As part of our preparations for the resumption of the “A View from Afar” podcasts, Selwyn Manning and I have been discussing topics for the first show. We have agreed on a micro/near-macro/far focus, with the first segment being about NZ, specifically about whether NZ should join the proposed “Pillar 2” of the recently announced AUKUS agreement that will see Australia acquire nuclear-propelled submarines based on US and UK submarine technologies. We will then move on to the impact of the Discord classified material leaks and perhaps, time permitting, what is going on in Russia recently. As part of my preparations, I shall use this post to outline some of the issues involved in NZ’s potential involvement with AUKUS Pillar 2.

AUKUS Pillar 1 involves the forward rotation of US Virginia class attack submarines based in Guam to HMAS Stirling outside of Perth, Western Australia beginning in 2027 and then the introduction of Australian nuclear-powered submarines based on the Virginia Class and UK Astute class attack submarines in the 2030s, followed by a new Australian class (the AUKUS class) in the 2040s. The SSNs (designation for nuclear powered attack submarines) will have the capability to conduct extended patrols off of New Zealand’s East Coast (which the current Collins-class diesel-electric Australian submarines cannot do) without entering NZ territorial waters (the 12 mile limit). This allows them to monitor adversary surface and submarine activity in and around NZ’s EEZ and further off-shore as well as conduct the submarine intelligence collection and intercept operations that modern submarines are primarily used for in times of peace. Undersea fiberoptic cables linking the US and Western Pacific are a major point of interest to all nations with a submarine intelligence operations capability since these are the main data exchange conduits across and within the Pacific that can be used for both offensive as well as defensive purposes in times of peace as well as war. The AUKUS submarines will certainly be used to these intelligence collection and interception ends.

It is very likely that, as has been the case with RNZAF P-3 maritime patrol and ASW aircraft in recent decades, the new RNZAF P-8 maritime patrol/ASW aircraft will be in regular contact with Australian and US naval assets, including the new RAN submarines. There is nothing new in that since the NZDF works towards seamless interoperability with Australian defense forces on land, sea and air and regularly conducts joint operations with ADF, US and other “friendly” forces across all battlefield dimensions, including tactical signals and technical intelligence. In a sense, nothing changes for NZ in terms of its defense posture now that AUKUS is in place. What does change is the modernity of the Australian naval platforms that it will be able to interact with in future operations as well as the broader range of Australian submarine coverage around all NZ shores (which in turn frees up US submarines for patrols further North in the Western Pacific). Otherwise, the current status quo remains.

For its part AUKUS Pillar 2 involves the non-nuclear, mostly economic and scientific aspects of the agreement. NZ would not have to loosen its non-nuclear status in order to participate in Pillar 2, either with regard to the submarines themselves or the land-based technologies that might be based or developed on its soil. The technologies involved include quantum computing, artificial intelligence, robotics, nano-technologies, unmanned aviation and sub-surface platforms, various sensing capabilities (e.g. acoustic, thermal, electronic, cyber) and related supply chain industries that have the potential for commercial as well as military-intelligence applications. For the Australian military industrial complex, AUKUS is a win-win. For NZ defense industrial circles, the same might apply if NZ joins Pillar 2.

When the agreement was announced Australian authorities touted the economic and scientific benefits that will accrue to Australia as a result of its signing. As the host state, Western Australia will not only see HMAS Stirling upgraded and jobs added to it in order to accomodate the presence of the nuclear submarines, but Perth and other parts of the state are envisioned to be in line to get some spill-over business in the form of input suppliers to the base. Seeing that, other Australian states have lobbied the federal government for a piece of the potential economic pie, noting for example that South Australia has a well-established boat-building capability and Victoria and New South Wales have extensive high technology sectors clustered around their main urban centres. Business leaders have joined the defense and security community in highlighting the high tech, value-added nature of both the products being developed as well as the jobs created by involvement with Pillar 2 initiatives.

Where does that leave NZ? A little while ago Minister of Defense Andrew Little said that his government “might consider” involvement in Pillar 2 once the specific details of it become known. His focus was strictly on the economic ripple effects and possible benefits to NZ of involvement in the scheme. However, in the past week Foreign Minister Nanaia Mahuta has rejected the very idea of involvement in Pillar 2, stating that policy decisions “are made by cabinet,” not by officials in the foreign or defense ministries. She went on to say that involvement in AUKUS was contrary to the “Pacific Way” of consensus building on key regional policy issues. This suggests that there is a fracture between the left and right wings of the Labour Party on the subject, something that will undoubtably come back into play as the October General Election draws closer.

We can safely assume that as a means of burnishing its conservative security and pro-business credentials, National will welcome involvement in Pillar 2 should it win in October. That is, to paraphrase notorious Iran invasion hawk Donald Rumsfeld, a “known known.” It may therefore be a better strategy for Labour to walk back its interest in Pilar 2 at least until the elections are over, if for no other reason than to not court problems with potential coalition partners like the Greens and Te Pati Maori. For their part, Australian security and business elites are unlikely to want to share the potential wealth of Pillar 2, so to speak, with NZ precisely because NZ politics is too unreliable when it comes to defense and security, especially when nuclear anything is involved. Unless Australian businesses are involved on NZ soil, why should the economic benefits of AUKUS extend beyond Australia, the US and the UK? As far as the agreement goes, NZ might as well be Canada in terms of economic involvement, and the Canadians do not constantly display a virtue signaling posture when it comes to nukes. From the standpoint of the principals involved, NZ is just trying to free-ride on their hard work.

