French Rafale UAE deal back on-report

Thu Feb 2, 2012 1:09pm EST

* La Tribune says Sarkozy could seal $10 bln deal by April

* Win in the UAE could pave way for Qatar, Kuwait

PARIS Feb 2 (Reuters) - France could seal a long-awaited deal for Dassault to sell at least 60 Rafale fighter jets to the United Arab Emirates by April, turning around what appeared to have been a lost cause, French newspaper La Tribune reported on Thursday.

The French-built jet emerged on Tuesday as preferred bidder in a $15 billion contest to supply India with 126 warplanes, lifting hopes for a sale that would boost French national pride and restore the lustre of its aviation sector.

Citing unidentified sources, the paper said on its website that President Nicolas Sarkozy would go to the UAE in March or early April when the contract is likely to be finalised.

The deal, potentially worth $10 billion has been in the works since 2008, but was thrown into doubt in November when the world's fourth-largest oil exporter said the proposed terms were "uncompetitive and unworkable." It asked for details of a rival aircraft, the Typhoon built by the Eurofighter consortium.

"Everything has been unlocked (between the UAE and Dassault)," an unidentified source told La Tribune.

A French government source told Reuters that Paris was waiting to hear from the Emirates this month. Dassault and the Defence Ministry declined to comment.

Sarkozy scored a commercial coup with the announcement this week that years of lobbying had pushed India close to buying the Rafale and will look to make political gains ahead of April's presidential election in which he is lagging in the polls behind Socialist rival Francois Hollande.

The UAE has pressed for the aircraft's engines to be upgraded with extra thrust and for better radar, industry sources have said.

La Tribune said there were a few technical details still to be ironed out, but that they were easy to resolve. It added that as part of the deal Paris would take back the Emirates' existing Dassault-made Mirage fighters.

Speaking after the India announcement, French Defence Minister Gerard Longuet hinted there could be more deals ahead.

"Good news are like worries, they fly in squadrons," he said. "That (deal) is the start of a squadron of good news."

A French win in the UAE could also lead to further contracts in the Gulf Arab region which shares 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.

Qatar, a close French ally, said last year it wanted to replace its fleet of Mirage fighter jets during 2012 possibly buying 24 to 36 units. Kuwait in 2010 said it was also considering buying Rafales to replace its ageing Mirage fleet.

According to analysts the Gulf countries are looking to have the same aircraft for inter-operability reasons as well as differentiating themselves from Gulf power house Saudi Arabia, which uses U.S. Boeing-built F-15s.

"My wish is that the UAE makes a decision that allows two neighbours that want inter-operability with it to make decisions," Longuet said in January when asked about potential contracts in Qatar and Kuwait.

"If they get the feeling no decision is taken they will look elsewhere. For now they are interested, but they will only really be if the first one takes a leap."

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