What does this mean for Australia and AUKUS

What does this mean for Australia and AUKUS?

The discussion above highlights how major financial interests such as the “Big Three” and Lockheed Martin can influence United States government decisions on military expenditure. However, those very same decisions can influence Australian government military spending too. The United States government's decisions about defence can influence Australian politicians' decision-making about military expenditure in a number of ways:

1. Alliance obligations: As well as being a part of AUKUS (the trilateral security pact between Australia, the United Kingdom, and the United States[1]), Australia is a member of the Five Eyes intelligence alliance (comprising Australia, Canada, New Zealand, the United Kingdom, and the United States)[2], the Quadrilateral Security Dialogue (QSD), commonly known as the Quad[3] (a strategic security dialogue between Australia, India, Japan and the United States) and the ANZUS Treaty, all of which commit Australia to cooperating with the United States on defence matters. This means that Australia is likely to take into account the United States' defence posture when making decisions about its own military spending. There are a number of experts who are concerned that the AUKUS partnership could backfire and actually increase the risk of conflict. Some of these experts include:

· Hugh White, a professor of strategic studies at the Australian National University, has argued that the AUKUS partnership is "a dangerous gamble" that could "provoke China into a more aggressive response".[4]

· Richard McGregor, a senior fellow at the Lowy Institute, has said that AUKUS “amounts to a de facto commitment to go all in with Washington in Asia, whatever direction it may go in.”[5]

· Shi Yinhong, a professor of international relations at Renmin University in Beijing, has said that AUKUS “military buildup would definitely prompt Beijing to respond with an uncompromising attitude and countermeasures, particularly if the future Australian submarines entered the South China Sea for joint military exercises.” He said: “China will definitely counter it, but the question is what kind of counter it would be.” The International Campaign to Abolish Nuclear Weapons (Ican), the winner of the 2017 Nobel peace prize, said on Thursday AUKUS was a move in “the wrong direction at the wrong time”. [6] There is certainly a history of numerous joint exercises, such as the “Exercise Predator’s Run 2023” which is currently underway on the Tiwi Islands, with more than 2,500 troops from the United States, Australia, Philippines, Timor-Leste, and Indonesia participating in the exercise. This joint military exercise aims to enhance cooperation and interoperability among the participating nations.[7]

These experts argue that the AUKUS partnership could lead to a number of negative consequences, including:

· Increased tensions between China and the United States and its allies.

· A more competitive and even dangerous security environment in the Indo-Pacific region.

· An arms race in the region.

· A risk of miscalculation or conflict.

Beijing has repeatedly denounced AUKUS and the Quad as anti-China groupings that seek to “stoke division and confrontation and revive the cold war mentality”. On the Quad alone, Asmiati Malik, an adviser to the Indonesian government writing in a personal capacity, said Indonesia, Malaysia, Laos, Thailand and Cambodia were sceptical of the Quad, partly because of the grouping’s “reputation as an anti-China alliance seeking to securitise the region”.[8]

It is important to note that these are just some of the experts who are concerned about the AUKUS partnership. There are also many experts who believe that the partnership is necessary to deter China from aggression and to maintain peace and stability in the Indo-Pacific region.[9] Ultimately, the impact of the AUKUS partnership on the risk of conflict is a complex issue that is difficult to predict.

2. Security threats: If the United States perceives a threat to its security, it is likely to increase its defence spending. This leads to Australia increasing its own defence spending in order to maintain its alliance with the United States and to deter potential aggressors. The United States already has a significant presence in Australia. This includes:

· Pine Gap – Joint Defence Facility Pine Gap (JDFPG), near Alice Springs, Northern Territory.

Naval Communication Station Harold E. Holt – located on the northwest coast of Australia, 6 kilometres (4 mi) north of the town of Exmouth, Western Australia.

· Robertson Barracks – located in Darwin, Northern Territory.

· Australian Defence Satellite Communications Station – located near Kojarena 30 km east of Geraldton, Western Australia.

