France claimed Australia had lied about its intention to cancel the 90 billion Australian dollars ($66 billion) contract with French majority state-owned Naval Group for 12 conventional diesel-electric submarines.
Last week, President Joe Biden announced a new alliance that includes Australia and Britain. This would enable Australia to have at least eight nuclear-powered submarines.
Morrison attributed the change to a weakening Indo-Pacific strategic environment. Morrison hasn't specifically mentioned China's recent military buildup that has increased in speed.
Morrison stated that Australia did not need the Attack Class submarines to defend its sovereign interests.
"They would have known that we have deep concerns that the Attack class submarine's capability was not going to be in our strategic interests, and we have made it very clear that our decision would be based on our strategic nation interest," he said. He was referring to France's government.
France responded to the cancellation of the contract, Morrison claiming that it will cost his government at most AU$2.4 billion ($1.7billion). It recalls its ambassadors from Australia as well as the United States.
Jean-Yves Le Drian, French Foreign Minister, denounced Saturday what he called "duplicity and disdainful lies" surrounding sudden termination of contract. He said France now questions the strength of the alliance.
According to a French government spokesperson, President Emmanuel Macron will meet with Biden in the next few days in their first contact since the crisis.
China denounces the sharing of nuclear technology from the U.S. and Britain as irresponsible.
France was awarded the contract over Japan and Germany in 2016. The Shortfin Barracuda was a nuclear submarine designed to run on diesel at the surface and a battery under water.
Japan was especially disappointed by the fact that Tony Abbott, then Prime Minister of Australia, had promised his close defense ally the contract prior to being deposed by his party in 2015.
Media reports about ructions among the French sub-project partners and delays in the original 2027 delivery date have been denied by the government.
There were concerns that there might be a gap in defense capabilities that the Collins-class conventional submarines of Australia's aging Collins class could not fill.
The delivery of Australia's first nuclear submarines is not anticipated until 2040.
Peter Dutton, Defense Minister, stated that his government is open to leasing nuclear submarines from the United States during construction of Australia's fleet.
Dutton and Foreign Minister Marise Penny are visiting the United States to meet with their counterparts in the United States and for their first meeting with the Biden administration.
Morrison will fly to the United States Monday to meet with Biden, the leaders of India & Japan who make up the Quad Security Forum.