Australia unveils £474MILLION deal with French submarine maker to repair soured relations

Australia: Labor's Anthony Albanese speaks after election vote

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Prime Minister Anthony Albanese said on Saturday that the French firm had agreed to a “fair and an equitable settlement” of £474million (€555million) for Australia ending a 10-year-old multibillion-dollar submarine contract. The agreement drew a line under a spat which caused leader-level recriminations and threatened to torpedo talks on a European Union-Australia trade agreement.

In September 2021, then-Australian Prime Minister Scott Morrison abruptly ripped up the French contract to build a dozen diesel-powered submarines.

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

French defence minister Sebastien Lecornu said: “It permits us to turn a page in our bilateral relations with Australia and look to the future.”

Mr Albanese said he would travel to France soon to “reset” a relationship beset by “pretty obvious” tensions.

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 on ice until this May when Australia elected centre-left leader Albanese.

Since coming to office, Albanese has rushed to fix strained relations with France, New Zealand and with Pacific Island nations, who objected to the previous conservative government’s foot dragging on climate change.

He has also made tentative steps to conduct the first ministerial-level talks with China in over two years, after a range of bitter political and trade disputes.

After speaking to President Macron about the settlement, Mr Albanese said: “We are re-establishing a better relationship between Australia and France.

“I’m looking forward to taking up President Macron’s invitation to me to visit Paris at the earliest opportunity.”

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

Speaking on the sidelines of the Shangri-La Dialogue security summit in Singapore, Mr Lecornu said France valued its “friendship” with Australia.

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He said: “Just because a government in the past did not keep its word, it does not mean we have to forget our strategic relationship.

“Australia has a new team in power, we are happy to be able to work with them.”

In total, the failed French submarine contract will have cost Australian taxpayers $2.4billion (£1.9billion), Mr Albanese said, with almost nothing to show for it.

The promised nuclear-powered submarines are likely to cost many billions more, but would give Australia the ability to operate more stealthily and – armed with sophisticated cruise missile capabilities – pose much more of a deterrent to Beijing.

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