Other U.S. bases in Australia are present and this list does not include ADF bases with U.S. access. The U.S. military has access to all major ADF training areas, northern Australian RAAF airfields, port facilities in Darwin, Fremantle, Stirling naval base in Perth, and the airfield on the Cocos Islands in the Indian Ocean.[10]

Many authors believe that the extensive US presence in Australia makes Australia a target in event of war between China and the US.[11]

3. Economic ties: The United States is a significant trading partner (ironically, well behind China but Australia's largest services import partner)[12] . However, the US is Australia’s largest direct investor, with a deep investment history that has embedded US investment in Australians’ day to day lives. That investment is A$1.5 trillion[13][14] with the highest levels of investment in mining and quarrying (32% of total), real estate and finance and insurance (13% in both), manufacturing (11%), and wholesale and retail trade (6%). For example, US companies Vanguard, State Street and BlackRock are among the largest shareholders in Australia’s largest company (“the Big Australian”) the BHP Group.[15] Vanguard and BlackRock also appear among the largest shareholders in Australia’s second-largest company, Commonwealth Bank.[16] The top 10 shareholders of Atlassian (5^th largest in Australia) are all from the United States with the largest being Vanguard.[17] Vanguard is also the largest shareholder in Woodside Energy (6^th)[18]. The list is too long for this paper, but note that Westpac Banking Corporation (WBC), which the second-largest bank in Australia, has the BlackRock Group, as its largest single shareholder. The largest single shareholder in Rio Tinto is the BlackRock Group, and so the list goes on. Of course, many of the largest shareholders of Australia’s top 100 companies[19] that are not already described as United States entities may themselves be wholly or partially owned and/or controlled subsidiaries of United States entities. The top 24 Australian companies with significant Vanguard investment of just one of its funds (Vanguard Investments Common Contractual Fund)[20] as at December 2022 is listed below in descending financial value:

This leads to the conclusion that “Australia” (starting to look like United States’ 51^st state, as some authors have written[21]) has a strong economic interest in maintaining good relations with the United States. If the United States were to reduce its defence spending, it could damage the Australian economy and lead to job losses in the defence industry. This could put pressure on Australian politicians to increase defence spending in order to protect jobs and businesses.

4. Public opinion: Australian public opinion is generally supportive of the alliance with the United States. This means that Australian politicians are likely to be sensitive to public concerns about defence spending. If the public were to perceive a threat to Australia's security, it could put pressure on politicians to increase defence spending.

The “Big Three” are major investors in Australian companies and government bonds. The biggest suppliers to the Australian Defence Force (ADF) such as Lockheed Martin and BAE Systems are also major players in the Australian economy. They employ thousands of Australians and generate billions of dollars in revenue each year. These companies and organizations can influence Australian political decisions about military expenditure in a number of ways:

· Lobbying: They can hire lobbyists to influence government policy on issues that are important to them, such as defence spending, taxation, and regulation.

· Financial: using the strength of financial positions to gain the ear of government (e.g., by referencing market influence, tax paid or number of employees engaged) and engage influential consultants (e.g., KPMG in 2018) to provide so-called “independent” reports not vetted by government.[22]

· Revolving doors: the phenomenon of people moving between government and private sector jobs resulting in potential conflicts of interest. One author recently wrote, “The Australian Defence Department’s new Frigates project is a jobs merry-go-round for former military officers, bureaucrats, and weapons makers.”[23]

· Donations: They can make donations to political parties and candidates, which can give them access to decision-makers and influence their policies.

· Public relations: They can use their media influence to shape public opinion on issues that are important to them.

· Direct engagement: They can engage directly with government officials to discuss their concerns and priorities.

It is important to note that there is no evidence that these companies and organizations have ever used their influence to corrupt or undermine Australian democracy. However, there is a growing concern that their growing power could have a negative impact on the political process.

