A dogfight over Delhi
Sir Stephen Dalton, the UK's chief of air staff, hurtled down the runway behind the controls of a Russian-designed Sukhoi-30 at the Kalaikunda air base in West Bengal. The deafening roar of the engines of the mainstay of the Indian Air Force swept over a small band of observers gathered just over a year ago in the rising tropical heat.
Minutes later, a Royal Air Force Eurofighter Typhoon built by a British, German, Italian and Spanish consortium took to the skies as part of a staged dogfight with India's French Mirages and Russian aircraft, designed to impress officials seeking to modernise an ageing fleet. Its near-vertical take-off was met with awed admiration.
Within the sights of Sir Stephen, a veteran of the first Gulf war - as well as his political masters and hundreds of aerospace executives - was one of the world's most sought-after jet fighter contracts. London, Paris and Washington were all vying to re-equip the world's largest democracy with 126 fighters — about one-10th of the force — seeing it as a chance to put a seal on a defining bilateral relationship of the 21st century.
The deal to supply India — with its fast-growing economy and geopolitical status, and concern about the threat from Pakistan to the north and China to the east — offered a European defence establishment suffering shrinking military budgets back home the chance to reshape the industry landscape.
But the mock battle was the closest the Typhoon came to the target. New Delhi chose Dassault's Rafale over the Eurofighter at the end of an eight-year competition. The significance of the agreement is being compared to that of the UK's record al-Yamama deal with with Saudi Arabia, signed in the 1980s. Optimists say it could be signed within eight months, joining a $9.3bn agreement for France to supply India with two nuclear plants and another to build it a modern conventional submarine fleet worth $4bn.
"This is a major win for France, and a major loss for the UK... French political backing has been essential in strengthening the French bid and the Rafale win is therefore also a major victory for President Nicolas Sarkozy," says Endre Lunde, an aerospace and defence consultant at IHS Jane's, a defence consultancy.
Rafale's selection is a bitter disappointment for all four nations in the consortium, and highlights Indian doubts about a pan-European partnership at a time of financial and political strain on the continent.
It has a particular sting for David Cameron. The UK prime minister identified the Indian market as one of the most important for Britain's exporters — but this opening gambit to his premiership has shown scant return even though accompanied by £1bn of aid in the next four years.
Eurofighter's backers thought it the lead contender, bringing more advanced technology and strategic clout than the Rafale, which had not been sold outside France. Their confidence soared after US rivals — Boeing's F/A-18 Super Hornet and Lockheed Martin's F-16 Super Viper — were knocked out of the highly secretive medium multi-role combat aircraft contest last year.
In London and Berlin, contractors salivated at the idea of harnessing via industrial partnership a greater share of India's $36bn annual defence budget. A big European purchase would shift India away from reliance on Russia and show the US was not the only alternative as Delhi sought to rearm itself in light of mounting concerns about a more assertive Beijing.
The executives of the consortium partners were convinced Eurofighter offered a superior so-called "4th generation" aircraft suited to aerial combat and able to strike targets on the ground. They were also confident they had priced it competitively, in spite of some analysts' claims that the Rafale was up to 10 per cent cheaper.
But they overlooked Indian misgivings about security of supply for an aircraft built by four countries across a continent in financial turmoil and amid worries about the aircraft's radar capabilities. "The upside is that Eurofighter delivers you four countries as strategic partners," says Douglas Barrie of the London-based International Institute for Strategic Studies, but "the down side is they have to negotiate with each other before they negotiate with you".
Eurofighter executives want a "detailed explanation" from India's Ministry of Defence of how calculations were made. They doubt that Dassault, which conducted its campaign from within the grey concrete walls of the French embassy, can deliver on its promises in terms of price and schedule.
Meantime, there is grim denial that the contest is over, and that India has overlooked a partnership that they say includes two of the more robust European economies, Germany and the UK, in favour of one with a country recently stripped of its triple A credit status. One veteran of the Eurofighter campaign vows not to give up until India makes the first down payment to the French, which might not be for years, claiming that arms deals of this magnitude are in play "until money is in the bank". BAE, one of the Eurofighter group partners, signalled that it was prepared to drop the price.
Delhi's version of events is that, in an era of corruption scandals and an activist Supreme Court, it has played the selection process entirely by the book. Defence officials say that, once the two models passed technical trials, the deciding factor was always going to be which was offered at the lowest price. They say the choice of Rafale, which some say came in $5m cheaper per aircraft, was one of the cleanest decisions in India's arms procurement history, with the minimum of political interference.
Defence experts, however, say other factors came into play in the form of investment agreements, whereby they were required to invest half the value of the contract back into India, and technology transfer. "The deal is beyond the aircraft," says Uday Bhaskar, a Delhi-based defence analyst. "If I was in the shoes of France looking at India, I would go beyond the fighter to the next big-ticket items of civil nuclear power and the [nuclear] submarine arena."
Bharat Karnad, a defence expert at the Centre for Policy Research in Delhi, says a likely bargaining chip was the prospect of the use of nuclear testing facilities in Bordeaux to shore up the thermonuclear shortcomings of India's nuclear arsenal. "The Indian government can't be blamed for misleading anyone. It was government-to-government from the very beginning.We wanted to know what things we would get with the fighter," he says.
Competitors suspect the nuclear element played a part in the decision. "Dassault got very aggressive on price and then Sarkozy rounded out the deal at the very end, possibly with some side-deal involving nuclear energy," one German official says.
Mr Sarkozy, months away from a presidential election that promises to be a bitter fight, and Dassault are quietly triumphant. He has underlined his determination by saying the final negotiations had "the full support of the French authorities" and would include technology transfers "guaranteed" by the state.
"Sarko is willing to give them whatever [technology] they want," says a French defence industry executive. "It's fair to say the technology has been around a while now so is not quite leading-edge. Remember we were talking about selling the Rafale to Gaddafi in Libya, so there are no qualms really."
Internal critiques on how the deal was lost will almost certainly heap blame on Germany — and, in some quarters, deepen existing regret that the UK, India's former colonial master, did not take the lead role in a more dynamic bid.
The German-led bid was excessively technical and lacked glossy display of what the Typhoon could do in conflicts, according to one critic. While Dassault's bid was captured in 20 pages, Eurofighter's ran to 150.
"The German government was very German. It helped as best it thought it could," explains one Berlin official. "But it was always trammelled by German public aversion to arms sales, and by the fact that it doesn't pursue a statist industrial policy like Paris... The fact that some countries do packages and the Germans don't is a fact you have to accept."
A dogfight over Delhi - Indian Express