French Defense Execs Woo Gaddafi

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French officials and the country's top defense executives vowed at a press conference on Thursday to boost the country's arms exports, by fast-tracking deals and aggressively seeking new business. Rare, considering the usually secretive nexus of government defense bureaucrats and the arms industry, French defense minister Hervé Morin met reporters for an hour, surrounded by top officials from Dassault Aviation and Thales, two of France's biggest defense companies, and told them that it was "a priority to revive our arms exports."

But the man most critical to that effort was not among those sitting around the gleaming conference table. Instead, Libyan president Moammar Gaddafi was just across the Seine, touring the Louvre Museum with a coterie of female bodyguards in tow.

Gaddafi's plane had barely touched the ground in Paris on Monday when the verbal ammunition among French politicians began flying over why President Sarkozy had chosen to host him during a five-day visit. France's junior minister for human rights Rama Yade blasted her government, saying that the visit would allow the Libyan leader to "wipe off the blood of his crimes." Unwilling to play the polite guest, Gaddafi spat back on Tuesday, saying said France had human-rights problems of its own in its treatment of immigrants, who include millions of North Africans.

But Sarkozy's welcome of Gaddafi concerns a bigger ticket issue than human rights — arms deals worth potentially about $5.86 billion and thousands of French jobs. Gaddafi has agreed to negotiate exclusively with France for six months to buy 14 Rafale fighter jets, made by Dassault Aviation, and 35 combat and transport helicopters. For France, the deal is crucial in reviving its faltering arms industry against the United States and Russia. Six years after the first Rafale jet was built, France has yet to sell a single new fighter abroad.

Despite his feisty talk, Gaddafi is a near-perfect customer for Sarkozy, if not quite yet his savior. Flush with revenues from record-high oil prices, the Libyan leader is rebuilding his military virtually from scratch, since decades-long Western sanctions banned him from purchasing arms and replacing broken equipment. "Libya's military inventories during the embargoes degraded to the point of being useless," says Matthew Smith, economics analyst for Jane's, the London-based defense research group. The organization this week estimates Libya's military spending was about $620 million last year — small change for the gargantuan defense industry. And since Libya has few military factories, Gaddafi is also unlikely to demand "offsets" — a common practice in arms deals, where a country agrees to buy expensive military items, in return for doing future maintenance on its own soil.

Sarkozy must surely hope Gaddafi does not veer off script again, by ultimately shopping for arms elsewhere, after the negotiations expire next June. France is the world's fourth-biggest arms exporter. But the top three — the United States, Britain, and Russia — account for nearly three-quarters of global arms sales, and they could increase that share in the future, leaving France ever-further behind.

Europe itself is not a big arms customer. The real hunger lies in oil-rich and third-world countries eager to modernize their armies. Unlike the 1980s, when France nurtured military ties with African governments — selling massive arms systems in return for political backing — France has few natural allies to whom to sell weapons. Two months ago Morocco — France's former colony and close neighbor — rejected the Rafale and instead bought Lockheed Martin's F-16 fighter jet, which has seen years of combat, including in Afghanistan and Iraq. "Even the French Air Force hasn't bought all the Rafale jets it promised," says Andrew Brookes, military analyst for the International Institute for Strategic Studies in London. "It's like buying a car that no one has bought from a showroom." For the same reason, France has been squeezed out of the arms industry's hottest contest underway — a $10-billion deal to overhaul India's Air Force, with 126 new combat jets. Military analysts believe India will choose between Russia's MIG-35 and the F-16.

And so Gaddafi has emerged has the bright hope for French weapons. The defense minister Morin told reporters on Thursday that the government has learned bitter lessons, like France's failure to coordinate negotiations at a top level, or to streamline its cumbersome bureaucracy. "We have to make sure we are in tune, speak the same language, and are quick enough not to be overtaken by someone else," Morin said. Libya's negotiations will be run out of the Elysee Palace, rather the Defense Ministry.

As both sides hunker down in talks, the political arguments in France are unlikely to subside. Dassault's president Charles Edelstenne said yesterday that criticisms over Libya's human-rights records were irrelevant to his negotiations. "If we start to enter into that debate there wouldn't be any international trade," he said. Yet other doubts could also emerge, including the real danger of selling lethal weaponry to an uncertain ally, who has only just emerged from a very long isolation. Says Brookes: "If Libyan Rafales were to end up with a third party who used them against Western forces, the French government could be seriously embarrassed." More embarrassing, perhaps, would be losing the deal altogether.