(Bloomberg) -- Secretary of State Antony Blinken stressed that the U.S. consulted with France before announcing a new deal that meant France would lose out on a submarine contract valued at more than $65 billion.
French officials said that wasn’t true.
“We had no heads up,” said Pascal Confavreux, the French embassy spokesman in Washington. “We learned it when U.S. media broke the news and at that time we made a demarche to get more information about what we had learned,” he added, referring to a diplomatic meeting often undertaken during a dispute.
The French foreign minister, Jean-Yves Le Drian, was more blunt, saying his nation, whose friendship with the U.S. dates to the Revolutionary War, felt “stabbed in the back.” Officials then promptly canceled a gala in Washington and Baltimore this week to celebrate close Franco-American ties.
The U.S.-U.K.-Australia agreement scuppered a 2016 deal that Australia sealed with France to acquire 12 diesel-powered subs from shipbuilder Naval Group.
The snub is a personal blow for Macron, who hosted Australian Prime Minister Scott Morrison at the Elysee palace in June and vaunted their friendship at the Group of Seven meeting in the U.K. the same month. Le Drian had described the French-Australian submarine contract as the deal of the century.
While it could take more than a decade for Australia to build the submarines, the agreement shows how the U.S. is joining with key English-speaking allies to form a more cohesive defense arrangement to offset China’s rising military prowess.
Speaking Thursday alongside his Australian counterpart, Marise Payne, Blinken said Washington had reached out to the French before this week’s announcement and sidestepped questions about damage done to ties with the country’s oldest ally.
“France in particular is a vital partner on this, on so many other things but also stretching forward into the future,” Blinken said. “We want to find every opportunity now to deepen trans-Atlantic cooperation.”
White House Press Secretary Jen Psaki said Thursday that the U.S. cooperates with France and shares a range of priorities in the Indo-Pacific region.
“We value our relationship and our partnership with France on a variety of issues facing the global community, whether it’s economic growth, or whether it’s the fight against Covid, or addressing security throughout the world,” Psaki said.
It’s up to Australia to describe “why they pursued this technology from the United States,” she said.
China Criticism
One U.S. official, who asked not to be identified discussing details of the decision publicly, said the deal was underway for weeks and that Australia had concluded that the French contract was no longer in their best security interests.
Secretary of Defense Lloyd Austin, who spoke alongside Blinken, Payne and Australian Minister of Defense Peter Dutton, said that the pact -- announced by President Joe Biden on Wednesday -- was not aimed at China, but that was belied by repeated remarks on strengthening security and stability in the Indo-Pacific.
The arrangements are “not aimed at anything or anyone,” Austin said, despite repeated references to Chinese aggression in his opening remarks.
Chinese Foreign Ministry Spokesman Zhao Lijian on Thursday criticized the agreement as an example of American “double standards,” adding that it would damage regional stability and prompt a regional arms race.
Dutton said the pact came at a time of “incredible uncertainty in the Indo-Pacific” and that the collaboration would help create a safer region. “This is not the first time we’ve seen outbursts from China with regards to Australia’s position,” he said. But Dutton and Payne reiterated Australian government statements that they remain ready to talk with China, their biggest foreign trading partner.
Byron Callan, a defense analyst at Capital Alpha Partners in Washington, said potential beneficiaries of the new deal in the U.S. include General Dynamics Corp. and Huntington Ingalls Industries Inc., and U.K.-based BAE Systems and Rolls Royce Holdings Plc, which builds nuclear reactor cores for submarines.
Yet given the extended time frame required to procure and construct nuclear-powered submarines, “We’d put this program in the potential long-term opportunity column,” Callan wrote in a note to clients on Thursday.
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