Australia's Prime Minister Scott Morrison confirmed Thursday the country has scrapped a Aus$90 billion (US$66 billion) submarine deal with France, instead building nuclear-powered subs using US and British technology.
"The decision we have made to not continue with the Attack Class submarine and to go down this path is not a change of mind, it's a change of need," he said.
The announcement confirmed a decision, which has been described as "regrettable" by the French government and met with "disappointment" by French firm Naval Group, which had been contracted to build 12 state-of-the-art Attack Class subs.
Morrison said France "remains an incredibly important partner in the Pacific" but acknowledged the relationship between Canberra and Paris has now taken a hit.
"We share a deep passion for our Pacific family and a deep commitment to them, and I look forward and I hope to see us continue once we move past what is obviously a very difficult and disappointing decision for France," he said.
"I understand that. I respect it. But as a prime minister I must make decisions that are in Australia's national security interests. I know France would do the same."
Morrison also announced that Australia would acquire long-range US Tomahawk cruise missiles for the first time, as it strengthens military defences to counter China's growing influence in the Indo-Pacific region.
Australia's decision to boost its military arsenal amid already surging spending on defence is likely to further strain its fraught relationship with Beijing.
Morrison issued China's President Xi Jinping with an "open invitation" for talks in the wake of the announcements, saying Canberra officials had commenced engagement with Beijing, though Australian ministers have found themselves frozen out by their Chinese counterparts in recent months.
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