Thayer Consultancy Background Brief:

ABN # 65 648 097 123

AUKUS-France Crisis: Impact
on the Indo-Pacific
September 20, 2021

We request your assessment of the Australia-France-U.S. submarine crisis and its

implications for the South China Sea.
Q1. France said that Australia’s new submarine agreement with the U.S and UK is “a
stab in the back.” As an Australian reseacher, what is your evaluation?
ANSWER: For the past nine years, Australia and France have been developing a
defence-security partnership. In 2012, they adopted a Joint Statement of Strategic
Partnership. In 2016, France and Australia signed a deal for France to build
conventional submarines for Australia.
After Emmanuel Macron was elected president of France, he =put considerable time
and effort into building on this foundation. France and Australia issued a Joint
Statement of Enhanced Strategic Partnership in 2017 to strengthen their engagement
in Indo-Pacific giving priority to political, defence, security and intelligence ties. In
2018, the two countries adopted a Vision Statement on the Australia-France
Relationship.
The submarine deal with France’s Naval Group has been a problem child with cost
overruns and extended deadlines. There is no doubt that Prime Minister Scott
Morrison appraised President Macron of these difficulties when they met face-to-face
this year. But Morrison did not tell Macron that because of rapidly changing strategic
circumstances that French submarines would be replaced by nuclear-powered U.S.
designed subs.
President Macron was never taken into confidence about months-long talks between
Australia, the United States and the UK. Macron only learned of the AUKUS
partnership the night before it was announced. Macron and France have every right
to feel betrayed because of Morrison’s inept handling of this affair. This undermines
the efforts undertaken over the last nine years for France and Australia to work as
strategic partners to ensure a peaceful and stable Indo-Pacific.
Q2. France considers that it is in a “crisis” with Australia and the United States after
the cancellation of a multi-billion dollar submarine order. As France is one of parties
that joined Western efforts in countering China’s aggression in South China Sea, how
does the crisis impact on these Western efforts? Does it pose any security concerns or
risks in South China Sea?
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ANSWER: The creation of the AUKUS trilateral security partnership is a momentous

strategic development that binds Australia to the United States for decades to come.
But other equally important developments are taking place besides the transfer of
nuclear propulsion technology. The Quad is about to hold its first face-to-face meeting
to map out a strategy to counter China’s rise in the Indo-Pacific. Quite separately
Australia has firmed up bilateral defence relations with Japan, India, Indonesia and
South Korea.
The United States’ defence footprint in Australia is set to grow larger with an increase
in the rotational deployment of U.S. Marines, and the stationing of U.S. warships and
military aircraft at Australian military bases. Australia will acquire long range missile
strike capabilities well before its nuclear-powered submarines are launched.
France’s strategic interests in protecting its territories in the Indian Ocean and South
Pacific will not change, nor will France’s interests in keeping the sea lines of
communication that pass through the South China Sea safe and secure. Time will tell
if France decides to go it alone. This will only marginally affect the balance in the South
China Sea where the U.S., Japan and Australia will play a greater role.
Q3. Does the crisis benefit China in any ways?
ANSWER: China may be able to reap some short-term political gains from this crisis in
Europe. But China must now confront the reality that its military modernisation will
face an even more formidable challenge in the South China Sea, not only now but in
the decades ahead when Australia acquires eight nuclear- powered submarines.
Q4. There’s a proposal that the United States could achieve three objectives by
purchasing a number of Shortfin Barracuda submarines from France and then giving
them to Vietnam.1 By doing so, the Biden administration could repair relations with
America's oldest ally. Second, it would supply a rising security partner with a potent
means of countering China's imperialism. Third, it would test President Emmanuel
Macron's commitment to international security in the South China Sea.What is your
evaluation of this idea? Is it a possible option to resolve the crisis between the three
countries?
ANSWER: This proposal is pie in the sky. Vietnam already has possession of six Russian-
manufactured Varshavyanka-class (Kilo-class) conventional submarines. Vietnam is
totally dependent on Russia and a handful of countries familiar with Russian military
technology (India, Belarus, Ukraine) for its navy, including its submarine fleet. It would
be a costly logistics nightmare to integrate French technology into Vietnam’s force
structure. It is not clear if Vietnam even has the capacity to integrate the French subs
in its navy.
It is also unclear if Vietnam has in fact developed a doctrine for its submarine fleet to
complement its maritime strategy. Besides, a handful of French Shortfin Barracuda
submarines would not alter the naval balance of power in the South China Sea, given
China’s current rate of producing submarines.

1
See https://www.washingtonexaminer.com/opinion/us-should-test-frances-seriousness-by-buying-
its-submarines-for-vietnam.
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There are four other factors that need to be taken into account. First, Vietnam has
noticeably slowed the acquisition of big-ticket defence platforms in recent years due
to the maintenance and upkeep costs of its current inventory. Acquisition of the
Shortfin Barracuda submarines would only exacerbate this.
Second, Vietnam has a long-standing defence policy of three no’s expanded to four
no’s in late 2019. These are: no military alliances, no foreign military bases, not joining
up with one country against a third party, and no first use of force. Vietnam cannot be
bribed into joining the U.S. to oppose China.
Third, despite the South China Sea dispute, bilateral relations between Vietnam and
China are progressing reasonably well at present.
Fourth, it is questionable whether U.S. law and/or the current Congress would
authorize such a deal.
Q5. Does the AUKUS benefitsASEAN countries that are claimants in South China Sea?
Will Vietnam be one of the key countries in the alliance’s strategies?
ANSWER: ASEAN countries, including Singapore, do not want to be forced into
choosing sides. But the majority privately view a continuing U.S. presence as stabilizing
to the extent it constrains China’s behaviour. It will be the combination of the Quad
plus AUKUS that will determine the future balance of power in the region. This will
buy time for ASEAN claimants to recover from the COVID-19 pandemic and develop
their economies. But is should be made clear that counter-balancing China’s military
modernization is not the same thing as resolving territorial disputes in the South China
Sea.
Vietnam will play a significant role as an emerging middle power. It will seek to
strengthen its autonomy for independent action and avoid aligning itself with either
the United States or China. Significantly, Vietnam added a caveat to its four no’s. Its
2019 Defence White Paper added this rider, “Depending on circumstances and specific
conditions, Viet Nam will consider developing necessary, appropriate defence and
military relations with other countries…” China is on notice that if it applies too much
pressure on Vietnam, Vietnam could turn to the United States to counteract Chinese
intimidation.

Suggested citation: Carlyle A. Thayer, “AUKUS-France Crisis: Impact on the Indo-

Pacific,” Thayer Consultancy Background Brief, September 20, 2021. All background
briefs are posted on Scribd.com (search for Thayer). To remove yourself from the
mailing list type, UNSUBSCRIBE in the Subject heading and hit the Reply key.

Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.