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Australia agrees to pay $578M to settle submarine dispute with France

Prime Minister Anthony Albanese said Saturday that Australia will pay French company Naval Group around $578 million to settle a scrapped deal to build defense submarines in South Australia. Photo by Paul Braven/EPA-EFE
Prime Minister Anthony Albanese said Saturday that Australia will pay French company Naval Group around $578 million to settle a scrapped deal to build defense submarines in South Australia. Photo by Paul Braven/EPA-EFE

June 11 (UPI) -- Australia's new prime minister announced Saturday that his government has agreed to pay $578 million to settle a submarine dispute with France.

"Now that the matter is resolved we can move forward with the relationship with France. Australia and France share deep historical ties of friendship, forged in common sacrifice in war," Prime Minister Anthony Albanese said in a statement.

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The dispute stemmed from a decision made by the government of former Australian Prime Minister Scott Morrison who, with the support of Albanese's Australian Labor Party, canceled a $64 billion contract with France's state-controlled Naval Group for non-nuclear submarines.

Instead, Australia decided to pursue an alliance with the United States and Britain which would help the country acquire at least eight nuclear-propelled submarines.

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As noted by Politico, the previous decision by Australia to scrap the program threatened ongoing trade discussions with the European Union.

"We deeply respect France's role and active engagement in the Indo-Pacific. Given the gravity of the challenges that we face both in the region and globally, it is essential that Australia and France once again unite to defend our shared principles and interests," Albanese said.

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"I look forward to taking up President [Emmanuel] Macron's invitation to visit Paris at an early opportunity, and to continuing to work closely with him as we deepen the strategic partnership between our nations."

French Defense Minister Sébastien Lecornu said in a statement from the sidelines of the Shangri-La Dialogue security summit in Singapore that the settlement would help France overcome its "crisis of confidence" with Australia.

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