Australia's Prime Minister Defends Submarine Decision

On Wednesday, Australian Prime Minister Malcolm Turnbull defended a decision to build a A$50 billion ($40 billion) submarine fleet in partnership with France in Australia, rather than opt for a faster build that would have seen initial work offshore.

Turnbull said Australia planned to sign a full contract with France's DCNS Group by the end of the year after announcing that the state-owned naval contractor beat bidders from Japan and Germany to win one of the world's most lucrative defense contracts.

DCNS proposed what it says is the world's most advanced conventionally powered submarine - the Shortfin Barracuda Block 1A - as its pre-concept design for Australia's future submarines.

Turnbull acknowledged that doing the build entirely in Australia, rather than allowing DCNS to begin construction in France, would cost more, "but it's not the huge figure people have speculated about.

“This is securing the future of Australia's navy over decades to come. The submarine project alone will see Australian workers building Australian submarines with Australian steel, here where we stand today, for decades into the future. 50 years from now, submarines will be sustained here, built here. Surface vessels will be built here, because of the commitment we have made to this great national endeavor of building Australia's navy of the 21st century.

“These submarines will be the most sophisticated naval vessels being built in the world and they will be built here in Australia.”

The victory for state-owned naval contractor DCNS Group underscored France's strengths in developing a compelling military-industrial bid, and is a blow for Japanese Prime Minister Shinzo Abe's push to develop defense export capabilities as part of a more muscular security agenda.

Japan's government with its Mitsubishi Heavy Industries and Kawasaki Heavy Industries boat had been seen as early frontrunners for the contract, but their inexperience in global defense deals and an initial reluctance to say they would build in Australia saw them slip behind DCNS and Germany's ThyssenKrupp.

DCNS' share of the overall contract to build 12 submarines will amount to about eight billion euros ($9.02 billion), according to sources with knowledge of the deal.

DCNS chief Hervé Guillou said the deal would create about 4,000 French jobs, benefiting shipyards and industrial sites in Lorient, Brest, Nantes and Cherbourg.

Australia is ramping up defense spending, seeking to protect its strategic and trade interests in the Asia-Pacific region as the United States and its allies grapple with China's rising power.

“Our decision to expand our submarine fleet to 12 regionally superior submarines is a decision driven by national security,” said Australia’s Minster for Defense, Marise Payne. “Indeed as set out in the White Paper, by 2035 around half of the world's submarines will be operating in the Indo- Pacific region. We need submarines with considerable range. We need the capacity to remain undisturbed and undetected for extended periods of time. We need submarines that are quiet, that have advanced sensor technology to detect other submarines.

“The decision that we announce today on the Future Submarines builds on the decisions on naval surface ships we announced last week, beginning with two of the first Offshore Patrol Vessels in 2018 and moving here in Adelaide to the more than $35 billion Future Frigate program in 2020. For the first time these three naval ship building programs together secure a permanent naval ship building industry in Australia and naval manufacturing base in Adelaide.”