Submission to the AUKUS Public Inquiry- SEA LANES, SUBMARINES AND THE LIMITS OF AUSTRALIAN POWER- Peter Holding

150. Peter Holding

Executive Summary

This submission argues that:

• The principal justification for AUKUS—the protection of Australia’s sea lanes—is unconvincing in the context of a major conflict between the United States and China.

• The ability of any allied naval force to guarantee normal commercial shipping during a major United States–China war is highly questionable. Australia’s proposed fleet of three nuclear-powered submarines would make only a limited contribution to that task.

• Australia’s submarine contribution is unlikely to materially alter China’s strategic calculations or significantly strengthen deterrence.

• Claims that AUKUS will provide Australia with substantially greater influence in Washington are overstated. Australia’s strategic value to the United States already derives principally from intelligence cooperation, particularly Pine Gap, and from Australia’s geographic position in the Indo-Pacific.

• Concerns about coercion in a China-dominated Asia deserve consideration, but discussions often overlook the reality that allies as well as rivals use economic and political pressure to advance their interests.

• Australia’s long-term security is more likely to depend upon economic resilience, diplomatic flexibility and political independence than upon a small fleet of nuclear-powered submarines.

The central question is not whether Australia faces strategic challenges. It clearly does. The question is whether AUKUS is the most effective and proportionate response to those challenges.

Protecting Australia’s Sea Lanes

One of the most frequently repeated justifications for AUKUS and Australia’s massive expenditure on nuclear-powered submarines is the need to protect “Australia’s sea lanes”.

But what exactly are these sea lanes, and can the proposed submarine fleet achieve that objective?

through the Indonesian archipelago, the South China Sea, the Strait of Malacca, the Indian Ocean and across the Pacific. Through them flow our exports of iron ore, gas, coal and agricultural products and many imports upon which Australia depends- manufactured products, pharmaceuticals, industrial components and much of our refined fuel.

As a trading nation, Australia clearly has an interest in keeping these routes open. The question is whether nuclear submarines can do so.

Can Nuclear Submarines Keep the Sea Lanes Open?

The central assumption behind current defence policy is that Australia can contribute to the protection of these sea lanes and, through deterrence, help prevent conflict from occurring in the first place.

Yet this argument becomes difficult to sustain when one asks what would happen in the very conflict for which these submarines are supposedly being acquired: a war between the United States and China.

If such a war occurred, commercial shipping throughout East Asia would immediately become hazardous. Insurance costs would soar. Shipping companies would avoid conflict zones. Missile strikes, submarines, drones, mines, cyberattacks and attacks on port infrastructure would threaten commercial traffic. The economic consequences would extend far beyond the immediate combat zone.

The argument is not that Australia’s submarines would operate alone. Supporters of AUKUS envisage them contributing to a broader allied effort, principally alongside the United States. Even so, it is difficult to see how allied naval forces could guarantee the safety of commercial shipping during a major war between the world’s two largest military powers.

Modern conflict would not resemble the relatively uncontested maritime operations of recent decades. Long-range missiles, submarines, drones, cyberattacks, mines and attacks on port infrastructure would create risks across vast areas of ocean. Commercial shipping companies and insurers would respond accordingly. Insurance premiums would rise sharply, many vessels would avoid conflict zones altogether, and some trade routes could become effectively unusable regardless of how many warships were deployed.

Australian submarines might contribute to military operations conducted by an allied coalition. That is not the same thing as ensuring that commercial sea lanes remain open for normal trade. The ability to sink enemy vessels is not necessarily

the same as the ability to guarantee the safe passage of civilian shipping.

Indeed, the widespread use of drones in Ukraine and the Middle East has highlighted how relatively inexpensive systems can threaten far more expensive military platforms. This raises further questions about whether a strategy centred on a small number of extremely costly submarines represents the most effective means of protecting Australia’s interests.

Would AUKUS Strengthen Deterrence?

Nor is it obvious that Australia’s submarine force would significantly increase deterrence.

China will make its strategic calculations primarily based on the military capabilities and political resolve of the United States. It is difficult to believe that Beijing’s decision-making would be materially altered by the addition or subtraction of a small Australian submarine force.

This does not mean the submarines would be militarily irrelevant. Rather, it means that their existence is unlikely to be decisive in the strategic calculations of a great power.

Does AUKUS Increase Australia’s Influence in Washington?

A second argument often advanced is that AUKUS increases Australia’s influence in Washington.

Australia already possesses assets of enormous value to the United States, particularly Pine Gap and other intelligence and defence facilities. If Australia has influence in Washington, it derives principally from these assets, from decades of intelligence cooperation, and from our geographic position in the Indo-Pacific.

Three submarines will not provide influence that Pine Gap does not already provide.

More fundamentally, history suggests that great powers pursue what they perceive to be their own interests. If a future crisis over Taiwan occurs, Washington will act according to its own assessment of American interests, not according to the wishes of Canberra.

What Would Chinese Regional Dominance Actually Mean?

Supporters of AUKUS often respond that the real issue is not sea lanes or submarines but what happens if China becomes the dominant power in Asia.

