to join these efforts.

The hope of these initiatives is to create a virtuous circle: the more that the United States and its closest partners lean in to actively enhance security in the Indo-Pacific region, the more other countries will be willing to lean into their own, or joint efforts. And the more resources that are invested, the greater the overall capacities that will be generated.

THE FORTY-YEAR WAGER

But even more than a deal, a hope, or a harbinger, AUKUS, at its core, fundamentally represents a bet. It is a bet that promoting, enabling, and further enhancing Australian and British capabilities will cause the overall regional balance of forces and power to reach a more favorable and sustainable footing, resulting in collective deterrence. It is also a bet because it remains unclear if the deal will work in the long run—whether it will create a sufficient number of constraints on Beijing’s actions to truly deter China.

To increase their odds in this bet, Australia, the United Kingdom, and the United States will need to address a host of challenging questions. The first is whether they can maintain bipartisan political support and public enthusiasm for the deal in all three countries over the next several decades. There will be multiple administrations of different political persuasions over the life of the initiative, and if the enthusiasm of the current governments is not sustained, AUKUS is unlikely to survive.

Related to this challenge is the question of whether the deal will receive the funding necessary to rapidly expand the industrial base and shipbuilding capacity of all three nations. This project is enormously expensive—the Australian government has pegged the initiative as costing it between $178 billion and $244 billion, and analysts have estimated that total U.S. shipbuilding costs will average nearly $30 billion a year for the next 30 years. This project is enormously expensive, and without sufficient investments, its lofty ambitions will meet with disappointment. Some of those investments will be to produce and maintain submarines, but as much attention needs to be given to more mundane details such as worker recruitment, creating AUKUS-class visas, and even the provision of affordable housing, parking, and childcare near shipyards.

A U.S. amphibious military vehicle in Bowen, Australia, July 2019Anaid Banuelos Rodriguez / U.S. Navy

To ensure that both grand and mundane details are addressed, AUKUS needs a better administrative setup and governance structure. During the initial 18 months after the deal was announced, Canberra, London, and Washington stood up a joint steering group to determine the optimal pathway for Australia’s acquisition of nuclear-powered submarines. That work was well done by a small and able group, but now those efforts need to expand to ensure that they are coordinated, provide oversight, and possess appropriate authorization to reach into and coordinate with other government agencies whose work will be critical—these include the departments of labor, education, health, energy, and state in all three countries.

Making that coordination happen will require rethinking how the United States shares, and how Australia and Britain safeguard, sensitive technology. The export control regime that the United States—and its allies—use was built for the Cold War and was intended to prevent the proliferation of weapons systems and protect the intellectual property of American businesses. Unless its new model of technology transfer has political support, bureaucratic buy-in, and legislative backing, AUKUS will almost certainly fail to produce the collaborations it needs to sustain cutting-edge innovation and increased industrial capacity in all three nations.

Part of that challenge is a failure to define what the Australians have labeled “interchangeability.” The aim of this concept is sound enough—to address the problem that current platforms and systems are not sufficiently interoperable to fully support enhanced collaboration among these three allies. In fact, Canberra, London, and Washington are trying to achieve something far more ambitious. Interchangeability begins to get at the scale, sustainability, synergy, and redundancy AUKUS might offer, but the concept remains underdeveloped. A starting point would be to detail which areas need to be more interchangeable among the three allies, such as people, places, and platforms.

CHANGING CHINA’S CALCULUS

Fundamentally, these challenges must be squarely addressed by the leaders of all three AUKUS countries themselves. Extraordinary efforts and extraordinary expenditures require clear, urgent, and forceful explanations if they are to succeed in breaking down outdated processes and be sustained in the long run. All three leaders have discussed how ambitious the deal is and have noted its potential to spur significant new growth in their industrial and technology sectors. But they have not yet made a sustained public case detailing either the purpose or the strategy behind AUKUS. In Washington, this is a conversation that demands more detailed focus on deterrence and competitive advantage. In Canberra, it entails more explicit discussion of China and the types of activities Australia would like to forestall. And in London, it requires a more sustained argument for why the Indo-Pacific is worthy of the United Kingdom’s time, attention, and resources.

Finally, although AUKUS may result in more robust deterrent capabilities in the years to come, it has not yet solved any pressing operational challenges, nor has it created any dilemmas for Beijing beyond the prospect of tighter coordination among Canberra, London, and Washington. Signaling matters, but creating indisputable facts on the ground matters more. This is where Pillar 2—the advanced capabilities pillar that exists adjacent to the submarines—and changes to force posture have the potential to deliver more immediate dividends. Timelines matter here, because there is an immediate deterrence challenge—not one that materializes a decade from now. A useful step, then, would involve bringing government, industry, and the academy together to define operational challenges and to begin sketching innovative solutions to them.

Whether AUKUS will deter China from further acts of aggression and provide stability to the Indo-Pacific region is a question that can likely only be answered by the Chinese leader Xi Jinping. After all, deterrence resides in psychological spaces—something that takes place in a government’s calculations about its adversary’s intent and capabilities. AUKUS is a bold and ambitious initiative. It is also an enormous gamble to create, in Biden’s words, “more partnerships and more potential” that can produce “more peace and security in the region.” Providing answers to the questions that continue to challenge the deal’s implementation will be essential to realizing these larger goals. Giving the United States and its allies more capabilities and demonstrating their readiness to run more bureaucratic, political, and ultimately strategic risks is also the surest course for altering Xi's calculations.