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Submarines: five questions about Australia’s breach of the ‘deal of the century’

Posted Sep 16, 2021, 4:20 PMUpdated on Sep 17, 2021 at 10:21 am

It is a decision with serious consequences. On Wednesday, the Australian government decided to break a contract to supply twelve French submarines worth 56 billion euros, in favor of a strategic partnership with the United States and Great Britain. A decision that neither France nor China can digest. Here is what we know at this stage about the consequences of this resounding reversal.

1. What happened?

The contract which had been signed with France provided for the delivery to Australia, by Naval Group, of twelve conventional submarines, with diesel-electric propulsion. But Australian Prime Minister Scott Morrison has suddenly decided to change strategy: Australia will now opt for nuclear submarines.

The French contract was therefore terminated and a new partnership signed with the United States and Great Britain. Canberra will receive at least eight state-of-the-art nuclear-powered submarines. According to observers, this contract could be the first of a long list, linking Canberra to Washington and London “for generations”, as a senior American official has put it. Incidentally, Scott Morrison breaks an old Australian political taboo: that relating to the ban on the use of nuclear energy.

2. How did France react?

In France, the announcement provoked a strong reaction in the ranks of the executive. France received a “blow in the back” from Australia, Foreign Minister Jean-Yves Le Drian said on Thursday, adding that Canberra had “betrayed” the relationship of trust with Paris. The Minister of the Armed Forces, Florence Parly, expressed her “enormous disappointment” and denounced the “questioning of the word given”.

The anger of the two ministers is all the greater since they both had a videoconference meeting with their Australian counterparts at the end of August and at the time welcomed “the very high degree of cooperation” between the two countries. Furious, Jean-Yves Le Drian also deplored on Thursday the “quite unbearable” attitude of the American administration of Joe Biden, which he puts in parallel with that of his predecessor, Donald Trump.

3. What impact for Naval Group?

Main concerned by this reversal: Naval Group. The ex-DCNS was selected in 2016 to build the 12 submarines in Australia. The Australian contract was “the contract of the century”, the largest ever awarded for defense equipment by either a French industrialist or by Australia. In a statement, the group expressed its “great disappointment” and explained that it will study the consequences with Australia “in the days to come”.

According to experts, Naval Group will nevertheless be able to recover. The industrialist has plenty to see ahead: he must build five more Barracuda submarines by 2030, prepare the design of the four future ballistic missile submarines (SNLE3G) and the future French nuclear aircraft carrier. It is also building six conventional submarines for India, four for Brazil and hopes to win new contracts in the Netherlands and India. Thalès, a 35% shareholder of Naval Group, for its part confirmed all of its 2021 financial objectives despite this contract cancellation.

4. What does the French government intend to do?

Jean-Yves Le Drian has warned that France will demand “clarifications” from Australia after the breach of contract. ” It is not finished […] we have contracts, the Australians will have to tell us how they are doing,” he said.

On the industrial level, Florence Parly declared that France was going to “study all possible ways” to be sure of not suffering economic damage. According to the Australian press, the denunciation of the contract should cost several hundred million dollars in compensation to Canberra.

5. What geopolitical consequences?

France is not the only one to have expressed its dissatisfaction loud and clear. China reacted quickly through the voice of its diplomatic spokesperson, Zhao Lijian. “This cooperation (between Australia, the United States and London) on nuclear submarines seriously undermines regional peace and stability, escalates the arms race and undermines international nuclear non-proliferation efforts,” he said. he declared.

China feels particularly targeted. The Indo-Pacific zone has in fact become a place of indirect confrontation between Beijing, which seeks to extend its zone of influence there, and Washington, which seeks to contain it. This vast space, which extends from the East African coasts to the West American coasts, is highly strategic from a military point of view but also economically: it could contribute to approximately 60% of the world’s GDP by 2030, recalls the Ministry of Foreign Affairs on its website.

France, like the rest of Europe, seeks to defend its interests there. Emmanuel Macron made it a priority in his speech delivered at the Garden Island naval base in Sydney in 2018. The breach of the Australian contract is now shaking up his strategy in the region.

VIDEO. Why Australia is abruptly ending the “contract of the century” for 12 French submarines

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