France angry with Poland after it scraps Airbus deal

PARIS (Reuters) - France reacted angrily on Friday after Poland scrapped a multi-billion-dollar helicopter deal with Airbus, warning it would review defense cooperation with its NATO ally and cancelling a presidential visit to Warsaw.

Poland had agreed to buy 50 Airbus utility helicopters in April 2015 for 13.5 billion zlotys ($3.5 billion) as part of efforts to modernize its military at a time of tensions with Russia.

Its previous centrist government, beaten by the Law and Justice (PiS) party in elections last October, had agreed the provisional deal, but on Oct. 4 the new authorities said they were scrapping the contract altogether.

Members of the new euroskeptic government have said they would rather see the deal awarded to a company that could build the helicopters locally.

“The Franco-Polish bilateral relationship will undeniably be extremely affected by this decision,” a French source close to the matter said.

“The contract’s cancellation will force us to review all the defense cooperation that we have with Poland and see what can be maintained and sadly what can’t in the current context.”

Without indicating which investments, the source added that the French government, which holds roughly 11 percent in Airbus, would advise the firm to review its strategy in the country, including investments that had already been made.

A source in the French presidency had earlier said President Francois Hollande had decided to cancel a visit to Warsaw next week for intergovernmental consultations, in protest.

In a speech on Friday, Prime Minister Manuel Valls took a swipe at Poland at a time when the European Union is trying to reinforce its common defense policy in the face of growing concerns over Russian foreign policy, Islamic militancy and the refugee crisis.

“Poland is a big country, but questions need to be asked of Poland, notably its defense industry, after the choices that have just been made,” Valls said.

“As far as France is concerned, we’re worried because negotiations had started, but also for the very concept of European defense.”

Polish media has reported that Warsaw has already begun negotiations with U.S. firm Lockheed Martin’s Sikorsky, manufacturer of locally-produced Black Hawk helicopters that could be purchased by the Polish army as soon as this year.

As well as boosting Poland’s defense industry, buying Sikorsky helicopters could further strengthen Warsaw’s ties with Washington, already its closest ally.

“Before we had a center-right platform that understood it was in Poland’s interest to go beyond the U.S. axis and have a bilateral relationship with France and Germany,” a French diplomatic source said.

“But clearly the PiS doesn’t understand the benefits for Poland, which are frankly huge in its European arena.”

Poland’s government spokesman and the defense and economy ministries were not immediately available for comment.

Additional reporting by Jean-Baptiste Vey, Elizabeth Pineau and Agnieszka Barteczko in Warsaw; Editing by Leigh Thomas and Andrew Roche