Rafale win leaves UK smarting

Last year, a group of Indian journalists were taken on a tour of BAE System's Warton Aerodrome on Britain's northwest coast, where Eurofighter Typhoons for British and Saudi contracts were being assembled.

We watched a Typhoon swoop above, tried on and played around with the jet's pilot helmet, a Darth Vaderesque object with an optical tracking system fitted inside, and generally had as much of an adventure park-like experience that one could have at an aerodrome assembling war planes.

Everyone, of course, avoided being drawn into a discussion of the four-nation Eurofighter consortium's prospects for winning the $10-billion bid for 126 medium multi-role combat aircraft (MMRCA) but there was certainly an air of cautious optimism.

Unsurprisingly, perhaps. With the exception of Russia, no other country has had as lucrative a trade with India when it comes to arms as Britain has.

Between 1950 and 2010, India has imported $15.3 billion worth of arms from Britain, against $4 billion from France and $1.8 billion from Germany, according to data from the Swedish International Peace Research Institute (SIPRI).

It is a dominance that has continued into the current decade: In the decade till 2010, British arms exports to India totalled $859 million, more than the total for Germany ($414 million) and France ($432 million) combined.

Britain's consistent position as second-to-Russia when it came to Indian arms imports has bucked the direction of their bilateral trade relationship, which has seen Britain slip behind other European nations in relative terms. And globally the Indian arms market matters more than any: between 2006 and 2010, it was the largest arms importer in the world, accounting for an impressive 9 per cent of international arms transfer volumes, according to SIPRI data.

France's steady presence

France has been a steady presence in that market since the 1950s, and Germany since the 1960s — but failed to take over from Britain.

While France has established itself across platforms — from the Mirage to submarines — Germany, the third largest exporter of arms in the world, has failed to establish a major presence beyond engine systems in the Indian market, often because of the costliness of its product, says Siemon Wezeman, senior researcher at SIPRI.

The Indian market has also consistently remained a European battleground, unlike other Asian markets (US arms exports to Japan totalled $57 billion between 1950 and 2010 against $1.4 billion from Britain and $442 million from Germany).

Excluding Russia, India's four largest sources of arms are European (Switzerland and the Netherlands are both ahead of Israel, with the US never taking off as a major supplier, partly because of its relationship with Pakistan and partly for limited willingness to transfer technology and stringent conditions such as weapons inspections).

Aggressive UK campaign

Though the Eurofighter bid was led by Germany's Cassidian, there was aggressive campaigning by Britain — not least during the Prime Minister, Mr David Cameron's visit to India in 2010 shortly after the British general election, during which a £500-million contract between BAE Systems and Hindustan Electronics for Hawk training jets was signed.

During a visit to India last year, Britain's development minister, Mr Andrew Mitchell, linked the strategic aim of the nation's decision to maintain £1.2 billion of aid to India — while scrapping it for many other countries — to trade and even directly to the Eurofighter campaign. “The focus is also about seeking to sell Typhoon,” he said, according to Britain's The Independent newspaper at the time.

In Germany, the reaction to the news that Dassault Aviation had emerged as the lowest, and therefore preferred bidder for the MMRCA contract was relatively muted, with criticism more focused on the limited role that the Chancellor, Ms Angela Merkel, played in the campaign, compared with the involvement of the French President, Mr Nicholas Sarkozy on Dassault's behalf.

By contrast, in Britain, it has been vitriolic at points, making clear the presumptiveness that prevailed in some quarters, despite the fact that it had been clear that having tested all the first-round contenders against 660 different criteria, the final round was all about costs. “Well, that's gratitude,” The Daily Mail newspaper — reportedly the most read newspaper web site in the world — declared furiously.

“We give India £1 billion in aid, THEY snub the UK and give France a £13-billion jet contract!” Some Conservative MPs called on the government to revisit the decision on aid.

Mr Cameron, steering clear of any retaliatory rhetoric, vowed to do all he could to persuade India to revisit the decision — though whether he will do so at a potential cost to diplomatic relations is another matter altogether, say some observers.

Boost for Sarkozy

That a country that exited the Eurofighter project — originally initiated in the 1970s as a cost-sharing project across European nations — had beaten the consortium on the complex cost calculations, including life cycle costs and technology transfer, was bad enough.

Let alone a company that is yet to sell a single Rafale outside France, despite coming close to deals in the UAE, Brazil, Libya, Switzerland and South Korea. (At one point a French minister warned that the project would have to be scrapped if no sales were agreed soon).

That it was a French victory, so soon after India had opted for a $2.5-billion upgrade of its Mirage 2000s grated even more in Britain, given the sparring between the leaders of the two nations in the past few months.

Mr Sarkozy has made no secret of his contempt for Mr Cameron's criticism of Euro Zone nations — at one point telling him to join the euro or ‘shut up'. Just the day before the contract was announced Mr Sarkozy declared Britain had ‘no industry left', a comment that wouldn't have rankled so much if there weren't elements of truth to it.

The MMRCA contact is a boost for Mr Sarkozy so close to the May Presidential elections, with the potential impact — should the contract be signed — set to be felt beyond just Dassault Aviation itself (Thales will supply information systems and Safran the twin M88 engines).

‘Dogfight' was the way Ashley J. Tellis of the Carnegie Endowment for International Peace characterised the global battle to win the MMRCA contract in a report last year, even before the initial shortlist was drawn up.

It has proved an accurate description: with the first round of short-listing last year being seen inaccurately by some of a rebuffing of a closer strategic relationship with the US, rather than the reality, which was a reflection of the military's technological needs and a willingness by the bidders to share technology.

Last week's decision is likely to face the same sort of pressure.

It is up to the government to combat that pressure, through transparency about how it arrived at the cost ranking, and to show that it is capable of having a relationship with diverse partners, based on a strict set of criteria, and that it is a relationship that no nation can take for granted.

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