The Royal Australian Navy’s HMAS Waller diesel-electric submarine in Sydney Harbour. Photo: AFP
by Neil Newman
by Neil Newman

Did Aukus just torpedo Europe’s ‘united front’ to contain China?

  • The uproar over Australia’s nuclear submarine deal threatens the relationship between the EU and the US, and could push France and Germany into softer positions on China
  • How France and Germany align will hinge on newly elected Olaf Scholz, and may come down to the Germans making a choice between Washington and Beijing

James Bond, embodied by Daniel Craig, pouted his way down the red carpet in London on Tuesday for the premiere of his final adventure as Britain’s favourite secret agent. The Bond film series has transformed many times over its 50-year run, adapting with the times.

Bond films have ranged from camp comedy with David Niven and Roger Moore, to brutal, Cold-War-tinged super-spy thrillers with Sean Connery and George Lazenby in the role, to gritty and modern action with Pierce Brosnan – and Timothy Dalton’s romp to fight Soviet arms dealers alongside Afghan freedom fighters in The Living Daylights falling somewhere strange in between. As Commander Craig hands back his blanks-firing Walther PPK and heads for his favourite pub in Shropshire, we are left wondering: who will be the next “Bond, James Bond”, and where will the source of villains be drawn from?

Given the events of the past few weeks and the tantrums from the French, I’m wondering if Port Antonio in Jamaica gets swapped for something nearer to Bond’s home – perhaps Boulogne – and the screenwriters write in a new French villain we’d love to hate. Perhaps with some heinous scheme to make the world’s stocks of fish and shellfish radioactive.

Daniel Craig stars as James Bond in No Time to Die. Photo: MGM
I jest. But the French are not making themselves very popular with the Brits, Americans, or the Aussies at the moment, with a renewed fight over who gets the fish and kicking off a row over nuclear submarines.

To my mind, all large, ocean-going vessels, whether they float or submerge, should be nuclear, as you don’t have to keep filling the filthy things up with diesel – or worse still, heavy oil. And I must say I think the Chinese may have missed a trick here by not immediately offering the Australians a cheaper alternative to American reactors. China seems to be quite good at building nuclear power stations around the world adapted from Western technology and has a very capable Navy with its own nuclear-propelled vessels.


The furore from the French over losing their lucrative submarine deal with Australia to America has reached almost comic proportions – and the reaction from China has been somewhat snippy, denouncing the new deal with Chinese Foreign Ministry spokesman Zhao Lijian saying the Australians and Americans were “severely damaging regional peace and stability, intensifying an arms race, and damaging international nuclear non-proliferation efforts”.
Given that there is supposed to be a European “united front” on Chinese containment, Paris amazingly started to sound sympathetic to the Chinese point of view, cancelled a UK-France defence summit, said it would reconsider its position in Nato, recalled its ambassadors to the United States and Australia and fired off insults at the British as being “fifth wheel” back-stabbers.
The Brits, with their spare tyres, certainly let loose a post-Brexit wry grin over the affair, and Boris Johnson appeared in parliament looking extra round and fluffy even though it doesn’t benefit the UK much beyond getting one over on the French. The submarine deal has no real financial impact on Britain: the clever electronics that come from BAE Systems will end up in whatever boat the Australians buy.

I am wondering if the united front is no longer as united as it was, and if this parting of ways benefits China in Europe at a time when it is arguably being progressively shut out. Why the French were, or acted, so surprised over the cancellation of contracts, is something of a mystery. Canberra said it warned it was coming.

A US-built Los Angeles-class submarine. Photo: Getty Images


There can be no denying that Australia’s relationship with China has deteriorated quite dramatically since the boatbuilding contract to replace its failing Collins class of subs was signed with France back in 2016. The Japanese tried hard with their rubber-coated and newly designed Soryu class submarine, which according to them is as silent as Ariel passing wind. But it was ultimately won by the French who are a similar physical size to the Aussies – their subs are bigger – and of course China, then Australia’s largest trading partner, would have taken issue with the purchase of Japanese submarines.

As relationships in the Asia-Pacific deteriorated in the wake of the force and speed of Chinese maritime assertiveness, Canberra apparently decided that the French design was no longer adequate. Simply put, the Australians in 2021 feel the need to travel further and for longer than they did in 2016, and there are not many places to stop for a tank of fuel. If everyone stayed coastal just to protect their fish and trade, then there would be no need for such range – but they haven’t.

Apparently, it was Australia that in March started the talks which led to the UK, US and Australian trilateral security pact “Aukus”. The tricky question now is: where does France, or Germany’s incoming government for that matter, fit into this new picture?

For years, US told India it couldn’t share nuclear sub tech. Now this ...

Washington and London are like-minded in the view that countries should join up against China. The French beg to differ, with President Emmanuel Macron in February making this clear in Washington by saying such a strategy is counterproductive. France’s China policy regards the country as both a partner and a rival, a position Britain and the US consider “soft”. It is perhaps better described as ambivalent, almost trending towards indifferent, but in any case, it does not sit well with other allies in the West.
Germany’s former chancellor Angela Merkel also tended to err on the side of caution, seeing China as being of great benefit to German industry – in particular car manufacturing. The Comprehensive Agreement on Investment (CAI) between the European Union and China had been agreed in principle in December 2020. But renewed concerns about technology transfers and allegations of use of forced labour in China made it unsustainable, and in May the deal fell apart as China sanctioned several European Parliament members in retaliation to EU sanctions on Chinese officials believed to be connected with human rights abuses. Which prompted the EU to suspend CAI.

The Australians have clearly gotten more nervous about the Chinese presence around them, which has been partly their own fault by leasing off the Port of Darwin to China and then, quicker than a frightened Sebastian can scuttle under a rock, the Chinese reveal plans for a maritime products industrial park on other side of the Torres Strait in Papua New Guinea.

I believe that a lot of the Chinese traffic in the South China Sea is ultimately about food, in this case lobsters, but their close presence is unnerving to say the least for Australia. So, if it did come down to fisticuffs over fish, just as it did during the cod wars in Europe, would the French have the Aussies’ back like the Americans or the Brits would? Let’s hope it never comes to that.
Hell hath no fury like a Macron scorned. Photo: Reuters


Over the past year there has been murmuring that suggests not all of Europe’s countries are keen to fall in line behind the US in its staunch opposition to China. Does this sub debacle perhaps mean that China will have at least one more sympathetic ear in Europe; France, despite all that has happened? Perhaps.


Also, does it mean the relationship between Britain and France deteriorates further? I’d say it’s hardly about to get much better, but given that the French are – dare I say it – prone to emotional outbursts, they will probably come around in the long term. I’m still not quite sure why the French are so upset with the Brits over this.

How France and Germany align on China, however, is important. This hinges on how the newly elected Chancellor Olaf Scholz leads the country, and it may unfortunately come down to the Germans making a choice between the US and China, and splitting Europe on the matter.

Why is Southeast Asia so concerned about Aukus?

So, as I settle into my seat in the cinema to enjoy Bond’s latest escapade – the early reviews are very encouraging – hopefully I can have an icy-cold beer and a bucket of popcorn, which was denied me when I last went to Palace IFC cinema more than a year ago and I’ll shut out the real world for a while. At some point though, the very real question returns of who actually was the villain in scuppering the submarine deal and how do we deal with the consequences?


Right now, I really have no idea. But somehow, I find it all very fishy.

Neil Newman is a thematic portfolio strategist focused on pan-Asian equity markets