The Strategist

French DCNS will build 12 submarines for $ 39 billion

04/26/2016 - 12:17

French shipbuilding company DCNS Group has won a contract to build 12 submarines for Australia. The contract is worth $ 39 billion. The competitive tender for the construction was also attended by Germany and Japan.
According to Prime Minister Malcolm Turnbull, France offered the best conditions, which are suitable to meet the needs of Australia. In particular, the project will involve the Australian workers and will use Australian steel.

In addition to DCNS Group, the construction of submarines had also been claimed by the Japanese Mitsubishi Heavy Industries Ltd., Kawasaki Heavy Industries Ltd., as well as ThyssenKrupp AG of Germany. French authorities tried very hard to get this contract. Defense Minister Jean-Yves Le Drian spent almost a week on tour in Australia in February, and President Francois Hollande will take the Governor-General of Australia at dinner on the Tuesday night. 

The defense sector is one of the largest branches of the French industry, providing about 165 thousand jobs.

The loss of the contract was a very painful blow for Japan since Tokyo hoped to his support its flagging industry by getting the tender. Prime Minister Shinzo Abe is seeking to consolidate the "special" relations with Australia, as China increasingly realizes its military ambitions in the Asia-Pacific region.

France chosen as the contractor for the submarines construction will help to avoid the deterioration of Australia’s relations with China. Beijing is afraid of strengthening Japan's military forces, so the country called for Australia not to interfere in territorial disputes in the South China Sea.

"Geopolitical advantages of strengthening relations with Japan have not been enough to overcome any commercial and technical advantages of the deal with France," - said Mark Thomson, analyst at the Australian Strategic Policy Institute.

Now, Australia will have to find a way to keep the constructive strategic relationship with Japan.

Japan expressed "extreme regret" that Australia has chosen France. Representatives of Mitsubishi Heavy Industries called the incident "a disgrace", as the Japanese proposal "has not been fully understood."

Germany told they respect the decision of Australia; above that, the country is ready to support the project.

It is expected that the submarines will come into operation only in the early 2030's.

Australia is expanding its maritime presence due to the understanding that maritime assets in the region are also growing.

By 2035, half of submarines in the world will be based in the Indo-Pacific region. 

Tensions in the western Pacific is growing amid the US Navy increasingly patrolling the region. The main reason for this is signs of the islands’ militarization from China’s part. For Australia, this is a real headache since the country hosts the US Marine Corps base, and holds military exercises in the northern regions. On the other hand, to maintain strong economic ties with China is not less important.