The Australian government and the French defense company Naval Group have agreed a settlement payment after a major submarine contract was suddenly terminated last year.
Australia’s new prime minister, Anthony Albanese, announced the agreement that means the state-controlled French company will receive A$830 million (US$585 million) and brings an end to a bitter dispute.
In September, Australia’s government, under former prime minister Scott Morrison, reneged on a long-standing deal with the French supplier for it to build 12 diesel-powered submarines, and switched to nuclear-powered submarines as part of the AUKUS-enhanced trilateral security partnership formed with the United States and the United Kingdom.
The decision caused a deep row between the allies and threatened to end trade agreement talks between the European Union and Australia, noted the BBC.
Albanese promised to resolve the disagreement after taking office last month. He said the announcement paves the way for the nations to put the spat behind them. He said he planned to accept an invitation from France’s President Emmanuel Macron to meet and reset relations between the countries.
“We deeply respect France’s role and active engagement in the Indo-Pacific. Given the gravity of the challenges that we face both in the region and globally, it is essential that Australia and France once again unite to defend our shared principles and interests,” Albanese said in a statement.
He added: “This is a fair and an equitable settlement which has been reached. It follows, as well, discussions that I’ve had with President Macron and I thank him for those discussions and the cordial way in which we are re-establishing a better relationship between Australia and France.”
The Financial Times reported that Australia had already spent A$3.4 billion on the French project, which did not deliver any submarines and that Albanese described as an “extraordinary waste”.
He said Morrison’s administration would be remembered as “the most wasteful government in Australia’s history since federation”.
Commentators have said Australia’s move to join AUKUS was in order to strengthen alliances in the Indo-Pacific region. China has said AUKUS displays the “Cold War mentality” of Australia, the US and UK.
The AFP news service quoted France’s Defense Minister Sebastien Lecornu as saying the contract settlement “permits us to turn a page in our bilateral relations with Australia and look to the future”.
Speaking from the sidelines of the Shangri-La Dialogue security summit in Singapore, he added: “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.”