Geopolitical tectonics: Aukus, NATO and the European army

In the third decade of the 21st century geopolitics is evolving rapidly. Are we witnessing the realignment of the western alliance that has held together for nearly 80 years? And, if so, what will be the consequences, asks Victor Hill.

History unfolding

Before we consider France’s response to the announcement of the Aukus pact at 10pm UK time on Thursday 16 September, we need to review some key geopolitical developments that have been unfolding over the summer.

America’s ungainly retreat from Afghanistan, which permitted the Taliban to sweep back to power after 20 years on the run (and which was characterised by minimal consultation of America’s NATO allies), confirmed the suspicion in Europe – and not just in Paris – that the US is an unreliable ally and that the alliance which it leads is unfit for purpose. President Macron described NATO as “brain dead” last year, so this is not an entirely new idea. As I explained here recently, the operation in Afghanistan was a NATO mission, led of course by the US, which came about when Washington invoked Article 5 of the North Atlantic Treaty after the tumultuous events of 9/11.

Also, the idea that Europeans would be better off with an integrated defence network of their own (normally referred to by mainstream media as a European army, though it would be much more than that)– has been gaining traction in Europe due to the pandemic and the fact of an accomplished, hard Brexit. This is about much more than the anti-American sentiment which is prevalent amongst the French political elite. Many Europeans consider that Europe punches below its economic weight on the world stage because its diplomatic and military assets are so fragmented.

The European Union without the UK has a population of about 445 million people, though about 60 percent of that figure is accounted for by just five countries – Germany, France, Italy, Spain and Poland. And the EU has a nominal GDP of well over $15tn. That is nearly as big as China’s GDP and nine times bigger than Russia’s. Yet Europe lacks “strategic autonomy” and a coherent defence identity.

For the French, the answer to each successive European crisis – from the sovereign-debt wobble to the coronavirus pandemic – is always ‘more Europe’. In late August, EU defence ministers met to discuss plans to create a 5000-strong, rapid-reaction force which the EU could deploy globally at short notice. Officials hope to have firm proposals ready by November and finalised by next March. Yet, in fact, the EU has had two battlegroups, each of 1500 soldiers, standing by since 2007, which have never been deployed. Efforts to send troops to Chad and Libya under the EU banner floundered.

Furthermore, during the pandemic, Australia has emerged as a key obstacle to China’s relentless pursuit of influence and assets throughout the strategically vital Indo-Pacific region. China, which is ramping up its defence expenditure, has adopted a remarkably aggressive posture towards our Australian friends. When Australian prime minister Scott Morrison suggested that there be a UN-led investigation into the origins of the coronavirus, the Chinese imposed stiff tariffs on Australian wine, seafood and coal. The Australian government was also vocal in its criticism of China’s strangulation of democracy in Hong Kong and of human-rights abuses in Xinxiang. The Aussies have finally decided it’s time to declare their hand.

In addition, an increasingly explicit Russia-China pact is seeking to undo the post-1945 settlement from which the US emerged as global hegemon. The Sino-Russian foreign ministers’ summit in July vowed to “support each other’s efforts to safeguard national sovereignty”.

President Xi dreams of dismantling the scaffolding of American influence across the world and of replacing it with a Chinese version. An editorial in the Global Times (the mouthpiece of the Communist Party of China) recently celebrated the fact that Singapore is now “neutral” on the issue of Taiwan. The only countries that the US “can fool into taking sides against China are tiny ones like Lithuania”, the piece opined. Lithuania recently infuriated China by accepting a Taiwanese ambassador.

What is Aukus?

The pact is much more than a massive arms deal, in which Australia buys nuclear-powered submarines from the US instead of diesel-electric submarines from France – with Britain acting as ‘cheerleader’. In practice, it is a long-term security partnership in which Britain will progressively share with Australia the technology and experience garnered over more than 60 years of running a nuclear-powered submarine fleet.

Nuclear-powered submarines will endow Australia with the capacity to patrol the Pacific and Indian Oceans – and the South China Sea. Australia is a continental-sized nation: indeed its land area, at 7.692 million square kilometres is much bigger than that of the EU. Even just to patrol their own territorial waters, the Australians need submarines with much longer ranges than the French alternative. Canberra has been signalling this to Paris for more than one year now.

What the French don’t seem to understand is that there is already a “fraternal association of the English-speaking peoples” (as Churchill put it) in the realm of defence. The Five Eyes (US, UK, Canada, Australia and New Zealand) have been seamlessly sharing foreign intelligence for decades. This works well because the five nations literally speak the same language, and their intelligence services share a fundamentally similar modus operandi – covert operations which are ultimately subject to democratic scrutiny.

