German submarine builder warns Australia of Japanese risk

A German executive vying for a lucrative Australian submarine contract on Thursday said that awarding the contract to Japan could damage Australia's relationship with China.

German's ThysennKrupp Marine Systems, Japan's Mitsubishi and French company DCNS are in the running to build 12 conventional submarines that the Australian navy expects will cost at least 56 billion Australian dollars ($43 billion). The government expects to award the contract this year, with Japan regarded as a favorite early in the bidding process due to its close military relationship with Australia and the Unites States.

Hans Atzpodien, the German company's chairman, described the Japanese bid as a choice for Australia between its relationship with China, its biggest trading partner, and Japan, its second biggest partner.

"Maybe it is an advantage dealing with us not to be in a position where you have to — let's say — decide between certain heavyweights of the Pacific area," Atzpodien told Australia's National Press Club.

Japanese defense officials argue that the military partnership between Japan and Australia will enhance peace and stability, especially maritime security, in the Asia-Pacific region amid China's military buildup in the East and South China seas.

The submarine deal would be Japan's first fully-fledged military technology transfer since World War II.

Australian government ministers have expressed no preference for any bid.

Former Prime Minister Tony Abbott said during a speech in Tokyo last month that for Japan, the deal was strategic while for the others, it was of commercial value.

None of the contenders have ever built a conventional submarine large enough to meet Australia's long-distance requirements.

Germany is proposing a variation of its Type 214 submarine made for Australian specifications called a Type 216. France is offering a diesel-electric version of the Barracuda-class nuclear submarine under construction for the French navy. Japan proposes a longer version of its Soryu-class diesel-powered propulsion system with advanced stealth capabilities.

Atspododien said on Thursday that the Germans could build all 12 subs in Australia for AU$20 billion — less than half the cost that Australia is budgeting for.

Hugh White, Australian National University professor of strategic studies, warned that Japan's long-term cooperation in the submarine contract might hinge on Australia forming an alliance that could bring Australia into conflict with China.

"Tokyo expects that in return for its help to build our submarines, it would receive not just many billions of dollars, but clear understandings that Australia will support Japan politically, strategically and even militarily against China," White wrote in a Fairfax Media column this week.

U.S. Pacific Fleet commander Adm. Scott H. Swift told reports in Canberra on Wednesday that the United States would support Australia on any choice of submarine. The Chinese Embassy in Canberra did not immediately respond to a request for comment. By ROD McGUIRK for Asia Times