By Lidia Kelly and John Mair
SYDNEY (Reuters) -Australia on Sunday defended its decision to ditch a multi-billion-dollar order for French submarines and opt instead for an alternative deal with the United States and Britain, saying it had flagged its concerns to Paris months ago.
Canberra's move enraged Paris, triggering an unprecedented diplomatic crisis that analysts say could do lasting damage to U.S. alliances with France and Europe. It has also riled China, the major rising power in the Indo-Pacific region.
The United States has sought to assuage the anger in France, a NATO ally, and the French government spokesman said on Sunday that President Emmanuel Macron would have a call with U.S. President Joe Biden "in the next few days". Paris has recalled its envoys to Washington and Canberra for consultations.
"I don't regret the decision to put Australia's national interest first," Prime Minister Scott Morrison said on Sunday.
Morrison said he understood France's disappointment over the cancellation of the order - valued at $40 billion in 2016 and reckoned to cost much more today - but reiterated that Australia must always take decisions in its best interests.
"This is an issue that had been raised by me directly some months ago and we continued to talk those issues through, including by defence ministers and others," he told a briefing.
Under its new trilateral security partnership, Australia will build at least eight nuclear-powered submarines with U.S. and British technology. The scrapped deal, struck with France's Naval Group in 2016, was for a fleet of conventional submarines.
The new trilateral deal has cast into doubt the united front https://www.reuters.com/world/french-break-up-blow-bidens-china-focused-alliance-rebuilding-2021-09-18 that Biden is seeking to forge against China's growing power.
'OPEN AND HONEST'
French government spokesman Gabriel Attal told BFM TV that Macron would seek "clarification" of the cancellation in his call with Biden. Discussions would then need to take place over contract clauses, notably compensation for the French side.
European Union leaders are certain to discuss the issue at talks in Slovenia on Oct. 5, said an EU diplomat, saying it had raised questions over the transatlantic relationship and Europe's own geopolitical ambitions in the Indo-Pacific region.
"I think the French... will milk it for all it's worth," the diplomat said, referring to Macron's long-standing support for greater European strategic autonomy, though many EU states are reluctant to weaken security ties with the United States.
Australian Defence Minister Peter Dutton said Canberra was "upfront, open and honest" with France about its concerns. He declined to reveal costs of the new pact, saying only that "it's not going to be a cheap project".
Britain's role in the trilateral partnership demonstrates its readiness to be "hard-headed" in defending its interests post-Brexit, newly appointed Foreign Secretary Liz Truss said in an article published on Sunday.
She said it also showed Britain's commitment to security and stability in the Indo-Pacific region.