French Arms Exports Rise 42 Percent

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    France signed arms export contracts worth €6.87 billion (US $8.8 billion) in 2013, up more than 42 percent from the €4.8 billion in the previous year, despite tougher US competition and Russia, according to a report to Parliament released on Sept. 9.

    PARIS — France signed arms export contracts worth €6.87 billion (US $8.8 billion) in 2013, up more than 42 percent from the €4.8 billion in the previous year, despite tougher US competition and Russia, according to a report to Parliament released on Sept. 9.

    The rise in orders was due to eight contracts worth more than €200 million, compared to three such deals in 2012, with a total of €2.82 billion. That total value was up 81 percent from the previous year, the report said.

    “This result boosts the policy of support for exports delivered at the highest level of the state,” the report said.

    A separate and detailed study from the Defense Ministry, trade body Conseil des Industries de Defense Françaises and consultancy McKinsey pointed up the economic, labor and technology benefits stemming from export sales.

    Arms exports accounted for more than 40,000 direct and indirect jobs, and the French trade deficit would have been 5 to 8 percentage points higher between 2008 and 2013 if it had not been for those foreign arms sales, the study said. The case studies included civil-military technology, such as a carbon composite developed for the M4 ballistic missile to be used for carbon brakes for civilian aircraft.

    French military operations in a variety of theaters helped export sales, while small and medium-sized companies played an increasing role in winning foreign deals, the parliamentary report said.

    Competition is coming from leading arms sellers United States and Russia, European nations, and new export players, either emerging markets or new industrial powers such as South Korea, the report said.

    “To make up for the decrease in domestic orders, which had fueled growth for the defense sector over the previous decade, the United States seeks to strengthen its domination of the export market,” the report said. “This policy is implemented particularly in a determination to increase their market share, already substantial, in the Middle East and a new direction toward Asian markets. This strategy is supported by commercial and political partnerships sealed through government-to-government contracts, the foreign military sales contracts.”

    On the French export figure, there has been something of a recovery.

    “It’s a good figure, nothing exceptional,” said Jean-Pierre Maulny, deputy director of think tank Institut des Relations Internationales et Stratégiques.

    The baseline figure for annual French arms exports is around €4 billion, mainly the sale of maintenance, spares and low-ticket items. A major sale of a program worth a couple of billion euros is needed to lift that figure, he said.

    A key factor would be the hoped-for sale of Dassault Rafale fighters to India, as the export deal is needed to maintain an annual production rate of 11 units. That output rate ends in 2016, unless Paris signs a contract next year with New Delhi and relieves the straitened domestic budget.

    The first 18 of the planned 126-jet sale would be built in the Dassault plant near Bordeaux, France, with the rest assembled in India. That represents two-and-half years of domestic production, with an annual four units for France and seven for India.

    That Rafale sale would then boost the exports to a “a very good figure,” Maulny said.

    Exports are important but it is not the end objective, said Bertrand Slaski, project manager at consultancy Compagnie Européenne d’Intelligence Stratégique.

    “The point is to meet the needs of the domestic client. There is a virtuous logic — you can’t export without being used by the national forces,” he said, noting the US and Israel put the “combat-proven” sticker on their equipment.

    The French Air Force flew the Rafale in operations over Libya and Afghanistan. “This is incomparable marketing,” Slaski said, adding it was “much appreciated” that France deployed Caesar artillery, véhicule blindé de combat d’infanterie infantry fighting vehicles and Tiger helicopters in Mali.

    Defense Minister Jean-Yves Le Drian works hard on the export front, he said. “He is very determined, he is committed to the military front, and he is also reassuring as he takes the time to work with the Direction Générale de l’Armament [procurement office] and industry, he said.

    Le Drian has to work on Iraq, Syria, Ukraine, Mali and Libya, but he also supports the domestic defense industrial and technology base, he said.

    On the export front, there is strong competition from Europe, as British, Dutch, German, Italian, Spanish and Swedish companies have had to cope with budget cuts and are looking for export wins, particularly in emerging markets.

    A technology transfer requested by export clients will lead to future competition, while China, South Korea and Turkey are already winning export tenders and beating the established international players, the report said. French firms face stiff competition in drones, space systems and missiles from Israeli companies, the report said.

    France has renewed ties with Arabian Gulf nations and strengthened its position in Asian emerging markets, the report said. Saudi Arabia was the leading client, with deals worth €1.9 billion going into effect last year, with the Middle East region accounting for almost half the orders, 25 percent for the Asia-Pacific, followed by Latin America, central Asia, Russia and Europe.

    The chart for country-by-country arms sales shows a spike for Russia in 2011, when the €1.2 billion contract was signed for the two Mistral-class helicopter carriers. That deal is under suspension due to the Ukraine crisis. Russia ranks as the 10th largest customer, after Malaysia and Singapore, in the chart of sales spanning 2004 to 2013.

    Sales of missiles, naval and space systems accounted for the bulk of the deals.

    France ranks fourth after the US, Russia and Britain in the arms export market, with the former holding a 49 percent share and Moscow 10.7 percent, the report showed.

    “For export policy, I have set out three main principles: a share of tasks between the state and industry; a priority set on a political dialogue; and including export projects into defense cooperation and strategic partnerships,” Le Drian said in remarks prepared for a high-level conference named the Summer Defense University, held at Bordeaux on Sept. 8 and 9.

    French Arms Exports Rise 42 Percent - World News Report

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