The global submarine market will remain in the hands of Germany, France, Sweden and South Korea, according to a report drawing attention in defense circles. Eurasian Times, an India-based outlet, argued in a recent article titled "America's $40 Billion Blind Spot: Why the World's Largest Arms Exporter Hasn't Sold a Single Submarine in 50 Years" that the United States has no foothold left in the submarine market.
Despite its position as the world's largest arms exporter, the U.S. has not exported a single submarine in the past 50 years, the report said. As a result, the market is now led by Germany's Thyssenkrupp Marine Systems (TKMS), the outlet said. TKMS has won sole contracts for Canada's next-generation submarine program, worth 60 trillion won, and India's diesel submarine acquisition program, worth 10 trillion won.
The U.S. once dominated the field, accounting for roughly 25% of global diesel submarine exports between 1945 and 1975. It built more than 200 submarines after World War II. That changed when the U.S. commissioned the world's first nuclear-powered submarine, the USS Nautilus (SSN-571), in 1954.
The U.S. retired large numbers of its existing diesel submarines at the time. The decommissioned boats were handed over to allies including Turkey, Spain, Italy, Greece, the Netherlands, Canada and Taiwan as part of the Marshall Plan and efforts to strengthen the defenses of the North Atlantic Treaty Organization (NATO). Washington built almost no diesel submarines afterward. That was the point at which the U.S. began to be pushed out of the global submarine market, the outlet said.
The report focused in particular on how the U.S. commitment to nuclear-powered submarines alone left it in a completely different position from the era when it built and exported diesel boats. The shift to nuclear propulsion brought legal procedures requiring far more demanding export reviews than in the diesel era, making exports effectively difficult, the outlet said.
Washington has long worried that the spread of submarine technology could weaken the U.S. Navy's operational capabilities, and included submarines on the U.S. Munitions List. It also applied the strict controls of the International Traffic in Arms Regulations (ITAR) and the Arms Export Control Act. On top of that, nuclear propulsion technology falls under the Atomic Energy Act as well, making it the military technology the U.S. protects most thoroughly — and leaving submarine exports at zero for the past 50 years.
Britain, however, received access to nuclear submarine technology under the 1958 U.S.-U.K. Mutual Defense Agreement. The U.S. supplied the reactor for HMS Dreadnought, Britain's first nuclear submarine, and the two countries have cooperated closely since, but that was a matter of special bilateral military cooperation rather than a commercial export. Australia is also set to receive up to three Virginia-class nuclear-powered submarines under the 2021 AUKUS agreement.
For those reasons, the outlet concluded, the U.S. has disappeared from the global submarine market, which is now divided among Germany, France, Sweden, South Korea and Russia.
South Korea lost out in the Canadian Patrol Submarine Project (CPSP) but has recently revised its strategy, turning to naval modernization programs in the Philippines and Saudi Arabia and moving quickly to expand its global footprint, leaving its export prospects bright, the report said. Acquisition programs currently under way include four to six submarines for Saudi Arabia, two for the Philippines and four for Greece.
South Korea achieved its first submarine export in 2011, when Hanwha Ocean (042660), then Daewoo Shipbuilding & Marine Engineering, signed a 1.2 trillion won submarine contract with Indonesia's defense ministry. Under the deal, South Korea supplied three 1,400-ton diesel submarines and agreed to transfer construction technology and provide maintenance, repair and overhaul (MRO) services. All three boats were delivered on schedule in phases starting in 2017.
