An Update on Arquus: February 2022

02/17/2022

By Pierre Tran

Paris – Arquus, a French builder of light and medium armored vehicles, has set a high priority on winning export deals in 2022, after the COVID pandemic slashed foreign orders last year, executive chairman Emmanuel Levacher said Feb. 16.

Foreign deals accounted for some 10 percent of orders last year, with domestic contracts making up 90 percent, he told the annual news conference.

“2021 was a difficult year for orders,” he said, with foreign orders failing to hit targets.

On the domestic front, France was expected to launch in March or April a competition for some 9,400 army trucks, worth some €3 billion ($3.4 billion), which was expected to attract fierce foreign competition.

Arquus has partnered with Soframe, a unit of the Lohr company, to pitch in that tender, which will include fuel trucks.

Arquus, a unit of Swedish truck maker Volvo, won orders worth some €68 million from overseas clients, Levacher said. Most of those foreign orders came from five or six nations in the Middle East and Africa.

The COVID crisis hit export orders as there were restrictions on overseas travel and sparse attendance of trade shows, notably DSEI in London and IDEX in Abu Dhabi, he said. Meanwhile, there was strong foreign competition, particularly from Turkey, which “pushed its geopolitical advantage.”

The return of trade shows, including the French Eurosatory land weapons exhibition, was expected to help business.

Europe as Target Market

Arquus was now focusing on export deals in Europe, where markets were more open and accessible, he said, and was seeking to cut dependence on the Middle East and Africa. The company was pitching its Sherpa four-wheel drive light armored vehicle in a competition in Romania and was competing in a Greek competition for military trucks. There were also tenders in Estonia and Sweden.

Sales to European forces were also seen to be more acceptable in public opinion, as there were allegations of human rights abuse in some Middle Eastern nations.

More generally, there was something of a “schizophrenia” in the European Union, which is setting up its European Defense Fund (EDF) in the pursuit of greater sovereignty and autonomy, while the EU was also considering a formal adoption of social responsibility concerns on the arms industry in Europe, Levacher said.

Such a recognition of social responsibility was “extremely dangerous,” as that would deter banks and investors from making funds available for arms companies.

As part of its European drive, Arquus was among 18 companies from some 10 partner nations taking part in two EDF research projects, dubbed FAMOUS 1 and 2, he said.

That acronym refers to the European Future Highly Mobile Augmented Armored Systems project, backed by a budget of €9.92 million, of which €9 million was from the EU, Forces Operation Blog (FOB) reported.

Upgrades and Services

Arquus saw a prospective boost in business from foreign client nations upgrading and servicing their fleet of armored vehicles, with Kuwait setting up a local workshop, while Qatar was conducting a retrofit of the six-wheel drive Véhicule de l’Avant Blindé (VAB) armored personnel carrier.

Qatar, which has a fleet of some 300 VABs, had initially considered upgrading 170, and had decided to fit out 120 units in the Ultima kit.

Operators of the VAB, such as Cyprus and Morocco, were seen as prospective clients for an Ultima upgrade, which included a remote-controlled machine gun turret, Slate anti-sniper acoustic system, anti-mine protection for the soldiers’ seats, and updated driver’s dashboard.

Arquus saw a boost in domestic orders, sealing deals worth €275 million last year, mainly from the Scorpion army modernization program and service support.

Sales from overseas clients accounted for some 25 percent of 2021 revenue, with the balance  from France, Levacher said. The aim was a 50:50 balance of foreign and domestic sales.

Overall sales last year rose six percent, “not great,” he said, and followed a 10 percent revenue fall in 2020. “Profit was not great” last year, he said, and rose in “the single figures.”

The sales forecast for 2022, 2023 and 2024 was “moderate growth,” and the target remained hitting €1 billion by 2030, he said.

There was an “uncertain environment,” with political uncertainty due to the election, he said, Covid effects hitting client nations, and tension on the domestic supply chain, particularly in the auto industry. There was controversy on arms exports, and geopolitical uncertainty in the sub-Saharan Sahel region, Ukraine, and Eastern Europe.

French Tenders

There was “great satisfaction” with the French market last year, due to execution of the Scorpion program, which consists mainly of the Griffon troop carrier and Jaguar combat and reconnaissance vehicle.

In the outlook for domestic orders, the French Direction Générale de l’Armement procurement office was expected to launch in March or April a competition for a fleet of army trucks, in a deal worth some €3 billion.

Deliveries would run for 15 years, with first shipment in 2024. That program, replacing a  Renault Trucks fleet, would include four- and eight-wheel drive vehicles, and a fuel truck. The air force and navy would receive a few trucks, with the army as the main operator.

