Submarines Down Under
Why Did Japan Lose Out on the Aussie Submarine Bid?

Canberra sank the hopes of Tokyo last month, selecting France’s DCNS over Japan’s Mitsubishi and Kawasaki for a $40 billion submarine contract. Japan had been the heavy favorite for the deal last year and even, according to some reports, as recently as March. But the whole thing appears to have been doomed for many months, according to Reuters:

In particular, Japan misread the changing political landscape in Australia as [former Prime Minister] Abbott fell from favor. The Japanese group, which included Mitsubishi Heavy Industries (MHI) and Kawasaki Heavy Industries (KHI), also failed to clearly commit to providing skilled shipbuilding jobs in Australia. And Tokyo realized far too late its bid was being outflanked by the Germans and particularly the French, the sources involved in the bid said.

France, on the other hand, mobilized its vast and experienced military-industrial complex and hired a powerful Australian submarine industry insider, Sean Costello, who led it to an unexpected victory.

Prime Minister Abbott was a big force behind the deal, and when he was replaced in an intra-party coup by Malcolm Turnbull, many wondered if Japan was out. But it appears that the Japanese were playing the game poorly even before Abbott’s fall:

“Even though we were in the competition we acted as though nothing had changed,” said one Japanese government source involved in the bid. “We thought we had already won, so why do anything to rock the boat?”

The Japanese did not attend a conference for the Future Submarines project in March [2015], failing to understand the importance of the crucial lobbying event and leaving the field to their German and French rivals, sources within the Japanese bid said.

Japan’s belated attempt to engage with potential local suppliers at a follow up event in August 2015 went badly.

Ultimately, however, Japan’s lobbying failures may not have been the final nail in the coffin—it was the submarine designs themselves that made the difference. The Japan Times:

Canberra chose a French design for its next-generation submarine fleet partly because it can easily be refitted for nuclear propulsion by the time the vessels enter service, an influential Australian business daily has reported.

Why is nuclear so important to Canberra?

In general, a nuclear-powered submarine is noisier than a conventional one but can cruise underwater much longer without refueling or surfacing.

A nuclear submarine would allow Australia to reach China, the northern Pacific or the western edge of the Indian Ocean, the Australian newspaper reported.

Throughout this whole process, Beijing has been in the background. A deal with Japan—China’s chief rival in the region—would have been seen as a loss for Beijing and a victory for Tokyo in Asia’s game of thrones. Deciding not to go with Japan was viewed by some analysts as an a potential olive branch to Beijing. Union pressure to build the submarines using Australian labor and military concerns about the proposals themselves were certainly important factors, but now it looks like Japan lost because Canberra wanted a fleet which could exert more pressure on the Chinese, and Japan’s subs were not quite up to the task. If that was indeed a factor, it adds an ironic twist at the end of a dramatic and fascinating saga.

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