FLEXIBILITY vs AGGRESSION

“This is not what the Allies do”, “stab in the back”, “it’s probably time to suspend and reset the relations between the European Union and the United States”...

The uncoordinated and chaotic withdrawal of allied troops from Afghanistan did not cause as much negative emotions in Europe as the unexpected news of the creation of a trilateral defense alliance dubbed AUKUS.

EU leaders have bluntly accused the US President Joe Biden of neglecting their transatlantic alliance partners. “The main principles of the alliance are loyalty and transparency. But we see a clear lack of transparency and loyalty,” said Charles Michel, President of the European Council.

Key region

Less than a month after the fall of Kabul, the US, Great Britain, and Australia announced a trilateral security partnership.

AUKUS provides for the exchange of information and technology in a number of areas, including intelligence and quantum technologies. But most importantly the new deal will provide support to Canberra in the construction of nuclear submarines. Their deployment in Australia is critical to expanding US influence in the region. Moreover, this is the second case in history when the US agreed to share its nuclear technology. Prior to that, the UK received them back in 1958.

The Australian Navy will also be upgraded with long-range missiles, including the Tomahawk cruise missiles. At the same time, the parties assured that Australia will not receive nuclear weapons.

The growing economic, demographic, and political weight of the Asia-Pacific region makes it a key actor in shaping the international order and solving global problems. The main objective of AUKUS is to contain the threat posed, according to the US, from the growing influence of China in the region and its global ambitions.

With the world's largest navy (by number of ships, not by tonnage), China becomes increasingly persistent in the disputed areas such as the South China Sea. Since there are sea routes important for international trade, this cannot but cause concern for the US and other countries. At the same time, the establishment of AUKUS confirms that the cornerstone of Washington's strategy to contain China is in the Indo-Pacific region.

However, the new trilateral agreement is partly a result of mutual frustration between the US and its EU partners. From Washington's point of view, the EU is too soft on China, while the EU believes that the US, on the contrary, is too aggressive. Therefore, the EU seeks to develop its own strategy for the Indo-Pacific Region (IPR) and deepen its ties with its countries.

The EU strategy

Strategic importance of the Indo-Pacific region is becoming increasingly important for the EU, which is a leading investor and one of the largest trading partners of countries located in this region. The share of Europe and IPR in the world trade turnover reaches over 70% and over 60% of foreign direct investment flows.

Therefore, it is not surprising that the EU needs its own strategy to strengthen political and defense ties in this area, which Brussels announced the day after the announcement of AUKUS.

But unlike the trilateral deal, the EU's strategy is largely about building cooperation with countries in the region in the areas of trade, health, data, infrastructure, and the environment. Well, and “to study the ways to ensure the expanded deployment of EU naval forces to protect maritime communications and freedom of navigation.”

Sceptics believe that this strategy will not increase the EU's influence in the Indo-Pacific region significantly, as the EU has become interested in the region relatively recently. It will also not solve the problem of the increasingly complex position of the EU between the US and China in their increasingly fierce rivalry there. Take, for example, the EU-US Council on Trade and Technology (CTT) established just three months ago.

Dissatisfaction with Germany and France

CTT should coordinate the approaches of the EU and the US on key issues related to the global trade, economy, and technology. However, even before the conflict with AUKUS, the views of Washington and Brussels on the new initiative were quite different.

Washington views this format as an excellent opportunity to develop common technology and trade standards and to act as a united front against China. On the other hand, the EU did its best to play down any perception that Beijing was the target of the agreement. EU member states, especially France and Germany, are hesitant to put too much pressure on China because of their significant economic ties with Beijing.

Moreover, last year, shortly before Biden took office, the EU rushed to conclude a Comprehensive Agreement on Investment (CAI) with China despite the strong resistance of many members states. In particular, Italy, Poland, Belgium, Spain, and others countries criticised Germany and France for aggressively promoting an investment agreement with China in the last days of Germany's presidency of the EU Council and just a month before Joe Biden took office.

Their main argument against the deal was the lack of obligations regarding slave labour and investment protection. In addition, they feared that such actions would complicate the EU's position in future relations with the US and China.

Many European countries are also unhappy that the French are trying to link their problems with the EU's trade agenda. In particular, the trade agreement between the EU and Australia, which is expected to be signed by the end of the year, is in danger due to France’s irritation over the loss of a major contract with Canberra.

Seventh in the world

By signing the AUKUS deal, Australia has demonstrated its choice - it is taking the side with the US, not China. This was a bold move for an Asia-Pacific country that has 40% of its exports to China, with Beijing having invested in the Australian economy more than $100 billion.

However, the security deal with the US and Britain is giving Australia a significant boost in modernizing its defense potential. It will become the seventh country in the world - after the US, Britain, Russia, France, China, and India armed with nuclear submarines.

Submarines are much faster than conventional boats and are more difficult to spot. They can stay underwater for months, fire missiles over long distances, and have more options for storing combat gear.

Therefore, it is quite understandable that Australia decided to abandon the contract with France for the construction of diesel submarines. Especially, amid the problems with that contract, which began almost immediately after its conclusion in 2016.

The main stumbling block of the contract was a dispute over the actual constructor of the 12 Barracuda-class submarines. Canberra demanded that they be built in Australia with 90% local participation, but the French resisted this, assuring that the Australian industry was not ready for this.

In addition, the execution of the contract was delayed, with the price tag rising from the original 31 to 56 billion euros. There were other problems that the French ignored, for some reason believing that Australia had no alternative. But they were wrong. Earlier this year, it was reported that Canberra was trying to pull out of the deal, despite having already paid more than $1 billion and facing a payoff. It hesitated for one reason- it needed a viable alternative. France could not have been unaware of this. Therefore, its nervous reaction to the AUKUS deal and the news of the termination of the contract do not seem convincing.

On the other hand, amid the upcoming presidential elections in France, we can assume that the cause of Emmanuel Macron's anger is primarily the domestic consumption.

Reset

However expressible is the discontent of the EU leaders on the AUKUS, the controversy around the alliance highlighted an important new reality: confrontation between the US and China will only grow, while the Europeans have no other choice but adapt to it.

And this is where the approaches of the EU and China to cooperation are fundamentally different. The growth of Chinese investment in European infrastructure and high technology is based on Beijing's geopolitical goals, not a desire to make a profit. This is what largely determines China's approach to trade and investment operations. While the European companies have been trying to access the Chinese market to earn money for their shareholders.

We will see the viability of Europe's geopolitical ambitions in the near future. Perhaps it is the EU that needs a reset.