Is CPSP causing diplomatic issues? Maybe.

I tend to try and stay out of drama, esepcially foreign drama. However this one time I feel like I can make an exception, especially because it so directly involved us.

German broadcasters WDR and NDR reported that the Canadian Patrol Submarine Project has apparently caused quite the diplomatic stir between Germany and the United Kingdom. Of course it's not the only one, British support for Saab in the upcoming Orka project in Poland has also apparently drew ire.

Nevertheless, the situation is intense enough that both Chancellor Friedrich Merz (CDU) and Defense Minister Boris Pistorius (SPD) raised a complaint with London about this behavior. Chancellor Merz reportedly raised the issue directly with Prime Minister Kier Starmer last week.

This all ties back to one person it seems -Babcock- currently working with Hanwha, the teo signed a Teaming Agreement back in September under which Babcock will be the exclusive provider of In-Service Support should the KSS-III be selected. Babcock is also the lead on Team Victoria-class, providing ISS for the Victoria-class Submarines.

Babcock is also seemingly going to be heavily involved in Saab’s work in Poland should the A26 be selected, and unlike our rumored, it would appear that the Prime Minister did send a letter in support of the acquisition.

As of right now such a letter is rumor for us. I have not heard of it, and so it is left as speculation among the article. Similar to us the Starmer government has been keen to boost defence exports under the guise of Nation-building.

The UK released their own Defence Industrial Strategy in September, of which core tenants include ‘Making defense an engine for growth’ and ‘Backing UK Based Businesses’. This includes things such as appointing a new National Armaments Director to lead export campaigns, a new Office of Defence Exports, and bolstering financial instruments through assets like UK Export Finance.

To quote the Prime Minister himself:

“Our task now is to seize the defence dividend - felt directly in the pockets of working people, rebuilding our industrial base and creating the jobs of the future….

A national effort. A time for the state, business and society to join hands, in pursuit of the security of the nation and the prosperity of its people."

You can hear quite a lot of the same messaging that we hear from our own government about using the defence industry and defence investment as a tool of economic growth. That should also show you as to why the Starmer government is taking such a hands-on approach to things. The Defence Industrial Strategy outlines this in a Whole-of-Government apparoach, fitting given the situation.

So it's little wonder that the UK is keen to secure such contracts, esepcially when we're talking about a project valued in the tens of billions, stretched out over a decades-long timeline. It’s also no wonder why the Germans are understandably annoyed.

It's easy to forget the value of such contracts, and the opportunities they provide for wider economic benefit. A letter might not seem like much in the grand scheme of things, yet a major ally stepping in to voice their own support, and potential willingness to be involved, can quickly shift the balance of any assessments.

We heard from TKMS CEO Oliver Burkhard yesterday speak very candidly about the value the company sees in Canada, and their own concerns and worries about the project. With the looming economic power that companies like Hanwha and Hyundai could bring to the table, coupled with them snatching up a healthy list of Canadian partners already, adding on the support of the United Kingdom can quickly push the GERNOR side past the point where they could resonably compete.

CPSP is being billed as the start of a new economic relationship with whatever partner is chosen. What comes with CPSP isnt just the initial deal for submarines, but a direct pathway into the Canadian economy, and the access to things like energy, critical minerals, and industry that come with it.

The economic incentive for everyone is massive, and understandably the reactions to a third-party direvtly involving themselves, seemingly outside the competition, is an understandable irritant. It's why the reaction is seemingly so aggressive. There is a right to be if one os looking at this from an economic standpoint.

The size and scale of CPSP is often underdiscussed. Outside Australia this is potentially the largest singular order for submarines is decades, assuming the full twelve is procured. Tied into it are also massive contracts for In-Service Support and again what is essentially prefered access to Canadian industry and markets.

Its not flattery. It's not kind words. When both sides talk about the ecpnomic potential they're being serious. Korean media will often present the potential as ‘thousands of jobs and valued at 9% of the national budget’ when discussing CPSP. The scale cannot be understated.

Of course for now a lot of this is anonymous reports and rumors. Usually I wouldnt bother to comment on this stuff, however the interest, the intrigue in me got the better. The rumors of support from the British government is also something I think is worth of reporting on.

Either way, take these as rumors and a bit of drama to spice your life with. We will now in a few weeks whether this mysterious letter of support comes to pass. CPSP is moving fast, and a contract is expected in the Spring or Summer. That doesnt leave much time to get things done.