How Australia and France pressed reset button after crisis of confidence


The relationship has been tense since Australia backed out of a $90 billion submarine deal. The reset required more than 'not Scott Morrison'.

On June 11 this year, nine months after the cancellation of the $90 billion submarine deal between Australia and France, a settlement was reached between the Australian Government and France's Naval Group. The government will pay $835 million to the French defence contractor, as compensation for backing away from a deal that would have seen Australia acquire French submarines.

As this deal occurred just three weeks after the Federal election, it might seem like politics played a large role in resetting the relationship between the two countries. While it cannot be considered as the sole factor, the change of government in Canberra did not go unnoticed in Paris.

“The defeat of Mr. Morrison … is very fine by me,” said Jean-Yves Le Drian, who was French foreign minister at the time the Morrison Government reneged on the contract last September. The contract reversal left the French feeling betrayed and humiliated. From their point of view, Australia, the United Kingdom and the United-States (through the AUKUS military partnership) went behind the back of an ally to negotiate their own deal, while the original deal was officially still going ahead. Asked whether he thought then prime minister Scott Morrison was a liar in his dealings, French President Emmanuel Macron spoke in unambiguous terms: “I don’t think, I know.”

Even though the Albanese government is committed to going ahead with the AUKUS deal, looking ahead, we can expect French officials to use a more diplomatic language when commenting on the Australian prime minister.

Three elements allowed for a reset of the relationship.

The first one is time. While the Federal election result no doubt helped the French see the water under the bridge flow faster, it is worth noting that negotiations for the financial compensation started months ago. Ross McInnes, the French Special Representative for Australia, appointed by the French Ministry of Foreign Affairs, said "this kind of deal does not happen in one week”.

McInnes said Naval Group representatives and Australian senior civil servants and diplomats had been negotiating a settlement for a while and he gave them credit for reaching a fair deal.The tensions were with Mr Morrison, Mr Dutton and Mrs Payne who have been duplicitous towards us,” he said.

The second element that drew the bilateral relationship out of the deep freeze was compensation. Since the original contract was signed in 2016, the French had begun work on the submarines and the cancellation of the deal made their investments over six years in vain. That’s why it was also important for them to receive financial compensation. The new French Armed Forces Minister, Sébastien Lecornu, acknowledged in a statement that the $835 million settlement was “fair and equitable” for the parties involved.

'France and Australia have too many shared issues that they need to cooperate on for them not to work together.'

A third element revolves around the common interests of the two countries. In his statement, Armed Forces Minister Lecornu described France and Australia as neighbouring countries, through New Caledonia and that the two countries shared the ideal of a stable region.

Hugh Piper, research and policy manager at the James Martin Institute for Foreign Policy in Sydney, said this is especially true when considering the growing influence of China in the Pacific. “Australia and France have a very similar way of looking at the threat and the nefarious influence that China is currently posing in the region,” he said. A shared strategic challenge can be a way to put aside some differences. More broadly, Piper said, the two countries have “too many shared issues that they need to cooperate on for them not to work together”.

The reset came faster than many predicted when President Macron invited Prime Minister Albanese to the Élysée Palace on July 1. The "shared interests" message was immediately on display with the newly minted Australian prime minister stressing France was “not only a great European power, but also an Indo-Pacific and world power”.

“Its engagement in the Indo-Pacific will be essential to address the challenges facing our region,” Albanese said.

So, is the setback in diplomatic relations behind the two countries? The results of the election did not change the outcome of the submarine contract, but a new government is a good way to press the refresh button on a dispute diplomatique. Asked at their joint press conference if he expected an apology from Albanese, Macron replied: “We are talking about the future not the past. He isn’t responsible for what happened.”

On France's national day this week, the embassy in Canberra's Bastille Day message underscored France's determination to move on. "We start a new era ... This is the spirit of Bastille Day: breaking barriers, freeing the imagination, working together toward a better future," Ambassador J.P. Thébault saidin a video message on Twitter.

In that "better future", Australia might want to avoid seeing one of its partners humiliated by its actions, and also to carry through on its deals so it does not end up paying $835 million for submarines not to be delivered. A stable and coherent defence strategy, whomever the prime minister is, can surely allow that.


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