The Dutch company DAF, Mercedes of Germany, Italian manufacturer Iveco, and Rheinmetall Man of Germany were expected to enter that tender.

In other French tenders, a competition was expected this year for some 40 robots to detect mines, to replace the fleet of Buffalo anti-mine vehicles, an industry source said. The requirement was for a remote controlled robot of three to five tons, to be towed behind the Griffon troop carrier, which can hit a high speed of 70 km/hour. That budget will be less than €100 million, with a first delivery in 2024. French state-owned Nexter and Milrem, an Estonian robotics specialist, were expected to pitch rival products.

Technology explored in the EU-backed FAMOUS study will feed into a French project, dubbed Véhicule Blindé d’Aide à l’Engagement (VBAE). Belgium has said it was ready to work with France on the VBAE, which will replace a French scout car, the Véhicule Blindé Léger (VBL).

The French requirement for VBAE was for 1,900-2,500 units, weighing less than eight tons, with a first delivery in 2027.

Emmanuel Levacher

President and CEO of ARQUUS since June 2015.

Born: 1962.

Principal work experience: During his rich career, with inter alia 30 years in the automobile industry (Renault Trucks, Renault, Volvo), Emmanuel has held multiple operational and strategic functions in contact with markets on the five continents. He has also built a solid experience with French and foreign governments, state authorities and public and diplomatic institutions.

Education: Master in Political Science, Institut d’Etudes Politiques, Paris, France. Master in Business administration (finance), Ecole de Management, Lyon, France. American Language Program Columbia University, New-York, USA. CEDEP Operational Management Program, INSEAD, Fontainebleau, France.

 

France and the Ukraine Crisis, 2022

02/16/2022

by Pierre Tran

Paris – President Emmanuel Macron’s Feb. 7, 2022 flight to Moscow could be seen as the doves’ diplomatic attempt to defuse the crisis over Ukraine, a counterbalance to the hawks dispatching troops and weapons to warn off Russian forces massed on the border with its neighbor.

Macron spent five hours in talks behind Kremlin closed doors with Russian president Vladimir Putin, with the French head of state flying the next day to Kyiv to meet Ukrainian president Volodymyr Zelenskiy, and then on to Berlin to see German chancellor Olaf Schulz.

The French aim was to “de-escalate” the crisis rising from Russia gathering some 130,000 troops and armor on the border with Ukraine, previously part of the former Soviet Union.

Moscow may have denied any plan to invade Ukraine, but there is deep concern Moscow will order a military move, such as seen in 2014 by seizing the Crimean Peninsula and Donbas region, eastern Ukraine.

Macron had assumed the role of peace broker, carrying the badge of French political leader, as he may hold the six-month rotating presidency of the council of the European Union, but he knew he had no mandate to speak for the 27-strong EU. And France may be a NATO member, but Paris also had no remit to speak for the transatlantic alliance.

Macron had actively taken up the role of the nation’s top diplomat, spending precious political time in search of a peaceful solution to a perceived Russian threat on an East European nation. France is due to go to the polls in April, and Macron has yet to declare candidacy in the election for the five-year tenancy of the Elysée president’s office.

That diplomatic whirlwind may well have been a French drive, but it may also be seen as part of Macron’s wider mission of boosting the role of Europe in world politics, his pursuit of the concept of European strategic autonomy, including a military capability, separate from NATO and Washington.

Among the points Macron and Putin agreed at the Moscow summit was resumption of talks over the territorial dispute in Donbas under the 2015 Minsk agreement. Officials from France, Germany, Ukraine and Russia met Feb. 10, but the four members of the Normandy format came away with little to show for resolving the low-level conflict in the region.

Macron also discussed a new security order for Europe at the Moscow summit, as Russia has demanded a roll back of the NATO membership and missiles deployed around Russia. France has urged grave caution but has not advised French nationals to leave Ukraine, pointing up a distinct approach from at least 30 other nations, which afternoon daily Le Monde reported Feb. 14  have told nationals to leave the country.

Paris insists on an independent verification of threat, a cornerstone of its pursuit of strategic autonomy. France has its own intelligence gathering means on land, sea, air and in space, and will have access to intelligence gathered and shared by NATO partners.  That independent approach could be seen in the decision by the then President Jacques Chirac to stay out of the U.S.-led 2003 invasion of Iraq, a decision which bruised relations between Paris and Washington for years.

After the Moscow meeting, the Russian spokesman disputed media reports that Putin had assured Macron that there would be no further military moves around Ukraine.

Russian intelligence agencies reportedly have a common practice of recording events, perhaps prompting the question whether there is a recording of that high-level exchange of views, perhaps resolving who said what and when.

