There are a number of reasons. For one, the deal was of virtually unrivaled economic significance to France’s defense sector, said Pierre Morcos, a French visiting fellow at the D.C.-based Center for Strategic and International Studies.

The deal was crucial for “a whole network of small and medium enterprises” in France that were supposed to benefit from it, he said. The economic significance of the Australia deal has been compared to a landmark 2015 agreement between India and French company Dassault Aviation to supply 36 Rafale fighter jets.

Second, France stands to lose strategically as a result of Australia bowing out of its previous commitment. When the deal was struck, the French government celebrated a “strategic partnership … for the next 50 years.”

“This overall framework is now jeopardized,” Morcos said.