Eyeing China, Biden and allies unveil nuclear-powered submarine plan for Australia

SAN DIEGO, March 13 (Reuters) - The leaders of the United States, Australia and Britain on Monday unveiled details of a plan to provide Australia with nuclear-powered attack submarines, a major step to counter China's ambitions in the Indo-Pacific.

In a joint statement, U.S. President Joe Biden, Australian Prime Minister Anthony Albanese and British Prime Minister Rishi Sunak endorsed plans for the so-called AUKUS project, first announced in 2021, at the U.S. naval base in San Diego, California, principal home port of the U.S. Pacific Fleet.

Under the deal, the United States intends to sell Australia three U.S. Virginia class nuclear-powered submarines, which are built by General Dynamics, in the early 2030s, with an option to buy two more if needed, the joint statement said.

The statement from the leaders said the multi-stage project would culminate with British and Australian production and operation of a new class of submarine - SSN-AUKUS - a "trilaterally developed" vessel based on Britain's next-generation design that would be built in Britain and Australia and include "cutting edge" U.S. technologies.

At the ceremony in San Diego, Biden stressed that the submarines would be nuclear-powered, not nuclear armed: "These boats will not have nuclear weapons of any kind on them," he said.

Britain will take delivery of its first SSN-AUKUS submarine in the late 2030s, and Australia would receive its first in the early 2040s, Albanese and the British statement said.

The vessels will be built by BAE Systems and Rolls-Royce, the British statement said.

The agreement will also see U.S. and British submarines deployed in Western Australia to help train Australian crews and bolster deterrence, a senior U.S. official said. The joint statement said the United States and Britain would begin these rotational deployments as soon as 2027 and the official said this would increase to four U.S. submarines and one British in a few years.

This first phase of the plan is already underway, officials said.

AUKUS will be the first time Washington has shared nuclear-propulsion technology since it did so with Britain in the 1950s.

China has condemned AUKUS as an illegal act of nuclear proliferation. In launching the partnership Australia also upset France by abruptly cancelling a deal to buy French conventional submarines.

Briefing a small group of reporters on Friday, Sullivan dismissed China's concerns and pointed Beijing's own military buildup, including nuclear-powered submarines.

"We have communicated with them about AUKUS and sought more information from them about their intentions," he said.

Big questions remain about the plan, not least over strict U.S. curbs on the extensive technology sharing needed for the project and about how long it will take to deliver the submarines, even as the perceived threat posed by China mounts.

In a reflection of stretched U.S. production capacity, the senior U.S. official told Reuters it was "very likely" one or two of the Virginia-class submarines sold to Australia would be vessels that had been in U.S. service, something that would require congressional approval.

Australia had agreed to contribute funds to boost U.S. and British submarine production and maintenance capacity, the official said.

He said Washington was looking at "double digit billion" investment in its submarine industrial base on top of $4.6 billion already committed for 2023-29 and that the Australian contribution would be less than 15 percent of the total.

Albanese said he expected the AUKUS deal would result in A$6 billion invested in Australia’s industrial capability over the next four years and create around 20,000 direct jobs over the next 30 years. He said the commitment from the Australian government would require funding amounting to around 0.15% of GDP per year.

Australia's nuclear-powered submarine programme with the United States and Britain will cost Australia up to A$368 billion ($245 billion) by 2055, a defence official said.

One senior U.S. official said AUKUS reflected mounting threats in the Indo-Pacific, not just from China towards self-ruled Taiwan and in the contested South China Sea, but also from Russia, which has conducted joint exercises with China, and North Korea as well.

Albanese said on Saturday that South Australia and Western Australia would be big beneficiaries of AUKUS. "This is about jobs, including jobs in manufacturing," he said.

Britain, which left the European Union in 2020, says AUKUS will help boost its economy's low growth rate.

Sunak said AUKUS was "binding ties to our closest allies and delivering security, new technology and economic advantage at home."

Australia's Defense Minister Richard Marles said last week the submarines would ensure peace and stability across the Indo-Pacific, Southeast Asia and the Indian Ocean.

"It is difficult to overstate the step that as a nation we are about to take," he said.

Political analysts said that given China's growing power and its threats to reunify with Taiwan by force if necessary, it was also vital to advance the second stage of AUKUS, which involves hypersonics and other weaponry that can be deployed more quickly.

U.S. officials said Monday's announcements will not cover this second stage.