French and Australian leaders hold the first talks after the submarine quarrel

French President Emmanuel Macron and Australian Prime Minister Scott Morrison held talks for the first time after a major dispute over a scrapped submarine deal.

Macron’s office said it told Morrison over the phone that last month’s incident “broke the relationship of trust between our two countries.”

Morrison’s office said the two leaders had “a sincere discussion”.

Paris was furious after Australia canceled the multi-billion dollar deal to build 12 submarines.

Instead, Australia said it was negotiating a new defense pact with the United States and the United Kingdom, the so-called Aukus.

France reacted by recalling its ambassadors to Australia and the United States, with French Foreign Minister Jean-Yves Le Drian denouncing the Australian decision as “a stab in the back”.

Paris is also asking for financial compensation.

The Aukus Pact – widely seen as an effort to counter China’s growing military might – will allow Australia to build nuclear-powered submarines for the first time, using technology provided by the United States.

It will also cover artificial intelligence and other technologies.

China condemned the deal as “extremely irresponsible”.