SYDNEY --- “A stab in the back” is how French Foreign Minister Jean-Yves Le Drian described Australia’s move to tear up a submarine deal worth more than €50 billion to instead acquire nuclear-powered subs from the United States.
France could have seen it coming.
Canberra signaled in June it was looking for a way out of the contract, signed in 2016 with French company DCNS (now known as Naval Group) to build 12 Barracuda submarines.
Questioned by a Senate committee about issues with the project, Australia's Defense Secretary Greg Moriarty said: "It became clear to me we were having challenges ... over the last 15 to 12 months." He said his government had been considering its options, including what it could do if it was "unable to proceed" with the French deal.
Moriarty's admission came after his government in April refused to sign a contract for the next phase of the French submarine project, giving Naval Group until this month to comply with its demands. There were reports dating back to the beginning of this year that Canberra was seeking to walk away.
Here's why Australia wanted out of the contract — and what could happen next.
Trouble began brewing almost immediately after Canberra chose the French bid ahead of alternate designs from Germany and Japan in April 2016.
That August, before the Australian deal was formally signed but after it had been announced, the company DCNS admitted it had been hacked after 22,000 documents relating to the combat capacity of its Scorpene submarines being built in India were leaked, raising concerns about the security of its Australian project.
The Australian defense department warned the submarine-builder it wanted top-level protection for its project.
And while politicians from Australia's ruling center-right Liberal Party sought to downplay the implications of the hack on the Barracuda subs, opposition figures jumped on the revelations, with some calling for negotiations with the French firm to be suspended.
Despite that, Australia later that year signed its largest-ever defense deal with DCNS for 12 Shortfin Barracuda Block 1A conventional diesel submarines.
Canberra was reportedly particularly keen on the French bid because of the ability to switch the Barracudas from diesel to nuclear power — technology that was deemed political poison so recently after the Fukushima disaster in Japan, but that the government believed could become more palatable in time.
The project was meant to cost 50 billion Australian dollars (€31 billion). But that figure has since almost doubled.
At last count, the Barracudas were going to cost around 90 billion Australian dollars (€56 billion). And that's before the government factored in the cost of maintenance — which in November 2019, the department of defense told a Senate committee would set Canberra back a further 145 billion Australian dollars (€90.1 billion) over the life of the subs.
And that wasn't all. (end of excerpt)
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