Australian defence minister asks Japan to help develop new subs

(Adds further comments, details)

By Tim Kelly

TOKYO, Oct 16 (Reuters) - Australia's defence minister David Johnston asked Japan on Thursday to help his country develop new submarines, his first formal request for cooperation that could lead to an unprecedented deal for Australia to buy Japanese-built vessels.

Johnston made the request during a meeting in Tokyo with his Japanese counterpart, Akinori Eto, said a Japanese Ministry of Defense spokesman who attended the talks.

"Johnston requested cooperation from Japan. Eto said Japan will consider ways in which we can help," said the spokesman, Hirofumi Takeda.

Australia and Japan are leaning towards Australia replacing by the 2030s its ageing fleet of six Collins-class submarines with as many as 12 stealth submarines based on the 4,000-tonnes Soryu-class vessels built by Mitsubishi Heavy Industries (Other OTC: MHVYF - news) and Kawasaki Heavy Industries (Other OTC: KWHIF - news) , sources with knowledge of the talks told Reuters in August. [ID;nL3N0R24D6]

Such an agreement would require Australia's prime minister Tony Abbot to backtrack on a promise to build new boats at home

amidst strong local opposition to a foreign construction deal.

For Japan such a deal with Australia could rile an increasingly assertive China and would be its first fully-engineered military export since at least the end of World War II. As part of a wider strategy to forge a more robust military capability to counter China, Prime Minister Shinzo Abe in April ended a decades-old ban on overseas arms sales because it will lower arms costs by widening the Japanese defence industry's production base.

BACKLASH

In Australia the political backlash to any deal to buy submarines from Japan is already gathering pace. Opponents, such as Labor Party Leader Bill Shortern, say such a deal would hit employment at home, particularly in South Australia, which is home to some 27,000 defence-related jobs including 3,000 in shipbuilding.

Abbott so far appears to be weathering the political storm insisting his government will pick the vessel that best fits the needs of the navy.

"Decisions about future submarines have to be made on the basis of what is best for our armed forces, not what is best for a particular region or what might be best for a particular company," Abbot told reporters on Thursday during a visit to a school in Melbourne.

His government says it is mulling several options for the new submarine programme, including building the vessels at home or overseas. Construction in Australia, which has never designed or built a conventional submarine as large as the Soryu, is a potentially riskier and more prone to possible delays and budget overruns.

The research institute Rand last year estimated in a report commissioned by the Australian government that the design phase would require 1,000 draftsmen and engineers, five times more than are currently available in the country.

In a bid to counter the Japanese proposals a delegation from German submarine maker ThyssenKrupp Marine Systems this week travelled to Canberra with a proposal to build the boats in Australia, local media reported.

U.S. BACKING FOR JAPAN

However, backing from the United States, which has close but separate security pacts with Japan and Australia, may make a deal to buy Japanese submarines more attractive.

Admiral Stuart Munsch, the chief U.S. undersea naval officer in Asia, told Reuters in August that U.S. Navy would be pleased to see Australia operate Japanese-built submarines. His boats may have to rely on help from Australian and Japanese vessels to monitor increased undersea activity by China.

Over the next 15 years the U.S. global submarine fleet could shrink to as few as 41 vessels from around 50 now according to an estimate from the conservative think tank, the Heritage Foundation. At the same time China's fleet may expand by a quarter to around 80 boats.

Meanwhile Japan, which currently has 16 submarines, is at the start of a building programme that will increase its undersea fleet to 22 vessels over the next decade or so. (Additional reporting by Lincoln Feast in Sydney; Editing by Pravin Char, Greg Mahlich)