Korea, Germany in Tight Race for 60 Trillion Won Canadian Submarine Deal

South Korea's Hanwha Ocean and Germany's ThyssenKrupp Marine Systems (TKMS) are set for a showdown, with the winner of Canada's 60 trillion won next-generation submarine project (CPSP) expected to be announced on July 6 or 7 (local time), drawing global attention to who will emerge victorious. Regarding speculation about a "split order," the Canadian government has stated that such a scenario is "unlikely."

This raises the likelihood that only one of the two qualified competitors—Hanwha Ocean and TKMS—will be selected. CPSP is a large-scale project to acquire up to 12 diesel submarines to replace the aging Victoria-class fleet. Including submarine construction costs and 30 years of maintenance, repair, and operations (MRO) expenses, the project's total value is estimated to reach as much as 60 trillion won.

The contest between South Korea and Germany is so tight that President Lee Jae-myung, who recently returned from meeting Canadian Prime Minister Mark Carney at the Group of Seven (G7) summit in France, personally admitted, "Based on our comprehensive assessment, we have considerable hope, but it's not easy to be optimistic."

Judging from remarks by Kang Hoon-sik, presidential chief of staff, who visited Canada twice as President Lee's special envoy for strategic economic cooperation to directly support the bid, the two countries appear locked in an extremely close race in which neither can guarantee victory. In an interview with the presidential press corps, Kang said the Canadian submarine order situation was "about 50-50."

Kang explained, "Canada and South Korea have a completely complementary structure, so there are a great many opportunities for a 'win-win.'" He added, "On the other hand, our competitor Germany has the advantages of being a leader in submarine technology and, above all, a core member of the North Atlantic Treaty Organization (NATO). Canada will be weighing these considerations."

The defense industry initially expected South Korea to be far behind Germany in the early stages of the competition, but views its chances as having improved as the government mobilized all-out efforts to win CPSP. Since this bid takes on the character of a comprehensive competition weighing not only submarine performance but also industrial cooperation and economic ripple effects, hopes are pinned on the South Korean "One Team" winning the order.

South Korea is waging an all-out effort, expanding cooperation with local Canadian companies led by Hanwha and others. HD Hyundai Oilbank proposed plans to expand imports of Canadian crude oil worth trillions of won, while HD Construction Equipment proposed cooperation on the Canadian government's infrastructure projects. Beyond simple submarine cooperation, they presented cooperation plans spanning defense, advanced manufacturing, energy, and even aerospace.

Local Canadian media reported that Prime Minister Carney could announce the preferred bidder before departing on the 7th to attend the NATO summit. Analysts say the announcement's timing is being coordinated in line with Canada's security and diplomatic schedule. Some observers suggest the announcement could come around the 8th or 9th, the days following the NATO summit.

Notably, the Canadian Navy is reported to have determined that both submarines can meet its operational requirements. Prime Minister Carney also stated last September that "both candidates meet the Canadian Navy's very high requirements." Accordingly, the final outcome is expected to hinge not only on submarine performance but also on delivery timelines, maintenance, local industrial contributions, and the diplomatic and security cooperation framework.

Amid this razor-thin contest, Germany has been making confident statements assuring victory, as if seeking to seize the initiative. On the 3rd (local time), German Vice Chancellor and Finance Minister Lars Klingbeil visited the site of German shipbuilder ThyssenKrupp Marine Systems (TKMS) and said the situation was "very favorable to us in many respects."

TKMS CEO Oliver Burkhard also expressed confidence, saying, "We believe we have a strong chance of winning the contract," and that if the deal goes through, "it would be the largest conventional submarine contract in history concluded among NATO allies."

Hanwha Ocean proposed that if the contract is signed this year, it could deliver the first vessel in 2032 and four vessels by 2035. It then plans to supply one vessel per year, delivering all 12 by 2043. TKMS pledged to supply four vessels by 2036. Germany and Norway also proposed advancing Canada's delivery timeline by each ceding one submarine slated for their own navies.

Locally, some analysts say that if the announcement comes on the 6th, it would be a favorable sign for Germany. Since Prime Minister Carney is scheduled to attend the NATO summit the following day, an announcement just before the summit is interpreted as being made with Germany, a member state, in mind. If Canada chooses German submarines, it would send both an internal and external message of strengthened European defense cooperation and NATO solidarity.

Of course, there is considerable uncertainty in concluding any particular company's advantage based solely on the announcement's timing. The Ottawa Citizen, a major Canadian outlet, reported that choosing South Korean submarines could signal Canada's intent to expand defense and security cooperation with South Korea in the Indo-Pacific region and to counter China's influence.

For Canada, choosing Germany would carry the strategic meaning of strengthening European and NATO cooperation, while choosing South Korea would mean expanding its foothold in the Indo-Pacific—each carrying different strategic significance. In a situation bound to require deep deliberation, attention is increasingly focused on whose hand Canada will ultimately grasp.