With its attempts to recover from the COVID-19 pandemic, the Afghanistan withdrawal and Brexit firmly in its wake, the role ‘Global Britain’ will play on the international stage looks subject to major change.
Most notably, the trilateral ‘AUKUS’ security pact, recently signed by Australia, the United Kingdom and the United States, is a useful indicator of Britain’s international priorities when it comes to security, technology-sharing, trade and diplomacy.
AUKUS clearly designates the ‘what’ and the ‘who’ of Britain’s geopolitical strategy. Firstly, we can see the perceived solutions to Britain’s bruised international position: improvements to cyber capabilities, artificial intelligence, quantum technologies and additional undersea capabilities.
Perhaps more importantly, AUKUS signals a re-imagination of Britain’s economic and security allies; turning away from Europe and simultaneously orienting itself towards deeper relations with a select few (Anglophonic) states, as well as maintaining security in the Indo-Pacific and challenging the threat from China.
Unsurprisingly, the deal has raised hackles throughout the Indo-Pacific and the European Union, with French foreign minister Jean-Yves Le Drian commenting that France’s exclusion constituted a “stab in the back” and his Chinese counterpart, Zhao Lijian, warning that AUKUS revives a “Cold War zero-sum mentality”.
Clearly then, at its heart, AUKUS is more strategic than it is financial. Nevertheless, let’s attempt to look behind the curtain to determine what AUKUS’ likely short and long-term financial implications are for a reimagined, ‘Global Britain’.
Beneath the surface: Who wins in the short-term?
The short-term ‘winners’ are those involved in submarine manufacturing, who look set to enjoy a lucrative financial boost from AUKUS. The pact, entailing the production of eight nuclear-powered submarines by the UK and the US for Australian consumption, was predicted by Boris Johnson to ‘unquestionably’ create high-wage and high-skill jobs domestically.
Through their strong global links and sizeable manufacturing capacity, UK firms Rolls Royce and BAE Systems look well-placed to be involved in production, or at least co-production, generating job growth in the north of England and throughout the Midlands.
In the short-to-medium term, an experimental co-production process alongside US allies allows the UK’s military-industrial complex to benefit from knowledge-sharing, thereby accelerating the pace of future domestic projects.
Challenging the Chinese dragon: Britain’s long-term international financial strategy
More importantly however, the AUKUS deal signals a long-term re-imagination of Britain’s geopolitical orientation and a restructuring of the constellation of international relations.
To counter the growing Chinese presence both in the Indo-Pacific and beyond – it has the second-largest outwards Foreign Direct Investment (FDI) flows estimated at US $136.91bn for 2019 alone – the AUKUS triumvirate look likely to collaborate to pose a specific retaliation, with long-term financial implications from Australia’s financial centres, London, Washington D.C. and beyond.
Indeed, the new Foreign Secretary, Liz Truss, has committed to carrying a “strong economic focus” as she eyes up further trade and security agreements in the Indo-Pacific.
Whilst recognising their financial inferiority to China, the ‘Network of Liberty’ – as nicknamed by Truss – look likely to target investments into emerging technologies, as well as deepening the interdependence of current financial ties with current relations and widening their scope by seeking new regional allies.
A cautious conclusion: are we putting the cart before the horse?
However, one must question whether this is merely a pompous display designed to present Johnson’s government as more of a British Bulldog and less of a post-Brexit, whimpering Pug? If so, this would make AUKUS not only strategic and financial but also a political deal.
Mark Rutte of the Financial Times commented that the “AUKUS deal is any Brexiter’s dream”, as a clear metaphorical two-fingers up to the European Union. It goes without saying that the unification of Anglophonic nation-states with a reassuringly familiar cultural politics, history and language, as well as the outright rejection of the European, and particularly French neighbours, would be enormously appealing to socially conservative ‘Red Wall’ voters.
Whatever the tangible implications of AUKUS come to be – be they strategic, financial, political, or all three – the deal is nevertheless clearly one of great importance. Where, how and to what extent AUKUS comes to hold importance are however questions to which only the future offers the answers to.