By Pierre Tran
Paris – Australia seeks to calm troubled waters by paying shipbuilder Naval Group (NG) €555 million (US $581 million) for sinking a large French submarine deal, with Canberra pledging to resume close relations with Paris.
That desire to be mates again with France follows the Australian Labor party winning last month’s general election, with Anthony Albanese taking up the prime minister’s office after the departure of Scott Morrison, leader of the conservative Liberal party.
It remains to be seen how Australia will rebuild those ties with France, in the wake of severe turbulence brought on by Canberra’s cancellation last September of the Shortfin Barracuda project, once seen as the multibillion deal of the century for NG.
There may be political will to rebuild links between the two nations, but there remains bitterness at the business level in certain circles. A French executive who worked on the Australian project expressed deep skepticism on the outlook for cooperation.
“Just words,” the executive said, “there are no competitions, no concrete ideas, no details.”
On tenders, Australia is holding a competition for unmanned autonomous systems for a maritime mine countermeasures and military survey program, dubbed Sea 1905 MCM Tranche 1. The unmanned system will be fitted on ships based on the Arafura class of offshore patrol vessels, with media reports of a budget of A$3.3 billion -A$5 billion for the fleet of future mine warfare ships.
ECA group, a French underwater specialist, said May 2021 it has teamed up with a local partner, Total Marine Technology, for that competition. Saab Australia said last month it has partnered with Leidos, SeeByte, and Sonartech Atlas.
A restricted tender for the mission management system for that program comprises four bidders, namely Atlas Electronik, ECA, SeeByte, and Thales Australia, Asia-Pacific Defence Reporter, an Australian magazine, reported last month.
Australia stands to lose submarine capability, national sovereignty, and jobs due to the cancellation, the executive said. It looks likely the Australian navy will wait 20 years to sail a nuclear-powered boat, seen effectively as under joint U.S. control.
If the submarine deal were the price Australia was willing to pay for U.S. security, there is uncertainty over U.S. political leadership to consider, the executive said.
The U.S. program for nuclear powered boats is fully committed, as is the U.K. with its Astute class of nuclear submarines, leaving little room to supply boats for the Australian navy, the executive said.
Australia had considered ordering two Virginia class submarines by 2030, Peter Dutton, the former defense minister, wrote June 9 in The Australian daily, sparking a row with the Labor government.
“You don’t defend your country and our national security with a media release,” Albanese told June 11 a press conference. “You defend it with operational capability. My government intends to concentrate on delivering rather than the statements that Peter Dutton has made that contradict all of the statements that he made while he was defense minister.”
The Australian navy is in bad shape, the executive said, with the Collins class of submarines aging, and there is a delayed start to building the Hunter class of frigates, based on the Type 26 frigate from BAE Systems.
Perhaps there might be Australian interest in the Airbus A400M transport aircraft, which has greater reach than the C-130, a defense specialist said. The A400M could tackle Australia’s lack of long-range capability.
The Australian air force flies seven Airbus A330 multirole tanker transport aircraft, badged as KC-30A and based at Amberley air base, near Brisbane, eastern Australia. A further two more units were considered in the 2016 defense white paper, the website of the Royal Australian Air Force reported.
That reach for long range was a key reason for Australia switching to the requirement for nuclear power on the submarine, dropping the diesel-electric Shortfin Barracuda, which would have been a modification of the nuclear-powered Barracuda built for the French navy.
The Suffren, the first of class of the six Barracuda boats, entered service June 3, and the newly appointed armed forces minister, Sébastien Lecornu, attended the high profile event at Brest naval base, northwestern France.
Lecornu met June 11 his Australian counterpart, Richard Marles, on the sidelines of the Shangri-La security conference in Singapore, after president Emmanuel Macron and Albanese had agreed the settlement on NG.
“He (Lecornu) expressed the wish that this agreement and the change of the government team will make it possible to overcome the crisis of confidence with Australia,” the French defense ministry said in a statement.
“France, Australia’s neighbor in the Pacific, namely because of New Caledonia, will listen to Australian proposals to project the bilateral defense relationship into the future, on the basis of operational cooperation and structuring projects,” the ministry said. There will be work meetings in Paris, it was noted.
Both sides, Albanese and NG, used the phrase “fair and equitable” on the settlement on the submarine deal.
Thales has its Australian unit, which supplies Bushmaster and Hawkei protected vehicles, and works on underwater systems and mine countermeasures. The Australian unit has generated exports worth A$1.6 billion over 10 years.
Thales holds 35 percent of NG, with the French state owning 62.3 percent.
Airbus Helicopters has fallen on hard times in Australia.
Australia last December decided to ditch its fleet of NH90 military transport helicopters, known locally as the Multi-Role Helicopter 90 Taipan, to be replaced by the Sikorsky Black Hawk and Seahawk. Airbus Helicopters is partnered with Leonardo Helicopters and Fokker Aerostructures on the NH90.
Australia is also replacing the Airbus Tiger armed reconnaissance helicopter with the Boeing Apache attack helicopter.
A Clean Slate
Just three weeks in office, Albanese told journalists June 11 he had talked to his French counterpart, Macron, and agreed financial settlement of €555 million to wipe the slate clean with NG, and how it was important to renew close ties with France.
“I thank him (Macron) for those discussions and the cordial way in which we are re-establishing a better relationship between Australia and France,” Albanese said, pointing up the cost of the cancellation, which he saw as a fumbled move.
“It brings the total cost of the former government’s failed policy to A$3.4 billion (US $2.3 billion). This is a saving from the A$5.5 billion that Senate Estimates was told would result from that program.”
France is a long standing ally, having fought side-by-side in two world wars, and also had a “significant presence” in the Pacific, amid tension in the Indo-Pacific region, he said.
Labor, then the opposition party, had backed the switch to a nuclear-powered submarine.
The financial settlement is intended to clear the decks with NG, which won a competition in 2016 and had expected to be approved for the next design stage last September. Instead, Australia sent notice of cancellation.
“Importantly, this draws a line under this issue, and I thank the Naval Group for the way in which they have conducted the relations,” Albanese said. “This procedure has gone through our appropriate approvals processes and ensures that we can now reset the relationship without this clouding that relationship going into the future.”
The settlement payment of €555 million follows the €840 million of sales NG booked for its work on the Australian future submarine project since 2016.
Details of the settlement are confidential for commercial reasons, Albanese said.
It is understood NG will pay subcontractors out of that settlement, as it closes down its Australia future submarine office, which is down to 50 staff, with 45 Australians and five French, after previously employing some 350 personnel.
“Naval Group and the Commonwealth of Australia have reached a fair and equitable settlement to bring a conclusion to the Future Submarine Program,” NG said in a June 11 statement, which declined to give an amount for the settlement.
“Naval Group also recognises the important work of those who contributed to the discussions leading to this agreement.”
NG has its Naval Group Pacific office in Sydney, working in research and development.
In 2016, the then Australian prime minister, Malcom Turnbull, said the French submarine project would create 2,800 local jobs and use Australian steel for the ocean-going boats.
Last September, NG had been expecting to sign an Australian two-year contract worth €1.4 billion for the basic design stage, having received approval on the system functional review.
Instead, Australia told NG the Shortfin Barracuda was cancelled. Talks started on financial settlement.
That cancellation was due to Australia, the U.K. and the U.S. setting up the AUKUS alliance, opening the way for Canberra to order nuclear-powered attack submarines, with help from its British and American allies.
Albanese said Macron has invited him to a Paris meeting, and that was “absolutely vital to resetting that relationship, which is an important one for Australia’s national interest.”