top of page

The Contract of the Century’s Sinking

On the 16th of September 2021, Scott Morrison, the Australian Prime Minister, has made an unexpected announcement, stating that Australia would terminate the submarine contract it had struck with France back in 2016. Instead, the nation decided to forge a defence alliance with the United States and the United Kingdom and acquire nuclear-powered submarines. The declaration has left the French government and European authorities dumbfounded. Both parties claimed not to have been notified neither of an alliance nor of the intent to pull out from the deal. The submarines agreement and the creation of the three Anglophone countries' coalition do not have only a financial objective. Although not stated publicly, the settlement is part of a wider geopolitical and strategic scheme aimed at deterring the growing influence of China in the Indo-Pacific region. In pursuing the Cold War-like fight of “autocracy versus democracy”, the American president has once more asserted the United States’ foreign policy engagement in countering Chinese power.

The Australian-French deal, nicknamed the “contract of the century”, consisted of a $90 billion agreement with the French company Naval Group. The pact involved the manufacturing of 12 conventional submarines to be added to the Royal Australian Navy. The financial settlement was highly praised by Paris’ political leadership, which further contributed to the disappointment felt when Scott Morrison’s termination announcement became public. France has much to lose to the cessation of the contract. Indeed, the collapse of the accord will have repercussions on the economic, diplomatic, military, and political levels.

Although French officials have claimed to be surprised by their partners, the Australian government commented that there were numerous shortcomings and concerns about the smooth progress of the project. Indeed, already at the beginning of 2021, the Prime Minister was reported to be sceptical about the deal and the possibility of walking away from the agreement emerged. Numerous are the reasons that fuelled Scott Morrison’s uncertainty. The combination of a series of events such as the leaking of defence manufacturing data by the French submarine-maker company DCNS; the dramatic increase in construction costs; the multiple delays in the submarines’ production; and, the disagreement over the countries’ local industries’ involvement spurred Australian officials to look out for other options. As reported by the South Australian senator, Rex Patrick, “the Shortfin Barracuda [French submarine] program … it was running late already, it wasn’t meeting expectations in terms of industry engagement and there are questions about whether it would give us a regionally superior submarine”. However, the French company Naval Group has opposed these claims affirming that “Naval Group was offering Australia a regionally superior conventional submarine with exceptional performances” and that “(F)or five years, Naval Group teams, both in France and in Australia, as well as our partners, have given their best and Naval Group has delivered on all its commitments”.

Following the Australian Prime Minister declaration and the presentation of the tripartite Anglophone alliance named AUKUS, multiple were the criticisms.

Most notably, France was quick to respond with French Foreign Minister Jean-Yves Le Drian describing the turning of events as a “stab in the back”. He also added that “(T)his unilateral, brutal, unforeseeable decision really looks like what Mr. Trump was doing” and that “(T)his move is unacceptable between allies who want to develop a structured Indo-Pacific partnership”. These comments were later supported by an official statement by the French government saying that “(T)he American decision, which leads to the exclusion of a European ally and partner like France from a crucial partnership with Australia at a time when we are facing unprecedented challenges in the Indo-Pacific region, be it over our values or respect for a multilateralism based on the rule of law, signals a lack of consistency which France can only notice and regret”. On a turning of circumstances, on Friday the 17th of September the French President Emmanuel Macron has decided to recall the ambassadors to the United States and Australia, further exacerbating diplomatic relations.

Moreover, another player who strongly opposed the Australian move was China. Indeed, although not stated publicly, the Asian country is central in the willingness to form AUKUS as “part of a large effort to sustain the fabric of deterrence across the Indo-Pacific”. According to the United States officials, the pact will involve the cooperation on cyber warfare, AI, and quantum computing projects, with the aim of “advancing our (the alliance's) strategic interests, upholding the international rules based order, and promoting peace and stability in the Indo-Pacific”. In response to this statement, Chinese authorities have spoken out saying that “China will closely monitor the situation”. Zhao Lijian, the Chinese Foreign Ministry spokesperson, has also added that AUKUS “should abandon the obsolete cold war zero sum mentality and narrow-minded geopolitical concepts and respect regional people’s aspiration and do more that is conducive to regional peace and stability and development – otherwise they will only end up hurting their own interests”.

As of the 18th of September, the uncertainty surrounding the submarine deal and the AUKUS alliance is still palpable. In particular, the financial and legal clauses around the contract will need to be defined, with France authorities demanding explanations on circumstances allowing Australia to withdraw. As asserted by the French Minister Le Drian, “(T)he Australians need to tell us how they’re getting out of it. We’re going to need [an] explanation. We have an intergovernmental deal that we signed with great fanfare in 2019, with precise commitments, with clauses; how are they getting out of it?”.

Written by Cinzia Saro

Cinzia Saro is a columnist at DecipherGrey.

Up Menu
bottom of page