What Aukus means for India

Aukus, a trilateral security pact between Australia, the United Kingdom, and the United States, isn’t bad news for India but it essentially means the US will be minding its business in the Atlantic rather than looking to the Indo-pacific.

What is the geographical thrust of Aukus?

Aukus is possibly pivoted more towards the Atlantic than the Indo-pacific. Sure, the first port of call for the alliance of USA, UK and Australia is to secure the first nuclear-propelled submarines for Australia to fend against the massive Chinese navy. But even with such a sub, Australia, India and Japan know “they must share the region with China — and have no desire to seek a confrontation or pursue the impossible goal of containing a rising superpower”, as C Raja Mohan writes in Foreign Policy. The Indo-pacific is thus going to remain a contested region for the next decade or more.

Aukus is instead the first decisive evidence that the US, under its America First policy, is more concerned with developments nearer home. This is because while China with its vast navy can knock on the Pacific door of the US, it will be most unpleasant if it also knocks on the Atlantic door. This has become a possibility because the Arctic Sea is becoming navigable as the ice disappears. Along with Russia, China has already made plans to use this route, much to the chagrin of environmental groups. There is no navy to block this combined armada from arriving in the North Atlantic unless the UK gets into the act with the support of the US. The sea lanes of the Indian Ocean are not very vital to both the US and the UK as the fossil fuel era ends and dependence on supply lines from West Asia gets over.

What’s the alternative economic rationale for Aukus, like NATO?

For members of NATO, the organisation was mandated to carry out economic analysis to assess the security and defence implications of current and potential economic developments. This was under Articles 2 and 3 of the North Atlantic Treaty. While Aukus is also a military treaty alliance, those elements of the pact are not yet public.

Aukus brings in its fold two of the three global financial centres: New York and London, leaving only Tokyo out. This is a huge economic heft. Nations now often do not need to wage war with gunpowder but more often with financial power.

The US has demonstrated this repeatedly with its financial sanctions on Iran, Russia and even China to some extent. It is not yet given, but the coming closer of the US and UK can tie their financial centres even more closely against joint enemies, through legislations like the Foreign Account Tax Compliance Act (FATCA). It requires that foreign financial institutions and often nonfinancial foreign entities need to report on the foreign assets held by their US account holders or be subject to withholding on withholdable payments.

Within days of Aukus being announced, US Treasury Secretary Janet Yellen was on the telephone lines with both the UK Prime Minister Boris Johnson and his finance minister, Chancellor of the Exchequer Rishi Sunak. There was no other immediate trigger for the chats in September, a difficult month for her when there were talks of the US government breaching the debt ceiling. Along with some anodyne remarks about the importance of reaching a compromise on the withdrawal of digital services taxes and UK’S leadership of the G7, she “expressed gratitude for the close cooperation between the US and UK”. The trans-atlantic neighbours have signed deals to strongly link their banking and insurance sectors to the same standards. A UK finance company will enjoy domestic status in the US, and vice versa.

What are the key differences between the quad and aukus?

The Quad is a dialogue and not a treaty. It brings on the same table US, India, Japan and Australia to counter China’s ascendancy as a superpower. The leaders of the four nations issued a joint statement in March 2021, “The Spirit of the Quad”. The primary focus of the Quad nations is to maintain a free and open Indo-pacific. The theme of the declaration is to counter China’s geographical claim on territories of several littoral countries of the region.

While Quad members now hold sea exercises every year, yet despite US prodding, it has not become a security alliance. Both the Trump and the Biden administrations had suggested the Quad should evolve as an Asian NATO. Instead, it is becoming more broad-based. It now includes a climate working group, a vaccine group and a critical and emerging technology group, among others. Both Japan and India have responded to concerns from their neighbours that the Quad should not be a defence pact.

India and Aukus

The formation of Aukus has taken away the pressure on India to sign a security alliance with the US. As a member of Quad, some of whose members also sit in the defence alliance, India can be seen to be close to the Western nations, yet will have the freedom to pursue its own course. In economic diplomacy, this is an advantage, since India wants to encourage investments from as many nations as possible, like those from West Asia, on its own terms. The membership of Aukus does not confer any economic advantage on India at this stage. The three main drivers of the Aukus (US, UK and Australia) are all extremely keen to sign a Free Trade Agreement with India but for different reasons. This should suit India fine.