The announcement that Australia has awarded the biggest arms contract in its history ($40 bn) to France provides further fuel to the arms race in Asia. Already last year Asia overtook Europe in terms of defence spending with the total reaching $340bn according to IISS figures. This year the trend is continuing with overall defence expenditure likely to increase by a further 6%. Asian countries are shopping not only for submarines but new generation fighter aircraft, amphibious landing craft and other advanced weaponry. European defence contractors are now looking to Asia to boost falling sales at home.
The reasons for the rise in defence spending include the increasing tensions in the East and South China seas and the unpredictable nature of the regime in North Korea. China accounts for about 40% of the total spending and has ambitious plans to modernise its armed forces and increase its power projection capabilities. This, in turn, has led to increases in defence spending by India, Japan, Vietnam, the Philippines, Australia and other countries in Asia. South Korea is considering accepting a US missile system following the latest provocations from North Korea.
Both China and India are seeking to secure new aircraft carriers but the biggest increase is to be seen in market for submarines. Vietnam recently bought four Russian Kilo-class submarines to defend its territorial waters. India, Indonesia and South Korea are also planning major purchases. The Australian decision follows publication of a defence white paper which stated that Australia had a major strategic interest in a stable Indo-Pacific region and a rules-based global order.
The French bid to design and build 12 new submarines for its navy was a major victory for France over its German and Japanese rivals. The Japanese bid had seemed the favourite until the change of Australian leadership from Tony Abbott to Malcolm Turnbull. He accepted the arguments of trades unions that the French bid would provide more high-paid jobs in Adelaide where the submarines will be built.
The project will also cement the long-standing security relationship between Australia and France, a relationship that rarely receives much attention given Canberra’s close security ties with Washington. France and Australia have long cooperated in the Pacific and Indian oceans. The French territory of New Caledonia is one of Australia’s closest neighbours.
The submarine deal is a major blow to Japan as PM Abe had lobbied hard for the project following the relaxation of restrictions on arms exports.