Lockheed Martin Australia is a wholly owned subsidiary of Lockheed Martin Corporation, with 1,200 local staff. Post-AUKUS agreements, it is now one of the largest suppliers of “materiel” (supplies, equipment, and weapons in military supply-chain management), technology, services, and training to the Australian Defence Force. These include guided weapons, naval aviation combat systems, combat aircraft, transport aircraft and space domain awareness.[24] It is the second largest contractor to Australian Defence behind BAE Systems Australia, (a subsidiary of UK company BAE Systems plc: see Appendix).

In the last year or so much has appeared in the media about “tensions” with China. During that time Lockheed Martin’s sales to Australia have ramped up considerably. Some examples include:

1. Involvement with AUKUS submarines: Credible reports suggest that there are three stages to the AUKUS deal. In the first stage, up to four Virginia class submarines would be pre-deployed to Australia from 2027 and temporarily based at HMAS Stirling outside Perth. The United Kingdom may also pre-deploy an Astute class submarine to Perth. The second stage will see Australia acquire US-made Virginia class submarines early next decade and finally secure the new so-called AUKUS fleet in the 2040s. Reportedly, those AUKUS vessels will use a UK-designed platform and integrate US Lockheed Martin-made weapons and combat systems, so they are compatible with the Collins-class and the American sub fleet.[25] [26] delivering on a total plan that will possibly cost taxpayers up to $368 billion over coming decades (in comparison with $90 billion that the cancelled French submarine project was going to cost) constituting the most expensive defence procurement in Australian history by a wide margin..[27]

At the time of writing this paper, Australian Prime Minister Anthony Albanese has gained formal Labor Party approval for his $368 billion AUKUS pledge after a fierce debate on nuclear submarines that saw party members heckle ministers about the risk of a regional arms race that sided with the United States against China.[28] There is certainly growing discontent both in the Australian community generally and specifically within Labor Party ranks about AUKUS[29]. That $368 billion may blow out to half a trillion dollars should in-built “contingencies” eventuate.[30]

2. In addition to the AUKUS pledge mentioned above, according to the Australian Government's Defence Department, the Australian Government has paid Lockheed Martin a total of $21.3 billion for major acquisitions since March 1995 when Lockheed Martin was formed. This includes payments for the purchase of F-35 fighter jets, P-8 Poseidon maritime patrol aircraft, and other military hardware. The largest single payment was $17 billion for the purchase of 72 F-35A Lightning II fighter jets. The F-35 is a fifth-generation multirole fighter jet that is designed to replace the F/A-18 Hornet and the F-111C in the Royal Australian Air Force (RAAF). The first F-35A was delivered to the RAAF in December 2018, and the last is scheduled to be delivered this year. More purchases are proposed.[31]

The second largest payment was $4 billion for the purchase of eight P-8 Poseidon maritime patrol aircraft. The P-8 is a maritime patrol aircraft that is designed to find and track submarines. The first P-8 was delivered to the RAAF in 2017, and the last is scheduled to be delivered in 2023.

The Australian Government has also paid Lockheed Martin for a variety of other military hardware, including missiles, bombs, and electronic warfare systems. For example, in January this year the Australian Government announced the purchase of 20 Lockheed Martin High Mobility Artillery Rocket Systems (HIMARS), and associated hardware, for an estimated cost of $558 million.[32]

In April 2023 Lockheed Martin won the contracts to build sovereign military satellite communication known as JP9102 (MILSATCOM) for the Department of Defence worth roughly $3.3 billion.[33]

The 2023-24 Budget sets out some $9.4billion military equipment project acquisitions with a further $10.1billion “capability sustainment”.[34]

On 28 August 2023 it was announced that Australia has awarded Lockheed Martin $765 million AUD ($487 million US) for the first phase of building what it calls Air6500, (a.k.a. Joint Air Battle Management System - JABMS), which is a system of sensors to replace the in-service Tactical Air Defence Radar System and used to detect aircraft and missile threats at greater ranges and with increased accuracy than the current system. An Australian Defence Department statement says, “This first-of-its-kind system will provide greater situational awareness and defence against increasingly advanced air and missile threats, as well as give the ADF increased levels of interoperability with the United States and allied partners.”[35]

