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Australia backs out of contract with French company Naval Group

In 2016, Australia signed a contract with French company Naval Group to supply Australia with 12 diesel-electric Barracuda submarines over a 25 year period. In mid-September 2021, Australia unceremoniously withdrew from its contract with France and signed a new defence treaty with the United Kingdom and the United States. It is argued that the American submarines provide superior capabilities to the French, thereby better meeting the security needs of Australia.

The treaty known as AUKUS, involves Australia purchasing eight nuclear-powered submarines from the United States as well as participating in other activities such as increased intelligence sharing. The aim of the treaty is to improve security in the Asia Pacific as a result of increasing tensions with China.

Naturally, France was upset with Australia. So much so that it withdrew its Ambassador, an unusual move for allies. It is also estimated that the Australian Government may be liable for up to $400 million in compensation for terminating the contract.

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