Australia makes $500 million AUKUS payment ahead of US defence secretary meeting

By Kirsty Needham

SYDNEY (Reuters) - Australia has made its first $500 million payment to the United States under the AUKUS nuclear submarine deal ahead of a meeting between their defence heads on Friday in Washington.

Australian Defence Minister Richard Marles said the gesture showed Canberra is paying its way as a security partner.

Marles will be the first foreign counterpart hosted by U.S. Defence Secretary Pete Hegseth since his confirmation in the role. They are expected to discuss security in the Indo Pacific region and the growing U.S. military presence in Australia.

In early meetings with the Trump Administration, Australia has emphasised plans to double its annual defence budget over the next decade to A$100 billion ($63 billion) and notes that the United States has its second-largest trade surplus of $32 billion with Australia.

Under AUKUS, Australia will pay the United States $3 billion to boost the capacity of the U.S. submarine industry, and Washington will sell several Virginia-class nuclear-powered submarines to Australia, while Britain and Australia will later build a new AUKUS-class submarine.

Australia transferred the $500 million after a call between Marles and Hegseth on January 29.

Marles said in a statement the payment "is an important investment – it is about Australia paying its way when it comes to AUKUS by helping to uplift the U.S. submarine industrial base so that Virginia class submarines are available to be transferred to Australia".

Australia has previously said it will spend A$18 billion upgrading a network of northern defence bases used by the U.S. military, and A$8 billion on a defence naval base in Western Australia to support rotations of U.S. nuclear powered submarines.

Talks with Secretary of State Marco Rubio on AUKUS, Australia's biggest defence project, had been "very positive", Foreign Minister Penny Wong said last month.

($1 = 1.5891 Australian dollars)

(Reporting by Kirsty Needham in Sydney; Editing by Edwina Gibbs)