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Sale of submarines: France loses "contract of the century" with Australia

2021-09-15T21:02:21.791Z

Suddenly, Australian Prime Minister Scott Morrison must announce the cancellation of the "contract of the century", concluded six years ago.



In 48 hours, the “contract of the century” has become the commercial snub of the century. The contract for the sale to Australia by Naval Group of 12 submarines for an amount of approximately 34 billion euros, concluded in 2016, must be denounced around 11 p.m. (French time) by Scott Morrison, the First Australian Minister, from… the White House. Because Australia has now chosen to do business with the United States and Great Britain. The snub goes beyond the case of the French giant Naval Group, it is a setback for the entire French defense industry, and it is not only commercial, it is also political.

“We are pragmatic, explained to the Parisian in 2017, Brendan Berne, the Australian ambassador. Our decision was obviously based on technical specifications. But this contract goes well beyond the supply of defense equipment. It is a strategic partnership between our two countries. This is the basis of the Franco-Australian relationship for the next four decades. This Wednesday night, that special relationship for the next forty years is about to collapse.

"This summer, Australia carried out a review of its Air, Sea and Land capability means, that is to say a kind of white paper, which assesses the needs", justifies a senior official at the Ministry of the Armed Forces, in evoking the "official" reason for the cancellation: "The country had chosen traditional propulsion for its submarines, but it now wants nuclear-powered devices, which Naval Group does not manufacture ..." The unofficial reason? "The entryism of the Americans", slips the same source, denouncing "the soaping of the board in order" of the Biden administration in the United States, then "the American forcing" to recover the contract. The new contract will be part of a vast military cooperation agreement between Americans, Australians and British,which aims in particular to contain the appetite of China in the Indo-Pacific zone.

"A geopolitical decision"

"We are victims of the strategic decision of a sovereign country," sighs a senior official specializing in military contracts.

But this is a geopolitical decision, in no way technical.

The Australian press, moreover, was full of praise for "the quality of the technical solution provided by Naval Group, the work accomplished and the ability to transfer technology".

At Naval Group, which did not respond to our requests, the information about the cancellation of the contract has not yet been disseminated internally this Wednesday evening. Only a tight team, around CEO Pierre-Éric Pommellet, is aware of the imminent announcement. Naval Group will not lose an agent and is preparing to negotiate the terms of termination. But one thing is certain, the group will be very far from the expected 34 billion. Not to mention the inevitable repercussions.

The biggest risk now, after the official announcement of the Australian decision, is that of a ripple effect and a loss of confidence of other customers. Naval Group has ongoing submarine contracts with India and Brazil, and prospecting in the Netherlands and India for contract renewal. “We will have to communicate and reassure, because France and Naval Group have nothing to do with it, it's the truth, insists a good expert on the matter. This is not a technical failure or disappointment, but a geopolitical decision. "

Source: leparis

All business articles on 2021-09-15

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