Sep 23, 2021 - World

French submarine builder to bill Australia for sunk contract

A French Barracuda class nuclear attack submarine docked in Toulon's harbor in November 2020.
A French Barracuda class nuclear attack submarine docked in Toulon's harbor in November 2020. Photo: Nicolas Tucat/AFP via Getty Images

French defense contractor Naval Group said Wednesday it will bill the Australian government for torpedoing a multi-billion dollar contract to purchase submarines in favor of nuclear-powered ones from the United States, according to AFP.

Why it matters: Australia's new deal with the U.S. and its scrapped deal with France have set off a diplomatic crisis between the Western allies, causing France to recall its ambassadors to the U.S. and Australia last week.

  • Australia's agreement to purchase subs from the U.S. was part of a security pact between the two countries and the United Kingdom to counter China in the Indo-Pacific.
  • France said it was blindsided by the trilateral defense pact, called AUKUS, arguing it should have been consulted in advance.

What they're saying: Naval Group CEO Pierre Eric Pommellet told the French newspaper Le Figaro that a "detailed and calculated" bill would be sent to Australia “in a few weeks” but he did not disclose the financial amount the company will be asking for.

  • “It is a case that is planned for in the contract and will require a payment of our costs that were incurred and those to come, linked to demobilization of infrastructure and IT as well as the redeployment of employees,” Pommellet added.
  • France's Defense Ministry said Naval Group had already completed around $1.1 billion (€900 million) of work on the submarines — costs that were already covered by payments Australia had made, according to AFP.

The big picture: Australian Prime Minister Scott Morrison said Sunday that France was aware of his government's concerns over the submarines Naval Group was building.

  • Morrison said the capabilities of the French subs were "not what Australia needed to protect our sovereign interests."
  • President Biden spoke with French President Emmanuel Macron for the first time since the sub deal set off the diplomatic crisis, and Macron said the French diplomat to the U.S. would return next week.

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