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Jubilation in France as Dassault wins deal

French President Nicolas Sarkozy. File photo   | Photo Credit: ERIC FEFERBERG

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Nicolas Sarkozy is likely to make political capital out of it and seek to boost re-election bid

India's decision to buy 126 French-made Rafale fighter jets for its air force in a colossal 7.9 billion Euro deal, has understandably made headline news in France with a discreet popping of champagne corks, not just at Dassault Aviation, the makers of the plane, but within President Sarkozy's entourage and his Conservative UMP Party.

This French victory over the rival Eurofighter Typhoon (made by EADS and financed by a four-nation consortium that includes Britain, Germany, Spain and Italy) comes at a crucial time for the French President who is facing a difficult re-election bid in May 2012. With less than 15 weeks of campaigning left and extremely poor ratings, Mr. Sarkozy, who in the past has described himself as his country's “top salesman” is likely to milk the deal for all it is worth.

Serge Dassault, the Chairman and CEO of Dassault Aviation is a right-wing Senator and member of the ruling conservative UMP Party. He is also one of Mr. Sarkozy's most ardent supporters and uses his right-wing daily, Le Figaro, to further the President's cause. Both men are probably enjoying a rare moment of quiet victory before the fraught campaign weeks that lie ahead.

France had almost given up hope of ever selling its hugely expensive technological marvel. Rafale in French means gale, gust or squall and an acerbic scribe once remarked that the cash-guzzling Rafale programme was more of a tornado than a gale, sucking up a massive chunk of the defence ministry's budget. Had the deal not gone through, Dassault Aviation, which has been experiencing significant financial difficulties, would have been obliged to stop the Rafale programme altogether.

In its 26-year-old history, France has been incapable of selling a single plane outside its own frontiers. Defence Minister Gerard Longuet said last December after the nth prospective buyer opted out of bidding for the plane that if no foreign buyer could be found to underwrite the programme, he would have no choice but to scrap Rafale.

French Ambassador to New Delhi Francois Richier undertook several trips to Paris these past weeks in an attempt to throw in last minute sweeteners that would swing the deal for France. Ultimately, it was the price factor that carried the day, reliable sources said.

The Rafale first took to the skies in 1986 and at one point or another since, South Korea, The Netherlands, Singapore, Morocco, Libya, Brazil, Saudi Arabia, the UAE, Switzerland, Greece and even Britain's Royal Navy were tipped to purchase the fighter. All declined after showing initial interest. Too expensive, too difficult to handle, too sophisticated, they said.

But the news from New Delhi that final negotiations had been opened for the purchase by India of 126 Rafale jets made Dassault Aviation's share price jump a record 20 per cent on European markets, bringing the share to its highest level in 22 years. Officially, the company remained prudent, indicating that the announcement in Delhi was “just another step” towards reaching a commercial agreement. “No contract has been signed as yet. We have just moved one step closer to finalisation,” a source at Dassault told Reuters agency.

The Hindu's sources however indicated that the contract was a lifesaver for Dassault, which “could have experienced serious problems with job cutbacks and factory closures had this contract not come through.” Insiders say there was “unmitigated relief and joy” at Dassault headquarters.

There was some bitterness at EADS, the makers of the rival Eurofighter. A source at EADS told The Hindu that India's decision was “dictated as much by political concerns as it was by military ones.” The source said that the Eurofighter was a more advanced, younger and more modern aircraft. The fact that France has a permanent UN Security Council seat tipped the balance in favour of Rafale, the source indicated.

So fierce was the competition between the two companies that EADS Chief Louis Gallois who is French, expressly asked The Hindu to refrain from publishing his interview while Mr. Sarkozy was still on Indian soil during the latter's official visit in December 2010. “We are both pushing competing products. It could complicate matters,” Mr. Gallois, who was part of President Sarkozy's delegation explained.

Pat for transparency

Mr. Sarkozy in a statement obliquely refuted EADS suggestions that he had used political clout to swing the contract by praising the “transparency” of the selection process adopted by the Defence Ministry.

But his ministers themselves preferred to remain discreet. Pierre Lellouche, the junior minister for foreign trade said: “We have won the contract but it still remains to be finalised. We have entered a phase of exclusive negotiations.” Officials at the Finance Ministry said: “If any announcement is to be made at all, it will come from the Elysee presidential palace.”

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Printable version | Jan 19, 2018 10:13:40 PM | http://www.thehindu.com/business/jubilation-in-france-as-dassault-wins-deal/article2848475.ece