3. Australian universities are already racing to support the government’s ambitions for nuclear submarines under the AUKUS agreement. Universities Australia, representing university managements across the country, has declared their enthusiasm to be “a crucial partner of government in Australia’s defence transformation.” The most recent federal budget announced $127 million in funding and additional places for 4000 students in AUKUS-related courses and programs. The first batch of students in these courses is scheduled to commence next year. The Group of Eight asserts that this funding in STEM disciplines “will help generate that workforce; especially, to support Defence priorities”, and help ensure that “Australia’s required sovereign capability can be realised and on time”. [36]

4. Lockheed Martin has been working with the Commonwealth to fast-track the acquisition of guided weapons, increase and improve local sustainment and maintenance of guided weapons, and establish a domestic manufacturing facility. Lockheed Martin is intending to transfer to Australia the same level of technology and service delivery as in many of their US advanced weapon factories – accelerating the development of advanced guided weapon manufacturing capabilities in Australia.[37]

5. The U.S. State Department cleared more than $6 billion in possible foreign military sales to Australia “as tensions mount with China over a plan to station U.S. ‘nuclear-capable’ bombers in the southern Indo-Pacific country.” Canberra was approved to purchase 24 Lockheed Martin-made C-130J-30 Super Hercules airlifters at an estimated cost of more than $6.3 billion. The agreement includes missile warning systems, infrared countermeasures and other equipment and technology for the aircraft, according to the Defense Security Cooperation Agency.[38]

6. Pentagon officials said that Canberra could provide Washington with a ground to launch testing for its hypersonic and other long-range precision weapons under a trilateral agreement among Australia, the United Kingdom, and the United States (AUKUS) according to an AFP report.[39] Hypersonic missiles are capable of delivering a conventional, and potentially a nuclear payload.[40] The number of operational nuclear weapons has started to rise globally.[41]

7. The Australian Strategic Policy Institute (ASPI) is a defence and strategic policy think tank based in Canberra, Australian Capital Territory, founded by the Australian government, and funded by the Australian Department of Defence. It is chaired by Lieutenant General (Ret’d) Ken Gillespie and is described as “a Commonwealth company that provides policy-relevant research and analysis to inform Government decisions and public understanding of strategic and defence issues.”[42] At the time of formation in 2001 it was 100% funded by the Australian Department of Defence, but this had fallen to 43% in the 2018-19 financial year. By 2020, ASPI received funding from defence contractors such as Lockheed Martin. ASPI has been described by ITNews, The Diplomat and the Australian Financial Review as being one of Australia's most influential national security policy think tanks. [43] Critics chiefly argue that ASPI has talked up the China panic and then proposed only one way to deal with it: more powerful weapons in larger quantities, closer military ties to the United States and an adversarial posture.[44] ASPI is a repeat offender at concealing the interests of its donors, council members and fellows, and other writers it publishes. In turn, Australian media outlets regularly use ASPI for commentary on defence and national security matters yet fail to advise the public of its funding sources. Its core annual funding comes from the Department of Defence, supplemented by other federal departments, but ASPI’s next largest source of funding is the US Government, via the US Defense and State Departments, with an average $1.5 million annually in 2020-21 (17-18% of its funding).[45] This is highly pertinent given ASPI’s increasingly strong anti-China rhetoric.[46]

8. Even children are targeted through programs like the National Youth Science Forum, whose major sponsor is Lockheed Martin.[47]

9. Lockheed Martin Australia is a wholly owned subsidiary of Lockheed Martin Corporation in the U.S. The current CEO of Lockheed Martin Australia is Warren McDonald, who is a retired RAAF Air Marshal. Other Board members have included Kim Beazley, with current members including former CAF Geoff Brown and Amanda Vanstone. Not surprisingly, perhaps, is the fact that they are headquartered in Canberra.

