It's Typhoon vs. Rafale in Emirates Jet Joust
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Britain and France, longtime allies, are locked in a high-stakes contest for a $10 billion contract for up to 60 combat jets in the United Arab Emirates, a big prize in a global defense market now driven by exports.
The intense competition for one of the very few big-ticket military jet sales around these days and the byzantine backroom horse-trading that frequently accompanies any multibillion-dollar arms deal in the Persian Gulf illustrates the complexities of such endeavors in what has become very much a buyers' market.
Some defense analysts are suggesting that Dassault Aviation's multirole Rafale has the edge over BAE's Eurofighter Typhoon because the Emirates recently signed a $913 million deal for two high-resolution Helios military satellites.
The satellites acquired in the so-called Falcon Eye deal in July will be built by Astrium, the space division of the European aerospace giant EADS and Thales Alenia Space, a joint venture between Thales of France and Italy's Finmeccanica.
But other defense insiders argue the satellite deal favors BAE because it means the French have got a good deal out of the oil-rich Emirates and now it's the turn of Britain's biggest defense contractor, a veteran of several defense mega-deals in the Persian Gulf over the years, to make a big score.
Abu Dhabi wanted Dassault to cut the asking price for the Rafale, which made its combat debut during the NATO intervention in Libya's 2011 civil war, and to provide a more powerful engine and a wider range of advanced weapons systems.
Paris balked. It's not known what figure the Emirates proposed, but Dassault reportedly slashed $2 billion off its asking price for 36 Rafales during negotiations with Brazil in 2010. That deal, however, fell through.
The negotiations with the Emirates slithered to a halt, while Abu Dhabi suddenly took an interest in Boeing's F/A-18 -- although that apparently hasn't gone anywhere either.
Back in the Emirates, geopolitical developments have complicated the issue. Some analysts argue France's efforts to torpedo detente between Iran and U.S.-led Western powers, and President Francois Hollande's willingness to launch airstrikes against the embattled Syrian regime of President Bashar Assad gave the French a big advantage.
The Persian Gulf monarchies fear Washington is going soft on Iran, their main adversary, and want to see Assad, Iran's key Arab ally, toppled.
But British defense analyst Francis Tusa reckons that kind of thinking is way off beam.
He sees France's satellite sale in July as good news for BAE.
"What the Emirates may be saying is, 'We won't buy Rafale, but we will buy some satellites as a consolation prize."
That will be bad news for Dassault, which is having problems with India, the only foreign customer so far for the agile, twin-engined Rafale.
In January 2012, India made an initial deal to buy 126 Rafales for $10 billion, beating out the Eurofighter, although the final contract has yet to be signed.
But that got snarled over disagreements concerning the cost of assembling some Rafales in India and France's request for $2 billion extra to upgrade the technology India wants.
On top of the delays in starting production of Rafales for India, Paris says it plans to reduce orders from 11 per year -- the bare minimum for commercial viability -- to 26 over six years.
Le Drian admitted by 2016 Dassault would have to count on exports -- which it still doesn't have signed and sealed -- to keep production rolling.
Meantime, the British may get revenge for losing the India deal. Prime Minister David Cameron is negotiating a military cooperation deal with Abu Dhabi while Eurofighter negotiations are "progressing well."
Clinching the Emirates deal could unlock a Typhoon sale in Kuwait and a second order from Saudi Arabia, which is already buying 72. Oman has bought 12 and Bahrain's showing interest. [via]