Reinforcing Eastern European NATO States

The UK defense minister sparked controversy after the Sunday Times reported Feb. 13 that Ben Wallace said there was a “whiff of Munich in the air.” British authorities sought to play down that remark, which implied Russia might play the role of Adolph Hitler, the BBC reported the following day.

NATO was undergoing brain death, Macron told The Economist in 2019. But the crisis seems to have sparked something of a cerebral recovery, with NATO members rallying around to show support for Ukraine, which seeks to join the military alliance.

A first batch of U.S. airborne troops landed Feb.4 in Germany, part of a 2,000-strong deployment to Poland and Romania, with 1,000 soldiers moving from Germany to Romania.

The UK was sending 350 Royal Marines to Poland, adding to the 100 army engineers already there, helping to strengthen the border with Belarus.

Germany was sending 350 more soldiers to Lithuania, reinforcing the some 600 German troops already there and accounting for around half the battle group.

Russia has drawn a red line against NATO ever accepting Ukraine as a member, and it remains to be seen whether the alliance will accept Kyiv’s application, which would pledge  collective defense in the event of an attack.  Russia has demanded a NATOretreat from its borders, with weapons and troops pulled out of former Soviet bloc states which joined the Atlantic alliance after 1997. Moscow has also called for the NATO withdrawal of intermediate-range missiles from Europe, and recognition and autonomy of the Donbas region.

Russia has issued Russian passports to Ukrainians in the region, underlining its territorial claim.

U.S. president Joe Biden has clearly said there would not be armed conflict with Russia, which would spell another world war. The Western partners, including the European Union, have pledged to take severe economic sanctions if there were a Russian invasion.

Europe vs Putin

After the Kyiv meeting, Macron flew to Berlin, allowing a late working dinner with Scholz and the Polish president, Andrzej Duda, bringing together the three leaders of the Weimar Triangle, the cooperative group of France, Germany and Poland.  “Our common goal is to avoid a war in Europe,” Scholz said.

Scholz was just back from meeting Biden in Washington for talks. Before Macron flew to Moscow, he twice called Biden, and called Duda, UK prime minister Boris Johnson, Putin, Scholz, Nato secretary general Jens Stoltenberg, and Zelenskiy, clearing the ground for the meeting with Putin, The Economist said on social media.

That was a departure from Macron’s previous meetings with Putin, notably in 2019 at the Brégançon medieval fort, the French official holiday retreat on a Mediterranean island, and in 2017 at the Versailles palace, west of the capital. The Elysée reportedly did not brief Western allies before those meetings.

“These more than five hours of talks make us realise how different the Putin of today was to the Putin of three years ago,” said a French source briefed on the Moscow talks, Reuters reported. The Russian leader spent most of the time “rewriting history from 1997 on.”

Putin told the BBC that he had been forced to moonlight as a taxi driver in the 1990s as he earned so little after the collapse of the USSR.

“Sometimes I had to earn extra money,” Putin said. “I mean, earn extra money by car, as a private driver. It’s unpleasant to talk about to be honest, but unfortunately that was the case.”

Putin’s remarks were in the BBC documentary film, Russia, Latest History, which aired Dec. 12 2021.

Putin worked for the KGB intelligence service and resigned after the 1991 coup against president Mikhail Gorbachev, which led to the collapse of the Soviet Union. Putin went on to work with Anatoly Sobchak, mayor of St Petersburg.

Putin reportedly used the familiar French “tu” rather than the more formal “vous” form of address when he saw Macron at the meeting. Macron had declined to agree to give a Russian request for a DNA sample for a Covid test, which meant the meeting was held at a long table, sparking many visual jokes on social media.

A View from Latvia

The Latvian deputy prime minister and defense minister, Artis Pabriks, told Feb. 7 the German Marshall Fund of the United States, that while the US informed Latvia and the other Baltic states on US negotiations and plans with Moscow, it was not clear the Latvian government had been informed of  Macron’s “talking points” before he flew to Moscow.

Macron made a call Feb. 5 to Latvian prime minister Krisjanis Karins, before the meeting with Putin, the list from The Economist on social media shows.

Are those who are negotiating with Putin “representing the West or are they mediators between the West and Moscow?” Pabriks said, adding that Russia’s demands extended beyond Ukraine, and Moscow was seeking expansion against the West, Europe, the U.S. and Canada.

Pabriks evoked the then UK prime minister Neville Chamberlain and the 1938 Munich agreement – and referred to the film Munich: The Edge of War which recently started showing on Netflix. Macron should have flown to Kyiv first and discussed the “concessions” before going to Moscow, Pabriks said.

Franco-Russian Ties

France has strong links with Russia. That can be seen in the then leader of the Free French forces, Gen. Charles de Gaulle, sending French pilots to fly alongside the Russians on the Eastern Front in the Second World War.