In the digital age in which asymmetric warfare abounds – such as computer hacking – intelligence and state-sponsored cyber-security are of paramount importance. As General Sir Patrick Sanders said recently, our militaries “need more Qs than 007s”. Defence, these days is not just about submarines and fighter-bombers: it is also about high-altitude drones, satellites, cloud computing, AI and sophisticated surveillance systems that ‘join the dots’. The Aukus pact embraces cybersecurity, AI, quantum computing and undersea technology.

Anecdotally, Five Eyes has forestalled many a threat and is the envy of France’s DSG and Israel’s Mossad. Of course, four of the five members of this pact share the same head of state – HM Queen Elizabeth II. A French business contact of mine was shocked some years ago when he arrived in Sydney and purchased local currency, only to find the Queen staring back at him. What’s more, the UK and Australia have recently concluded a trade agreement. Ian (Lord) Botham has been despatched down under as UK trade envoy.

Aukus may also be seen as ancillary to the defence pact concluded last year by the ‘quartet’ – the US, Japan, India and Australia (I don’t seem to remember the Europeans complaining about that one). The Indo-Pacific is the fastest-growing region of the global economy and is also the most resource-hungry. Two-thirds of the world’s middle class will reside in Asia by 2030. It is already the source and destination of 17.5 percent of UK trade. Huge swathes of global trade pass through pinch points such as the Straits of Malacca. Large parts of the South China Sea are claimed by China, which has territorial disputes with the Philippines, Vietnam, Malaysia and others.

The presence of a British task force in the Indo-Pacific led by our new aircraft carrier, HMS Queen Elizabeth has generally gone down well in the region. The former Japanese prime minister, Shinzo Abe, was among those suggesting that the Royal Navy would be a welcome presence. These countries want the major trade routes to remain open and unhindered by the Chinese.

Aukus will become an important mechanism for technology exchange. It will create jobs in Barrow-in-Furness and in Glasgow, although final assembly will take place in Adelaide. Australia will become just the seventh nation with a nuclear-powered fleet. The US and the UK have been partners in nuclear technology since the Manhattan Project (1942-45); but the last time that the US shared nuclear propulsion technology with the British was in 1958. The propulsion systems used in the UK’s fleet of Trident submarines were developed and maintained at home by, amongst others, Rolls-Royce, British Aerospace and Babcock.

While America will remain the dominant partner, kinship ties count for much. The magnificent Shrine of Remembrancei in Melbourne is a tribute to the blood of Australians and New Zealanders spilled on European soil in ultimate defence of a ‘home’ country many had never visited.

Why are the French so cross?

Canberra had agreed a massive deal with the French shipbuilder Naval Group (state-owned) to supply a fleet of diesel-electric-powered Barracuda-class submarines. A figure of around £50bn has been bandied about – some put it higher. The fact is that we shall never know the precise details of this agreement because government-to-government arms deals remain secret and are never the subject of litigation, even if France has announced it will seek compensation.

It’s not just the loss of revenues and jobs which has upset the French. This was a national humiliation. And indeed, a personal humiliation for President Macron who, as economy minister under President Hollande, signed the original France-Australia deal.

The Australians have now said that the France-Australia deal was hopelessly behind schedule and technologically suboptimal. PM Morrison said that he had already signalled his “deep and grave concerns” to France. Australia was right to put its own security first and it is absurd for the French to claim that they have been “stabbed in the back”. Moreover, the fact that the French did not see this coming points to a curious failure of intelligence. The French ambassador first heard about the pact from the Australian press.

But the real deal is that France is devastated that a global player with a force de frappe (strike force) and territories in the Pacific was not invited to the party. One potential reason for that is President Macron’s disdain for ‘les Anglo-Saxons’, as epitomised by his stance during the painful process of Brexit and his attempt to sabotage the AstraZeneca vaccine programme earlier this year. Another possibility is that the Five Eyes simply don’t trust the French.

Why would they? They are consistently anti-American. Twice, France has threatened to cut the France-England interconnector cable (discussed last week). It excluded Britain from the Galileo GPS network, forcing us to develop our own (a good thing in my view). China was granted smoother access to the EU single market than Britain. France supported Germany over the Nord Stream 2 pipeline, knowing that the Poles objected.

The really galling thing for the French is that Aukus vindicates Brexit – and it may herald the even greater prize that is Canzuk. The Remainers’ lament that the UK would have no influence outside the EU has proven empty.

