AUKUS: Cancellation of contract for French submarines will cost up to € 3.7 billion in Australia

THE Australia will have to pay up to A $ 5.5 billion (EUR 3.7 billion) to break its submarine deal with France, after it eventually opted to supply American and British nuclear-powered submarines.

Last year, Australian Prime Minister Scott Morrison canceled the contract with the French group Naval Group for the construction of classic type submarines (with diesel engines), choosing nuclear power as an alternative, in the framework of the historic security cooperation agreement Australia enters into agreement with US and UK (AUKUS).

Today, when asked by one senator of the opposition, Ministry of Defense officials revealed that the abandonment of the contract with France entails the payment of a high clause.

“So taxpayers will have to pay $ 5.5 billion (Australian) for non-existent submarines?” asked Penny Wong during a meeting in Canberra.

The amount that will result from trading “will fluctuate at these levels”, he replied Undersecretary of Defense Tony Dalton. He clarified that the exact amount has not been clarified because the negotiations with the Naval Group are ongoing.

A source close to the French group confirmed that the talks are continuing and “no amount has been determined yet”. The $ 5.5 billion reported to the Australian Parliament “corresponds to the total expenditure” incurred since 2016, not only by the Naval Group but also by Lockheed Martin (the manufacturer of submarine defense systems), as well as as well as the cost of building a shipyard in Osborne, the same source added.

THE Australian Finance Minister Simon Birmingham insisted that the decision to cancel the contract with France was “necessary for the next decades”, noting that the government “knew the consequences would be significant”.

According to a study released in December by Australian Institute for Strategic Policy, the AUKUS program will cost more than $ 80 billion and will take decades to get operational. But it would give Australia a significant advantage in terms of its ability to repel an attack.

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