AIRSHOW-UPDATE 3-UAE says Rafale proposal 'unworkable'
* Dassault proposal described as uncompetitive
* UAE spoke to Eurofighter, Boeing over fighter jets
* Keen interest in arms in Gulf region
DUBAI, Nov 16 (Reuters) - A long-awaited French deal for Dassault to sell at least 60 Rafale warplanes to the United Arab Emirates hit a new snag on Wednesday when the Arab country's crown prince said proposed terms were "uncompetitive and unworkable".
The deal, which had been in the works since 2008, was thrown into doubt earlier this week when it became clear that the world's fourth-largest oil exporter had asked for details of a rival aircraft, the Typhoon built by the Eurofighter consortium.
"Thanks to President (Nicolas) Sarkozy, France could not have done more diplomatically or politically to secure the Rafale deal," Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed, deputy of the country's armed forces, said in a statement, adding that Sarkozy's "personal intervention in this process has sustained Dassault at the forefront of our considerations."
"Regrettably Dassault seem unaware that all the diplomatic and political will in the world cannot overcome uncompetitive and unworkable commercial terms," he said.
Officials at Dassault Aviation, which builds the Rafale, declined to comment.
A government source close to the deal blamed the current impasse on the "arrogance" of Dassault, despite French military officials saying they were confident about securing a deal and hopes of finalising the sale at the Dubai Air Show.
"There is a shared frustration in both the UAE and French leaderships at the apparent arrogance of Dassault," the source said.
"Rather than using the strength of the bilateral relationship to close the deal out they are attempting to use it to hold out on pricing and a deal structure that hasn't changed in more than a year and that has been significantly bettered by all competitors."
The United Arab Emirates and its Gulf neighbours share the West's concerns that Iran is using its nuclear energy programme to develop weapons, a charge Tehran has denied. Saudi Arabia inked a deal for U.S. arms worth nearly $60 billion a year ago.
The UAE is also in talks to buy Lockheed Martin's Terminal High Altitude Area Defense, or THAAD, an advanced missile defence system.
The two deals, for the air defence and new combat planes, could be worth as much as $17 billion.
COMPETITORS SMELL OPPORTUNITY
France said earlier this week it was still confident of striking a first export deal for the Rafale and Defence Minister Gerard Longuet said Paris remained in the final stage of talks.
French air force chief General Jean-Paul Palomeros told Reuters the Emirates air force was "very keen with Rafale".
Yet after news of Eurofighter's pitch emerged, the deal appeared to be blown open to greater competition, including from Boeing's fighter jets.
The company said it had briefed UAE officials recently on its F-15 and F-18 combat planes.
"We have not responded to a detailed set of requirements or anything like that. We have been asked for information on both platforms (F-15 and F-18)," Paul Oliver, its vice-president for Middle East & Africa, International business development, Defence, Space & Security, told Reuters in an interview.
"We have provided, through the U.S. government, information on these platforms. We have been providing information off and on for over a year."
Discussions between the UAE and Dassault were nearly derailed a year ago when Boeing was first asked for technical information on its warplanes.
France is struggling to secure a foreign buyer for the Rafale, which is more developed than fourth-generation combat aircraft but lags behind fifth-generation multi-role fighters such as Lockheed Martin's F-35 Lightning II.
The UAE has pressed for the aircraft's engines to be upgraded with extra thrust and for better radar, industry sources have said, but Palomeros said UAE officials are satisfied with the plane.
Both the Rafale and Typhoon warplanes were used in Libya during NATO operations that helped topple Muammar Gaddafi.
The Eurofighter is built by Britain's BAE Systems, Finmeccanica of Italy and European aerospace group EADS on behalf of Germany and Spain.
Boeing, however, said there was increasing local interest in its combat jets.
"There has been interest in the region. We have a couple of other customers who have expressed interest in the F-18 (apart from UAE)," said Boeing's Oliver. "They don't talk to me about competitors... but it is the big news of the airshow. I believe the UAE is looking at all their options."