Strategic interests come before French sensibilities

While acknowledging France’s disappointment over his government’s cancelling its $90bn submarine contract, Australia “must always take decisions that are in our sovereign national defence interest’’, Scott Morrison said on Sunday. The decision to abandon the contract with France was taken after assessing carefully whether the French submarines could do the job, at vast cost to taxpayers, that was needed. The conclusion was that they would not. “Therefore, to go forward, when we were able to secure a supreme submarine capability to support our defence operations, it would have been negligent for us not to,’’ the Prime Minister said. Changes in our geo-strategic outlook in the five years since the Turnbull government awarded the French contract make nuclear submarines the best option for our defence needs. In 2016, Beijing was nowhere near as belligerent and coercive as it is now. Australia needs the speed, stealth and maneuverability nuclear propulsion affords; and, in the absence of a domestic nuclear power industry, French nuclear subs were not an option. Their reactors need to be refuelled every seven to 10 years, Defence Minister Peter Dutton said on Sunday. The technology used by the UK and US was “best in class’’. It meant the reactor remained intact for the life of the asset, about 35 years. That was a game-changer, Mr Dutton said, in ensuring bipartisan support from Labor.

It also makes sense that the Morrison government, in discussions with the UK and US, will consider leasing nuclear submarines. Doing so would help plug the long gap before the first of the eight new submarines is ready to be put in the water in about 2040. As Mr Dutton says, working on the vessels will help upskill Australian submariners and workers ahead of the delivery of our own fleet.

In retaliation for cancelling the $90bn French submarine contract, France, unfortunately, is seeking to scuttle the proposed European Union-Australia Free Trade Agreement. It is asking fellow EU nations to “reconsider” the deal. France also recalled its ambassadors to the US and Australia on Friday, and cancelled a gala at the French embassy in Washington DC. France’s ambassador to London was not recalled, according to French Foreign Minister Jean-Yves Le Drian, because “we already know their constant opportunism”.

There is no justification for petulance. President Emmanuel Macron and his ministers need to consider the threat Chinese aggression poses to our region, including French territory in the Indo-Pacific that is home to more than 600,000 French citizens and 7000 soldiers stationed across the region. The conventional, diesel-driven submarines that were to have been built by France would never have been a match for China’s 12 nuclear-powered submarines and many more it is building. That was the reality the Morrison government had to confront when the French submarine project was already $40bn over budget and years behind schedule. When the initial agreement with France was made, Greg Sheridan writes, it was structured as a series of commitments, or “gateways”, and Australia explicitly had the full right to withdraw at any new stage – to terminate the project if it were unsatisfied after any particular stage was completed. Termination will involve a compensating payment from Australia. In the long term, an Australia with nuclear-powered submarines could be of strategic benefit to France and its Indo-Pacific territories.

It will reflect poorly on Mr Macron if he uses his position as the EU’s most powerful leader following Angela Merkel’s departure at the end of the month, and his position as EU president from 2022, to stymie Australia’s negotiations for a free-trade agreement with the EU. The Coalition believes scuttling the EU FTA may be a hollow threat, national editor Dennis Shanahan writes on Monday: “Not that it won’t be tried but that the negotiations have been going for so long that the chances of getting a good result are declining. During the same period, Canada, led by Prime Minister Justin Trudeau, has been unable to get a finalised agreement with the EU.”

As Shanahan and Adam Creighton report, Australia is also aware of individual EU member states wishing to continue their bilateral trade relations and existing contracts with Australia, especially in defence. Australia began free-trade negotiations with the EU, the nation’s second-largest trading partner and second-largest source of foreign investment behind the US, in July 2018 seeking abolition of EU tariffs of up to 12 per cent on Australian minerals, metals and chemicals. But negotiations have moved slowly, with the EU insisting on “content before speed” in the agreement, and disputes over geographical naming rights – for cheese and wine – and “carbon borders” placing more European tariffs on Australian imports because there is no commitment to achieve net-zero carbon emissions by 2050.

Australia’s relations with an important democratic ally such as France matter. But what takes priority is Australia’s strategic interest at a time when China is building new submarines, frigates and aircraft carriers at a record rate. As Mr Dutton says, that is the dynamic in which we have to operate.