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Australia will need to launch a diplomatic effort to repair damaged relations with Japan after it was overlooked in favour of France's DCNS for the $50 billion submarine contract, defence experts say.
It is widely known that Japan entered the submarine race with the tacit approval of the former Abbott government.
Japan's leader, Shinzo Abe, personally expended significant political capital pushing the bid, which was a leap of faith for a country that since the end of World War II has followed a pacifist constitution, including a curb on defence exports.
Japan swiftly expressed its disappointment with the outcome. Defence Minister Gen Nakatani branded the decision "deeply regrettable" and said Tokyo would "ask Australia to explain why they didn't pick our design".
A Japanese source in Australia said: "Mr Abbott entered into an agreement with us and Mr Turnbull stepped away from that agreement."
Defence officials have long said their advice would be driven by an assessment of what would be the best submarine for Australia's navy, rather than by seeking a closer strategic relationship with any one country. This would ultimately make Australia safer, they contended.
Sean Costello, chief executive of DCNS Australia, said that the eventual French-led design would be better than anything else in Australia's region.
"Whoever might choose to engage in an armed conflict with Australia ... will know that the submarines in the Australian navy will defeat their own, so that will cause them by way of a deterrent effect from taking us on," he said.
Experts said on Tuesday that the priority on capability had been borne out by the French win.
"What you see is what you get," said Andrew Davies, senior analyst at the Australian Strategic Policy Institute. "It's a more capable solution." But he added that the "way Japan's been treated is problematic".
The commonly believed "narrative" was that former prime minister Tony Abbott had assured Mr Abe that Japan would be chosen, but after Mr Abbott faced a political backlash in South Australia, he opened up the competitive bid.
The Japanese "didn't like this one bit", Mr Davies said. It then learnt through a leak that it had not won the bid.
"I think there will be some harm to the relationship as a result of it," he said. "It's not a pretty picture. There is some relationship mending [needed]."
This was a significant test case for Mr Abe's push for Japan to export military hardware and now we could expect more caution from Japan, he said.
Rory Medcalf, head of the ANU's National Security College, said there would be "some damage to relations with Tokyo".
"We need to take the initiative now to assure the Japanese that a close strategic partnership is about more than submarines," he said.
He added that Australia also needed to make sure the deal with France was about "deep strategic trust" and not just a commercial deal.
Mr Abbott welcomed the announcement, but supporters of the former prime minister were less keen.
"I really liked where Abbott was going with our relationship with Japan," one Coalition MP said. "Japan is important to us and he nurtured that well. This decision is a backward step for that relationship."
