France, Largest World Arms Exporter

(Version anglaise seulement)

The French defence industry can be pleased with its achievements in 2008, according to a report to parliament presented earlier this week by French Defence Minister Hervé Morin. In fact, arms sales have increased by 13 per cent over 2007, making France ...

the fourth largest arms exporter in the world with a 7.7 per cent market share and sales estimated at €55 billion (about $80.6 billion).

Furthermore, French companies received new orders value at some €6.6 billion ($9.7 billion), reaching the highest level of arms exports since 2000. But will France be able to maintain its world ranking? The report’s figures, as well as more recent events, seem to predict a continuously prosperous future for the French defence industry as France consolidates its position and further stabilises its export successes. Reportedly, France’s mid-term objective may be as bold as matching Britain’s annual arms export figures, estimated at €10 billion.

The French push is underlined by recent activities by the French government and French companies in countries such as Brazil and the United Arab Emirates, particularly in the naval and aerospace sectors. According to experts, this is not in the least due to the French President’s efforts to support the national industry in concluding export deals abroad. The most recent example could be seen during Mr Nicolas Sarkozy’s trip to Brazil, which resulted in significant arms contracts for the purchase of submarines and helicopters. And vast concessions to its contract partners regarding technology transfers do not seem to be an obstacle for the French administration, as long as it supports its struggle to secure the 50,000 jobs the defence industry provides.

In a globally complicated financial situation, France has managed to place its most prominent defence products (namely fighter aircraft, transport helicopters, submarines, and naval vessels) in quite promising markets and, in some cases, to participate in internationally competing tenders such as the fighter bids in Brazil and India. Stuck between the most successful exporting nations, such as the United States, Russia, the United Kingdom and Israel, French manufacturers, however, are continuously struggling to receive the much-desired recognition and proven results for their products.

The naval market

As defpro.com reported earlier this year (see http://www.defpro.com/news/details/228/), the DCNS group managed to sign a contract with Morocco for the purchase of a FREMM multi-mission frigate which, according to the company, opens up further business opportunities for this type of vessel as navies around the world seek to renew and modernise their fleets. This may include Greece, which has expressed its intent to buy six new-generation frigates, Saudi Arabia, interested in acquiring three ships, as well as Algeria and other countries which are pondering placing orders with DCNS.

Another promising case is the Russian government’s announcement to possibly buy a DCNS-built Mistral-class amphibious assault ship. As the chief of the Russian General Staff stated in late August, the signature on a contract is expected by late 2009. "We are negotiating the purchase of one ship at present, and later plan to acquire three to four ships [of the same class] to be jointly built in Russia," the general said (see also:http://www.defpro.com/news/details/9383/).

As could be learnt today from French foreign minister Bernard Kouchner, "negotiations on the purchase of the Mistral carrier are going on" between France and Russia. However, he clarified that such a deal would only come to conclusion if the two countries reach a political agreement, saying "there is political procedure that needs to be followed. If a political accord is reached, I believe [Russia] will be able to buy this ship." The Mistral is assumed to cost between €300 and €400 million ($430-580 million).

An example for truly verified results, however, is the recent agreement which was concluded during the visit of a Sarkozy-led delegation to Brazil, also including other defence equipment besides naval assets. Next to an order for four conventional propulsion submarines, the deal, which DCNS could sign with Brazil, has been particularly noteworthy due to fact that the company will assist Brazil in developing and building a nuclear-powered submarine (scheduled to be completed by 2021) as part of a vast technology transfer programme.

Aerospace market

The Brazilian success story, however, does not end with the naval contracts. In addition, Brazil has ordered and approved €1.847 billion (of which €1.764 billion will be financed by the French side over nine years) for the production of 50 Eurocopter EC-725 transport helicopters (Project HX BR) which will be built by the company's Helibrás factory in Itajubá (Mato Grosso state).

Further, regarding the Brazilian market, French aircraft manufacturer Dassault Aviation is also involved in the South American country and is offering 36 Rafale fighter aircraft for the FX-2 next-generation fighter tender for the Brazilian Air Force. Temporarily it even appeared to be a done deed. Much has been written about the very interesting and eyebrow-raising development in one of the largest international fighter competitions (see, for instance: http://www.defpro.com/daily/details/400/). To make a long story short: Brazilian President Inácio “Lula” da Silva announced his decision to purchase the Rafale well before the Brazilian Air Force (FAB) submitted its final report of the tender. After a noteworthy turmoil within the Brazilian political landscape, the tender officially is still in progress and, so far, no further announcement has been made except for various industry statements saying they were still in the race and in a good position.

At the same time, the Rafale is also competing in the much-noted €7.6 billion ($10 billion) Indian fighter race and is undergoing comprehensive trials, along with a strong international competition consisting of the Boeing F/A-18E/F-IN Super Hornet, Lockheed Martin’s F-16IL Super Viper, F/A-18, the MiG-35, Saab’s Super Gripen IN, as well as the Eurofighter Typhoon. The chances for the French fighter are believed to be quite slim as India is already operating a large number of Russian fighters, as well as due to the strong US and European alternatives. What is even more, in April 2009, official sources said that the Rafale had already been eliminated as it allegedly did not meet key requirements. A Dassault Aviation spokesman, however, said the company has never been noticed about such a step and is still part of the competition.

It, therefore, is very important for France to be able to rely on its global player, Airbus, which has significantly contributed to the increasing national figures with a number of export deals in the past. Most notably, the company has been able to sell its A330 multi-role tanker and transport planes to Australia, Saudi Arabia and the United Arab Emirates.

Success has also come from the country's sale of combat helicopters. Though perhaps not the most prominent example, but still with a significant value, Eurocopter will supply 24 EC 635 light helicopters to Iraq under a government-to-government agreement worth €360 million ($488 million) and including pilot training and maintenance. Again, this was achieved in the wake of one of the French President’s trips, this time a historic visit to Baghdad one month earlier. Furthermore, Cougar, Dauphin, Puma, Panther, NH90 and Tiger have all been popular exports and are in service with armed forces throughout the globe.

Defence Ministry spokesman Laurent Teisseire, therefore, can be in good spirits when saying, “We’re starting to climb back,” referring to France’s currently firm grip on the fourth place among world arms exporters.

By Nicolas von Kospoth

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