Strategic and industrial factors favour Japan for Australia’s frigate project

It’s not just technical naval capability. Australia has persuasive geostrategic and industrial reasons for choosing Japan over Germany as its partner in building as many as 11 general-purpose frigates in a priority defence program.

The upgraded Mogami class offered by Mitsubishi Heavy Industries (MHI) does have strong technical advantages for the Royal Australian Navy over the competing Meko A-200 from Germany’s ThyssenKrupp. But Australia must also consider that it and Japan share the threat from China, which is another reason to choose the Japanese design.

Related to that, the two countries can and should help each other. And, industrially, Japan is well positioned to help.

The Australia-Japan ‘special strategic partnership’ has great potential but is underexploited in defence industrial cooperation, largely because of Japan’s historically strict arms export controls. But the controls are gradually loosening as Japan faces an increasingly complex Indo-Pacific security landscape, with three assertive nuclear-armed neighbours—China, North Korea, and Russia—at its doorstep.

In response, Japan has taken significant steps, including establishing a joint public-private committee to support defence exports. This committee brings together representatives from various ministries and major industrial and defence firms such as MHI, Hitachi and NEC. The effort stems from lessons learned following Japan’s unsuccessful bid to sell submarines to Australia in 2016.

The stakes are high this time, since MHI is one of two finalists in the frigate program with an estimated budget of $7-11 billion.

The program, Sea 3000, prioritises rapid acquisition, requiring the first ship to be delivered by 2029. The first three members of the class will be built overseas by the designer and the rest in Australia.

The Mogami class is in Japanese naval service but the upgraded version offered to Australia is yet to be deployed. Thyssenkrupp’s design, Meko A-200 is an evolution of the Anzac class, which the new ships are intended to replace. A choice between the designs is due this year.

Leaving aside the question of which design is better technically suited to Australia (discussed in an accompanying article), Japan can offer more at a strategic and industrial level than Germany can. There are three aspects to consider.

The first is that Australia and Japan both reject Beijing’s moves to treat the South China Sea as its own. Australia and Japan have shared concerns over China’s increasing coercive behaviour that is responsible for the deteriorating strategic environment in the Indo-Pacific. Recent actions include China’s unlawful maritime claims with its 10-dash line (updated from the original nine-dash version), resource pilfering in the South China Sea, dangerous military manoeuvres, such as releasing flares in front of an Australian aircraft over international airspace, and violating Japan’s territorial waters around the Senkaku Islands.

The steady tempo of China’s coercive measures in the Indo-Pacific prompted action from Australia and Japan. In December 2022, Japan approved three strategic documents: the National Security Strategy, the National Defense Strategy and the Defense Buildup Program. These marked a shift in defence policy, a response to the real threat of military attacks on its territory. Similarly, Australia’s 2024 National Defence Strategy and Integrated Investment Program emphasise a strategy of denial, aiming to deter conflicts and prevent coercion through force.

Together, Japan and Australia view themselves as the northern and southern anchors of Indo-Pacific security, and both stand to play a strategic role in deterring China.

Germany is awakening to the challenge that China poses, but it is not there yet. The government of outgoing chancellor Olaf Scholz introduced a strongly worded China strategy in mid-2023, but his coalition government was deeply divided on China policy. So Berlin maintained Angela Merkel’s risk-averse policy, prioritising short-term economic gain over tackling strategic risks. Moreover, a major flaw in Scholz’s China policy was how strongly influenced it was by German companies with longstanding investments in China. This led to overdependency on China, paralleling the country’s reliance on cheap Russian oil and gas. However, the next German government, under Friedrich Merz, could potentially change course.

The second reason for Japan being a more attractive partner than Germany is that Australia and Japan stand to gain strategically by working more closely together in the Indo-Pacific. Canberra and Tokyo already share significant strategic alignment on China’s intensification of coercive activities, as highlighted in their eleventh 2+2 Foreign and Defence Ministerial Consultations in September 2024.

Australia and Japan have also taken steps to strengthen military cooperation with the planned deployment of a Japanese Amphibious Brigade to Australia for joint exercises with US Marines. These measures underline the salience of the special strategic partnership, reflected in the Reciprocal Access Agreement signed in 2022. The agreement, Japan’s first defence treaty with an international partner since 1960, demonstrates the priority both nations place on their bilateral ties.

The third reason is that Australia would benefit from Japan’s industrial capacity and maritime expertise in building advanced warships designed for the same operational environment in the Indo-Pacific. Australia’s limited shipbuilding capacity demands help from partners, and Japan is well positioned to provide it quickly. A clear indication that Japan is serious came from Japan’s defence chief General Yoshihide Yoshida, who said Japan would give ‘priority’ to Australia if the Mogami design was selected for the frigate program.

A related consequence of choosing the Mogami design would be strengthening the interoperability of the Japanese and Australian navies: they’d be using almost identical ships.

Australia must also be wary of risks to export supply from a German arms industry that is suddenly coming under great pressure as the United States tells European countries to look after their own defence. Urgent domestic needs can push their way to the front of the queue. Japan’s industry has been under rising pressure too, but the problem has been building up for years.

Australia stands to gain significantly by deepening its defence industrial cooperation with Japan. By forging a robust industrial partnership, both nations can enhance their defence capabilities, address shared security challenges in the Indo-Pacific and translate their strategic relationship into tangible benefits. Given their shared concerns over China’s coercive behaviour, this enhanced cooperation is necessary for maintaining stability and deterring aggression in the Indo-Pacific.