Biden flies to San Diego to sign nuclear submarine deal amid bank shares plummet

President Joe Biden travels to San Diego on Monday to announce that Australia has bought nuclear submarines to modernize its fleet and help the US counter China’s growing influence in the Indo-Pacific.

Before boarding Air Force 1, the president made brief remarks, hoping to reassure Americans that “American banking is safe” following the collapse of Silicon Valley Bank on Friday.

Shortly after Biden’s departure, the New York Stock Exchange opened and trading was quickly halted for three banks: First Republic Bank, Western Alliance and PacWest after shares fell 75 percent.

Financial jitters continue to overshadow the international deal as Wall Street scrambles to figure out what’s behind multiple US bank failures.

Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading on March 13, 2023 in New York City. Shortly after Biden’s departure for California, US stocks slumped Monday due to concerns about the banking system following the collapse of Silicon Valley Bank and others.

San Diego is Biden’s first stop on a three-day trip to California and Nevada. He will discuss gun violence prevention in Monterey Park, California, and his plans to reduce prescription drug costs in Las Vegas.

The trip will include fundraising freezes as Biden ramps up his political activity ahead of an expected announcement next month that he will seek re-election in 2024.

Landing in San Diego, home of the US Pacific fleet, Biden will meet with Australian Prime Minister Anthony Albanese and British Prime Minister Rishi Sunak – two of America’s closest allies – as part of the 18-month nuclear partnership, known by the abbreviation AUKUS, which stands for AUstralia, UK, USA.

Announced in 2021, the consortium paved the way for Australia’s access to nuclear-powered submarines, which are more stealthy and capable than conventionally powered boats, to counterbalance China’s military buildup.

Ahead of the trilateral meeting, Sunak announced he will increase British military funding by £5 billion ($6 billion) over the next two years in response to Russia’s invasion of Ukraine and Chinese aggression.

The AUKUS partnership was announced in 2021, but Monday’s announcement will bolster the details. Australia is buying up to five Virginia-class boats as part of the deal, according to the Associated Press.

China objects to the deal because it violates the Nuclear Non-Proliferation Treaty, which prohibits the transfer of nuclear weapons material from a nuclear-weapon state to a non-nuclear-weapon state.

Australian officials counter that they are working to procure nuclear-powered and non-nuclear-armed submarines.

Biden will also hold bilateral meetings with Albanese and Sunak in San Diego.

Australia will buy up to five Virginia-class submarines – above the Virginia-class USS North Dakota

British Prime Minister Rishi Sunak, left, speaks with Australian Prime Minister Anthony Albanese at Lionfish seafood restaurant in San Diego on Sunday

British Prime Minister Rishi Sunak addresses the British press traveling with him to San Diego

Silicon Valley Bank SVB’s logo is pictured on its German branch in Frankfurt, Germany, as concerns over a potential international financial contagion mount

Signature Bank was acquired by New York State Agencies last Friday, March 12, 2023.

The three parties have worked to provide Australia with a fleet of nuclear-powered submarines, given limitations on technology transfer and classified nuclear processes.

On the way to the US, Sunak said China “presents a game-changing challenge to us and to the world order. It is a regime that is becoming increasingly authoritarian at home and assertive abroad, and has a desire to reform the world order.’

But, he added, “you can’t ignore China” given the size of its economy.

“It’s good to engage with China on the issues where we can find common ground and make a difference, for example climate change, global health, macroeconomic stability,” he said.

“That is the right approach and at the same time very robust in defending our values ​​and our interests.”

The secretly brokered AUKUS deal included the Australian government’s cancellation of a $66 billion contract for a French-built fleet of conventional submarines, sparking a diplomatic squabble within the Western alliance that took months to mend.

French President Emmanuel Macron brought his ambassador from Washington in September 2021 and later met Biden in Italy at a G20 so the two could make amends.

Biden called Macron on Tuesday, but a White House reading of the call did not say whether the AUKUS deal would materialize.

The two leaders did discuss growing Chinese influence in the South Pacific, an issue that also worries Australia.