Albanese deserves praise but Trump’s warm words don’t alter a grim reality

Anthony Albanese and his team, including ambassador Kevin Rudd, should be very pleased with their meeting with President Donald Trump. They achieved the main objective which was to get in and out without mishap. Trump lavished Albanese with praise and Albanese lavished back without appearing sycophantic. He maintained his dignity with charm and good humour. It was definitely a 10/10 in diplomatic and political terms.

The agreement on rare earths development and processing is a very good step forward. Australia has been pressing for this for a long time. Back in February 2018 I agreed with President Trump that the US and Australia would work together on the extraction, processing and development of rare earths and strategic minerals, but until now not much progress has been made. Rudd’s energy will have made a big contribution. But the agreement of 2018 is a reminder that it is easier to announce deals in the White House than it is to actually make them happen. So there is much work to do, although China’s recent throttling of rare earth exports should ensure the Americans actually deliver the support they have promised this time.

There have been whoops of joy because Trump said he supported AUKUS. He also said Australia would get the nuclear submarines promised at the same time as he said America had lots of submarines and were building a few more. Of course he did. AUKUS is a fantastic deal for the United States. As the US secretary of the navy observed in the meeting the main game for the US is securing, at our expense, a submarine base and dockyard in Perth – further from China’s missiles than Guam and conveniently located on the Indian Ocean. And we continue to contribute $US3 billion ($4.6 billion) to the US submarine industry.

But while Trump’s warm words will cheer the credulous, they do not alter reality. The US does not have lots of attack submarines – in fact it is about 20 short of what its navy says it needs. It is also producing about 1.1 Virginia-class submarines a year, about half as many as the two submarines a year it needs to replace its older, retiring Los Angeles-class submarines. It is common ground that before a US president could authorise the sale of any Virginia-class submarines to Australia, that production rate would need to be at least 2.3 Virginia-class submarines a year – that is, production needs to more than double.

The decision to sell Virginias to Australia won’t be taken until 2031 at the earliest. Despite many billions of extra investment, submarine production in the US has remained flat for years. Repeated predictions of an increase in production have been unfulfilled. In other words all the risk of America being able to sell Australia submarines is borne by Australia – we have no leverage at all. So of course Trump loves AUKUS – he is hyper-transactional and he loves a good deal. He would be more than happy to sell us submarines – he offered to sell them to me in 2017 – but neither he, nor a successor, will sell Australia submarines if the US Navy continues to be short of them.

The China hawks both in Canberra and Washington will be puzzled by Trump saying that he did not think AUKUS was needed to deter China because relations with President Xi are going to be fine and nothing is going to happen to threaten Taiwan. That too helps Albanese as it validates his efforts to stabilise relations with Beijing.

A journalist from the Murdoch stable once again asked Trump about Kevin Rudd’s old tweets criticising Trump in colourful terms. Trump’s reply sounded tongue-in-cheek to me, hardly a savage rant. Albanese has been right in keeping Rudd in Washington, and right in bringing him to the meeting. That showed strength of character and strength and power are the only things Trump respects. Trump may not like Rudd, but today’s outcomes, especially on rare earths and critical minerals, are testimony to Rudd’s effectiveness. Bullshit and backslapping are fine but delivering the goods is what matters.

There will be disappointment that there was no change in the tariffs and that Australia did not achieve some relief from the high tariffs on steel and aluminium. A good outcome there would have been a quota arrangement so that a certain amount of both metals would be exempt, more or less along the lines of what the UK achieved. That remains a work in progress.