French demand compensation and may seek €250m after collapse of £72.8bn submarine deal

France has called for compensation after Australia scrapped a submarine contract with it in favour of a new alliance with Britain and the US – a first in an escalating diplomatic row between the four allies. The demand came after the Australian prime minister yesterday claimed France had long been aware of “grave concerns” about the deal.

Obviously there will be a need for compensation,” said Gabriel Attal, a spokesman for the French government.

“We need to exchange with our partners to see how they intend to leave this contract since there are clauses which have been signed, there is a whole procedure which has been foreseen.”

Mr Attal did not specify how much France expected in compensation for Australia’s cancellation of the £72.8 billion contract to buy diesel-electric submarines in favour of nuclear-powered technology from Britain and the US.

The penalties to be paid to Naval Group, the French company that was to have built the submarines, have been estimated by the Australian press at around €250 million.

On Friday, France recalled its ambassadors from the US and Australia over the trilateral Ausuk security agreement that sank the deal with Canberra.

Jean-Yves Le Drian, France’s foreign minister, described the withdrawals, the first in the history of relations between the countries, as a “very symbolic” act “to show how unhappy we are and that there is a serious crisis between us”.

Le Drian denied reports that there had been advance consultations with France ahead of the announcement, saying “this isn’t true.”

Allies “don’t treat each other with such brutality, such unpredictability, a major partner like France … So there really is a crisis,” Le Drian said.

Opposition figures and presidential hopefuls across France’s political spectrum called into question the future of the Nato military alliance.

“What we need to know is whether, for the Americans, we also count, or if we are in the second division,” said Xavier Bertrand, the Right-wing front-runner for the 2022 presidential poll.

“If the answer does not satisfy us, I wish to put on the table the question of the participation of France in the integrated command of Nato.”

Emmanuel Macron, the French president, is expected to talk to his US counterpart for the first time since the announcement in the coming days. There would be a telephone exchange in the next few days between Emmanuel Macron and Joe Biden after Mr Biden requested it, Mr Attal said. Mr Biden’s attempt to mend fences came as Australian prime minister Scott Morrison hit back at claims of “duplicity, disdain and lies”, saying the French had been warned that Australia had “deep and grave concerns” about the proposed fleet.

Earlier, France’s ambassador to Australia also strayed from diplomatic language when describing what has been widely billed in France as the “contract of the century.”

“This has been a huge mistake, a very, very bad handling of the partnership,” French ambassador Jean-Pierre Thebault said before flying home to France. The arms agreement between France and Australia, signed in 2016, was supposed to be based “on trust, mutual understanding and sincerity,” a fuming Thebault said. “I would like to be able to run into a time machine and be in a situation where we don’t end up in such an incredible, clumsy, inadequate, un-Australian situation.”

He said he found out about the cancelled contract in the Australian press.

“I don’t regret the decision to put Australia’s national interest first,” said Mr Morrison, who blamed the switch on a deteriorating strategic position in the Indo-Pacific – without referring to China’s military build-up specifically.

“[The French government] would have had every reason to know that we have deep and grave concerns that the capability being delivered by the Attack-class submarine was not going to meet our strategic interests,” he added.

Telegraph Media Group Limited [2021]

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