French fighter jets find takers in a worried world

Reuters News
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Posted: May 05, 2015 6:56 AM

By John Irish

RIYADH (Reuters) - After failing for years to win a single order for the Dassault-built Rafale fighter jet, France has scored a string of multi-billion-euro wins in recent weeks and is on a quest for more.

Global appetite for the jets has surged as a result of the United States' diminishing influence in the Arab world along with wider security concerns over the rise of Islamic State insurgents - which Paris is more than happy to assuage. Egypt, India and Qatar have all just signed contracts.

"Good things always come in four," Foreign Minister Laurent Fabius quipped to reporters on the jet taking President Francois Hollande to the Gulf this week to sign the Qatar deal and make a rare guest appearance by a Westerner at a regional summit there.

After signing deals worth some 15 billion euros for a total of 84 aircraft, France now has the United Arab Emirates in its sights for dozens more purchases that are a much-needed boost to jobs at home, where unemployment is stuck at a high 10 percent.

"Above all, this is good news for the French economy," Hollande said in Doha of the fruits of his "economic diplomacy" policy, which has turned Fabius and Defence Minister Jean-Yves Le Drian into France's top traveling salesmen.

Le Drian predicted at the weekend that recent arms deals could create up to 30,000 French jobs. This success may account for a striking lack of domestic criticism so far about the Socialist government promoting arms sales to entrenched monarchies, many of whom have patchy human rights records.

"If we want France to have influence, this is one of the best ways to get it," Eduardo Rihan-Cypel, a Socialist lawmaker on parliament's defense committee told Reuters of the sales.

Hollande's conservative predecessor Nicolas Sarkozy deployed the Rafale to wars in Afghanistan and Libya over the past decade but was unable to find a single foreign buyer for it. Now, growing security jitters are unlocking order books.

"We are at war with Islamic State," former Sarkozy minister and party ally Xavier Bertrand told French TV. "Countries have realized they have to equip themselves."

SECURITY JITTERS

Once the dominant Western player in the Arab world, the United States has seen its influence wane following its reluctance to intervene in Syria, last year's failure to secure a Middle East peace deal and its readiness to strike a nuclear deal with Iran.

That has left a strategic window for fellow U.N. Security Council veto-holder France, advocate of a tough line on Tehran and whose bombers were on the runway ready to fly to Syria in August 2013, before Barack Obama backed down on Western strikes.

"We naturally have a good defense industry - that plays its part," one French diplomat said of a sector which employs some 165,000, according to government figures.

"But they (Gulf states) are looking at us now more closely because we have worked with them closely on a strategic level and that naturally helps on a commercial level."

Some industry-watchers predicted France's move to suspend its delivery of Mistral aircraft carriers to Russia in the wake of the Ukraine conflict would harm its image as a defense supplier. But the Rafale deals suggest this is not the case.

Saudi Arabia's new Foreign Minister ?Adel al Jubeir told Reuters that Hollande's invitation to the GCC summit showed the close ties between Paris and the region, noting a "commonality of views with regard to the challenges."

That said, French officials are under no illusion that the star treatment offered to Hollande during the trip is part of a wider Gulf game meant in part to send a message to Washington.

"They are going to Camp David on May 14," one senior French official said of Obama's invitation for talks sent out to Gulf Cooperation Council countries Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

"They wanted us to come to say to the Americans 'look, in any case we have France, so make sure you don't get edged out'."

KEEPING UP WITH DEMAND

Dassault joins Sweden's Saab, manufacturer of the JAS 39 Gripen, in having assured production well beyond the end of this decade through a recent breakthrough in exports.

    The Eurofighter consortium, from which France's decision to break away in 1985 led to the independent Rafale project, and Boeing's F/A-18 E/F and F-15 jets face their factories going dark before the end of the decade without fresh orders.

Yet both the F-18 and Eurofighter are expected to put up tough competition for contracts with Kuwait, where the Rafale is seen by many in the industry as a long shot.

And while Saudi Arabia financed a $3-billion French arms deal for Lebanon signed last November, French officials concede that Riyadh is unlikely to wind up its longstanding defense ties with the United States and Britain any time yet.

The United Arab Emirates publicly rebuffed France's offer to supply 60 Rafale jets in 2011 as "uncompetitive and unworkable".

Moreover some defense analysts say Dassault's success in Qatar could dampen its chances in the UAE, given the sometimes prickly relations between the two Gulf states.

    But a fighter industry source noted the latest wins gave the Rafale economies of scale and industrial flexibility which could give it new momentum in export prospects, including in the UAE, and recent contacts suggest there are grounds for hope.

Le Drian, architect of the recent successes, met Crown Prince Sheikh Mohammed bin Zayed Al Nahyanfor for an hour this weekend to specifically discuss the sale of the fighter jets.

"Everything went well," two diplomatic sources said, with one noting that negotiations were already "in an active phase".

However an official close to the talks said the flurry of recent orders meant Dassault production lines were already under pressure to meet deadlines, noting: "If they want the plane quickly, they will have to pay more for it."

(Additional reporting by Marine Pennetier and Tim Hepher in Paris; writing by Mark John; Editing by Sophie Walker)