Japan wants answers after losing Australia’s $50 billion submarine contract

Japanese Prime Minister Shinzo Abe wouldn’t be happy. Photo: Kim Hong-Ji-Pool/ Getty Images.

Australia has awarded French shipbuilding company DCNS the $50 billion submarine contract to replace Australia’s Collins-class fleet.

The French chosen unanimously by a government-appointed assessment panel over bids by the Japanese government and German firm TKMS.

Japan was heavily favoured by many analysts to win the contract, and was publicly supported by former prime minister Tony Abbott, who just two months ago said, “this submarine deal is strategic; for the other bidders, it’s commercial”.

Now Japan wants answers, with the minister of defence calling Australia’s choice “deeply regrettable”.

“We will ask Australia to explain why they didn’t pick our design,” said Gen Nakatani, according to Reuters.

During the submission period there was mounting pressure for Australia to choose the Japanese bid in the interests of regional security.

At today’s announcement in Adelaide, Turnbull said the decision on the contract was a “sovereign matter”.

“I want to thank TKMS and the government of Japan for their proposals, which were of a very high quality. However, the recommendation of our competitive evaluation process of the panel – the Department of Defence, the experts who oversaw it – was unequivocal; that the French offer represented the capabilities best able to meet Australia’s unique needs,” Turnbull said.

“As Japan is concerned let me just say this, that both Prime Minister Abe and I and our respective governments, and I believe our respective nations, are thoroughly committed to the special strategic partnership between Australia and Japan which gets stronger all the time. It gets stronger day by day and we’re committed to that. And we are committed to our strong trilateral strategic engagement between Australia, Japan and the United States.”

It’s the second time Japan, which had offered to build Australia a variant of its 4,000 tonne Soryu submarine, was jilted.

The former Abbott government was within weeks of announcing that Japanese contractors would build the boats, but an unsuccessful leadership spill in February 2015 resulted in the competitive evaluation process being put in place, which led to the selection of the French firm DCNS.

On The Conversation today Nick Bisley, professor of international relations at La Trobe University, says while the government emphasised that the decision was merit-based, it is likely to have obvious strategic and foreign policy implications.

“The conventional wisdom had been that Australia would take the J-option as the culmination of significant tightening of the strategic links between two of America’s most important Asian allies. That Australia did not go with Japan will clearly hurt that relationship to some degree, but it won’t be a major setback,” he writes.

“Japan and Australia have become one another’s most important strategic partners after the US. The reasons for this – the convergence of strategic interests and their shared commitment to the prevailing regional order – mean that the underlying relationship will continue on its long-run trajectory.

“Unusually, Australia has a relatively strong hand in the relationship. Japan needs support for its broader security transformation, and it has relatively few friends in Asia. It had been thought that the submarine deal was part of this support – with Australia helping Japan to become a defence exporter – yet it is likely that there will be some other defence procurement of a lower profile and lower risk that Australia will put toward Japan.”

Some have interpreted the decision as something that would please – or even appease – Beijing in light of the nation’s aggressive expansion plans in the South China Sea.

However Sam Roggeveen, of the Lowy Institute, writes “Australia is still doubling the size of its submarine fleet from 6 to 12. Whether the contractor is French, German, Japanese or other, that is still a substantial statement of Australia’s strategic anxieties, which inevitably centre around China’s long-term intentions.

“It is a dramatic gesture which we might find alarming had it been made by any of our close neighbours.”

Tony Abbott backed the decision, saying it was the result of the process his government put in place.

“I am pleased that the shameful procrastination of the Labor years is now over,” he said.

“Australia’s special relationship with Japan is more than strong enough to withstand this disappointment and I am confident that our strategic partnership will continue to grow through other means.”

Labor welcomed the government’s announcement, but was left with little room to object with prime minister Turnbull delivering jobs, keeping the election promise and emphasising the use of Australian steel in the decision.

The best the ALP could manage was saying the fact that it has taken three years was “an outrage”.

“After trying everything else Malcolm Turnbull and Marise Payne have finally made the right decision,” the ALP said in a statement.

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