Those French air force pilots formed a squadron, dubbed Normandie-Niemen, flew Yakovlev Yak 1 fighter planes 1943-45, and supported Russian troops in the battle of Kursk. Moscow  awarded the French squadron the distinction of Hero of the Soviet Union.

The present Normandie-Niemen squadron flies Rafale fighter jets from Mont-de-Marsan air base, southwest France.

In 2011, the then president, Nicolas Sarkozy, backed a controversial sale worth €1.2 billion ($1.4 billion) of two Mistral class helicopter carriers to the Russian navy, with options for two more.

The Baltic nations, the U.S., Ukraine, and other central European allies criticized that deal, which stood to boost Russian force projection.

Sarkozy’s successor, François Hollande, cancelled the Mistral carrier deal in 2015 and repaid Russia €948 million, comprising €893 million for building the two warships and €55 million for adapting Russian equipment for fitting on the vessels.

The French authorities declined to pay the French shipbuilder, Naval Group, an estimated €200 million payment for building the two warships, Vladivostok and Sevastopol, which were later sold to Egypt.

Featured Photo: Flags of France, Germany, Russia, and Ukraine. Normandy Format meeting on eastern Ukraine. Credit: Bigstock

See also the following:

President Macron and Defense: En Même Temps

Ukraine Crisis 2022: A Polish Perspective

02/14/2022

By Robert Czulda

Despite numerous alarmist tones, average Ukrainians do not panic – shops are open and people gather at restaurants and pubs.

Ukrainian security expert Yevgeniya Gaber, whom I interviewed recently for the Polish media, said that there are no signs of any chaos and the Ukrainian intelligence community did not consider an invasion as an imminent threat.

While American, British and Canadian diplomats were ordered to leave Ukraine, Polish embassy and consulates work as usual – there is no evacuation at all. Poland, who is among few countries supplying the Ukrainian Armed Forces with defensive arms, firmly stands by Ukraine’s side.

Is an invasion imminent?

First of all, it must be underscored, that Russia has already invaded a sovereign territory of Ukraine – parts of this country have been under Moscow’s occupation since 2014. An open invasion is not Putin’s ultimate goal – army is a tool of foreign policy and thus by gathering tens of thousands of soldiers at the borders of Ukraine, the Kremlin primarily wants to achieve political goals.

There are many indications to argue that that some of them will be achieved without firing a single bullet. An often erroneous explanation is that the current crisis is Moscow’s attempt to undermine Ukrainian bid for NATO and the European Union, but no one can seriously conclude that Kiev was on any path to a full membership in these organizations.

Putin’s primary and personal goal is to stay in power, and a “sieged fortress syndrome” is a simple yet effective way to unite poor and frustrated citizens around their leader.

The Kremlin was unable to build a thriving economy in the country, but was very successful in creating an image of NATO as a hostile, aggressive organization preparing to attack Russia, which is, of course, an absurd narrative. Moscow has been pursuing an anti-Western narrative for years.

Ultimately it has borne fruits. According to Moscow-based Levada Center, 82% of Russian citizens believe that Russia has enemies. For 70% it is the United States, while in 2011 only 33% shared such opinion.

In a geostrategic dimension, Moscow’s goal is to ultimately destroy international rules, which were created after the Cold War.

After the aggression on Ukraine in 2014 Russian commentator Fyodor Lukyanov, Editor-in-Chief of Russia in Global Affairs magazine and Chairman of the Presidium of the Council for Foreign and Defense Policy, explained a Russian approach: “after the end of the Cold War, we got tangled up in some misunderstandings. Supposedly everyone knew who won, what is the new world order, but no one defined it formally. New rules were not written in any international documents, acts or agreements. Now Russia tried to set new rules, because those that have been in force until now have not been beneficial to Russia”.

Now many experts and some officials – French President Emmanuel Macros has been among them for the last couple of years – claim that Russia must be included in a new European security system.

However, it is impossible to reach a solid agreement with Putin’s Russia without significant concessions. Moscow’s demands are as long as absurd – the Kremlin expects the West to fully abandon Ukraine (all foreign advisors and arms delivered to Kiev are to be withdrawn, NATO has to stop any military exercises with Ukraine, which would be forced to become a neutral country).

Moreover, Russia expects NATO to halt its enlargement. In return, Russia offers nothing. Moscow has been playing on dividing the West and weakening Central and Eastern Europe, which it still considered by the Kremlin as a Russian sphere of influence. Russia does not want to conquer this part of Europe militarily, but is ready to use non-military yet still hostile instruments to achieve subordination, which would be ultimately recognized by the West.

An open war or even a limited armed conflict would be a massive disaster, but that does not mean that we should yield to the thug.

