Cancellation of submarine contract with France costs Australia up to 3.7 billion euros

Cancellation of submarine contract with France costs Australia up to 3.7 billion euros

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Australia will have to pay up to 5.5 billion Australian dollars (3.7 billion euros) to cancel the submarine contract with France. This was confirmed by officials from the Australian Ministry of Defense in Parliament.

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Australian Prime Minister Scott Morrison in September 2016 blew up a purchase of 12 French submarines worth about A$90 billion (about €60 billion). Canberra entered into a new partnership with the United States and the United Kingdom (AUKUS), which resulted in the Australians purchasing nuclear-powered submarines from the Americans.

The contract for the French classic (diesel) submarine is a contract with Naval Group. Australian defense officials said on Friday that negotiations with the French defense contractor to terminate the contract are currently underway. In response to a question from senators, they confirmed that “the final settlement will be close to $5.5 billion, but the exact amount has not yet been determined.

Finance Minister Simon Birmingham defended the decision to scrap the French contract, which is “essential for decades to come”. “I admit we knew the consequences would be significant,” he said.

The decision to terminate the contract led to a diplomatic row with France at the time.

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