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UPDATE 1-Despite fanfare, France's Valls leaves Saudi with few deals
October 13, 2015 / 2:17 PM / in 2 years

UPDATE 1-Despite fanfare, France's Valls leaves Saudi with few deals

* French PM says 10 bln euros of deals signed

* Document signed shows very little agreed

* Saudi Arabia looking to cut wasteful spending (Adds details, background, quotes)

By Elizabeth Pineau

RIYADH, Oct 13 (Reuters) - French Prime Minister Manuel Valls trumpeted 10 billion euros ($11 billion) worth of contracts with Saudi Arabia on Tuesday, although few had actually been finalised as he concluded a visit to the kingdom.

The two countries set up a joint committee in May to conclude this year some 20 projects across sectors ranging from defence to transport infrastructure and civil aviation.

But with lower oil prices prompting Saudi Arabia to cut back spending, French hopes may be disappointed, especially as a visit to Paris by Saudi Deputy Crown Prince Mohammed bin Salman in June also failed to bring concrete agreements.

“10 billion euros of contracts,” Valls, who was leaving the Middle East after a four-day trip, said on his Twitter feed. “The government is mobilised for our companies and our jobs.”

France has been able to nurture new links with the Gulf Arab region due to its tough stance on Iran and aligned policies on conflicts across the Middle East -- all in a context of what some Gulf countries perceive as disengagement on the part of traditional ally the United States.

But behind the initial euphoria, the document agreed between France and Saudi Arabia on Tuesday suggested that little had been sealed.

Among the potential deals in the document, the kingdom is expected to order 30 military patrol boats by year-end. An announcement of that plan was already made in June, and had been due to be concluded this month.

Saudi Arabia has also entered exclusive negotiations to buy spy satellite and telecommunications equipment worth “billions of euros” from Thales, the document added.

It said the Saudi authorities had expressed their intention to enter negotiations for deals worth 5 billion euros with Veolia, Alstom and ENGIE for contracts in waste management and the metro in Riyadh, as well energy distribution in Jeddah.

An official from one of those firms said those negotiations were likely to be part of a general tender offer in which other international firms would also compete.

French sources had said at the weekend they expected “significant” contracts, with one source saying there would be a military contract with Airbus Helicopters

Valls looked to play down the lack of deals.

“What’s important is the perspective, the movement,” he told reporters. “Step by step, we are deepening each time our partnership. We don’t doubt for a second that the letter of intention will be finalised.”

The lack of contracts may also reflect lower Saudi spending. Its finance ministry, seeking to cut waste as state revenues shrink because of low oil prices, is telling government bodies to return unspent money allocated in this year’s budget.

“I‘m not convinced there will be big contracts,” a French diplomatic source had said prior to the visit. “Saudi Arabia’s appetite is not as big. With the fall in oil prices and intervention in Yemen, they are less inclined to spend.” (Writing and additional reporting by John Irish; Editing by Andrew Callus and Catherine Evans)

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