Posted Apr 1, 2022, 6:46 PMUpdated Apr 2, 2022, 8:55 AM
In Australia, the case of the canceled submarine contract with France has not finished making waves. As the country enters the electoral period again, the government, questioned by an opposition senator, had to admit that the renunciation of the purchase of 12 Barracuda-type submarines ordered in 2016 from France, was going to cost it a fortune.
Australia will have spent in this failed contract up to 5.5 billion Australian dollars, or 3.7 billion euros. “So taxpayers will have to shell out $5.5 billion for submarines that don’t exist? asked Senator Penny Wong during a hearing in Canberra. “The final negotiated settlement will be within the range of 5.5 billion Australian dollars,” replied the Deputy Secretary of the Ministry of Defense, Tony Dalton.
Negotiations still ongoing with Naval Group
The minister added that the exact final amount was not yet clear, as negotiations on the costs of completing the site were continuing with Naval Group. But overall, Australia had already paid some 840 million euros in turnover to Naval Group for the design and construction of future submarines, not counting the millions also paid to Lockheed Martin, which was in charge of the combat system, the millions spent on the public management of the contract, the claims of dozens of Australian companies on board the contract, etc.
At Naval Group, we just point out that the rest to be paid in the context of the negotiations in progress will not represent much compared to this sum of 3.7 billion, since it is just a question of negotiating the unpaid invoices, dismissal costs, repatriation, computer costs, in short all the costs of ending the contract.
Indeed, when Australian Prime Minister Scott Morrison decided last year to terminate the contract with Naval Group to choose the acquisition of nuclear-powered submarines promised by the United States – as part of a broad agreement security tied with Washington and London-, he took advantage of a window of opportunity in the contract allowing him to do so. This prevents Naval Group from claiming compensation for breach of contract.
It prevents. Between 2016 and 2021, Australia had already incurred heavy expenditure, first to acquire the design of the submarine it no longer wants, but also to build the shipyard in Adelaide where the submarines were to be built. A site that will probably not correspond to the future American proposal, knowing that Washington and London must make an offer next year.
A heavy bill for an alternative still unknown
Yesterday, in the face of opposition attacks, Finance Minister Simon Birmingham defended the decision to scrap the French deal as ‘necessary for decades to come’. “It must be admitted that we knew that the consequences would be significant,” he defended himself. As a reminder, Scott Morrison had explained that he now wanted nuclear-powered submarines in view of the threatening attitude of China.
According to a study published in December by the Australian Institute of Strategic Policy, the AUKUS program will cost more than $80 billion and will take decades to become operational. But at this point, the Australians still have no idea what submarines they might one day have. Naval News reports studies for a nuclear adaptation of their current Collin’s submarines instead of the purchase of nuclear submarines of the Astute class (British model) or Virginia (American model).
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