We could be less than a week away from a crisis in US-Australia relations.
On 12 June, the Financial Times published a scoop: the Pentagon is reviewing the AUKUS agreement, a deal which includes the supply to Australia of three to five US-built Virginia-class nuclear-powered attack submarines. The FT story said the review “was set to take 30 days”. That period expires on Friday, 11 July.
Chances are, some face-saving solution will be found and a crisis averted. But President Trump and his administration are mercurial.
Why a crisis? For one thing, because US Undersecretary of Defence Elbridge Colby, who is leading the review, has previously expressed scepticism about selling submarines to Australia. When news of the review emerged, Representative Joe Courtney, chief advocate for AUKUS in the US Congress, immediately spoke as if the entire deal was under threat: “To walk away from all the sunk costs invested by our two closest allies, Australia and the United Kingdom, will have far-reaching ramifications.”
Observers were also quick to point out that US Defence Secretary Pete Hegseth’s speech to the Shangri La Dialogue in Singapore on 31 May did not reference AUKUS. But in Hegseth’s meeting with Australian Defence Minister Richard Marles at the same forum, the American did make a rather brusque demand for a hike in Australian defence spending. Finally, there’s the fact that US shipyards are struggling to increase production of submarines to meet demands from both the US and Australian navies.
All of this has encouraged the idea that the review is designed either to pressure Australia to commit more money to the American shipyards that produce Virginia-class submarines (and to its defence budget generally), or to create a pretext for cancelling the submarine sale.
The best reason to think nothing will change is the one offered by Representative Courtney: “There is no ticking clock that says that a decision has to be made in 2025.”
A few caveats: first, the initial FT report said that the Pentagon was not prepared to comment on the timing of the review, so it might take longer than 30 days. Or it might already be done. Second, we shouldn’t necessarily expect a detailed public report at the end – this is an internal review. Third, and most importantly, while this review could provoke a crisis, the odds are still against it.
The preferred Australian government interpretation of this review is perfectly plausible: this is simply what new administrations do when they want to run the ruler over decisions made by their predecessors. Furthermore, as Courtney said: “There is no ticking clock that says that a decision has to be made in 2025.” The United States has plenty of time to cancel the submarine transfer, he seems to be saying, so why act now?
Of course, that rationale will not be particularly reassuring to Canberra because if the plug were to be pulled, Australia would need all the time it can get to arrange an alternative.
Even if cancellation of the Virginia deal is unlikely, the review could still provoke a crisis. Prime Minister Anthony Albanese has repeatedly defended his government’s defence spending, and pointedly rebuffed Hegseth’s demand for more by saying that “we’ll determine our defence policy”. If the Pentagon’s review really is designed to leverage higher defence spending out of Australia, the PM will either have to perform a humiliating backdown or stand his ground, thereby threatening the submarine sale. The speech Albanese delivered on the weekend suggests he is not preparing to back down.
Chances are, some face-saving solution will be found and a crisis averted. Or maybe the review will simply find that the project is on schedule, and recommend a “steady as she goes” approach. But US President Donald Trump and his administration are so mercurial that a dramatic reversal of support for the Virginia-class submarine deal, or the intensification of the administration’s campaign to get Australia to spend more on defence, are both distinct possibilities. Canada, Denmark, Ukraine, Panama and NATO have all suffered crises in their relations with Washington in recent months. Why would Australia be exempt?
This article is not the first to see trouble ahead. Evan Feigenbaum of the Carnegie Endowment made many similar points in June, when he argued that Washington seems unaware of the differences in Australian and American worldviews lurking beneath the apparent unity of purpose. But Feigenbaum’s conclusion (“The United States and Australia have everything to gain from a vastly enhanced alliance”) belies his own analysis. Given the risks exposed by this Pentagon review, Australians should be asking: wouldn’t the alliance be more secure and easier to manage without the Virginia-class submarine project?
