Australia to pay 555 million euros to the French Naval Group after giving up its order last year

A big check to settle the grudges. Australia on Saturday (June 11) unveiled a massive compensation deal with French submarine maker Naval Group, putting a financial end to a dispute that has soured relations between Canberra and Paris for nearly a year. New Australian Prime Minister Anthony Albanese said the French company had agreed to a “just and fair settlement” of 555 million euros, for the breach of the gigantic contract of 56 billion euros, which had caused a diplomatic crisis between Paris and Canberra last fall.

In September 2021, then-Australian Prime Minister Scott Morrison suddenly ended the French contract that had been in preparation for ten years. The head of government announced that his country would buy American or British nuclear-powered submarines, a major change for a country with weak nuclear capabilities.

Scott Morrison then drew the wrath of French President Emmanuel Macron who accused him of deception and recalled his ambassador from Australia in protest.

Relations between the two countries remained frosty until the election in May of centre-left Anthony Albanese. Since coming to power, he has rushed to mend strained relations with France, New Zealand and Pacific island nations who blamed the previous Conservative government for its slow pace on climate change.

“We are restoring a better relationship between Australia and France”said Anthony Albanese, thinking “looking forward to responding to President Macron’s invitation to come to Paris at the first opportunity”.

In total, the failure of the contract for French submarines will have cost 2.4 billion dollars to Australian taxpayers, specified their Prime Minister, without them being able to derive any benefit from it. The first American or British submarine is unlikely to be in service for decades, leaving a void for Australia with its aging fleet.