No serious analyst suggests that China intends to invade Australia. Australia is geographically distant, sparsely populated, militarily capable and occupies a continent that would be extraordinarily difficult to conquer and administer.

The more plausible concern is that China could seek to pressure Australia to align more closely with Chinese preferences on issues such as Taiwan, intelligence cooperation, human rights criticism or regional disputes.

That concern is not irrational. However, it raises an important question. Why do we assume that coercion is uniquely a Chinese problem? Economic Coercion by Allies: Recent Examples

The United States has repeatedly demonstrated a willingness to use economic pressure against allies when it believes its interests require it.

Recent examples are instructive.

In 2025 the Trump administration imposed significant tariffs on Canada despite Canada being one of America’s closest allies, a NATO member and a Five Eyes intelligence partner. The dispute became intertwined with broader political disagreements and repeated public comments questioning Canadian sovereignty and suggesting that Canada should become America’s “51st state”.

The administration also imposed and threatened tariffs against Brazil while openly criticising legal proceedings involving former Brazilian president Jair Bolsonaro, a political ally of President Trump. Trade measures were linked to concerns about Brazil’s domestic political decisions.

Similarly, the United States threatened retaliatory tariffs against several European allies in response to digital services taxes and regulatory measures affecting major American technology companies. The objective was not simply to secure market access but to influence the domestic regulatory choices of allied governments.

These examples demonstrate that great powers frequently use economic leverage against both allies and rivals.

Coercion, Influence and Australian Independence

China has certainly attempted to exert pressure on Australia. It has objected strongly to criticism of its human rights record, calls for a COVID inquiry and other policies it regarded as hostile. Its trade restrictions on Australian exports were clearly intended to influence Australian behaviour.

However, China’s pressure has generally been directed at what Australia says or does about China.

By contrast, the United States has often sought influence over Australia’s domestic economic arrangements themselves.

Successive American administrations and corporate interests have pushed Australia on pharmaceutical regulation, intellectual property rules, investment

provisions, agricultural market access and other matters. The Pharmaceutical Benefits Scheme has repeatedly been a target of American lobbying because it restrains drug prices and therefore pharmaceutical profits.

In other words, China has largely sought to influence Australia’s foreign policy towards China. The United States has often sought to influence how Australia’s domestic economy operates.

Indeed, one could argue that American influence already penetrates much more deeply into Australian institutions than Chinese influence does. Intelligence cooperation, defence procurement, technology standards, financial markets and trade arrangements all bind Australia closely to the United States.

The point is not that America and China are identical. They are not. The point is that the mere possibility of coercion cannot by itself justify one alliance and condemn another relationship. The relevant question is not whether coercion exists, but how much coercion exists, in what forms, and with what consequences.

Trade, Protectionism and Australia’s Economic Interests

Australia is a trading nation. Yet if our prosperity depends upon open markets and relatively free flows of goods and capital, it is worth noting that China remains deeply dependent upon and supportive of international trade while the United States has become increasingly protectionist.

Under both Republican and Democratic administrations, tariffs, industrial subsidies, export controls and economic nationalism have become mainstream features of American policy. Donald Trump accelerated trends that were already emerging, but those trends have continued under subsequent administrations.

This raises a difficult question. If open trade is an Australian value, why do we automatically assume that our economic interests align more closely with the United States than with China?

Historical Affinities and Strategic Assumptions

The usual answer invokes shared history, shared values and the alliance.

Australia has deep historical, cultural and institutional ties to the Anglosphere. We speak the same language as Britain and America. Our legal and political systems have common roots. Our intelligence services are closely integrated.

But perhaps these historical affinities also shape our perceptions in ways we rarely examine.

Australians tend to view the United States as familiar and therefore reassuring, even when Washington imposes tariffs on allies, seeks changes to our domestic policies, or pursues its own interests at our expense.

China, by contrast, is often portrayed as fundamentally alien, opaque and threatening.

The old phrase was “the inscrutable Oriental”. We no longer use such language openly, but it is worth asking whether remnants of that mindset still influence some of our strategic assumptions.

This does not mean China poses no challenges. It does. Nor is Australia about to abandon the alliance with the United States. Support for the alliance is deeply embedded in Australian political culture and remains strong across much of the electorate.

Conclusion

This submission argues that public discussion of AUKUS often proceeds from a series of assumptions that deserve closer scrutiny.

Even if one accepts concerns about China’s growing power, it does not automatically follow that spending hundreds of billions of dollars on a small fleet of nuclear-powered submarines is the most effective response.

The ability of even a large allied naval force to guarantee normal commercial shipping during a major United States–China war is highly questionable. Australia’s proposed submarine capability would make only a limited contribution to that task. Nor is it likely to alter China’s strategic calculations in a decisive way or provide Canberra with substantial additional influence in Washington beyond that which Australia already derives from intelligence cooperation and its strategic location.

Australia’s security ultimately depends not on the illusion of controlling events far beyond its power, but on maintaining economic resilience, diplomatic flexibility, political independence and a realistic understanding of the limits of Australian influence.