If the West – both NATO and the United States – want to preserve its position – it must draw a red line. Of course, Ukraine is not in NATO and it will not be defended by NATO troops, but the Ukrainians know that. Lithuania, Latvia and Estonia – the most vulnerable NATO member states – are a different story. Their security is also a security of the whole transatlantic security system. The failure of their defense would mean the end of NATO as a security provider and the United States as a superpower and protector.

Russia has already achieved an important goal.

What many Western analysts fail to notice is the fact that during the current crisis, Russia has completely absorbed Belarus, which no longer exists as a separate state. Security apparatus and armed forces have been closely integrated and Belarus has lost its defense and political independence.

Polish security expert Andrzej Wilk put it bluntly: “Belarusian military and its defense industry are parts of Russian system.”

Now, the whole was accomplished – Russia deployed its troops in Belarus, which will remain there after the current crisis is over. Moreover, Russia moved a potential frontline with NATO several hundred kilometers to the West. A length of NATO’s border with the Russian Federation was expanded too.

Secondly, when the current crisis is over, Moscow will finally open the Nord Stream 2 pipeline, which will increase European dependence on Russian natural gas. As soon as the NS2 is operational, Ukraine will lose its transit role and Russia might invade it without any fear that a secure flow of its gas to Western Europe is threatened.

Do not be fooled – Nord Stream 2 will be opened sooner or later and definitely will not be cancelled – the pipeline has already been built and both Moscow and Berlin are waiting for the best moment to make it running. Russian aggressive behavior will be ultimately rewarded.

Featured photo: Robert Czulda moderating a panel on air power modernization at the Defence 24 Conference on September 27, 2021. Image Credit: J.Sabak

Also, see the following:

Seam Warfare and Polish Defense

Looking Back and Looking Forward: The Case of Ukraine

Looking Back and Looking Forward: The Case of Ukraine

Shaping a Way Ahead for Polish Defense: The Perspective of Robert Czulda

A Nordic Perspective on the 2022 Ukraine Crisis: A Discussion with Hans Tino Hansen

02/13/2022

By Robbin Laird

I have had the opportunity over the years to visit what I refer as the defense arc from the UK through the Nordics to the Balts to Poland. The CEO of Risk Intelligence, Hans Tino Hansen, has been a key guide to thinking through the process of change in defense and security affecting Northern Europe over the past decade and a half.

On February 8, 2022, I had a chance to discuss with him what he sees as the view from the Nordic side of the current Ukraine crisis and its implications.

Question: How does the current Ukraine crisis fit into the evolving history of European direct defense?

Hans Tino Hansen: “With the preoccupation with the Iraq and Afghanistan wars, the West has in a certain sense had its head in the sand and developed a geopolitical blindness with regard to European geopolitics. Putin has not. And he has been working his approach to determine who in the West is willing to do what in meeting his ongoing demands.

“He proposed several demands which he knew – as a self-fulfilling prophecy – the West could not accept. But what he is observing is that the European states along with the United States and Canada are laying out their real red lines. The Western written response to his demands stated very clearly in paragraph 12 of the reply that NATO would act to defend any NATO member. This means from Putin’s perspective, that NATO states would not directly defend Ukraine.”

Question: Let me pick up on your point about geopolitics. I think it is safe to say that for many in the United States policy community, with globalization and a focus on climate change, geopolitics seems to have been lost in the shuffle. Both President XI and Putin are refocusing attention, but we seem to have very different perspectives coming from modern Europe and the Biden Administration about what this crisis is about compared to what Putin thinks it is about.

What is your take on the apparent disconnect?

Hans Tino Hansen: “It is if the two sides are playing the well-known strategic game, Risk. But the two sides are using different playbooks.

“For Putin, a key objective is to reinforce his position that the West is the aggressor and will not meet his “legitimate” demands about creating a buffer zone between the West and Russia.”

Question: Indeed, in both the Russian military doctrine statement issued in July of 2021 or Putin’s presentation last fall to the Valdai Discussion Club Meeting 2021, it is clear that his position is that Russia is in a state of permanent war with the West, and to use Putin’s words, the inferiority of the West is proven by the simple fact that there is a debate in the West about who is man and who is woman. We are talking about big cultural gaps, and those gaps are also replicated within divisions in the West as well.  

Is this not just the next phase in Putin’s approach to determine who is friends and committed enemies in the West really are?

Hans Tino Hansen: “For Putin, this is a fight about long-term survival of the current Kremlin leadership, which makes it all the more dangerous. To him, it is legitimate to use virtually all means to achieve his objectives. For Western publics and leaders, this appears so old fashioned and antiquated, but not to a number of former Warsaw Pact states who see the Russian threat as very real indeed.

