Australia will become a nuclear submarine-owning nation but won't abandon existing nuclear weapon prohibitions as it embarks on a new "forever partnership" with the UK and United States known as AUKUS.
At least eight new submarines will be built in Adelaide to be ready in the 2030s as part of the historic agreement.
Australia will not develop its own nuclear reactors for the submarines, but will instead purchase reactors from the US or the UK, which do not need to be replaced during the lifespan of the boat.
The move has drawn both praise and criticism from leaders and experts around the world with former prime minister Paul Keating warning it would result in Australia playing "hostage" to US wartime demands if it ever engaged in conflict with China.
World leaders respond to new AUKUS deal
The new AUKUS partnership brings to an end Australia's Attack-class conventional submarine program with French shipbuilder Naval Group before a single submarine could be built.
Prime Minister Scott Morrison said he had no regrets about sunk costs in the order of $2.4 billion plus "reasonable compensation" to Naval Group.
Australia was not in a position to pursue nuclear submarine technology when it signed the conventional submarine contracts, Mr Morrison said. The US has not agreed to share its prized nuclear secrets with any country since it gave the submarine technology to the UK in 1958.
"This is a historic opportunity for the three nations, with like-minded allies and partners, to protect share values and promote security and prosperity in the Indo-Pacific region," he said.
France Foreign Minister Jean-Yves Le Drien and French Defence Minister Florence Parly expressed disappointment in Australia's decision to dump their submarine deal in a joint statement released on Thursday.
They said the move was "contrary to the spirit and the letter" of cooperation between the two countries.
China's Washington embassy spokesperson Liu Pengyu said countries should avoid excluding others, warning it would unfairly target and harm some in the region.
He added countries should shake their "Cold War mentality and ideological prejudice".
New Zealand prime minister Jacinda Ardern said she supported stability in the region but the nuclear-powered submarines would not be allowed to enter New Zealand waters due to long-standing nuclear-free zone policy.
Australia 'not seeking to acquire nuclear weapons'
Mr Morrison said a nuclear submarine capability was needed for the strategic challenges of the Indo-Pacific region. A conventional fleet would not have met Australia's ongoing needs, he said.
Defence chief General Angus Campbell said the regional strategic environment was rapidly deteriorating, and the rate of change in that strategic position was accelerating.
Greg Moriarty, Australia's top defence official said he was looking forward to exploring other non-nuclear capability as well, including drone submarines, long-range missiles, cyber and artificial intelligence technologies.
"I reassure you and the government and the Australian people of Defence's absolute commitment to the highest international standards of nuclear safety and security. We are also committed to our non-proliferation and treaty obligations," he said.
Australian Prime Minister Scott Morrison made the initial announcement in a joint video conference with UK Prime Minister Boris Johnson and US President Joe Biden.
"Australia is not seeking to acquire nuclear weapons or establish a civil nuclear capability, and we will continue to meet all our nuclear non-proliferation obligations," Mr Morrison said.
Leaders stressed the significance of the partnership for the region of the Indo-Pacific.
"AUKUS will also enhance our contribution to our growing network of partnerships in the Indo-Pacific region: ANZUS, our ASEAN friends, our bilateral strategic partners, the Quad, Five Eyes countries, and of course, our dear Pacific family," Mr Morrison said.
President Biden also assured the submarine technology was safe.
"These are conventionally armed submarines that are powered by nuclear reactors, this technology is proven, it's safe," he said.
He also emphasised America's continued willingness to work with France, which previously held a submarine deal with Australia.
"France in particular, already has substantial Indo-Pacific presence as a key partner and ally in strengthening security and prosperity of the region," Mr Biden said.
"The United States looks forward to working closely with France and other key countries as we go forward."
A 'forever partnership' with the US amid China tensions
The historic agreement has been lauded by experts and analysts.
Opposition Leader Anthony Albanese welcomed the announcement but said the cost of the new deal, and the one that had been severed with Naval Group, needed to be scrutinised.
"The submarines won't enter the water until 2040 so we will continue to examine the detail of these proposals," he said.
Australian Strategic Policy Institute senior analyst Dr Malcolm Davis said the deal was "hugely important" for the country and brought it to the world table.
"It's a recognition that Australia has a global role. We are laying our cards on the table. We are saying, 'We are going to be there with the UK and the US in any crisis' and they are going to be there for us'," Dr Davis said.
However, former prime minister Paul Keating slammed the move in a statement, criticising the government's move toward a greater reliance on the US amid ongoing tensions with China.
"The announced agreement will amount to a lock-in of Australian military equipment and thereby forces, with those of the United States with only one underlying objective: the ability to act collectively in any military engagement by the United States against China," he said.
"The arrangement would witness a further dramatic loss of Australian sovereignty, as material dependency on the United States robbed Australia of any freedom or choice in any engagement Australia may deem appropriate."
Mr Morrison rejected the former prime minister's conclusion, adding the agreement would serve both peace and security interests "forever into the future".
"The former Labor prime minister is entitled to his views," he responded on Thursday.
"I prefer to be in the company of [former prime ministers] John Curtin and Robert Menzies when it come this issue, and John Howard."
New technologies for a new world
The new partnership, to be known as AUKUS, will share information on key technologies in the 21st century warfare, including so-called grey-zone conflict, in the emerging domain of cyber as well as traditional sea and air war-fighting domains.
The technologies will include long-range strike capabilities and underwater systems.
Long-range strike capabilities were a key feature of two recent Defence strategy documents from the Australian government aimed at deterring aggression in the Indo-Pacific - the 2020 Defence Strategic Update and the Force Structure Plan.
Australia has also been investing in hypersonic missile research, advanced guided missiles and upgraded air and underwater surveillance capabilities. Artificial intelligence, another area proposed for technology cooperation, has been a major focus for Defence in recent years.
Australia's Foreign Affairs and Defence ministers are in Washington for annual AUSMIN talks with their US counterparts. The meetings were scheduled to occur in Australia this year, but the US officials did not want to agree to Australian quarantine requirements.
Senator Marise Payne and Peter Dutton will be heading to the United Nations in New York before returning to Australia following a ministerial tour that has taken them to Indonesia, India and South Korea.
They laid wreaths at the War Memorial of Korea to remember the 340 Australians who lost their lives during the Korean conflict.
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