BY COLIN PACKHAM, NOBUHIRO KUBO AND TIM KELLY
France has beaten Japan and Germany to win a A$50 billion ($40 billion) deal to build a fleet of 12 submarines for Australia, one of the world's most lucrative defense contracts, Australian Prime Minister Malcolm Turnbull announced on Tuesday.
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.
Reuters earlier reported that DCNS would be announced as the winner, citing sources with knowledge of the process.
"The recommendation of our competitive evaluation process ... was unequivocal that the French offer represented the capabilities best able to meet Australia's unique needs," Turnbull told reporters in the South Australian state capital of Adelaide where the submarines will be built.
In a statement, French President Francois Hollande said the deal "marks a decisive step in the strategic partnership between our two countries", while Prime Minister Manuel Valls said it was "cause for optimism and pride."
The French shipbuilder's share of the overall contract will amount to about 8 billion euros ($9.02 billion), according to sources with knowledge of the deal. DCNS chief Hervé Guillou said the deal would create around 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 Asia-Pacific as the United States and its allies grapple with China's rising power.
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 AG.
Read the full story at Reuters