Report: Australia close to eliminating much-hyped Japanese bid for $50 billion sub contract

Jesse Johnson, Japan Times
20 April 2016

Canberra has all but eliminated the much-hyped Japanese bid to build the country’s 50 billion Australian dollar fleet of new submarines, a report by the Australian Broadcasting Corp. said Wednesday.
The Cabinet’s National Security Committee reportedly discussed the bids by France, Germany and Japan on Tuesday evening, moving closer to a decision that is expected by the end of the month.
While a final decision has not been made, the ABC report said that reservations among officials had likely sunk any potential Japanese deal to build 12 Soryu-class submarines that would replace the Royal Australian Navy’s aging Collins-class fleet.
Japan’s Chief Cabinet Secretary Yoshihide Suga told a news conference Wednesday that Tokyo was aware of the media report.
“Details of when it will decide is up to the Australian government and the Japanese government is not in a position to comment at his point,” Suga said.
Nick Bisley, a professor at La Trobe University in Melbourne, Australia, said Canberra had been telegraphing its intentions for weeks.
“The government has been flagging that Japan was not a ‘done deal’ for at least three weeks,” Bisley said by email.
Concerns about the Japanese bid had apparently been festering since at least the time of former Prime Minister Tony Abbott, who was ousted in a party coup last September.
Chief among these concerns, the ABC report said, were reservations among Australian Defence Department officials about the early stages of the Japanese offer, and
how it had initially emerged as an “understanding struck between Abbott and Japanese Prime Minister Shinzo Abe.”
Australian media had reported that Abbott and Abe, who had close personal ties, privately agreed in 2014 that Japan would get the contract. Both sides denied the existence of such a secret deal.
Australian officials also cited an apparent lack of enthusiasm for the deal among Japanese bureaucrats, which they feared could ultimately undo any deal with Tokyo.
In its campaign for the contract, Japan has pushed hard on the strategic angle, hinting at even closer ties between Tokyo and Canberra – and their mutual top ally, the United States.
This strategic aspect appeared earlier to resonate in all three capitals as Beijing stoked international concern with its massive land-reclamation projects in the contested South China Sea.
Australia’s Defence White Paper, released earlier this year, also played up the strategic aspect, noting that the new subs would be built “with a high degree of interoperability with the United States.”
Analysts had said the DWP added weight to their view that the Japanese bid was the front-runner.
With Australia and the U.S. set to jointly develop a combat system to be installed in the new subs, a Japanese deal was seen as bringing the three countries’ militaries even closer.
But some officials in Washington had reportedly been quietly pushing the Japanese bid by raising the prospect that the U.S. might not allow its most advanced combat systems to be installed in European subs.
Wednesday’s report, however, threw cold water on these claims, with the Australian government now saying that it is convinced that there would be no such complications – no matter which bidder is chosen – after a senior source said U.S. President Barack Obama had made it clear to Australian Prime Minister Malcolm Turnbull that the deal was a sovereign issue for Canberra.
According to La Trobe’s Bisley, there are two schools of thought as to what this means.
The Australian government could be “managing Japanese and U.S. expectations that they’re going for someone else or trying to signal that Australia is not on autopilot and taking instructions from the U.S., which clearly would prefer Australia opt for Japan.”
What is certain, added Bisley, is that Canberra “wants to make clear that the decision is ‘on the merits’ and not about alliances ... which is also about trying to manage third-party expectations, i.e. China.”
An agreement to build the subs would be Japan’s first large-scale weapons export deal in decades after Abe’s Cabinet approved new rules in April 2014, ending an almost 50-year ban on the practice.