Australia overpaid for cancelled French subs so Anthony Albanese could repair relations with France
How Australia massively ‘overpaid’ for canceled French submarine contract by hundreds of millions of dollars so Anthony Albanese could restore relations with France
- Australia has finalized French subs deal compensation with $835 million compensation
- But details of the contract reveal that Australia only had to pay the shipyard $90 million
- Extra payment to French government shipbuilder is seen as sweetener
- Move helps rebuild Australia’s relationship with France after anger over canceled deal
Anthony Albanese has attempted to buy back Australia’s relationship with France by paying hundreds of millions of dollars more than was necessary to nullify the abandoned submarine contract.
The prime minister confirmed this weekend that Australia is paying $835 million to French government-owned shipbuilders of the Naval Group to scrap the $90 billion deal for diesel submarines.
But details of the contract have now leaked showing that Australia only had to pay a $90 million break fee to the shipyard to cancel the order.
Australia will pay $835 million to French government-owned shipbuilders owned by the Naval Group to cancel the $90 billion subs deal, but the contract only included a $90 million fee if it was terminated
No compensation agreement was included in the deal if it were scrapped – but Australia paid an additional $745 million on top of what was needed.
Even if the order had moved to the next stage of development, Australia would still have paid only $250 million in damages, the AFR reported.
The extra payment of the bonus to the shipyard would have been an attempt to rebuild Australia’s broken relationship with France after the uproar over the canceled deal.
It was dumped after the coalition government struck the secret $70 billion AUKUS deal with the UK and US for nuclear submarine technology instead of French diesel submarines.
President Emmanuel Macron accused Scott Morrison of lying to him about the move that blinded the French, which the then prime minister denied.
The $745 million overpaid bonus to the French government-owned Naval Group shipyard is seen as a sweetener to restore relations between French President Emmanuel Macron (seen here with his wife Brigitte) and Australia after the anger over the secret AUKUS pact
President Macron welcomed the election of the new Labor government last month, praising it as an opportunity to “heal the broken relationship.”
Just days later, the final $835 million sweetener deal with Naval Group was confirmed.
“Australia has a new team in power and we are delighted to be working with them,” French Defense Minister Sebastien Lecornu said over the weekend.
“Just because a government hasn’t kept its word in the past doesn’t mean we should forget our strategic relationship.”
Prime Minister Anthony Albanese said the deal was value for money if it meant Australia and France could continue from the previous row and ‘a rule under the contracts’
Mr Albanese said the deal was value for money as it meant Australia and France could continue with the previous row and “rule a rule under the contracts”.
“This is a fair and equitable settlement that has been reached,” he said when announcing the deal.
“It follows from the discussions I have had with President Macron and I thank him for the cordial way we are restoring a better relationship between Australia and France.
“Given the gravity of the challenges we face both in the region and globally, it is essential that Australia and France reunite to defend our shared principles and interests.”
The total cost of breaking the French deal was originally estimated by then Defense Secretary Peter Dutton at $5.5 billion, but the final total is now $3.4 billion.
Daily Mail Australia has contacted the Ministry of Defence, the private office of the Prime Minister and Opposition Leader and ex-Defence Secretary Dutton for comment.