10. Australian Government announcements about weapons spending are increasingly frequent and now almost daily. Recall that Australia increased its arms imports by 23 per cent between 2013–17 and 2018–22. Today (21 August 2023) an announcement was made that Australia will buy more than 200 Tomahawk Cruise Missiles for its navy under a $1.3 billion investment, “as concerns mount over China's military presence in the Indo-Pacific.”[48] While the Tomahawks missiles themselves are not supplied by Lockheed Martin (they are manufactured by Raytheon), in March this year Lockheed Martin received a $99.9-million contract from the US Navy to provide maintenance support services for the Tactical Tomahawk Weapons Control System (TTWCS)[49]. This was awarded because the US State Department had approved the sale of up to 220 Tomahawk cruise missiles to Australia earlier in March, saying it was "vital to the US national interest to assist our ally in developing and maintaining a strong and ready self-defence capability". Defence Industry Minister Pat Conroy said, "As we enter what many are calling the missile age, these will be vital tools for the Australian Defence Force to do its job of defending Australians."

Additionally, this month saw the announcement that the RAAF will acquire more than 60 Advanced Anti-Radiation Guided Missile - Extended Range (AARGM-ER) missiles from the US under a $431 million spend. Again, it will be Lockheed Martin that will equip the Lockheed F-35A combat jet with those (jointly developed by Lockheed and Northrop Grumman) missiles.[50] Again today Defence Minister and Deputy PM Richard Marles mentioned that more than $50 million will also be invested to arm the Australian Army's boxer combat reconnaissance vehicles with (Lockheed Martin’s) Spike Long-Range 2 anti-tank guided missiles. At Labor’s National Conference last week Marles referenced the military build-up in China in support of AUKUS but not the fact that the United States accounts for nearly 40% of global military expenditure and China 13%.[51]

11. The annual Australian defence budget has cracked $50 billion for the first time: predicted defence funding in 2023-24 will be $53 billion between the Department of Defence and the Australian Signals Directorate. Moreover, it will continue to grow, totalling $224 billion over the four years of the forward estimates. Furthermore, the Defence Strategic Review (DSR) recommended accelerating the delivery of some capabilities, or even adding new ones. The government has said they included more long-range strike, domestic guided weapons production and strengthening northern bases. All up, the cost of the DSR in the forward estimates is meant to be $19 billion. [52]

[1] https://en.wikipedia.org/wiki/AUKUS

[2]"Five Eyes Intelligence Oversight and Review Council (FIORC) www.dni.gov.

[3] https://en.wikipedia.org/wiki/Quadrilateral_Security_Dialogue

[4] https://www.thesaturdaypaper.com.au/news/politics/2023/04/15/why-australias-china-strategy-dangerous#hrd

[5] https://www.lowyinstitute.org/publications/how-does-australia-square-aukus-taiwan

[6] https://www.theguardian.com/world/2021/sep/16/cold-war-mentality-china-criticises-aukus-us-uk-australia-submarine-pact

[7] https://www.globalvillagespace.com/australia/us-marines-on-board-military-aircraft-crash-on-tiwi-islands-north-of-darwin/#:~:text=Exercise%20Predator's%20Run%202023%20is,interoperability%20among%20the%20participating%20nations.

[8] https://www.theguardian.com/world/2023/aug/30/aukus-alliance-australia-us-uk-japan-south-korea

[9] https://www.defense.gov/News/News-Stories/Article/Article/3328430/aukus-plan-looks-to-shore-up-deterrence-promote-stability/

[10] https://en.wikipedia.org/wiki/List_of_United_States_military_bases

[11] https://michaelwest.com.au/b-52s-in-australia-unknown-american-troops/ See also https://www.theguardian.com/australia-news/2023/jul/17/supporting-us-military-against-china-could-draw-australia-into-nuclear-war-expert-warns

[12] https://www.abs.gov.au/statistics/economy/international-trade/international-trade-supplementary-information-financial-year/latest-release