Back in February 2015, Prime Minister Tony Abbott was gearing up to gift the contract to build Australia’s future submarines to the Government of Japan. The press release had been drafted and the announcement was imminent. Fearing an electoral wipeout if the submarine work went offshore, South Australian backbenchers compelled the prime minister to declare a Competitive Evaluation Process ^[1] to assess tenders from France, Germany and Japan. Agreeing to the CEP had allowed Tony Abbott to stare down a party room spill motion ^[2] the week earlier. The process was mired in politics from day one.

Despite the political pressures, the Abbott government had seen the future, and it was Japan. The government’s public advocacy for Option J was taken seriously in Tokyo. The Government of Japan came to the party on domestic politics and strategic factors, pledging palatable workshare arrangements and the transfer of highly sensitive technology to Australia. Tokyo’s expectations were sky high, egged on by Prime Minister Abbott and buttressed by his tight relationship with Japanese Prime Minister Shinzo Abe. The former PM’s comments are still seen by some Japanese to be ‘a matter of honour’ ^[3]. Tony Abbott has a lot to answer for.

Yesterday’s announcement ^[4] that France will be Australia’s international design partner for the future submarines would have come as a serious disappointment to Japan’s defence industry and political establishment. It was reported ^[3] last week that the Japanese were ‘beside themselves with angst’ after receiving news their bid was on the ropes, and that losing out on SEA1000 would be a ‘disaster for them, because they will lose face.’ Tokyo’s bid was a high-profile, “Japan-Inc” effort focused on strategic imperatives. Yet it didn’t display the hallmarks of a well-thought-out roadmap designed to win the confidence of Australian decision-makers and opinion leaders.

For Japan, cooperation on submarines was to be the cornerstone of a deeper special strategic partnership with Australia. So we should expect the CEP outcome to dampen the energy and enthusiasm that’s driven the bilateral relationship for much of the past two and a half years. But Japan’s loss to France’s DCNS won’t compel Tokyo to reconsider its blooming defence and security relationship with Australia, nor should it. It’s imperative that Canberra now works diligently to ensure that our bilateral relationship doesn’t cool down too much or for too long.

The Abe administration has invested considerable political capital in efforts to modernise and normalise Japan’s international posture through various foreign and defence policy initiatives and reforms. Article 9 of Japan’s constitution was reinterpreted; record defence expenditure was approved; new defence guidelines enmeshed Japan deeper in its alliance with the US; and the ‘Three Principles’ policy was put in place, overturning a half-century prohibition on defence exports. SEA1000 provided a foreign proving ground at which to test the Three Principles; it was a high-profile opportunity to engage Japan’s defence industries on their maiden large-scale arms export agreement.

While Japan’s quest for a more normal posture highlights its success in overcoming its post-war political culture (as Sam Roggeveen noted last week ^[5]), the CEP outcome betrays Japan’s failure to quickly build a functional corporate culture around defence exports. The Japanese government and defence businesses were always going to be behind the eight ball when up against experienced arms exporters like DCNS and thyssenkrupp. In the end, a lack of experience saddled their bid with ‘considerable risk’ ^[6].

DFAT describes ^[7] Australia’s relationship with Japan as ‘our closest and most mature in Asia’. Canberra’s bipartisan strategic commitment to Tokyo runs deep, and there’s a great deal of goodwill in the relationship. It’s in Australia’s interests that Japan is strong, capable and engaged. A more ‘normal’ Japan that can proactively shape and sustain the regional and global order is crucial to Australia.

On the back of Tokyo’s failed CEP bid, we should be thinking about how Canberra can minimise the harm done and further support Japan’s normalisation. SEA1000 has no doubt helped the Japanese to understand the dynamics of Australian defence acquisition processes. We should encourage the Government of Japan and its partners like Mitsubishi Heavy Industries to bid for defence projects on the cards in Australia and in other like-minded countries. Doing so will allow Japan to develop a corporate culture around defence exports. High-speed rail ^[8] provides another opportunity to familiarise Japanese corporates with Australia’s business culture. We should look to deepen maritime engagement through the Trilateral Strategic Dialogue, as Andrew Shearer recently advocated in a paper for CSIS ^[9]. We should also heed Tokyo’s pivot to Southeast Asia ^[10], and look for opportunities to support regional capacity building and exercises with the JSDF.

As the Prime Minister noted yesterday, the partnership between Australia and Japan ‘gets stronger day by day’ ^[11]. Indeed, it’s been on the up for well over a decade. Turnbull might not be able to rely on a personal rapport with Abe (as Abbott could), but he can certainly count on an alignment of values, interests and concerns ^[12].

While Abbott stoked unrealistic expectations in Japan, Tokyo’s enthusiasm wasn’t curbed when a new political reality emerged upon Turnbull’s elevation. It now seems that Turnbull, too, could have done more to manage Tokyo’s expectations, either when he came to the prime ministership six months ago, or indeed once it was patently clear that Japan was out of the race.

But that’s all in the past. What’s important now is that we soothe sensitivities in Tokyo, continue to offer our unalloyed support for Japan’s normalisation, and double-down on efforts to deepen and broaden our crucial strategic partnership.