Sunak signs Britain’s biggest defence deal in decades

Rishi Sunak is poised to sign Britain’s biggest defence deal in decades – a multi-billion-pound submarine agreement with the US and Australia to counter China’s growing might in the Pacific.

In a summit this evening in San Diego, California alongside President Joe Biden and Australia’s Prime Minister, Anthony Albanese, Sunak will unveil the details of a plan to collaborate on building at least eight nuclear-powered submarines for the Australian navy by the 2040s. They’ll be designed by Britain, built in Australia, and use US technology and weapons.

As well as beefing up Western military capabilities the deal looks likely to be a godsend for British defence manufacturers. Firms such as BAE Systems and Rolls-Royce are expected to hoover up a good slice of the contracts for the $65bn project.

Eighteen months ago, the US, UK and Australia signed up to AUKUS, a wide-ranging military pact between old friends designed to contain Chinese naval ambitions in the decades to come. 

Submarines are one element of the agreement, which also involves sharing information and technology in areas ranging from intelligence and quantum computing to the acquisition of cruise missiles.

Alongside the submarine announcement comes the latest iteration of the UK’s Integrated Review, which sets out the government’s priorities on security, defence, development and foreign policy. (Sunak has pledged to periodically update the review, first published in March 2021, to ensure it keeps pace with evolving threats.)

The paper’s focus is squarely on China. It warns that the risk of escalation on the international stage is “greater than at any time in decades” and says Britain must be prepared to take “swift and robust” action against China to protect its interests. Yet the paper stopped short of re-classifying China as a “threat”, instead calling it an “epoch-defining challenge”.

The distinction matters. Sunak sees it as a pragmatic attempt to cooperate with China in areas such as climate change and global health, including pandemic preparedness, while acknowledging the serious strategic problems it poses.

China hawks in the senior ranks of the Tory party and on the backbenches aren’t best pleased. Sir Iain Duncan Smith has urged the government to “make its mind up about China and stop sitting on the fence,” and said ministers are “panic-stricken” about upsetting Beijing.

The Integrated Review and the AUKUS submarine deal fit with the idea of Britain as still being a big player in world affairs, which in many respects it is. The counter-argument is that Britain must remain realistic about its capabilities and reach, and be careful not to spread itself too thinly.

The defence spending debacle is a case in point. Sunak yesterday refused to pledge permanently higher defence spending, saying instead that his “ambition” is for spending to reach 2.5% of GDP, although no timeframe was given. The PM is allocating an extra £5bn to the MoD budget this year, just half what Ben Wallace, the defence secretary, had asked for.

As security specialist Edward Lucas notes, Britain’s eagerness to support allies on the global stage, while valuable, may distract from security issues closer to home: “The Americans will not thank us if our Indo-Pacific ambitions mean more European defence tasks land on their overburdened shoulders.”

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