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  • Joanne Starkie

The Impact of France's Cancelled Submarine Deal

On 15th September 2021, Australia abruptly announced that it was cancelling a major submarine deal with France in favour of forging a new trilateral security agreement with the US and the UK, which has now become known as the Aukus pact.

Submarine Deal

Australia’s sudden decision to renege on its contract with France was met with shock and anger from the French government, as well as having significant implications for international relations.

Why did Australia unexpectedly choose to abandon its submarine deal with France in order to establish a new pact with the US and the UK, what are the political and economic repercussions of this decision, and how has it affected the relationship between France and the three Aukus nations?

Why does Australia want new submarines?

There is growing international concern over China’s progressively assertive stance towards the Indo-Pacific region and its increasing deployment of military equipment and aircraft to its outposts in the South China Sea. This has undoubtedly played a key role in the Australian government’s decision to expand and upgrade its fleet of submarines in order to protect its own interests against any potential threat posed by China in Indo-Pacific waters.

What was the original deal with France and why did Australia cancel it?

On 26th April 2016 France secured a deal worth €56 billion with Australia for the production of 12 attack-class diesel-electric submarines, which were to become operational by 2034. The contract was awarded to French defence contractor Naval Group and construction of the submarines was already underway when Australia made the shock announcement in September 2021 that the contract, which had been established for five years, was being cancelled.

Australian Prime Minister Scott Morrison suggested that terminating the contract with France was not a decision that was made in haste and alleged that Australia had been having doubts about the suitability of the French-made submarines for a few months before cancelling the deal upon realising that nuclear powered vessels would be much more appropriate for their needs. According to Morrison, the deal was annulled with France because it became apparent that the French attack-class submarines would not sufficiently protect Australia’s sovereign interests in the Indo-Pacific region.

What are the economic and political consequences of Australia cancelling the deal with France?

Australia’s decision to abandon the French deal and pursue a new alliance with the US and the UK has ongoing political, diplomatic and economic repercussions for France, the long-term effects of which may be challenging to resolve. Australia’s unexpected withdrawal from the original submarine deal has left the French government shocked and dismayed. It has been reported that France was only aware that the deal was off a mere few hours before Morrison, US President Joe Biden and UK Prime Minister Boris Johnson publicly announced the establishment of the Aukus pact via videoconference, during which Morrison notably neglected to mention France at all.

France has suffered a significant economic blow, as well as a political one, in the loss of the €56 million submarine contract, with the financial effects being felt not only by the primary contractor Naval Group, but also by a wider network of small and medium-sized businesses in France who were going to be involved in the contract on some level.

The breakdown of the agreement has left France’s future relationship with Australia in doubt and has also shaken France’s trust in the US and the UK. What was initially viewed as “the contract of the century” for France has resulted instead in what Jean-Yves Le Drian, France’s Minister for Foreign Affairs, described as a “stab in the back” by Australia, the US and the UK. Australia’s decision to pull out of the deal at short notice led to the recall of the French ambassadors to Canberra and Washington; the long-term political consequences of Australia cancelling the contract remain to be seen.

What does the new Aukus deal involve?

Aukus is a trilateral security alliance between Australia, the US and the UK, which will facilitate the sharing of naval intelligence between the three nations and enable Australia to develop its own fleet of nuclear submarines by being granted access to US and UK military technology information.

Although concern over China’s attempts to assert its dominance in the Indo-Pacific has not been explicitly attributed to the formation of the trilateral agreement, the Aukus pact aims to promote greater collaboration in order to maintain what Biden describes as a “free and open Indo-Pacific.”


What does the Aukus pact mean for the US-UK-French relationship?

In the wider context of international relations, the Aukus pact reasserts the UK’s position as a key military ally to the US whilst, at the same time, distancing the two nations from their other major Western allies of France and the rest of the EU. Florence Parly, France’s Armed Forces Minister, expressed bewilderment at the US’s “regrettable decision” to exclude an ally as significant as France from this new alliance and warned of the grave consequences that this would bring for international politics. Le Drien on the other hand, compared President Biden’s approach to that of his predecessor Donald Trump.

The Aukus agreement has also placed further strain on the UK-French relationship, which is already suffering from the economic and political fallout of Brexit. The UK’s role in the aborted submarine deal with Australia is not something that is likely to be forgiven or forgotten in a hurry, particularly when the British government’s increased involvement in the Indo-Pacific could be interpreted as an opportunity for the UK to pursue its own ‘Global Britain’ agenda to the detriment of France.

There is no doubt that France’s future relationship with the US, the UK, and Australia is going to be a complex one. The Aukus pact has resulted in the nation’s long-established Western allies alienating France, whether deliberately, or unintentionally, in favour of working more closely with Australia in the Indo-Pacific with no apparent regard for France’s existing agreements or interests. It will take a lot of work on all sides to rebuild a sense of mutual trust and cooperation in order to improve and secure any future international collaboration between France and the three Aukus nations.

Edited by Mohamed Abdulkahar.

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