Will the Submarine Crisis Impact Trade Relations between France and Australia?

20 декабря 2021, 16:23

In economic relations between the great powers, certain incidents can call into question the value of decades-old alliances, which is the case with the so-called submarine crisis, rocking France and Australia and spreading across Europe.

«A Stab in the Back»

In 2016, the French company Naval Group was selected by Australia to honor a France-Australia deal to supply conventional submarines, which was called the «contract of the century» in France because of its €31 billion value. On September 15th, 2021, Australia surprisingly announced its decision to break this contract by favoring a new type of submarine using American and British technologies. The Australian government characterized this change as a decisive and corrective action.

On the other hand, the French government, through the Ministry of Foreign Affairs, described this decision as «a stab in the back» on the part of Australia. In addition to the statements made by the foreign affairs ministers across Europe, France expressed dissatisfaction by taking strong actions. The day after Australia announced this decision, a gala evening planned in Washington to celebrate the relationship between the US and France was canceled at the last minute by French diplomacy.

Possible Repercussions

There will likely be potential consequences on relations between the two countries and their allies. One of them will be the financial issue, since Australia has to pay France compensation for breaking up the contract unilaterally.

A long legal battle is imminent, but these financial repercussions are not the vital part. Indeed, France is an influential member state of the European Union (EU), and at the moment, the EU and Australia are amid final discussions for a free trade agreement. This negotiation could be strongly impacted by the recent submarine crisis, even if the EU’s deputy spokesman declared that there would be no immediate effect on the discussions and the relations with Australia.

Given the controversy generated by the failed France-Australia deal, British Prime Minister Boris Johnson said that this agreement was not planned to oppose any other country, assuring that the military relationship of the UK with France was extremely solid. On the side of the US, Secretary of State Antony Blinken was also conciliatory towards Paris, assuring that the US wanted to work closely with France in this very strategic area. He added that France is a vital partner in the Indo-Pacific region.

The whole world is curious about what will happen next, as any solution for this crisis will undoubtedly redraw the borders of the various alliance blocks worldwide.

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