From the “contract of the century” to the earthquake: how the Australian submarine business came about

It is a “blow in the back”, estimates Jean-Yves Le Drian. The French Foreign Minister is struggling to swallow Australia’s breach of a colossal contract with France for the sale of 12 diesel-electric submarines. With, the key, the “contract of the century” flew away, estimated at nearly 56 billion euros. The Quai d’Orsay also seems very annoyed by the coup by the United States, in partnership with the United Kingdom, to have signed a strategic partnership, called “Aukus”, with Australia. The latter foresees that Washington and London will help Canberra to acquire nuclear attack submarines, consequently taking the place of the French industrialist Naval Group.

  • Signature of the contract in 2016

The “contract of the century” with France was signed in 2016, after the selection of Naval Group to build the machines, for an initial amount of around 30 billion euros. The document provides for the production of 12 Attack submarines derived from future French Barracuda nuclear submarines. It had been validated with the blessing of the United States, which had accepted that the American industrialist Lockheed Martin provide the combat system for the future buildings, representing a third of the value of the contract.

No nuclear option retained at the time because the country aims to navigate throughout the Pacific area. However, its neighbor, New Zealand, refuses any nuclear device in its ports. “The irony is that when we chose the French-designed submarine a few years ago, we actually took a nuclear powered submarine and spent millions of dollars to turn it into a diesel submarine. “, observes Peter Jennings, director of the Australian think tank ASPI on ABC News.

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The submarines were to be built in Australia and the industrialist pledged that 60% of the contract value would be spent in Australia and create nearly 1,800 jobs in the country over the next few years.

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  • Australian alert in June

Since then, the bill has continued to swell, almost doubling due to cost overruns and currency effects. An increase widely criticized in Australia, which, in the person of the Prime Minister, Scott Morisson, alerted Paris of this increase which did not suit him. On June 15, the politician visiting the French capital, had expressed his “dissatisfaction” during a working dinner organized at the Elysee, reveals franceinfo according to whom a breach of contract had been in the drawers since February.

Faced with this soaring price and a proposal deemed “far too expensive”, Scott Morisson then gave the manufacturer until September to present a different option. Because, “as with any contract, I expect that they will be able to respect it”, he had justified.

At the end of a “2 + 2” meeting between the Defense and Foreign Ministers of the two countries, on August 30, France and Australia had nevertheless affirmed in a joint statement their desire “to deepen cooperation in the field of the defense industry “and” underlined the importance of the submarine program of the future “between the two countries.

  • The announcement falls on September 15

But Tuesday, September 15, the ax falls. The Australian government officially notifies the French government – just hours before the official announcement coordinated with Washington and London – of the breach of the contract in favor of a new agreement with the United States and the United Kingdom. This time for nuclear submarines. A strategic partnership to counter China, called AUKUS.

Jean-Yves Le Drian’s disappointment and anger are not in doubt. “We had established a relationship of trust with Australia – this trust is betrayed,” he said on franceinfo. “I am angry today, with a lot of bitterness about this rupture, especially since this is not done between allies and in addition when there were first two years of negotiations (…) This unilateral, brutal, unpredictable decision is very similar to what Mr. Trump was doing, “he added, attacking Joe Biden.

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For the French industrialist, it is also a “great disappointment”. “The Commonwealth of Australia did not wish to initiate the next phase of the program, which is a great disappointment for Naval Group which offered Australia a conventional submarine of regional superiority with exceptional performance”, affirmed the group in a statement sent to AFP.

“For five years, the Naval Group teams in France and Australia, and those of our partners, have fully mobilized. They have given the best of themselves and Naval Group has honored all of its commitments,” continued. the French industrialist.

Ambassadors recalled

The diplomatic crisis takes another step on Friday with the recall, by Paris, of its ambassadors in the United States and Australia. A first. A decision that Washington says it regrets. The White House nevertheless affirms that the United States remains “engaged in the days to come to resolve (their) differences, as we have done on other occasions during our long alliance”. But France does not seem ready to forgive. The same evening, an evening planned at the residence of the Ambassador of France in the American capital was canceled. This reception was to celebrate the anniversary of a decisive naval battle in the United States War of Independence, which ended with a victory for the French fleet over the British fleet on September 5, 1781. Quite a symbol.

“Today, our position is very firm, of a total incomprehension and a request for explanation and clarification on the part of each other”, Jean-Yves Le Drian reacted again, Saturday evening, denouncing in addition a “duplicity” of Canberra and Washington. “There was a lie, there was duplicity, there was a major breach of trust, there was contempt so things are not right between us,” he said. For the Minister of Foreign Affairs, this crisis could weigh on the definition of NATO’s new strategic concept.

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“We have trade negotiations with Australia, I do not see how we can trust the Australian partner”, replies on RFI the Secretary of State for European Affairs, Clément Beaune. “This is a serious breach of confidence on Australia’s part,” he said. “International relations, it is not naivety, good feelings, but the word, the signing of a contract is worth something. If we no longer have confidence, we can no longer move forward,” he said. -he thinks.

Australia takes over

Australian Prime Minister Scott Morrison responded to France’s accusations on Sunday. “I think they would have had every reason to know that we had deep and serious reservations that the capabilities of the Attack-class submarine did not meet our strategic interests and we had made it clear that we would take a decision based on our national strategic interest, “Scott Morrison said at a press conference in Sydney on Sunday.

“I do not regret the decision to put Australia’s national interest first. I will never regret it,” he added, stating that it would have been “negligent” to go forward. forward against advice from the Australian Defense and Intelligence Services.

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Defense Minister Peter Dutton, for his part, insisted that Canberra had been “outspoken, open and honest” with France about its concerns over the deal, which was over budget and years behind schedule.


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