A European army: the case against

Even if there were a European defence identity, the fact is that few European leaders outside France would want to send soldiers to die under the EU banner. And to do so would require the unanimous agreement of all participating countries. Also, there are anxieties in the EU nations about the EU undermining NATO as Europe’s main bulwark against Russia. Estonia, Latvia, Lithuania and Poland all have sensitive borders with Russiaii. If Russia encroached, would French and German forces be up to the challenge? Others, such as Hungary, are wary of any grand project which is going to be dominated by France.

Many of these eastern-European countries face the prospect of having their Siberian gas switched off, thanks to Nord Stream 2 − so it’s unlikely they would want to spill their blood for the French or the Germans. France and Germany want to strip all EU members of their veto on foreign-policy matters. That won’t happen without rupture.

The UK, while still an EU member, was an implacable opponent of anything that resembled an EU army − even though we have a long-standing record of bilateral military cooperation with France that goes back to the St. Malo declaration, signed by Tony Blair and Jacques Chirac in 1998. Most recently, the RAF supplied Chinook helicopters to assist the French army in its fight against Al Qaeda in the Sahel.

Conservative MP Bob Seely warned this week:

“If the EU army undermines NATO or results in the separation of the US and Europe or produces a paper army, Europe will be committing the most enfeebling act of self-harm since the rise of fascism in the 1930s”.

But then, timing is all. Next week Angela Merkel will step down as German chancellor. Whoever replaces her will look inexperienced compared to the French president who has a presidential election to win in just eight months’ time. He is, it seems, even prepared to put France’s permanent seat on the UN Security Council at the disposal of the EU – but only if the EU backs a European army (whether that would be acceptable to the UN is another matter). Currently, the EU only enjoys observer status.

Emmanuel Macron knows that he has a narrow window of opportunity in which he will be seen as the de facto leader of Europe – France takes over the rotating presidency of the EU on 1 January. And he intends to use this window to his maximum advantage.

Fallout

France has withdrawn its ambassadors from Washington and Canberra (not from London – apparently, we are too insignificant to worry about – “the fifth wheel on the carriage”, as foreign minister Le Drian put it).

This is not the first time that President Macron has lost his temper, diplomatically speaking. He withdrew the French ambassador from Rome in February 2019 after Luigi di Maio, the Italian foreign minister and leader of the Five Star movement met with ‘gilets jaunes’ protesters in Paris. Then after President Erdoğan was critical of him, he withdrew the French ambassador to Ankara. France considers Mr Biden to be ‘Trump II’, even though he’s the most left-wing president ever. Yet they never withdrew their ambassador under ‘The Donald’, for all their disdain for him.

Charles Michel, president of the European Council, said in New York this week that the pact had damaged US-EU relations just as they were recovering after the Trump presidency. Ursula von der Leyen, president of the Commission, said that France had been treated “unacceptably”.

Bilateral discussions between the French and British defence ministers scheduled for this week were cancelled. France has now stymied the ongoing EU-Australia trade negotiations. France’s Europe minister, Clément Beaune, has suggested that the issue will affect the ongoing negotiations concerning the implementation of the Northern Ireland Protocol.

History accelerating

France and Britain drew different lessons from the Suez debacle in 1956, and there is a parallel today. France determined that it could not rely on the US and that the only way forward was a deep rapprochement with its historic enemy, Germany. Britain concluded that we always had to keep the Americans onside. Of course, we would be the junior partner – Harold Macmillan compared the relationship to that between the Greeks and the Romans in the classical world – but, without America, our true adversaries would flourish. That analysis has not changed.

What is now critical is that like-minded nations participate in the development of emerging technologies. In 2017, President Putin said that the nation which leads in AI will rule the world. In 2020, Britain was ranked third, after the US and China, in the AI Index published by the Harvard Kennedy School Belfer Centre. France was at sixth place and Australia at tenth. But those with superior AI will be able to emasculate rivals’ inferior AI.

So, Mr Putin was correct: this is more about AI than submarines.

The world is becoming more dangerous. With America’s Afghan retreat under Biden, the rise of a belligerent China, AI, accelerating climate change and the decarbonisation agenda, we have suddenly moved back into a multi-polar world of shifting, geopolitical tectonic plates. That raises the risk of an earthquake sometime soon.

Listed companies cited in this article which merit further investigation:

  • BAE (LON:BAE)
  • Rolls Royce (LON:RR)
  • Babcock International Group (LON:BAB)

i I encourage readers who have not had the good fortune to visit Melbourne to take the virtual tour.

ii Poland and Lithuania have borders with Kaliningrad Oblast, which is highly militarised and possibly the location of ballistic missile launch sites.

Victor Hill: Victor is a financial economist, consultant, trainer and writer, with extensive experience in commercial and investment banking and fund management. His career includes stints at JP Morgan, Argyll Investment Management and World Bank IFC.