In early September, Yonhap News Agency reported that South Korean giant Hanhwa Defense had been selected as the sole preferred bidder for the Australian Defense Force’s LAND8116 Protected Mobile Fires requirement. Under the contract, Hanhwa will provide 30 K-9 Thunder self-propelled howitzers and 15 K-10 armored resupply vehicles to Australia for around AU$1 billion. While at face value this seems a relatively minor development, the awarding of the contract to Hanhwa could lay the foundation for expanded bilateral defense industry collaboration.
Australia and South Korea have long sought to improve ties in this particular area. Defense industry was one of three primary avenues for defense cooperation identified during the first ever visit by a South Korean defense minister to Australia in 2005. Commitments to expanding ties in this area also featured prominently in both the 2009 Action Plan for Enhanced Global and Security Cooperation and 2015 Blueprint for Defense and Security Cooperation. However, the last decade has seen practical cooperation routinely set back by project cancellations, poor communication and (allegedly) broken promises. Because of this checkered history, the sudden revival of the LAND8116 project in May 2019 (originally cancelled in 2012) with a South Korean company once again among the leading contenders led Australian commentators to warn that domestic politicking, budget constraints, and a shaky strategic rationale left the project vulnerable to cancellation, risking further damage to relations with Seoul. Indeed, the onset of the COVID-19 pandemic led to speculation that the howitzers could soon disappear from Australia’s priority procurement list.
Fortunately, that prediction did not come to pass. The awarding of the contract is some vindication of commitments made last September by Australian Prime Minister Scott Morrison and South Korean President Moon Jae-in to “reinvigorate” the bilateral relationship. Still, the consensus among Australia-Korea watchers seems to be that the LAND8116 development is a relatively small step forward, and that a true breakthrough in defense industry cooperation likely rides on the outcome of the much larger LAND400 Infantry Fighting Vehicles tender (now forecast to cost between 18-27 billion Australian dollars) for which Hanhwa is one of two remaining bidders. A decision on that project is not expected until 2022. Nevertheless, that Hanhwa has now secured a foothold in the Australian market surely improves it chances of securing that contract, particularly given its commitment to build both its howitzer and infantry vehicle offerings at a dedicated facility in the southern Australian state of Victoria. The company has also pledged to provide opportunities for Australian small and medium enterprises (SMEs) to participate in both projects as well as its wider global supply chain network.
Rather than the deals or specific capabilities themselves, the true significance of Hanhwa’s arrival in Australia arguably lies with the opportunities this may present for bilateral collaboration in areas of mutual strategic interest, including defense supply chain issues and research and development (R&D). Former Australian Ambassador to South Korea Bill Patterson wrote recently that for Hanhwa to secure the LAND400 contract could provide the catalyst for “a much stronger defence partnership,” highlighting both countries’ mounting concerns over “supply chain vulnerability” and their growing interest in decentralizing manufacturing and diversifying suppliers. Indeed, as I argue in my latest report for Pacific Forum’s Issues and Insights series, emerging challenges to shared defense supply chains should prompt Australia and South Korea to work towards establishing a defense industry partnership built more on collaboration than transaction. There have been signs over the last 12 months to suggest that this is the direction that such cooperation is headed. For example, the joint statement from the last defense and foreign ministers’ “2+2” meeting in December highlighted both countries’ mutual interest in cooperating on defense industrial base and supply chain issues, and noted that regular meetings of the then-dormant Joint Defense Industry Cooperation Committee would be restarted.
Emerging opportunities to deepen defense industry ties ought to be leveraged by governments in Canberra and Seoul to address common strategic needs. As I argue in the aforementioned report, one specific example of where the two might explore cooperation on defense supply chain issues could be on sonobuoy development and production. Sonobuoys are items dropped from maritime patrol aircraft and helicopters to locate and track submarines operating under the ocean’s surface. At present, problems with the capacity and long-term resilience of the single-proven supplier of high-end sonobuoys, the UK-U.S. ERAPSCO, to the U.S. and many key Indo-Pacific partners threaten to undermine the capacity of these states to execute independent and collective anti-submarine warfare (ASW) operations. Shortages in critical non-lethal mission items like sonobuoys could undermine both peacetime (deterrence) and wartime (combat) operations alike, and at a time when demand for airborne ASW operations is only growing in response to a marked increase in the activity, quality and quantity of China’s submarine forces (and to a lesser extent those of North Korea).
Australia is particularly well-placed to address vulnerabilities in the sonobuoy supply chain given its own history of developing advanced acoustic and sonar technologies (including sonobuoys), force structure orientation, industry relationships, investments in ASW-relevant infrastructure and recent commitments to improve its sovereign defense manufacturing capabilities. However, it will unlikely be able or willing to do so alone, and it would make much more sense to do so in collaboration with other key partners with large industry prime companies of their own. The United States and Five Eyes are the most apparent and most trusted partners Australia could turn to, yet there are well-documented obstacles to deepening defense industry cooperation with the U.S., and real limitations to the value of defense innovation collaboration with Five Eyes in terms of improving Australia’s sovereign capabilities. As such, Australia should also consider deepening defense industrial and scientific cooperation with other in-region partners like South Korea.
Cooperation on the sonobuoy problem would make sense for several reasons. ASW is already the focus area for major defense exercises between the two countries, and South Korea will soon fly the same models of high-end ASW aircraft (P-8A) and, potentially, helicopters (MH-60R) as Australia and other key regional partners like India and the U.S.. Both countries have also emphasized the growing importance of improving their sovereign defense industrial capabilities. For instance, Australia’s recently released 2020 Force Structure Plan earmarked between 0.8-1.1 billion Australian dollars for improving sovereign weapons manufacturing capabilities, namely explosive munitions and propellants. Meanwhile, South Korea’s Defense Acquisition Program Administration is moving to localize the production of critical defense spares and other items under the mandate of the Moon Jae-in Administration’s “Defense Reform 2.0” program, and increased funding is being allocated to South Korean industry and research entities to support deeper regional collaboration in defense R&D and manufacturing. It’s also worth noting that Hanhwa has a demonstrable interest in developing its own sonobuoy technology. In that respect, Australia’s proven expertise and experience in developing advanced sonar technologies (including sonobuoys) and South Korea’s sheer industrial and manufacturing clout (something which Australia notably lacks) would seem well-matched to addressing the sonobuoy supply issue.
Whether or not Australia-South Korea defense ties can reach a point where this sort of mutually beneficial and strategically minded cooperation can move forward remains to be seen. Nevertheless, this is exactly the kind of direction in which the two should seek to take their bilateral defense relationship. Hanhwa’s arrival in the Australian market is a good first step forward, and one that the two countries ought to capitalize on as new demands and opportunities arise.
Tom Corben is a resident Vasey Fellow with Pacific Forum.