AUKUS Pillar II: Progress, Challenges, and Implications for Indo-Pacific Security After Five Years

Five years after its announcement, AUKUS's Pillar II, focused on developing advanced military capabilities, faces challenges in measuring its success. While Pillar I, centered on nuclear-powered submarines for Australia, is reportedly on track, Pillar II's progress has been difficult to assess due to a lack of agreed metrics. Pillar II, also known as Advanced Capabilities, aims for collaborative development and deployment in six key areas: artificial intelligence (AI) and autonomy, cyber, electronic warfare, hypersonics and counter-hypersonics, quantum, and undersea warfare. These technologies are reshaping modern conflict, and AUKUS seeks to counter China's advancements in these critical domains. Over the past five years, cooperation has occurred in research, development, and testing, along with regulatory alignment. For instance, a jointly developed AI algorithm for reconnaissance aircraft was unveiled in December 2023. Regulatory reforms, including exemptions for approximately 80 percent of U.S. defense exports to Australia and the UK from ITAR, aim to facilitate technology and industrial collaboration. However, whether these activities translate into delivering operational capabilities remains a point of debate. Some analysts view regulatory alignment and technology demonstrations as laying the groundwork for genuine trilateral cooperation, while others point to delays in tangible capability development. Amidst these discussions, the first Pillar II signature project was announced in May 2026, targeting the joint production of shared payloads and systems for uncrewed underwater vehicles (UUVs) by 2027. This initiative aligns with Pillar I's focus on undersea warfare and aims to bolster maritime capabilities for each nation. Despite these efforts, Pillar II must overcome enduring structural challenges to translate its ambitions into concrete capabilities. As of September 2026, roughly 20 percent of intra-AUKUS defense trade remains outside licensing exemptions, impacting sectors directly relevant to technological cooperation and potentially hindering deeper interoperability and industrial integration among the partners. Information Source: The Diplomat Indonesia