“I think for states who take the defense threat seriously, and certainly Nordic states increasingly do so, there is a recognition that some of the lessons learned in the Cold War need to be applied again but in the new context. It is not so much history repeating itself but the need to remember and relearn what is relevant from that history and applying to a new technological and cultural context. But it most certainly is about geopolitical conflict.

“We have cleaned the chalk board of the realities we faced militarily in the Cold War. There was nothing left of the knowledge and experience from the Cold War, and nothing left about geopolitical analysis and understanding of geopolitical threat. After the 30 years of the collapse of the Soviet Union and the military sent to distant realms.

“The direct defense of Europe in a modern geopolitical context has simply disappeared as a core subject of analysis and focus of attention for the general public and its politicians.”

Question: What now the response within Europe going forward?

Hans Tino Hansen: “The closer you are geographically to Russia the more focused you are on a direct threat, so for Finland, Poland, Estonia, Latvia and Lithuania or for Norway the Russian challenge is not ever far from sight. For a state like Germany, energy, inflation or climate change is more pressing than a Russian take-over of Belarus for example.

“For us it cannot be.

“The Russian de facto swallowing of Belarus connected to their ramped-up presence in Kaliningrad poses a direct threat to the Nordics, the Balts and the Poles. Kaliningrad, while on one side a military stronghold, it also puts Russia into a more vulnerable position than many realized, and one response to this crisis could well be significantly enhanced cooperation among those states who take the threat seriously.

“But with regard to Germany, with what I call the “Schröder-Merkel trap” their leaders have tied Germany tightly into the Russian spider’s web and significantly reduced their freedom of maneuver in political, energy and military terms.”

Question: Macron has recently visited Moscow to negotiate with Putin? What is the view from the Nordic region of such actions?

Hans Tino Hansen: “Who is Macron representing? Although France currently heads the EU, it is not clear in the media that he is representing the EU. Given he has declared NATO as “brain dead”, we hope he does not think he is representing NATO and he may be representing France, so it is unfortunately unclear.

“For the Northern European states, NATO is critical and the role of U.S. and the UK, in particular. Even the states who are not formally part of NATO see NATO as crucial, and they have ramped up their cooperation since 2014 with the organization.

“So returning to Macron, the Prime Minister’s in Northern Europe do not have Macron on the top of their call list although especially Denmark has been building military cooperation with France over the recent years.

“And looking forward, there will be greater cooperation in our region on defense matters. And we have some significant equipment in common which will allow us to do that, notably the F-35 will be flown by Poland and Finland, along with Denmark on the way and Norway is already doing so.

“This will not be limited to F-35 for new submarines and surface ships will come online in common as well over the next decade.

“Putin has done more to ramp up the common defense in Northern Europe and between the Nordic countries and the Poles and Balts than any NATO meeting could have.”

Credit Photo: Photo 106226824 / Kaliningrad Map © wael alreweie | Dreamstime.com

Indonesia Deepens French Defense Industrial Cooperation: Rafales Displace Su-35 Buy

02/10/2022

By Pierre Tran

Paris – Indonesia ordered on Feb. 10, 2022, 42 Dassault Aviation Rafale fighter jets and missiles in a package worth $8.1 billion, with delivery of a first batch of six units in 2025, a French defense official said.

“The chairman and CEO of Dassault Aviation, Eric Trappier, and the Air Vice Marshal Yusuf Jauhari, Head of Defence Facilities Agency of the Indonesian Ministry of Defence, signed the contract for the acquisition by Indonesia of 42 latest-generation Rafale aircraft, at a ceremony held today in Jakarta,” the aircraft company said in a statement.

Meanwhile, French warship builder Naval Group signed on the same day a memorandum of understanding with PT PAL, an Indonesian state-owned shipbuilder, for industrial cooperation and opening a joint research and development center for a prospective local build of the Scorpene diesel-electric attack submarine.

The Indonesian Rafale order will go into effect this year when a down payment is paid, the defense official told reporters. The fighter deal is the result of 18 months of detailed talks following the signing of a letter of intent by the French and Indonesian defense ministers.

The French armed forces minister, Florence Parly, flew out for the contract signing, marking the importance attached to the fighter deal and the  significance attached to the Indo-Pacific region.

A major arms deal in the Indo-Pacific region could be seen all the more  significant in the wake of the Australian cancellation of a project to build 12 French designed Barracuda Shortfin conventional attack submarines.

That submarine deal would have been worth some €30 billion ($34 billion).

Indonesia will likely pay for the first batch of six Rafales from the some $600 million earmarked for buying the Sukhoi Su-35 fighter, business website La Tribune reported.

That deal with Russia was dropped after the U.S. warned such a purchase would put Jakarta in contravention of the Countering America’s Adversaries Through Sanctions Act.

