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Australia Stepping Up
Defense Contractors Compete for Aussies’ Business

After the replacement of Australian Prime Minister Tony Abbott with Malcolm Turnbull, we reported on the reduced domestic appetite for a $50 billion submarine deal with two Japanese companies, Mitsubishi and Kawasaki. Now it appears that where many saw doubts about the deal’s future, Germany’s ThysenKrupp and France’s DCNS see an opportunity. The FT reports that these companies have stepped up their bidding efforts to win the contract to build new subs for Australia. The push by the companies includes aggressive attempts to woo unionized workers and their executives, and the Europeans’ hopes were raised this weekend after French firm Thales won a $917 million contract to build light armored vehicles for Canberra.

Last month, some analysts thought that Turnbull, who is more conciliatory than his brash predecessor, would turn Australia away from Japan in an effort to avoid confronting Beijing. But while Japan may yet lose out here, the dangers to the submarine deal have so far come for domestic, not international, reasons. Unions aren’t interested in tweaking Canberra’s geopolitical strategy. Rather, they just want the $50 billion to create jobs at home, and the two European companies seeking the contract may be more willing to help on that front than Japan. It’s now pretty clear that someone will get the submarine contract, and the bottom line is that, whether its financed by Europe or Japan, the militarization of Australia isn’t good news for China.

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