While Scott Morrison was secretly pursuing the AUKUS deal with Washington and London, the French ambassador in Canberra was starting to fret. President Emmanuel Macron had charged him to act with “ambition” in expanding the relationship with Australia, yet Jean-Pierre Thebault was finding it impossible to get access to cabinet ministers except for fleeting handshakes and “how-do-you-dos” at cocktail parties.
Foreign Affairs Minister Marise Payne would not agree to see him, nor would then defence minister Linda Reynolds. Yet the nations were supposed to be strategic partners on a high-stakes, $90 billion “Future Submarine” project. As 2020 became 2021, Thebault was feeling stonewalled. What was going on?
Morrison was confidentially exploring the prospect of nuclear-propelled submarines with the US and Britain. Yet a Defence Department official says: “The PM was still telling us, ‘I’m not cancelling anything – this is not signed, sealed and delivered’. We were supporting the PM on AUKUS while proceeding with the French. Whatever else was going on, we needed to deliver to the government the [French] Attack Class subs because that’s what we’d been directed to do.”
The Defence Department handled the duality – or perhaps duplicity – of the two projects by setting up compartmentalised working groups.
One, led by former submarine skipper Rear-Admiral Greg Sammut, continued working with the French towards the delivery of 12 French “Shortfin Barracuda” subs.
Sammut had no knowledge of the other project, led by one-time clearance diver Rear-Admiral Jonathan Mead, who was pursuing the idea of nuclear-powered subs with the Americans and the British.
The two were kept in strict separation. Both reported to Moriarty and the Chief of the Defence Force, General Angus Campbell. “Only a very small number of people had sight of both,” a government official says. “Hard barriers were kept because we had to be able to say to the French, ‘these officials are dealing with you in good faith’. They were busting a gut to produce the Attack Class.”
Moriarty made news when he told a Senate estimates committee in early June that he’d been considering alternatives in case the French deal didn’t proceed. “We wouldn’t refer to it as Plan B, I’d say prudent contingency planning,” he said.
A crunch loomed. The French contract was approaching a “gate” in September 2021. Morrison would have the option of pulling out, but if he decided to go ahead it would be an irrevocable decision.
He was excited at the prospect of nuclear-propelled subs, but they were just that: a prospect. He needed a top-level commitment from US President Joe Biden and British Prime Minister Boris Johnson, and he needed it fast.
Morrison saw an opportunity. US President Joe Biden and British Prime Minister Boris Johnson would be at a G7 summit in the quaint English seaside resort of Carbis Bay in Cornwall in June. Australia, not a member of the G7, was invited as a guest, along with India and South Korea.
Morrison used the meeting of 10 democracies to highlight the China threat. He produced the list of 14 demands that Beijing had made on Australian sovereignty, reading them out to the assembled leaders.
This seemed to come as news to some European leaders. The Americans, British and Japanese were fully aware.
Morrison organised a smaller meeting with Biden and Johnson to drive his submarine ambition. Biden and Johnson had been briefed.
Morrison pitched two ideas. One was the request for the two countries to help Australia get nuclear-propelled subs. The other was a wider project for the three nations to develop other, cutting-edge technologies crucial to future warfare, such as quantum computing, artificial intelligence and other undersea capabilities. “Wouldn’t it be good if we were always on the ground floor with new technologies – why shouldn’t we be more closely involved?” he says in an interview.
Morrison wanted a commitment; he didn’t get it. Biden’s big concerns remained. He said that he needed to be satisfied that the three countries would meet their obligations under the Nuclear Non-Proliferation Treaty. He wanted more work done on this in the White House.
The British were keen to proceed. Johnson even told Morrison that the UK would be prepared to build nuclear-propelled subs for Australia. It was one way he could show that post-Brexit Britain was expanding its horizons beyond Europe. He’d embraced “a free and open Indo-Pacific” as a British priority and announced plans to send its new aircraft carrier, HMS Queen Elizabeth, through the South China Sea. Johnson also saw it as an opportunity for British industry.
Morrison started to think of a British sub – smaller than the American nuclear-powered subs (SSNs) – as the working model for Australia’s fleet. The British also have a different training system for submariners to the Americans. It would be useful to be able to learn from two nations. As a political and military package, a partnership of three nations rather than two would be stronger and more capable.