That act went into effect in 2017, imposing U.S. sanctions against Iran, North Korea and Russia.

Indonesia had previously offered payment in palm oil, coffee and other commodities in exchange for 11 Sukhoi Su-35 fighter jets, when Russia was hit by U.S. and European sanctions in response to the annexation of Crimea, east  Ukraine.

Rafale deal

The Rafale deal includes aircrew training, logistical support of local airbases, and a training center with two full-mission simulators, Dassault said.

No details were available on the missiles in the deal. MBDA declined comment.

Trappier signed a partnership agreement with PPTDI, a local aeronautics company, for implementation of 10 projects in engineering, electronics, and the engines, daily Le Figaro reported. Such local offset deals will account for 85 percent of the contract. Le Figaro is owned by the Dassault company.

“Indonesian industry will benefit from a substantial industrial return, not only in the aeronautical sector, but also in all the other major areas of cooperation relating to the broad portfolio of dual technologies mastered by Dassault Aviation and its industrial partners, Safran Aircraft Engines and Thales,” the aircraft company said.

The Rafale deal comprises 30 single-seat and 12 twin-seat fighters at the F3-R standard, with an active electronically scanned array radar and capable of firing the Meteor long-range, air-to-air missile. The French air force flies that model.

Dassault has sold a total 471 Rafales, of which 279 were in the export market and 192 for the French air force and navy. Those foreign sales included second hand fighters previously flown by the French air force.

That makes a ratio of some 60:40 of foreign over domestic sales, compared to 50:50 for the Mirage 2000 fighter jet, which preceded the Rafale.

France sealed a notable arms deal with Indonesia in 2012, with the supply of 34 Nexter Caesar 155 mm 52 caliber truck-mounted artillery, with the €108 million deal financed by a bank loan.

That buyer’s credit allowed Jakarta to pay a 15 percent down payment and finance an 85 percent loan, backed mostly by French commercial banks. That bank loan ran for under five years and carried a lending margin below 200 basis points. A basis point is 1/100th of a percentage point and is keyed to official interest rates.

The Indonesian navy lost the KRI Nanggala 402 submarine April 21 2021, which sank with the loss of all 53 crew. The German-built boat had been engaged in a live torpedo firing exercise in the Bali sea, the BBC reported. The 40-year old submarine had gone through a refit in 2012.

Naval Group executive chairman Pierre Eric Pommellet signed the MoU with the Indonesian parter on local cooperation.

“Naval Group and PT PAL signed a Memorandum of Understanding seeking to leverage the capabilities of both partners to meet the growing requirements of the Indonesian Navy,” the French company said in a statement.

“Both companies are leaders in their markets and confirm their willingness to further increase their cooperation to provide solutions to meet the needs of the Indonesian Navy but also by opening a joint R&D center involving other Indonesian companies.”

Parly said on social media, “Indonesia announced the intention to buy two French-built Scorpene submarines. Indonesia is equally committed to cooperating with our industry in the domain of submarines.”

Dassualt Rafale of the Armée de l’air – French Air Force rotates from during Exercise Atlantic Trident ’17. Joint Base Langley-Eustis, VA. Credit: Murielle Delaporte

Franco-German Defense Industrial Cooperation: A Strategic Failure or Necessity?

02/07/2022

By Pierre Tran

Paris – France would do well to discard Germany as a military and industrial partner and strike out on its own, Vauban, an anonymous group of defense specialists, said Jan. 24 in La Tribune, a French business news website.

“Three years after the signature of the Aix le Chapelle treaty (Jan. 22 2019), there is an incontrovertible truth: Franco-German ties in defense and armaments are a resounding failure,” the op ed said in a strident attack on the Paris-Berlin partnership.

Vauban, which describes itself as a group of some 20 defense specialists, does not give their names, perhaps raising questions of open governance.

The Vauban articles have pointed up in no uncertain terms perceived lapses in French support for the arms industry at home and abroad, with particular criticism for Germany, both under the previous Christian Democrat-led administration and the new “traffic light” coalition of Social Democrats, Greens, and the Free Democratic Party.

French analysts, however, pointed up the need for Paris to stay close to Berlin and the compromises required on both sides of the Rhine. Large arms programs bring heavy financial burdens, calling for close partners.

The latest Vauban op ed carried a particularly harsh tone, calling out what it saw as German “treachery” in response to Berlin’s call for a study on whether to buy the F-35 fighter jet, seen as a policy switch threatening the European Future Combat Air System project.

“It is true it (F-35) is the only modern aircraft which can be certified to carry the future American B-61-12  gravity bomb, but how can it not be seen that this undoubted procurement is both a complete allegiance to Nato and the U.S., but also a betrayal of France and the FCAS project, which will have its budget gutted by the acquisition of the worst enemy of the European military aeronautics industry?” the defense group said. It was time for a “divorce.”

