Washington's regional ambitions center stage in Australian submarine tender

* U.S. military supports Australia buying Japanese submarines
* Move would tighten links between the three Asia-Pacific navies
* Other competitors in the project are from Germany and France
* A$50 bln deal is largest defence project in Australian history

By Matt Siegel

ADELAIDE, Australia, April 2 (Reuters) - Washington's strategic ambitions in Asia are looming large over Australia's multi-billion dollar tender for new submarines, giving Japan a possible edge over competitors from Germany and France, defence and industry sources said.
Although the United States had little presence at a conference last week in Adelaide convened to discuss the project, the enthusiasm U.S. commanders have shown for Canberra buying Japanese submarines was one of the hottest topics behind the scenes.
Such a purchase would bind the U.S., Japanese and Australian navies more tightly together in the face of China's rapid military modernisation and growing assertiveness in Asian waters.
It would also give Japanese Prime Minister Shinzo Abe, whose more muscular security agenda is supported by Washington, his first major weapons export deal after he lifted a ban on overseas arms sales last year.
That would boost Japan's defence industry and potentially pave the way for the sale of advanced Japanese weapons to countries such as the Philippines and Vietnam that are at loggerheads with Beijing over the disputed South China Sea, sources at the conference said.
Australian defence officials have acknowledged that compatibility with the U.S. navy will be an important factor in choosing the winning bid.
"The level of Australian industry involvement will be a fundamental consideration, as will interoperability with our alliance partner, the United States," Defence Minister Kevin Andrews told the conference.
A Defence Ministry spokesman, asked to comment further, said capability, cost and schedule were also important.
Sources at the conference said choosing Japan would give Australia a high-tech submarine and possible access to sensitive technology to boost its own shipbuilding industry if the boats were built in Australia.
It would also allow Canberra to cement its outsized role in regional affairs by partnering with a country that has a long-standing security alliance with the United States.
The qualitative difference between the various submarines on offer was negligible, Rex Patrick, a former advisor to the previous defence minister and a submarine expert, told Reuters.
"All these guys build a good submarine. It will be factors other than capability which determines who wins," he said, partly referring to Washington's geo-strategic goals in Asia.
COMPETITION GROWS
Competition is heating up for Australia's biggest defence procurement, worth A$50 billion ($38 billion) over the life-cycle of the submarines.
Japan had been the frontrunner to replace Australia's ageing Collins-class submarines with an off-the-shelf version of its 4,000-tonne Soryu-class vessel after Prime Minister Tony Abbott agreed to cooperate on military technology with Abe last June.
But during an internal challenge to his leadership in February, Abbott promised something closer to an open tender to be completed by the year-end in an attempt to shore up political support.
That opened the door to Germany's ThyssenKrupp Marine Systems (TKMS) and France's state-controlled naval contractor DCNS, which have both said they would build submarines in Australia, where manufacturing jobs have been disappearing. The makers of the Soryu-class boats are Mitsubishi Heavy Industries and Kawasaki Heavy Industries .
U.S. officials insist they are not pressing Australia to buy any particular submarine but say they see benefits from the interoperability of the Japanese option.
During a visit to Australia in February, General Martin Dempsey, chairman of the U.S. Joint Chiefs of Staff, said the decision was one Australia would have to make on its own "for any number of domestic and international reasons".
But Dempsey also cited "interoperability" among allies as a key factor, although experts at the conference noted that submarines built by Germany and France, both NATO members, can communicate with U.S. vessels.
Still, Washington's view is that the Japanese submarine is technically superior to any European-made vessel, and will allow for the integration of more U.S. technology, a senior U.S. military source told Reuters.
"If they want to do it right, it is a Japanese hull and propulsion plant, with a U.S. combat system and ISR package," he said, using an acronym for the various types of intelligence, surveillance and reconnaissance sensors like sonar and radar used on U.S. submarines.

SHARED VALUES
One notable Japanese participant at the conference, retired Vice Admiral Yoji Koda, told Reuters that Japanese-Australian cooperation on the submarine deal would ensure countries in the Asia-Pacific with common values such as democracy also shared a common defence capability.
"The key point is not exporting our equipment on an industrial basis, but to be more strategic," added Koda, who also said Tokyo should be flexible and build most of the vessels in Australia, which would make the deal politically more palatable for Abbott.
Until now, sources had said Japan was reluctant to engage in a tender partly to avoid getting embroiled in a bidding war.

Japanese industry is also seen as wary of undertaking significant construction in Australia because of concerns about its sensitive submarine technology, including its stealthy propulsion system and advanced welding techniques.