An announcement by AUKUS partners on the “optimal pathway” for Australia to acquire nuclear-propelled submarines is imminent. Prime Minister Anthony Albanese will travel to the United States for the occasion.

Media speculation is intense. Governments are tight-lipped.

Unconfirmed reports suggest a package involving: rotations or basing of US submarines; the acquisition by Australia of up to five US Virginia class nuclear submarines from the mid-2030s as a stopgap; and the longer-term development a new generation UK submarine.

We will find out soon enough if this is accurate, but such a phased approach would match hints from Defence Minister Richard Marles of a “truly trilateral” way forward.

Whatever the final deal, nuclear-powered submarines are by far the highest cost and highest risk of any of the options previously considered. They are a leap of faith -  by Australia and by its AUKUS partners.

The government also appears set still on ultimately building as much as the new submarine as possible in Australia.

The vast skilled workforce, whether specialist welders or nuclear engineers, and the facilities to do so do not currently exist.

How did we get here?

The plan to replace Australia’s now elderly Collins Class boats dates to the 2009 Defence White Paper, which announced twelve “Future Submarines” would be assembled in South Australia.

The White Paper ruled out nuclear propulsion, demanded that the complex task of design and construction “be undertaken without delay”, and presciently warned that “strategic circumstances can change more rapidly” than the ability of governments to deliver new military capabilities.

More than a decade of indecision, wasted money and lost opportunity followed.  Along the way, an “evolved” Collins design, a Japanese submarine and, most notoriously and expensively, a conventionally-powered variant of the French Barracuda class nuclear submarine, were considered and discarded.

In September 2021, the leaders of Australia, the United Kingdom and the United States announced the AUKUS partnership, the centrepiece of which is a “shared ambition” to support Australia’s acquisition of nuclear-powered submarines.

Why nuclear submarines?

In 2009, new submarines were considered essential to respond to China’s military modernisation and the possibility, however unlikely it might have seen at the time, of a conflict between the United States and China.

In the intervening years, while Australia dithered, China built the largest navy in the world, sought de-facto control of the South China Sea, and pressed Japan and India over disputed territories. US-China relations collapsed, and China refused to renounce the use of force to achieve “unification” with Taiwan.

In 2021, the Morrison Government decided nuclear-powered submarines were the better capability for this deteriorating strategic environment. The Albanese Government agrees.

The Australian Defence Force (ADF) says nuclear-powered submarines are a “pre-eminent warfighting capability”, backing their speed, stealth, manoeuvrability, range, and strike capabilities.

Not all Australian defence experts are convinced, citing the tremendous cost and complexity of building and running nuclear boats.

Last year, the Australian Strategic Policy Institute estimated eight nuclear submarines would cost somewhere in the order of $153 to $171 billion (accounting for inflation) and quite possibly a great deal more.

The cost of acquiring Virginia class submarines is unknown. Regardless, Australia seems set to spend more than the current two per cent of GDP on defence.

Moreover, the AUKUS submarines have become the centrepiece of a broader, ambitious and also expensive plan to give Australia’s defence force more firepower, especially long-range naval and air strike capabilities.

The military objective is to defend Australia and deter threats by holding an adversary at distance. Such a scenario might seem a remote prospect to many Australians but it is not implausible. If a war  broke out over Taiwan, for example, and Australia joined the conflict, China might threaten Australia directly.  

Is sovereignty an issue?

Both the government and the ADF assert that the submarines will remain under Australian operational control, even in a crisis and even if US or UK submariners are on board.

US officials have also been quick to say there is no quid pro quo to the submarine deal. Still, the problem for future Australian governments, if it ever arises, is likely to come in the form of expectation of how the submarines would be used rather than a demand for operational control.

For the Biden team, the radical decision to give Australia access to nuclear propulsion is about sustaining “the fabric of engagement and deterrence” in the region. At the time of the launch of AUKUS, officials in Washington expressed the hope that nuclear-powered submarines would allow Australia “play at a much higher level and augment American capabilities”.   

Managing US expectations in a crisis, including any Taiwan contingencies, will demand a clear-eyed view of Australia’s national interests. Australia must sustain sovereignty and autonomy within the Alliance, even as defence cooperation moves beyond interoperability towards integration.

How will China respond?

China regularly and vehemently voices its “strong opposition” to AUKUS and the nuclear submarine deal, arguing that together they “introduce bloc confrontation” into the Indo-Pacific and will stoke an arms race.

Beijing has also waged a relentless but so far unsuccessful war in the International Atomic Energy Agency (IAEA) against the transfer of nuclear propulsion technology to Australia, describing this as “flagrant proliferation” and a “serious violation” of the safeguards obligations of the three AUKUS parties.

Australia and the United States counter that the reactors will be easier to manage from a non-proliferation perspective as they will come sealed and won’t require re-fuelling, even if they do run on highly-enriched (weapons grade) uranium.

China won’t entertain any suggestion that its own military build-up and behaviour in the Indo-Pacific are breeding insecurity and driving pushback. Beijing believes the United States will never accept China as a peer competitor and that AUKUS is part of a campaign of containment.

China is particularly neuralgic about AUKUS (as it is about the Quad) because it views it as NATO-like coalition building in the Indo-Pacific. President Xi Jinping hit out this week at what he called US-led “encirclement and suppression”.

So, can the stabilisation of Australia-China ties survive AUKUS and ongoing efforts to balance China’s power in the Indo-Pacific, including through the Quad?

As ever with China, it is hard to know. Beijing can see what is coming down the track, so presumably has factored AUKUS into its calculations. Economic recovery has been a recent priority for Beijing.

An abrupt reversal of all recent progress in the relationship is possible, but would seem less likely than targeted expressions of displeasure. This could conceivably include withholding an invitation for Prime Minister Albanese to visit China and slowing progress on the trade front. We could also expect China to keep campaigning against the submarines in Southeast Asia and the global south more broadly.

Are we frightening our Southeast Asian neighbours?

Indonesia and Malaysia have criticised AUKUS for the precedent it sets (either Australia or Brazil will be the first non-nuclear weapon state with nuclear-propelled submarines) and worry about a regional arms race.

Other Southeast Asians have been less vocal but most will see AUKUS – and the Quad – as representative of the now wide gap between the region and the United States and its close partners on how best to manage the challenge from China. They too worry about a conflict, or having to “choose” between the United States and China.

Australian ministers, diplomats and defence officials were offering reassurance and as much visibility as is possible to regional partners ahead of the announcement.  They will be busy again in coming days.

Such active diplomacy is essential, even if it can’t erase the inevitable tension between Australia’s direct national interests in Southeast Asia and the nation’s equally important efforts to help support a balance of power, or “strategic equilibrium”, in the Indo-Pacific in which China is not hegemonic.