But the nuclear-propulsion technology was American and veto power rested with Washington. The Carbis Bay meeting broke with an agreement to work on the idea. In Australia, Labor, with no inkling of the high-stakes discussions, taunted Morrison for failing to get a one-on-one with Biden.
After Carbis Bay, Morrison had a dinner date with Macron at the Elysee Palace in Paris. He had to keep the French option alive. But he also wanted to tell Macron that his thinking had changed; to put him on notice.
“I was very honest with him,” Morrison says. “I told him that the limitations of the conventionally-powered subs raised real issues for us, and we had to make decisions, and that could be very difficult. I didn’t say where we were up to with the others, the US and UK.” Which means that he might have been honest, but not fully so.
Macron evidently understood the seriousness of the moment. He proposed that he dispatch Vice-Admiral Bernard-Antoine Morio de l’Isle, commander of French submarine forces, to Canberra to deal with any problems. Morrison agreed.
At a press conference in Paris the next day, a reporter asked Morrison: “Is it true that Naval Group has a September deadline to submit the design work for the next two years and if the government is not happy in September would you, will you, walk away from the contract?”
He answered: “The Scope Two works, the master schedule, total costs, these are all the next steps. Contracts have gates and that’s the next gate.”
He left open the prospect of walking away. Deliberately.
That gate was three months away. Morrison pushed hard to get the assurances Biden needed. He had a vital friend at court: Kurt Campbell, the White House’s Indo-Pacific Co-ordinator and the man the Lowy Institute’s head, Michael Fullilove, calls “Mr Australia in Washington”.
COVID-19 constraints meant US, British and Australian officials had weekly meetings by secure video link only. Progress was slow and incremental.
Campbell decided it was a break-the-glass-in-case-of-emergency moment. He called officials from the three nations to a meeting in Washington.
Each government sent a team of 15 to 20 people drawn from multiple agencies. They were told to set aside eight to 10 business days.
Secrecy was paramount. The naval officers, led by Mead in Australia’s case, were told to wear civilian clothes so as not to draw attention to themselves in the streets of Washington.
They met at the Pentagon in August, not in the famous main building but in a smaller side structure with the gym downstairs and an enormous conference room on top. The aim was to draft a memorandum of understanding for the deal including technical, legal, training and nuclear non-proliferation aspects.
It was to be a trilateral security partnership, but what to call it? AUKUS, redolent of ANZUS, was favoured. And, a wit observed to some hilarity, if the French decided to join at some future date it could be amended to FAUKUS.
The delegations initially sat in national groups around the room, co-chaired by Campbell, Mead and Vanessa Nicholls, the British government’s Director General Nuclear. But camaraderie was built over Pentagon rations of sandwiches, bagels and chips, described by a participant as “better than MREs but not fine dining”.
Agreement had to be reached between the three countries, but, just as importantly, within the US group. The director of the US Naval Nuclear Propulsion Program, Admiral Frank Caldwell, custodian of the late Hyman Rickover’s crown jewels, had to be thoroughly satisfied. It took four consecutive full-day sessions to complete the work.
The nuclear Navy, once committed, committed fully. The former Chief of US Navy Operations, retired Admiral Jonathan Greenert, attested: “In complete honesty, from cocktail parties to services meetings to formal meetings in mahogany-lined offices, I have never heard any doubts or concerns about Australia being serious or reliable or committed.”
One by one, Biden’s four big concerns were met. Experts on the Nuclear Non-Proliferation Treaty were consulted. They agreed that if the reactors on the submarines were run as sealed units, installed and later removed by the US or UK at the end of their 30-year life, then the treaty would not be breached. Australia may have use of, but not access to, the nuclear technology and materials. “The Australians will never have to handle any of this material, it can’t be lost or stolen,” a US official explained.
An Australian official observed: “Biden had to protect his own left flank within the Democratic Party on the non-proliferation issue. It was his biggest political risk.”
Morrison and Payne met with the International Atomic Energy Agency’s director-general, Argentinian Rafael Grossi, to reassure him.
