France accepts Australian cash compensation deal to end submarine spat

Australia on Saturday unveiled a substantial compensation deal with French submarine maker Naval Group, ending a contract dispute that has soured relations between Canberra and Paris for almost a year.

Australian Prime Minister Anthony Albanese said the French firm had agreed to a "fair and an equitable settlement" of 555 million euros in compensation for Australia's termination of a decade-old multi-billion-dollar submarine contract.

The settlement draws a line under a spat that caused leader-level recriminations and threatened to torpedo talks on an EU-Australia trade agreement.

"It permits us to turn a page in our bilateral relations with Australia and look to the future," said French Defence Minister Sebastien Lecornu.

Albanese said he would travel to France soon to reset a relationship which had been beset by "pretty obvious" tensions.

'Liar' Morrison sneaks out of sub deal

The tussle began in September 2021, when Australia's then-prime minister Scott Morrison abruptly ripped up a long-standing contact with the French state-backed Naval Group to build a dozen diesel-powered submarines.

He also stunned Paris by revealing secret talks to buy US or British nuclear-powered vessels.

The decision drew the fury of French President Emmanuel Macron, who publicly accused Morrison of lying and recalled his ambassador from Australia in protest.

Relations were on ice until earlier this summer when Australia elected centre-left leader Albanese.

Albanese tries to rebuild trust

Since coming to office, he has rushed to fix strained relations with France, New Zealand, and Pacific Island nations, who objected to the previous conservative government's foot-dragging on climate change.

"We are re-establishing a better relationship between Australia and France," Albanese said, after speaking to Macron about the settlement.

"I'm looking forward to taking up President Macron's invitation to me to visit Paris at the earliest opportunity."

Speaking on the sidelines of the Shangri-La Dialogue security summit in Singapore, Lecornu said France valued its "friendship" with Australia.

"Just because a government in the past did not keep its word, it does not mean we have to forget our strategic relationship," he said.

 "Australia has a new team in power, we are happy to be able to work with them."