By Colin Packham

CANBERRA (Reuters) – Prime Minister Scott Morrison said on Friday he had raised the possibility that Australia might scrap a 2016 submarine deal with a French company in talks with the French president in June, rejecting French criticism that it had not been warned.

Australia said Thursday it would cancel the deal worth $40 billion with France’s Naval Group, which would have allowed for conventional submarines to be built. It would instead make at least eight submarines powered by U.S. or British technology. This was in response to a trilateral security partnership.

Jean-Yves Le Drian from France was critical of the move, calling it a “stab in your back”.

Morrison claimed that France was informed about the decision before the public announcement, but France refuted this claim.

Morrison, despite acknowledging the loss to Australia-France ties on Friday, insisted that he had spoken to French President Emmanuel Macron back in June to inform him that Australia had rethought its position on the deal.

Morrison stated that he made it clear during a long dinner in Paris about his concerns regarding the ability of traditional submarines to cope with the changing strategic environment.

He said, “I made it clear that this is a matter Australia would have to decide on in their national interest.”

As the United States and allies look for additional support in Asia and the Pacific, they are strained Australia-French relations amid concerns about a rising China.

France, poised to assume the European Union’s presidency, released Thursday night its Indo-Pacific Strategy. It pledged to make trade agreements with Taiwan and deploy more ships in order to protect sea routes.