France secures €34bn submarine deal with Australia

President Francois Hollande seemed to bubble with happiness when he congratulated the staff of the French naval group DCNS on winning the "contract of the century" at their Paris headquarters yesterday.

The €34.3 billion deal for 12 Shortfin Barracuda Block A1 submarines, to be delivered to the Australian navy from 2027, is the largest arms contract ever won by France and will continue for half a century, including training, infrastructure and maintenance.

Mr Hollande received a second piece of good news yesterday evening, when it was announced that 60,000 French people left the jobless register in March.

The submarines will be assembled in Adelaide, southern Australia.   France will receive some €8-€10 billion of the total amount, greater than the €7 billion Brazil paid for French submarines in 2006.

“I feel very great pride,” Mr Hollande said, praising  the “competitiveness and strength of the French team” of engineers, industrialists, diplomats and civil servants.  “You are the best,” he told them.

Defence minister Jean-Yves Le Drian had doggedly pursued the Australians, although Japan or Germany appeared more likely to win the contract.  "France is becoming the world's second arms exporter [after the United States, ] Mr Le Drian boasted on Europe 1 radio.  France "shares interests with partner countries," he stressed.

Although the final contract will not be signed until early next year, Australia will henceforward negotiate exclusively with France.  "The French offer best fulfils Australia's unique needs," prime minister Malcolm Turnbull said early yesterday.

The contract is expected to create 2,900 jobs in southern Australia, which has the highest jobless rate of 7.7 per cent, and 4,000 jobs in France for six years.  Mr Turnbull faces parliamentary elections in early July, while France will elect a new president and national assembly in 2017.

“The most sophisticated submarines in the world will be built here, in Australia, by Australians, with Australian steel,” Mr Turnbull said.

Diesel-fuelled

There were doubts that the Japanese consortium would be able to assemble the submarines in Australia, as demanded by Canberra.  And the Germans have never built submarines anywhere near as large as the long-range, 4,000-tonne Barracuda made by DCNS.  France’s submarines are nuclear-powered, but the Australian models will be diesel-fuelled.

The French sales pitch to the Australians was that the Barracudas are “the most advanced submarine you’ll never see”. The contract is the result of a complex diplomatic, industrial and commercial effort over 18 months.

The US, which will supply weapons for the submarines, reportedly approved Australia’s choice.  A defence White Paper published in February said Australia needs to match China’s growing military power in the Asia-Pacific region.

Mr Le Drian first brought up the submarine contract in 2014.  Australia notified Paris of its decision on Anzac Day, which commemorates the engagement of troops from Australia and New Zealand in the first World War.

“A century ago, Australians came to defend us. Today, Australia has shown confidence in us,” Mr Hollande said.