Australia accepts payment from navy, ending French submarine spat


AUSTRALIA today unveiled a massive compensation deal with French submarine builder Naval Group, ending a contract dispute that has soured relations between Canberra and Paris for nearly a year.

Prime Minister Anthony Albanese says the French company has agreed a ‘fair and just settlement’ of €555m (RM2.6bn) for Australia, ending a multi-billion submarine contract ten-year-old dollars.

The deal draws a line under a spat that has derailed relations between the two countries and threatened to torpedo talks on an EU-Australia trade deal.

In September last year, then Australian Prime Minister Scott Morrison abruptly tore up the French contract to build a dozen diesel-powered submarines.

He also stunned Paris by announcing a secret deal to buy American or British nuclear submarines, a major change for a country with little domestic nuclear capability.

The decision drew fury from French President Emmanuel Macron, who publicly accused Morrison of lying and recalled his ambassador from Australia in protest.

Relations were frozen until last month when Australia elected centre-left leader Albanese.

Since taking office, Albanese has rushed to mend strained relations with France, New Zealand and Pacific island nations, which opposed the previous Conservative government’s procrastination on climate change.

He also took tentative steps to hold the first ministerial-level talks with China in more than two years, after a series of bitter political and trade disputes.

“We are restoring a better relationship between Australia and France,” Albanese said, after speaking to Macron about the settlement.

“I look forward to responding to President Macron’s invitation to travel to Paris as soon as possible,” he added.

arms race

The submarine contract had been the centerpiece of Australia’s race to develop its military capabilities, as it feared the threat from a more belligerent China under President Xi Jinping.

In total, the failure of the French submarine contract will have cost Australian taxpayers $2.4 billion (RM10.6 billion), Albanese said, with next to nothing to show for it.

The promised nuclear-powered submarines will likely give Australia the ability to operate more stealthily and – armed with sophisticated cruise missile capabilities – will have a much more deterrent effect on Beijing.

But there remains deep uncertainty about how quickly they can be built.

The first American or British submarines are unlikely to be in the water for decades, leaving a long capability gap as Australia’s existing fleet ages.

The choice of contractor will have significant economic impact and strategic implications, closely linking the Australian Navy with that of the chosen nation.

Former defense minister and now opposition leader Peter Dutton said this week he had decided to source submarines from the United States, an unusual revelation given the sensitivity ongoing talks.

The current government has insisted that no decision has yet been made. — AFP, June 11, 2022.


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