The Development and Outlook of AUKUS: Australia’s Implications
Yirong Han | 11 June 2025
Summary
The AUKUS security pact, established in September 2021, is a trilateral agreement among Australia, the United Kingdom (UK), and the United States (US) that focuses on technology sharing and deterrence in the Indo-Pacific region.
The pact faces significant challenges, including immense financial costs, domestic public scepticism in Australia regarding its value, varied international reactions, particularly concerning nuclear non-proliferation, and diverging interests among the partner nations.
AUKUS is likely to lead to deeper defence-industrial integration and enhanced compatibility among its members, with a possible long-term expansion of Pillar II cooperation with other like-minded nations.
The AUKUS security pact, a trilateral agreement between Australia, the United Kingdom (UK), and the United States (US), was formally announced on 15 September 2021. This initiative aims to enhance technology sharing and act as a strategic deterrent against China’s increasing assertiveness in the Indo-Pacific. Structured around two core pillars, Pillar I focuses on Australia’s acquisition of conventionally armed, nuclear-powered submarines, while Pillar II accelerates collaborative research and development of advanced military capabilities like artificial intelligence and hypersonics.
Political Implications
AUKUS is fundamentally intertwined with intensifying US-China rivalry, and this dynamic creates a security dilemma – risking a possible escalating cycle of competition. France’s strong negative reaction to the cancellation of Australia’s submarine deal as a direct result of the AUKUS agreement further complicated efforts to present a united Western front, as Paris prioritises avoiding bloc geopolitics. Domestically, Australia faces significant political hurdles, with cost concerns and declining public support for the AUD 268-386 billion nuclear-powered submarine project (Pillar I of AUKUS). Public scepticism highlights a critical disconnect between strategic rationale and broader public acceptance, necessitating transparent communication and genuine community consent for the pact’s long-term viability. Furthermore, domestic opposition to nuclear waste disposal and the establishment of new military bases underscores a desire for national and local control over decisions with significant environmental and social impacts, reflecting a broader concern about maintaining autonomy over critical domestic affairs.
Security implications
The transfer of nuclear-powered submarines to non-nuclear weapon state Australia, though these vessels will be conventionally armed and not carry nuclear weapons, generates significant international controversy. Critics, including China and some non-aligned nations, allege it undermines the Nuclear Non-Proliferation Treaty (NPT) by creating a dangerous precedent for the transfer of highly enriched uranium, thereby raising proliferation and regional arms race concerns. Intensifying these anxieties, the projected delivery of these submarines in the 2040s means they offer little immediate enhancement to Australia’s defence posture against current threats, thereby raising critical questions about their near-term strategic value and the long-term utility of such a prolonged timeline. Beyond external criticisms, the pact also highlights potential divergences in the security interests of the core AUKUS partners. While the US and UK emphasise immediate collective deterrence and technological collaboration, Australia’s primary interest centres on long-term capability acquisition and industrial development, creating complexities in balancing strategic needs with future defence readiness. Regional states, including Indonesia and Malaysia, express substantial apprehension over nuclear proliferation risks. Meanwhile, New Zealand is exploring Pillar II participation, carefully balancing the defence opportunities offered by advanced technologies (like AI and hypersonics) with concerns about its independent foreign policy and long-standing non-nuclear status.
Economic and Operational Implications
The financial burden for Australia, with estimated submarine costs ranging from AU 268-386b and expected cost blow-outs, raises substantial opportunity cost questions amidst Australia’s cost-of-living crisis and post-COVID debt. Fundamentally, AUKUS is an industrial strategy aiming to integrate defence sectors and foster innovation, strengthening Australia’s homegrown manufacturing capabilities. However, numerous bureaucratic challenges, particularly concerning International Traffic in Arms Regulations (ITAR) reforms, impede seamless technology and information sharing, making Pillar II’s success contingent on overcoming systemic barriers. Despite these challenges, AUKUS’s future trajectory will be shaped by its internal progress, the evolving regional landscape, and its ability to manage complex international and domestic factors.
US Department of Defense
Forecast
Short-term (Now - 3 months)
Domestic debate in Australia over AUKUS’s financial costs and public acceptance is likely to intensify, posing a high risk to the project’s social licence, potentially impacting the pace of initial Pillar II initiatives.
Diplomatic efforts by AUKUS partners to manage regional perceptions and non-proliferation concerns are likely to remain a high priority, with a medium impact on international relations, as they seek to reassure cautious regional actors.
Long-term (>1 year)
Deeper defence-industrial integration and enhanced compatibility among AUKUS members are very likely, leading to a very high impact on collective defence capabilities and the potential for Pillar II expansion to other like-minded nations, thereby reshaping regional security partnerships.
Australia will likely face persistent and high-impact challenges regarding nuclear waste disposal from its submarines, requiring significant community consent and infrastructure development.
Sustained US commitment to AUKUS, particularly regarding funding and technology transfer, is likely to face scrutiny, posing a high impact on the alliance’s long-term trajectory if domestic political priorities or administrations shift, potentially affecting the pace and scope of the project.
AUKUS is very likely to continue influencing the US-China strategic competition in the Indo-Pacific, with a very high impact on regional power dynamics and stability.
