Barracuda subs to be made in Australia

Valls' visit to the capital Canberra came days after his Australian counterpart, Malcolm Turnbull, announced that France had beaten Germany and Japan to a military submarine contract worth roughy $38 billion (33 billion euros).

"I will supervise, myself, the implementation of our commitments with the minister of defense who will be coming shortly to Australia," Valls told journalists.

Speaking through an interpreter, Valls said: "We will now deliver on all of commitments…the choice of the Australian contract was to have the 12 submarines built in Australia and that was the basis of our agreement."

Comments last week from DCNS chief Herve Guillou, saying the deal would generate thousands of jobs at French shipyards, had raised eyebrows in Australia - but Valls sought to clarify on Monday.

"This contract represents also a lot of work for the DCNS staff both in France and across the world," he said.

Australian Prime Minister Malcolm Turnbull, who may hope the deal boosts his Liberal Party ahead of a general election due on July 2, agreed that "the entire submarine fleet" would be built in Adelaide by Australian workers with domestic steel. He said the two countries would "work together to develop the supply chain here in Australia right from the shipyard to every person, every firm that is contributing to this effort."

"This is a great national enterprise and it will drive our economic plan for jobs and growth in the 21st century," he added.

'Most lethal' conventional submarine ever

Under the agreement, France plans to build a dozen 4,500-tonne, diesel-electric versions of its Shortfin Barracuda submarines (pictured above). DCNS says the new vessel would be "the recipient of France's most sensitive and protected submarine technology and will be the most lethal conventional submarine ever contemplated."

Japan had hoped to land the contract as part of its bid to start military exports, but reportedly it baulked at calls to manufacture in Australia, not Japan. Germany's ThyssenKrupp was considered the main rival to DCNS by the end of the bidding process.

Australia's increased defense spending comes at a time when the US is seeking to increase its presence in the Asia-Pacific and counter China's growing influence in the Indian and Pacific oceans.

"We are an island nation and we need to ensure that we have the best defenses. Now, that is the primary objective," Turnbull said.

mg/msh (AP, AFP, Reuters)