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Poland signs agreement with France's DCNS to work on building submarines

WARSAW (Reuters) - Poland's state-run defense firm PGZ has signed a memorandum of understanding with French military shipbuilder DCNS that could allow them to work together on building submarines in Poland, PGZ said in a statement.

The agreement marks an improvement in relations between Poland and France after Warsaw last year canceled a preliminary $3.4 billion helicopter deal with France's Airbus, a decision which has angered Paris.

"The signed agreement guarantees PGZ and the shipyards owned by PGZ ... a possibility to co-operate on building submarines in Poland," PGZ's Chief Executive Arkadiusz Siwko said in a statement published by the company.

Both sides expressed their willingness to cooperate on Polish plans to obtain submarines, coastal defense ships and patrol ships able to combat mines, PGZ said.

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Warsaw plans to devote 61 billion zlotys ($15 billion) by 2022 on acquiring military hardware, including three submarines.

"This is a great chance. We are opening the doors to further cooperation, further deepening of our partnership relations," DCNS' Deputy Chief Executive Alain Fougeron was quoted as saying in the statement.

"DCNS wants to contribute its experience so that Poland in the future is able to carry out its own defense programs," he said, adding there was still a lot of joint work ahead.

NATO member Poland is one of the few countries in Europe which meets the alliance's goal of spending 2 percent of economic output on defense.

(This version of the story was refiled to fix spelling of name to Fougeron in sixth paragraph)

(Reporting by Marcin Goettig; Editing by Keith Weir)