Australia Risks National Security with Japan Sub Deal

Australia would be risking both its national security and damaging its economy by buying next-generation submarines from Japan instead of building them at home, the opposition leader said on Tuesday, amid growing speculation over a possible deal.

Australia has been looking for partners to help it build about a dozen diesel-electric submarines to replace its aging Collins-Class fleet, with a decision set for early 2015.

But its conservative government has signaled it could abandon a pledge to build the ships at home, exploring instead an off-the-shelf model, with Japan appearing the front runner.

Canberra is worried about the A$40 billion ($37 billion) estimate for the home-grown option, but risks further alienating working-class voters still smarting from the recent decisions by Ford Motor Co, Toyota Motor Corp and General Motors Co to cease manufacturing in Australia.

Opposition leader Bill Shorten blasted the hypothetical deal as politically and economically short-sighted during a visit to the South Australian shipyard where the subs are due to be built.

"No one can predict every threat or future conflict, but we do know that Australia will remain an island nation. And submarine- and ship-building is a strategic asset that we can't let wither and die," he said.

Any deal would signal a major expansion of Japanese Prime Minister Shinzo Abe's controversial drive for a more active military after decades of pacifism. Selling a fleet of subs would mark the first time since at least the end of World War Two that Japan had sold a complete weapons platform overseas.

Options under discussion run from working jointly to develop the technology, to Australia importing the engines and building the rest, to building the fleet in Australia under licence from Japan, to Canberra buying finished subs designed and built by Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd, sources say.

By Matt Siegel (C) Reuters 2014.