Australia Signs Massive Sub Deal with French Firm

Australia formally signed a Aus$50 billion "strategic partnership" with France to build 12 state of the art submarines Monday, a signal of Canberra's willingness to project power across the Pacific.

Prime Minister Scott Morrison hailed the "very audacious plan" at a ceremony in Canberra as "part of Australia's biggest ever peace-time investment in defense."

The partnership's main pillar is a contract for France's Naval Group -- a consortium with state backing -- to build 12 attack-class submarines and has been years in the making.

At roughly US$35 billion this is Australia's largest ever defense procurement project and the largest ever foreign sales deal by French shipbuilder Naval Group. 

The first submarine is expected to be finished in the early 2030s, starting with sea trials around the first quarter of 2031 and operational testing in late 2032.

Critics say that is too late: the waters to Australia's north and east are the scene of an intense struggle between the United States, China and regional powers, who are all vying for influence.

Beijing has made territorial claims to much of the South China Sea -- a marine thoroughfare that is vital to maintain the supply of ores, minerals and crude that fuel the Chinese economy.

Washington fears that China is becoming increasingly assertive over those claims to display its dominance over smaller Asian nations and become the prime regional power.

Australian military analysts hope the subs will allow the country to maintain a credible deterrent against possible hostile actions.

Visiting French Armed Forces Minister Florence Parly cosigned the agreement in a ceremony that took place in the shadow of a memorial to U.S. forces in front of the Australian defense offices in Canberra.

"It takes a lot of confidence for Australia to bet on France and a lot of confidence for France to share with Australia the capability that is so close to the core of our sovereignty and our strategic autonomy and a result of immense investment over decades," Parly said.

- 'Eyeless beasts' -

Under the Strategic Partnership Agreement, 12 conventionally powered submarines derived from the Naval Group Barracuda nuclear design will be constructed in a new shipyard in South Australia.

Parly hailed the agreement, which was negotiated and drafted entirely in English, as a long-term partnership between Australia and France and dismissed some "whining about the lengths of the negotiations."

"Behind those masses of dark steel, behind those eyeless beasts" there was friendship and a common attachment to multilateralism and the rules-based order, she said.

Naval Group chairman Herve Guillou said Australia chose the French submarine design because of its endurance, long range and acoustic superiority.

"We are bidding in the Netherlands today. That is one really important bid because they are looking as well for expeditionary submarines," he said, hoping the Australia contract would serve as a launchpad for contracts in other countries including India, Poland and Brazil.

Guillou confirmed the first Australian submarine should be sailing in the early 2030s, the last in the early 2040s with the last decommissioned probably in the early 2080s.

"We are looking at a very, very long-term partnership with Australia," he said.

The agreement comprises two thick volumes with 23 schedules, with two more schedules to be added later.

It sets conditions on what intellectual property Australia has access to and which it owns, and covers a range of provisions for contract termination or missed deadlines.

Guillou also said an alliance with Italian shipbuilder Fincantieri would permit the two companies to team up on research, development and procurement for some common projects, either bilateral or for export.

"If we look at the change in the market, we need European players to unite more strongly to be able to face the new giants in this market, like CSCC in China, like OSK in Russia," he said.

"We really want to take the initiative of being stronger before the others are stronger."