LONDON – British Defense Secretary Ben Wallace admitted if he were French he would be extremely disappointed over the Australian decision to ax a $65 billion deal with Naval Group to build diesel electric-submarines, but he said the move was done for strategic, not industrial, reasons.

“I understand Frances’s disappointment at the cancellation of the diesel-electric deal,” Wallace said at the DSEI defense exhibit here on Sept. 16. “It was a big deal, done in 2016. I would be deeply disappointed on behalf of the industry I represent, of course I would, but fundamentally this is about Australia changing its capability requirements.”

The step didn’t amount to a “betrayal” of France, Wallace told the BBC earlier in the day.

The British defense minister said on a smaller scale he took similar decisions every day to cancel projects, sometimes upsetting companies, but he had an obligation to taxpayers to change direction.

Would Britain do a similar deal with other nations seeking nuclear submarines? Wallace thought not.

“First of all, it’s based on the Five Eyes agreement. They are one of our closest, oldest, allies,” Wallace said, referring to the Australians.

He stressed Britain wasn’t the only player in the saga.

“We are joined at the hip with the U.S. – it takes two to agree on these types of approaches. That’s why on this type of program you don’t get one without the other,” he said.

Wallace said Australia first approached the U.S. and Britain in March. It started, he said, with Australia wanting to have a better capability to defend itself and protect its interests.

“We have all seen China investing more than anybody else on the planet increasing its armed forces,” said Wallace.

“I think we should recognize Australia is joining that very small club of nations that have nuclear submarines and it did it for strategic advantage,” said the defense secretary.

Most of the French anger over the Australian decision has been directed at the U.S., but Wallace said the three nations had too much in common for a lasting dent in relations.

“If we all step back, France, Britain and the U.S. agree on so many things. We share same the values,” he said.

BAE System is currently building a fleet of Astute- class nuclear powered attack submarines and designing a fleet of Trident ballistic missile submarines for the Royal Navy at its Barrow yard in northern England.

The company has a substantial stake in the Australian shipbuilding industry in part due to Canberra’s 2018 selection of the companies Type 26 frigate for anti-submarine duties.

“There will be a boost for the British defense industry in this collaboration because we have sub-systems that Australia doesn’t have that we will be able to offer into that,” Wallace told the BBC.

Wallace suggested there might even be a consolation prize for French industry resulting from the change of industrial partners.

“Thales, a great success, a French company with a very large workforce in the UK benefits from our submarine industry and [they] have a potential benefit from the new deal.”

The company was quick to announce in a statement on Sept. 15 that its business outlook would remain untouched by the Australian decision to drop Naval Group.

Andrew Chuter is the United Kingdom correspondent for Defense News.

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