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    Apr 27, 2016

    Japan snubbed as Australia awards France $52b contract


    AUSTRALIA snubbed a bid from Japan to award one of the world's biggest defence deals to France's Direction des Constructions Navales (DCNS), opting for a submarine contract that will generate jobs in Australia and minimise a backlash from its major trading partner China.

    The outcome is a double loss for Japan, which saw the contract as a step towards opening up its defence industry two years after the government lifted a decades-old ban on arms exports, Bloomberg pointed out.

    Prime Minister Shinzo Abe has also sought to boost ties with Australia as China asserts its military ambitions in the region.

    The offer by DCNS for the A$50 billion (S$52 billion) contract to build 12 submarines trumped the bid by a Japanese consortium led by Mitsubishi Heavy Industries and another by Germany's Thyssenkrupp.

    DCNS will build the fleet in Adelaide and the project should create about 2,800 jobs, said Australian Prime Minister Malcolm Turnbull in announcing the winner yesterday.

    The DCNS-designed Shortfin Barracuda submarine - which he described as "the most sophisticated naval vessels being built in the world" - will replace Australia's ageing Collins Class vessels and will be diesel-electric powered. 

    Earlier, in a defence white paper, Australia said half the world's submarines will be based in the Indo-Pacific region by 2035 and vowed it would build 12 new submarines, which will likely enter service in the early 2030s.

    Japan was the early favourite and, in November, Tokyo said handing it the contract would help bolster regional security, reported Agence France-Presse.

    Earlier this month, The Australian newspaper cited United States officials supporting Japan, not just for the quality of its submarine but also for the development of deeper cooperation between Washington, Canberra and Tokyo at a time of China's rise.

    But for Australia, cooperating with Japan risked angering its biggest trading partner China.

    Japan had proposed a longer version of its Soryu-class submarine with advanced stealth capabilities, said China's Global Times yesterday.

    But Australia's main interest is in Japan's lithium-ion propulsion technology, which Tokyo is not yet ready to share, according to the newspaper.

    Australian submarines operate across huge areas, from the cold Southern Ocean to the tropics and, so, require range and endurance to cope with the varied geographic and oceanographic conditions they encounter.