PARIS – France welcomed Australia's "historic" pick of DCNS for exclusive negotiations for the Australian $50 billion ($38.7 billion), Future Submarine program, and President François Hollande made a visit to the office of the naval shipbuilder in the French capital.

"This is an historic program, the largest weapons export program our country has ever undertaken," the Elysée president's office said in a statement. The selection was possible due to a government-to-government agreement at a "strategic level" of over 50 years.

Australia's selection opens negotiations for a three-year submarine design contract expected to be concluded at the end of this year or early 2017, a DCNS executive said.

"This decision marks the beginning of a process of exclusive negotiations which should lead to a contract signing in 2017," said Hélène Masson, senior research fellow at the Fondation de Récherche Stratégique think tank. "France has a strong image of technological and industrial independence, the corner stone of French arms policy over the last 50 years, particularly in submarines."

DCNS won with its Shortfin Barracuda A1 submarine design, a conventionally-powered derivative of the nuclear-powered Suffren-class submarine now under construction for the French Navy.

Unlike the Suffrens, however, Australia's submarines will be armed with US weapons and a US combat systems integrator, either Raytheon or Lockheed.

Australia is expected shortly to choose between Raytheon or Lockheed Martin, and DCNS will work the winner of that competition to integrate the combat system into the submarines.

The deal is also a win for Thales, which holds 35 percent of DCNS, with the French government holding the remainder. Thales's share of the program is expected to be some €1 billion, with €100 million per sub based on the sale of sonar systems, electronic warfare and periscopes, a Thales executive said.

DCNS chairman Hervé Guillou welcomed the support from the Direction Générale de l'Armement procurement office, Navy chief of staff Adm. Bernard Rogel, Thales, Sagem, and Schneider Electric, a French energy company with a significant business presence in Australia.

The selection of DCNS reflected the importance of a "close working relationship with industry," as set out in Australia's 2016 defense white paper, said Robbin Laird of consultancy ICSA, based in Washington and here. Australia is looking for a long-term, upgradeable system with a large role for local manufacturing.

Defense minister Jean-Yves Le Drian said in a social media message he was with the Australian governor general on April 25, the Anzac day that marks the memory of Australian troops fallen in the battle of the Somme in the First World War.

Hollande's highly visible visit, with the joint chief of staff, defense, interior and foreign ministers, to the DCNS office marked the political and economic significance of the prospective Australian deal.

While all 12 submarines will be built in Australia, the contract will support some 4,000 jobs for DCNS and its subcontractors, with work at Brest, Cherbourg and Lorient, on the coast of northwest France, a DCNS spokesperson said. The former and latter are in Brittany, where Le Drian is president of the regional council.

Employment is a key factor as France heads toward a general election next year, with a jobless rate stubbornly stuck around 10 percent.

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