Tony Abbott wrote personally to Shinzo Abe after Japan lost Australia's $50 billion subs deal

Shinzo Abe, left, with former Australian PM Tony Abbott in 2014. Photo by Jason Reed – Pool/Getty Images / File

Tony Abbott has written a personal letter to Japanese prime minister Shinzo Abe following Australia’s surprise decision to award its submarine contract to French firm DCNS.

As prime minister, Abbott openly supported Japan building a replacement fleet of submarines for Australia but was pushed into a competitive tender process which awarded the deal to DCNS this week.

Photo: DCNS.

It was a $50 billion policy decision, announced by Abbott’s successor Malcolm Turnbull, and it delighted the French government.

A source close to Abbott confirmed to Business Insider that the former PM expressed “thanks for all Japan was ready to do for Australia” and “commiseration that this particular avenue for deeper strategic cooperation is now closed”.

When announcing the deal in Adelaide this week, Turnbull lauded the strategic capability of the DCNS-built Shortfin Barracuda, but it is also a clear local political coup for Turnbull as he leads his party to an election expected on July 2.

Analysts say the Turnbull government will now need to mount a diplomatic repair mission on relations with Tokyo where expectations remained high just weeks ago that the Soryu-class design would secure Australia’s backing. In early March, Japanese media reported that the Abe government had an “insurmountable lead”.

Abe’s defence minister, Gen Nakatani, said this week the awarding of the contract to France was “deeply regrettable” and added: “We will ask Australia to explain why they didn’t pick our design.”

In diplomatic code, this is unconcealed anger.

Abbott is known to have built a strong personal friendship with Abe. Within a year of taking office, Abbott’s government signed a free trade deal with Japan, while Abe initiated difficult reforms to his country’s post-war pacifist regulations that allowed for the export of military equipment, partly in anticipation of the submarine partnership.

Mark Beeson, professor of politics at the University of Western Australia, told Business Insider: “Perhaps it a salutary lesson in the dangers of doing things via personal relations rather than arm’s length – especially over an issue of such importance.”

And just in case anyone was unclear about the significance of an Australian defence deal, French prime minister Manuel Valls blasted out two joyous tweets welcoming Turnbull’s announcement.

“Hats off to the French-Australian partnership,” he said. “France advances. France wins.”

Back in Australia, Abbott’s pledge to entertain bids from other nations came when he was first challenged for the leadership in February 2015, in a concession to MPs anxious about the future of the Australian Submarine Corporation (ASC).

The Japanese government’s campaign which would have seen Mitsubishi Heavy Industry building the subs unravelled over a matter of weeks. The Wall Street Journal reported this month that the evaluation process had identified “considerable risk” in awarding the project to Japan because of the nation’s “inexperience building naval equipment overseas”.

Malcolm Turnbull. Photo: Don Arnold/Getty Images.

The contract with DCNS will also involve building the ships using Australian-made steel, which has been under pressure from cheaper products made overseas. (Yes, in China.)

Turnbull hinted in an interview with ABC’s 7.30 Report following the decision that he had already begun to mend the fences. He told Leigh Sales: “In all of my discussions with Prime Minister Abe, including the most recent one, each of us shared our unwavering commitment to our strong, special strategic partnership with Japan, which will become stronger in the years ahead.”

While some damage control is required, analysts don’t believe there will be a lasting impact on the Australia-Japan relationship over the long term, which is driven by strategic pressures including managing the tricky trade and defence relationship with China.

Putting aside all of the various concerns about the sustainability of China’s economic footing, it remains Australia’s biggest trading partner, the biggest source of regional demand for raw materials and, increasingly, the source of Australia’s most enthusiastic property investors and tourists.

Japan has had a long-established relationship with with Australia, including a $70 billion-plus trade relationship that will be cemented under the free trade agreement. Alignment of defence policy, however, would have been a very big call in a dynamic Pacific landscape where China loves to flex its muscles.

Andrew Carr, research fellow at the Strategic and Defence Studies Centre at ANU, told Business Insider:

Australia was never going to ally with Japan nor would it be be forced to defend Japan in a future conflict simply because we were buying their submarines. So the pro and anti-Japan sides have been overstated. Many countries trade military equipment without connecting it to their strategic partnerships. While Japan is understandably angry, it’s likely that its concerns right now are largely the same as Germany’s – the loss of jobs and income. Japan needs a strong relationship with Australia, it views the world roughly the same as Australia (though it is more concerned about China), and it wants to see regional partners developing strong defence capabilities. So the forces that have driven Australia and Japan closer together over the last decade will continue to push these countries to do more and more together, regardless of whether they trade military equipment.

After a period of a drought of policy announcements, Turnbull has been busy in recent weeks trying to get in front of the economic conversation in Australia. In Adelaide, he positioned the submarine contract in the heart of his agenda, saying it would “play a key part in the transition of our economy” and that the Shortfin Barracuda, specially designed by DCNS for the bid, was designed to “meet our unique national security requirements”.

UWA’s Beeson believes the diplomatic damage with Japan can be easily contained.

“The Japanese might reasonably feel they had been encouraged to think they were in the box seat when Tony Abbott was PM. It’s to Turnbull’s credit that he seems to have ignored this – and pressure from the US – to take a decision solely on the merits of the boats alone.”

He adds: “Whether we actually need them is another issue that’s unlikely to be debated.”

We’ll see. Provisions for the spend will be in the Turnbull government’s first budget delivered next Tuesday.

SEE ALSO: PHOTOS – Your first look at the Shortfin Barracuda, Australia’s next submarine >>

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