The second concern was China’s reaction. “We assessed with our intelligence community that blowback from China would be manageable,” says a White House official. “And its reaction has been in line with what we anticipated.”
In any case, says another US official, “our intelligence people told the President that China was already going as fast as it could, they couldn’t go any faster. That made a big impact.”
Third was Australia’s capacity. There were questions about Australia’s ability to recruit, train and retain the talent needed to maintain SSNs. However, the Americans’ biggest reservations were over Australia’s finances and politics.
The US wanted to avoid being entangled in any local budgetary disasters. A preliminary guess at the price of acquiring the nuclear subs ranges from $116 billion to $171 billion, including anticipated inflation, according to the Australian Strategic Policy Institute. Incidental extras would include the $10 billion cost of a new subs base on the east coast, as flagged by Morrison in March. The cost of training, crewing, operating and maintaining the boats would not be small.
“The question we asked,” says a US official, “was ‘Can Australia sustain the cost, which will be a not inconsiderable percentage of national GDP?’. And Australia’s force structure may need to be changed.”
Ultimately, Washington decided that Australia could manage the cost, but it was an act of faith in Australia’s future economic strength.
Of the hot potatoes tossed around by the US administration, Australia’s political commitment was the hottest of all. The Americans had tested their own political support. The White House confidentially consulted Trump-aligned Republican senators. They found them supportive, even enthusiastic.
But Biden’s people had reservations about Australia’s political stability. There were concerns about the Labor Party, about the churn of prime ministers in both parties in the last decade, and about the Coalition’s serial dumping of submarine agreements, first with Japan and now with France.
The cone of silence prevented direct US contact with Labor. They called on a National Security Council staffer who’d been posted to Australia, Edgard Kagan, for his view. He consulted the US embassy in Canberra and observed that the Australian government seemed confident that Labor would support such a deal when they were eventually informed.
The Americans could see that if Labor baulked, Morrison would use it as a wedge against opposition leader Anthony Albanese in the approach to an election, to frame him as weak on national security. “The government has clearly thought this through, and we should submit to their judgment,” Kagan argued. The Americans decided they’d have to.
That just left Paris. The White House had pressed the Australians on the need to consult closely with the French. To satisfy the Americans, Canberra went so far as to give the NSC a list of all dealings the Australian government had had with the French on the submarines.
In the end, France’s Naval Group gave Morrison no excuse for detonating the deal. It delivered all its contracted work on time. Australia’s Admiral “Greg Sammut reported that we’d received the report from the French and it met our requirements,” a department official said. “The reply was, ‘very good, the government will be advised’.”
Defence gave Naval Group a formal letter confirming that the work “has been achieved as required under the Submarine Design Contract”.
That was September 15. At the same time, Morrison was phoning Macron. When the French leader didn’t pick up, Morrison sent text messages to tell him he needed to speak with him urgently. The announcement of AUKUS was scheduled for September 16, Australian time. Word had started to filter out. Macron had figured out what was coming. Morrison in June had told him of his concerns, that diesel-powered subs no longer met Australia’s needs.
But Macron felt set up nonetheless. Payne and new Defence Minister Peter Dutton had met their French counterparts just two weeks earlier and given no sign of what was to come. Admiral Morio de l’Isle had been in Canberra just a week earlier to make sure that Naval Group was delivering as agreed, and the Australians had certified that they were. It was scant comfort that Moriarty confirmed that “the program was terminated for convenience, not for fault”.
It was a harsh blow to French pride and to Macron personally. He felt the US had connived with Australia against France. He withdrew his ambassadors from both countries in protest. When this masthead’s then Europe correspondent Bevan Shields asked Macron if he thought Morrison had lied to him, the French leader replied: “I don’t think, I know.”
In the White House, everyone who’d worked on the deal felt let down by the Australians. Biden felt blindsided. He mollified Macron. It was “clumsy, it was not done with a lot of grace,” Biden said. “I was under the impression that France had been informed long before that the [French] deal was not going through.”
Macron relented with the Americans. Morrison could not bring himself to show remorse. Macron has not yet forgiven him.
“The world is a jungle,” remarked the former French ambassador to Washington, Gerard Araud. “C’est la vie.”