The U.S. life extension program for the B-61-12 weapon replaces various models of tactical nuclear bombs, namely the B61-3, 4, and 7, with a single version capable of hitting different types of targets.

Besides posing a perceived threat to FCAS, Vauban points to Germany pulling out of the Tiger Mk 3 attack helicopter upgrade, the maritime airborne warfare system (MAWS) – a project for a new maritime patrol aircraft, and the entry of Rheinmetall into a project for a new tank and team of vehicles, the Main Ground Combat System.

The notion that France should break away from Germany was unwise, analysts said.

“France and Germany are two large countries which cannot be ignored,” said Renaud Bellais,  a director at Fondation Jean-Jaurès, a think tank.

A partnership with Germany made sense, with cooperation with the UK more complicated in the wake of Brexit, he said.

“It’s a real concern,” he said.

London had dropped a plan to build its own satellite communications network due to lack of funds, after being ejected from the European Galileo system in response to Britain leaving the European Union.

If Germany acquired the F-35, that would complicate the funding for FCAS, he said. France could go it alone, but the development and production cost would be much higher, the order would be smaller, and the production line would close earlier – maybe after 10 years.

“France and Germany need to make compromises and there is a real negotiation,” he said. “There is interdependence, which is different from dependence. It is wrong to be idealistic and it is wrong to be over critical regarding cooperative programs between both countries.”

Major arms projects last about 50 years, so it was essential to put the programs on a sound footing, with cooperation in political, military and industrial terms, he said.

The expected contract for the European medium-altitude, long-endurance drone showed compromise was eventually possible, he said.

France, Germany and Spain are partner nations on the planned unmanned aerial vehicle, providing a budget of some €7 billion ($8 billion).

The estimated cost of the FCAS project was €80 billion-€100 billion, with partners France, Germany, and Spain sharing the financial burden.

The 2020 total defense spending of the 26 member states of the European Defence Agency was €198 billion, up five percent from the previous year, the EDA said Dec. 6 2021. But cooperative procurement of equipment fell to a new low of €4.1 billion, down 13 percent.

The sale last year of 80 Rafales, worth €14 billion, to the United Arab Emirates could be seen as reducing the importance of German funding to France on the FCAS, specialist newsletter Defence Analysis reported in its January edition. That UAE deal will bring in a further €2 billion for the weapons.

The UAE deal will boost revenue for Dassault, Safran, Thales, and the other 400 or so companies in aeronautics, but will not flow directly to the Bercy finance ministry.

The government receives two percent levied on export deals, to recover funds for development of national arms programs when those weapons are sold to clients abroad, the spokesman for the armed forces ministry, Hervé Grandjean, told journalists Dec. 9.

“Dassault is not the French state,” said Jean-Pierre Maulny, deputy director of Institut des Relations Internationales et Stratégiques, a think tank. “France cannot work all on its own.”

For François Lureau, director of consultancy EuroFLconsult and former procurement chief, the op ed by Vauban gave “a nostalgic view of 50 years ago.”

“What could France do on its own?” he said, adding that France could not have operated in the sub-Saharan Sahel region without US help.

“Defense is politics,” he said. FCAS was a political decision, with the government providing funding and supporting industrial capacity.

There was concern as Germany relies heavily on trade with Russia, but if Europe wanted political weight, then strategic autonomy needed to be considered, to reduce dependency.

“It is very complicated, hard to manage,” he said.

A senior executive said, “France cannot go on its own. Where else can they go?”

The UK was seen as changing every five minutes, depending on what Boris Johnson felt on the day, the executive said. Italy had teamed up with the British, while it took a couple of years for Spain to find funds for the European drone.

“The order for the drone is a first step,” the executive said. “Nobody thought it would happen. Cooperation — it takes time.”

There is concern in some French companies over the arms export rules agreed in the Franco-German treaty, which some see as giving Berlin too great a say on deals with nations such as Egypt and Saudi Arabia, where there are concerns over human rights violation. The German government and the powerful Bundestag parliament prefer sales to European nations – although Ukraine is something of a sensitive subject just now.

The Aix le Chapelle accord, also known as the Treaty of Aachen, entered into force Jan. 22 2020, a year after the signing by the then German chancellor,Angela Merkel, and French president Emmanuel Macron. That was an agreement on bilateral cooperation and integration, extending the landmark Elysées treaty signed 56 years before.

Sébastien Le Prestre de Vauban was a military engineer who served mainly in the 17th century, and is remembered for his distinctive star-shaped fortifications, or bastion forts.

Featured photo: Photo 31903726 / German Flags © Joerg Habermeier | Dreamstime.com

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