On September 16, Australian Prime Minister Scott Morrison announced the cancellation of a submarine deal with France signed in 2016.
The original contract stated Australia was to buy twelve conventional submarines from French company, Naval Group, for $66 billion.
Instead of partnering with France, Australia has entered a new submarine deal with the United States and signed AUKUS, a trilateral security pact with the United Kingdom and the United States.
French Foreign Affairs Minister Jean-Yves Le Drian told Franceinfo: “It really is a blow to the back. We had established a relationship of trust with Australia that trust is betrayed.”
The contract of the century
Australia and France began the submarine negotiations in 2014, and they signed the final agreement in 2016. France was to supply twelve conventional propulsion submarines for $66 billion, over €50 billion. The first operational submarine was to be delivered in 2034, and the following submarines were to be delivered every two years following the reception of the first one.
In the city of Cherbourg-en-Cotentin, Normandy, 500 people were already working on the project on the Naval Group site.
In addition to a commercial partnership, France’s goal for this deal was to establish a robust strategic partnership with Australia in the Indo-Pacific region.
Due to its economic and military benefits, the French dubbed this agreement with Australia, ‘the contract of the century.’
Australia’s preference for the United States over France
Prime Minister Morrison explained that the conventional submarines of Naval Group no longer meet the needs of the Australian army, and it became essential to turn to American nuclear-powered submarines instead.
As tensions rise in the Indo-Pacific region, mainly in the South China Sea, Australia’s strengthening of its defence has become a priority.
The Australian annual defence budget for 2021 to 2022 is $44 billion. This funding goes toward the Australian Government Department of Defence and the Australian Signals Directorate agency. It represents 2.06% of the Australian GDP, well below the average countries of the Organisation for Economic Co-operation and Development (OECD) of 2.64%.
As of June 2020, Australia’s army consisted of 59,095 permanent personnel and 28,878 reserve personnel.
In 2016, the submarine deal with France represented a great way for Australia to improve their defence posture. However, since 2016, the submarine deal has encountered various issues including timeline extensions of several milestones, budget blowouts and the level of involvement of Australia’s local industry.
In an attempt to avoid any open conflict with France, Prime Minister Morrison stated: “I want to stress that France remains an incredibly important partner in the Pacific. There is few, if any other country around the world, which understands the importance of the Pacific and has been committed to the Pacific as France.” He added: “I look forward and I hope to see us continue once we move past what is obviously a very difficult and disappointing decision for France.”
Global powers organize themselves in the Indo-Pacific region
There are 24 nations in the Indo-Pacific region. It stretches from the west coast of the United States to the west coast of India.
In the region, four countries formed a group in 2017 called the Quadrilateral Security Dialogue (QUAD). The alliance includes Australia, Japan, India, and the United States. The four countries have carried out joint military exercises that analysts perceive as an attempt to intimidate China who’s also been carrying out military exercises.
In addition to QUAD, AUKUS allows President Joe Biden to increase American influence in the region.
This alliance between the United States, the United Kingdom and Australia could slow down China’s ambitions in the region.
Chinese foreign ministry spokesman Zhao Lijian declared: “The export of nuclear submarine technology by the United States and Great Britain to Australia once again proves that they are using nuclear exports as a tool of geopolitical play which is extremely irresponsible.”
In 2020, RAND Corporation published a study titled Regional Responses to U.S.-China Competition in the Indo-Pacific. The report states that the United States and China actively compete for influence in six countries – Indonesia, Malaysia, Singapore, the Philippines, Vietnam, and Thailand. Gaining influence in these countries would increase the geopolitical and geostrategic strength of either of these two superpowers.
Where France is concerned, it has a solid foot in the Indo-Pacific region through its overseas territories. These territories make France the second-largest economic exclusivity zone (EEZ) in the world. France counts 1.6 million people and 7,000 military personnel in its territories of French Polynesia, New Caledonia, and Wallis and Futuna. However, to maintain its security and defence objectives, France is not keen on losing partnerships that take place in the Indo-Pacific Region.
Conclusion
While Australia justifies backing away from the submarine deal with France for purely strategic reasons, France’s relations with the United States and Australia have turned sour.
The sudden cancellation of a multi-billion dollar contract has stunned France.
As new diplomatic and geostrategic consequences will take place in the next few weeks, the judicial battle between the Naval Group and the Australian government may linger on for years to come.
