France eyes UAE base, big military, nuclear deals

ABU DHABI Mon May 25, 2009 8:00am EDT

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ABU DHABI May 25 (Reuters) - France prepared to open its first military base in the Gulf Arab region on Monday as it eyed multi-billion-dollar deals to supply the United Arab Emirates with nuclear power plants and advanced military aircraft.

French officials said the naval base in Abu Dhabi, capital of the UAE, the world's third-largest petroleum exporter, would deepen ties to the Gulf Arab state and fortify efforts to battle piracy and defend trade.

"We look at this cooperation as an important pillar of our foreign policy because it helps the stability in the Gulf region," UAE President Sheikh Khalifa bin Zayed al-Nahayan said in comments read at a maritime security conference.

President Nicolas Sarkozy will open the base on Tuesday.

The UAE, the world's third-largest oil exporter, plans to build a number of nuclear reactors to meet an expected need for an extra 40,000 megawatts of electricity by 2017.

U.S. nuclear reactor builders GE (GE.N) and Westinghouse Electric Co, a subsidiary of Toshiba Corp (6502.T), stand to get a big share of the expected $40 billion market if the U.S. Congress approves the deal.

French firms plan to compete for the business. France's Total (TOTF.PA), Suez LYOE.PA, and state nuclear reactor maker Areva CEPFi.PA said last year they planned to develop two third-generation nuclear reactors in the UAE.

The UAE also wants French support for its bid to host the headquarters of the International Renewable Energy Agency (IRENA), the global green energy body, in Abu Dhabi, Sheikh Abdullah said.

"The UAE government has requested to host IRENA, we hope you will support our request," he said.

French Foreign Minister Bernard Kouchner told the conference the naval base in Abu Dhabi aimed to support and train France's allies in the fragile region.

"Some 90 percent of European trade traffic is by sea and we have to defend traffic and trade and we are interested in the Gulf and want to bring about the necessary balance in this region," he said.

France will also play a major role in combating piracy in the region. "The naval base is also strategic for international security and stability. We assure maritime trade security in this region, the Mediterranean Sea, the Gulf waters and the Indian Ocean," he said.

Kouchner declined to comment on whether the UAE had finalised a deal to buy Rafale fighter planes from France's Dassault Aviation (AVMD.PA).

Dassault said on Saturday it was in talks with the UAE on a possible order for its Rafale fighters, in what would be the first sale of the aircraft to a foreign buyer.

The newspaper Le Parisien reported earlier on Saturday that France was finalising the sale of 60 Rafale jets in a deal worth 6-8 billion euros ($8-11 billion), and that Sarkozy would personally push the issue during his visit to Abu Dhabi.

Dassault declined to confirm the figures and said an agreement might be reached this year. (Reporting by Stanley Carvalho; editing by Thomas Atkins and Tim Pearce)

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