More pointedly, as Jim Rolfe kindly alerted us in his comment below, most of what might be covered in Pillar 2 is already (at least seemingly) covered by the Five Country Technical Cooperation Program (TTCP). The TTCP is an extensive science and technology information-sharing arrangement between the 5 Eyes partners that covers a broad range of defense and intelligence-related scientific and technical subjects. Perhaps there are substantive and technical aspects to Pillar 2 that extend beyond what is covered by the TTCP remit and hence can be seen as a complement to or upgrade of already extant arrangements or a means of piggy-backing on what is already there when it comes to defense, security and intelligence industry collaboration. Remember that the pitch coming from Minister Little (as far as can be discerned) is about economic benefits that have the potential for “dual use” (i.e. military and civilian) applications, with the attendant spin-off civilian commercial effects highlighted rather than the military-security related flow-on effects per se.

One argument against NZ involvement in Pillar 2 is that it will be seen as a provocation by the PRC and thus invite retaliation. The PRC has a record for over-reacting to perceived snubs and NZ is a very dependent and hence vulnerable trade partner of it. Unlike Australia, which has strategic minerals that the PRC needs for sustain its industrial development and economic growth, NZ exports low value-added primary goods and derivatives to the PRC (think milk powders, lamb and beef, paua, crayfish and logs). When the PRC cut off Australian imports because of a diplomatic row, it went after things like wine and other non-essential goods, not the strategic minerals. NZ has no such export diversity from which to choose from when it comes to selective PRC trade sanctions, and with a third of its GDP grounded in primary good exports to the PRC, the direct and ripple effects of Chinese retaliation would be severe.

But there is a catch. The PRC already well knows which side NZ is on when it comes to international security affairs. It is well aware that NZ is part of 5 Eyes if for no other reason than the PRC is a prime target of 5 Eyes intelligence-gathering efforts, which includes a role for the NZ signals and technical intelligence agency, the GCSB. NZ has a military alliance with Australia, is a non-NATO NATO ally and has not one but two bilateral security agreements with the US (the Wellington and Washington agreements). Involvement in Pillar 2 is not necessarily an anti-PRC turn in NZ’s defense posture even if it may indirectly help the ring-fencing strategy that the US and its Pacific allies are currently undertaking vis a vis the PRC in the Western Pacific.

For the PRC, there are far more immediate concerns: the diplomatic-security (not full military) QUAD alliance involving Australia, India, Japan and the US; the recently renewed bilateral defense and security ties between the US and the Philippines, including forward basing rights for US troops as well as regular joint exercises; the change in the Japanese constitution that moves away from pacifist principles and which has facilitated a dramatic increase in defense expenditure, including on offensive weapons; the so-called US military “pivot” to the Indo-Pacific which has seen a majority of its naval assets moved into that theater along with increased numbers of amphibious troops such as the recently established US Marine expeditionary force based in Darwin and forward deployment of increased US Air Force assets in Guam; and the revitalisation of bilateral defense pacts between the US and various Southeast Asia states such as Singapore, which now has a permanent US navy presence at its naval base at Changi. There is the pushback from the US and regional allies against PRC belligerency towards Taiwan and its sovereignty-expanding island-building projects in disputed atolls across the South China Sea. The ramifications of all of these potential contingency scenarios are more pressing when it comes to Chinese military planning, so it is doubtful that NZ signing on to Pillar 2 will cause the PRC to react in an unexpected way even if it has that track record of over-reaction to perceived slights.

Plus, there is way for the PRC to exploit an advantage when it comes to NZ’s potential involvement in Pillar 2. It can use its extensive intelligence networks inside of NZ to try and obtain sensitive information about the industries and technologies involved as well as the political and military decisions that may surround them. Without firing a shot the PRC may well be able to undermine some aspects of AUKUS if it uses its intelligence assets in NZ and Australia wisely and adroitly. We can only assume that the NZ intelligence community is aware of this possibility and along with its AUKUS partners is planning counter-espionage efforts accordingly.

A significant aspect of AUKUS is that it violates the South Pacific Nuclear-Free Zone Treaty (an update of the 1986 Treaty of Rarotonga), especially Article 4 relevant to nuclear propulsion and the storage of fissile material. The stationing of the AUKUS submarines at HMAS Stirling may be an attempt to circumvent the Treat by claiming that the base is located on the Indian Ocean and outside of the SPNFZT area of coverage. But the truth is spelled out in the language of the original Treaty as well as its refinements. This is the area covered by the SPNFZT:

Should Australia breach (which is what many believe that it is doing) or renounce the SPNFZT, then it sets a precedent for other nuclear states to establish a non-weapons nuclear presence in the South Pacific if they can find a willing partner in the region (say, by forward basing a nuclear powered submarine in a Pacific Island Forum country much as the US will be doing at HMAS Stirling later this decade). The recent PRC-Solomon Islands bilateral security pact opens the door for such a possibility, and if that does in fact occur in the Solomons or elsewhere, then the taboo on stationing nuclear material of any sort in the region will have been broken.

On balance, for reasons both internal to NZ as well as those intrinsic to Australia, NZ involvement in Pillar 2 is in my opinion at least temporarily dead in the water. When it comes to high tech/value added production, perhaps NZ is better off supporting its nascent gaming, unmanned avionics and rocket booster-building industries rather than those associated with AUKUS, especially because the ripple effects of AUKUS will be felt in NZ anyway, however lightly in terms of public consumption. Moreover, with non-involvement the threat of PRC retaliation is mooted and the costs of conducting increased counter-espionage efforts against it are avoided as well.

From a political-diplomatic standpoint, Minister Mahuta may be right: NZ participation in Pillar 2 is letra morta.