Australia said Tuesday it accepted a Japanese company's bid for a lucrative and hotly contested contract to build Australian warships, expected to be worth 10 billion Australian dollars ($6.5 billion).

Japan’s Mitsubishi Heavy Industries won a multi-billion dollar deal to build a fleet of advanced naval frigates for Australia, boosting Tokyo’s ambitions to become a major exporter of military equipment and develop its defense sector.

Against this backdrop, the frigate deal serves as a diplomatic balm. It is both a reassurance to Tokyo and a statement of intent that Australia sees its future defence firmly embedded in the Indo-Pacific, and not just in trans-Atlantic alliances.