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Australia reaches settlement with France over scrapped submarine deal

French President Emmanuel Macron and former Australian Prime Minister Malcolm Turnbull stand on the deck of HMAS Waller, a Collins-class submarine operated by the Royal Australian Navy, at Garden Island in Sydney on May 2, 2018.
Ludovic Marin | Afp | Getty Images

Australia’s new Labor-led government has reached a 555 million euro ($583.58 million) settlement over a controversial decision last year to scrap the French submarine deal, a move Canberra hopes will help repair the rift between the two countries.

Australia last year cancelled a multi-billion-dollar order for submarines with French military shipyard Naval Group and opted instead for an alternative deal with the United States and Britain.

The move enraged Paris and triggered an unprecedented diplomatic crisis. It has also riled China, the major rising power in the Indo-Pacific region.

Australia Prime Minister Anthony Albanese said on Saturday in a news conference in Sydney that his government had reached a “fair and equitable” settlement with Naval Group.

The cancellation last year of Canberra’s order for a new conventional submarine fleet with Naval Group – valued at $40 billion in 2016 and reckoned to cost much more today — came after the previous government signed a trilateral security partnership with the United States and Britain.

The trilateral deal was for a fleet of nuclear-powered submarines with U.S. and British technology. Albanese said the settlement would allow Australia to move forward in its relationship with France.

“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 separate statement.

Australia, the United States, France and its partners have all expressed concern about China’s growing influence in the Pacific, a region that has traditionally been under their sway. Their concerns increased after China and the Solomon Island’s signed a security pact earlier in the year.

“We deeply respect France’s role and active engagement in the Indo-Pacific,” Albanese said. He added he was looking forward to taking up French President Emmanuel Macron’s invitation to visit Paris.

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