Prime Minister Scott Morrison says he does not regret his decision to scrap a $90 billion submarine deal with France in favour of a new alliance with the United States and the United Kingdom.
France has responded by recalling its ambassadors from Canberra and Washington.
"It's understandable that when that occurs that the other party that was involved in that contract would be aggrieved and disappointed. I understand that," Mr Morrison said on Sunday afternoon.
Australian Prime Minister Scott Morrison arrives to speak to media during a press conference at Kirribilli House in Sydney on Sunday. Source: AAP
"But equally I'm sure people would understand that Australia's national interest comes first.
"It must come first and it did come first. And Australia's interests are best served by the trilateral partnership that I have been able to form with President Biden and Prime Minister Johnson. That's what serves Australia's long-term national interest."
France and Australia had signed a contract in 2016 for a dozen conventional diesel-electric submarines and the work to make them was already underway.
But Mr Morrison said he had "deep and grave concerns" the French submarines were not going to be sufficient to "protect our sovereign interests".
"That's what this issue was about - it was about protecting Australia's sovereign interests. Of course, it is a matter of great disappointment to the French government and those who were working on the project, so I understand their disappointment," he said.
"But at the same time Australia, like any sovereign nation, must always take decisions that are in our sovereign national defence interest - and this is what we have done in this circumstance."
French Foreign Minister Jean-Yves Le Drian again slammed Australia on Saturday for reneging on the deal, denouncing what he called the government's "duplicity, disdain and lies".
Allies "don't treat each other with such brutality, such unpredictability, a major partner like France... So there really is a crisis," Mr Le Drian said.
"There are reasons for us to question the strength of our alliance."
With AAP.
