'Huge' Uncertainty Over AUKUS Sub Project as Costs Shown to Include '50% Contingency Fund'

The trilateral AUKUS security pact between the US, Australia, and the UK presupposes a deal worth more than US$245 billion over the next three decades for Canberra to purchase nuclear-powered Virginia-class submarines from a consortium of American and British weapons manufacturers.

There is a “huge level of uncertainty in the AUKUS submarine deal," Australia’s Greens Senator David Shoebridge said in a statement, after what he described as the agreement’s "unprecedented" contingency fund was revealed.

The Greens party had earlier commissioned an analysis by the Parliamentary Budget Office into the costs linked to the AUKUS nuclear submarine program.

The scrutiny revealed that the A$368 billion (US$245 billion) agreement over three decades incorporated a 50% contingency fund. In other words, the budget overrun is anticipated to be at least A$123 billion (more than US$82 billion). A major part of the expenses connected with the submarine program would fall on the two decades from 2033, the data reportedly shows.

The analysis added that the Australian Department of Defense had not released the sale price of the US Virginia Class submarines that Canberra would initially be purchasing.

After the revelation, Defense Minister Richard Marles said the deal was a "massive challenge for the country" and that the government was "prudently budgeting here for the unexpected".

"We have sought to be as upfront and transparent as we possibly can be," he was cited as telling local media.

Divisive AUKUS Deal

The trilateral Australia-United Kingdom-United States security pact - AUKUS - was announced in September 2021. It is centered on cooperation in the transfer of nuclear technology to Canberra for nuclear-powered submarines. Furthermore, there is to be collaboration on hypersonic weaponry, cyber warfare, artificial intelligence, quantum computing, and expanded information and intelligence sharing.

The sub deal stipulates that the United States will sell Australia three Virginia-class nuclear-powered submarines, built by General Dynamics in the early 2030s, with an option for two more. Subsequently, during phase two, Australia and Britain will build the new SSN-AUKUS submarine. Canberra would likely get its first such submarine in the early 2040s.

The AUKUS pact triggered a scandal from the outset, as the sub deal robbed France of its own $66 billion submarine contract with Australia.

Countries such as China, Russia, and North Korea have criticized AUKUS, saying it threatens to kick off a new regional arms race. The AUKUS deal, which also provides for a new naval base in western Australia from which US warships can operate, was slammed by Chinese Foreign Ministry spokeswoman Mao Ning as ratcheting up tensions in the Asia-Pacific region. Beijing accused Washington of “pursuing its own interests and adhering to a zero-sum game mindset.” The result of US policy would “inevitably be increased tension and a threat to regional peace and stability,” Mao said.

The US-UK-Australia deal involves the transfer of large quantities of highly enriched weapons-grade uranium from nuclear-weapon states to a non-nuclear-weapon state. Accordingly, it poses a serious risk of nuclear proliferation and violates the goals of the Non-Proliferation Treaty, China underscored.

Russia has also voiced its concerns regarding the AUKUS pact.

"The Anglo-Saxon world with the creation of bloc structures like AUKUS, with the promotion of NATO military infrastructure in Asia, is making a serious bid for confrontation for many years," Russian Foreign Minister Sergey Lavrov said.