Australia bought $1b in armoured vehicles from this Asian nation. Does it mean closer ties?

With South Korean defence firm Hanwha breaking ground for its armoured vehicle production facility in Victoria, an Indo-Pacific security expert says the incoming Yoon administration shows “hopeful” signs for stronger Australia-Korea security ties.

South Korean army's K-9 self-propelled howitzers move on the street in Paju, South Korea, Tuesday, Aug. 29, 2017. Source: (AP Photo/Lee Jin-man)

Highlights

• Australia inked a deal with South Korea defence giant Hanwha to build military vehicles in Victoria last December
• The $1 billion contract is the first defence deal between the two countries
• Indo-Pacific security expert Dr Peter K. Lee says South Korea's incoming Yoon administration attaches 'higher value' to Australia

Hanwha Defense Australia officially embarked on construction of the Armoured Vehicle Centre of Excellence in April.

The new manufacturing facility in Geelong is part of a $1 billon dollar defence contract, hailed as Australia's largest-ever military deal with an Asian nation, signed during outgoing South Korean President Moon Jae-in’s state visit in December 2021.

Under the contract, Hanwha will build 30 self-propelled howitzers called “Huntsman” and 15 armoured ammunition resupply vehicles for the Australian army in collaboration with local companies.

The defence deal is said to be the first of its kind between the two countries, and is a major milestone in bilateral relations, according to Indo-Pacific security expert Dr Peter K. Lee.

Dr Lee, who is a research fellow in the Foreign Policy and Defence Program at the United States Studies Centre and a Korea Foundation research fellow at the University of Melbourne, says the deal is a win for the Australian government, as it focuses on “developing a sovereign defence industry” through technology transfer between partners.

“Rather than an off-the-shelf acquisition of weapons systems, Australia is seeking to co-develop and manufacture defence capabilities domestically together with Korea,” he tells SBS Korean.

Dr Lee further explains that it is South Korea's first defence export to a member of the Five Eyes intelligence partnership.

The value of the contract is therefore in its potential to open Korea's access to this larger high-end defence market.

President Moon’s visit coincided with the 60th anniversary of diplomatic relations between Australia and South Korea.

During the visit, the two countries elevated their bilateral relations to a comprehensive strategic partnership, and revived a Memorandum of Understanding on Defence Industry and Defence Materiel Cooperation for the first time since a similar MOU expired in 2011.

South Korean President Moon Jae-in (R) and Assistant Director of the Australian War Memorial Brian Dawson (L) view the Roll of Honour. Source: AAP Image/Lukas Coch

Jeffrey Robertson, a Visiting Fellow at the Asia Institute, University of Melbourne, has pointed out that South Korea's primary benefits from the historic deal are economic. 

In Mr Robertson's article published in The Interpreter by the Lowy Institute, he writes that for Australia the contract with Hanwha is “about addressing mutual security challenges” while, from South Korea’s perspective, it “reflected a long-term strategy to develop a competent, domestic military-industrial sector and expand exports”.

Dr Lee expresses a similar view.

“Australia-Korea defence cooperation, such as military exercises, has tended to proceed in a low-key manner in comparison to trade cooperation. This has especially been the case in recent years during the Moon Jae-in administration.”

He claims that the two governments' different “threat perceptions towards China, North Korea, and Russia” made it “unclear who exactly was the target and focus of their military exercises and their respective leaders tended to downplay the military dimensions of the bilateral relationship”. 

However, there has been a noticeable shift in Korea’s approach to security cooperation with Australia in recent months as President-Elect Yoon Suk-yeol prepares to take office in May.

Six days after his election victory on 10 March, the incoming President Yoon spoke with Australia’s Prime Minister - his fourth call with a foreign leader after speaking with the leaders of the US, Japan and UK. 

Dr Lee argues the call “reflects the higher value that this incoming administration attaches to Australia”.

He predicts there will be considerable changes in Yoon administration’s foreign policy outlook including its attitude towards Australia.

Yoon Suk-yeol of the main opposition People Power Party poses with bouquets after he was elected President. Source: EPA/YONHAP SOUTH KOREA

“Whether this stems from Yoon's personal interest in Australia remains to be seen, but what is clear is that many in his foreign policy team view Australia favourably. For example, foreign minister nominee Park Jin and national security advisor Kim Sung-han have long advocated for expanding the Korea-US alliance's cooperation with other US allies, including Australia,” he says.

“In addition, former Korean ambassadors to Australia such as National Assemblyman Cho Taeyong and Professor Kim Woosang, who played key roles in promoting a closer Korea-Australia relationship in the past, are set to play an important role in the new government.”

Joining Quad was one of President-elect Yoon's election promises, and the fact that three out of four on his top call list were members of the security dialogue can be seen as an effort towards achieving this goal.

In the same month as the new South Korean government swears in, Australians will head to the polls to elect the next government.

South Korea held an inaugural K-Defence Industry Outlook Roundtable in Melbourne. Source: KOTRA

However, Dr Lee says the outcome of the May election is likely to have less impact on the bilateral relationship.

“Australia's foreign and defence policy is largely bipartisan at the moment due to China's coercion of Australia and the ongoing crisis in relations. So, Anthony Albanese's position on how to respond to Chinese pressure, AUKUS or the Quad are in fact quite similar to the current government,” he argues.

Meanwhile, South Korea, encouraged by Hanwha’s success, is doubling down on efforts to boost its defence exports.

In early April, an inaugural K-Defence Industry Outlook Roundtable was held in Melbourne, hosted by the South Korean National Assembly’s Defense Committee and the Defense Acquisition Program Administration.

Australian government bodies and businesses including Invest Victoria, Austrade, MEMKO and Downer attended the event.

Hanwha is one of two remaining contenders vying for a multi-billion dollar infantry fighting vehicle project.