France Offers Heron for NATO Role

PARIS - France is offering the Heron TP as its contribution in kind to the NATO Alliance Ground Surveillance program, but technical and financial problems related to adapting the medium-altitude, long-endurance (MALE) UAV to French standards are holding up a deal with Dassault and Israel Aerospace Industries (IAI), industrial and political sources said.

DASSAULT IS NEGOTIATING with Israel Aerospace Industries on the contract for the Heron TP, which the French company would then deliver to French authorities. (Israel Aerospace Industries)

French Defense Minister Gerard Longuet told the French aerospace journalists' press club that the deal would be sealed by "the end of 2012."

Dassault is negotiating with IAI on the contract for the Heron TP, which the French company would then deliver to French authorities.That's later than expected by industry and parliamentary sources, who had thought the controversial contract would be signed before the presidential elections starting in April.

"There are many difficulties" on adapting the Heron TP, driving the cost above the 320 million euro ($408 million) budget, a parliamentary source said. An extra 150 million euros each for Dassault and Thales has been estimated for the modifications, the source said.

That would push the cost to 620 million euros, approaching the 700 million euro price tag of a previous Dassault offer of the Système de Drone MALE.

The Defense Ministry has asked Dassault to submit a technical-financial proposal on the Heron TP at the end of the month.

Among the key modifications are a satellite communications link and de-icing equipment, vital to plugging the UAV into the French - and NATO - network and fly in the northern European climate, the industry executive said.

Procurement officials are working hard to make progress on the UAV case, and one option might be to acquire the Heron TP with little or no modification, the executive said.

That might create problems of interoperability within NATO as Paris has offered the Heron TP as its asset contribution, instead of paying cash, toward maintaining the AGS system, the executive said.

Although 13 nations are acquiring AGS, based on the Northrop Grumman Global Hawk UAV, all 28 alliance members help maintain the system in return for access to AGS information.

"The AGS package is still being discussed at NATO," an alliance press officer said. "It is a topic to be discussed in the February meeting of defense ministers."

NATO has long sought to launch the AGS program, intended to provide commanders with a common operational picture.

France has had a troubled relationship with AGS, as Paris looked to gain a big technological role. The planned AGS system relies on five Global Hawks to provide radar and optical pictures of conditions the ground, and a network of transportable ground stations. The UAVs will be based at Sigonella airbase, Italy.

The choice of the Heron TP sparked resistance in the French Senate, which argued for acquisition of General Atomics' Reaper on grounds of cost, performance and interoperability with allied forces.

Longuet defended the choice of the Israeli UAV as "a compromise between capability and a long-term interest for industrial policy," he told the press club.

"We could have found a cheaper, more efficient, quicker solution, but at the [unacceptable] price of long-term dependence," he said.

Longuet denied that most of the contract value would go to IAI, saying that air vehicle is the smallest part of the system, with communication and observation more important.

The government argues that adapting the Heron TP to French needs will help develop competences among about 10 domestic companies in high-value areas, particularly in communications. Critics of the choice say there would be more work for French companies on the Reaper, pitched by EADS and General Atomics.

"No proposition was made by Reaper, which did not want to share, nor to adapt to French standards," Longuet said.

General Atomics did not make a formal offer because France did not send a letter of request, an industry executive said.

In 2010, the U.S. company signed a technical-assistance agreement with EADS detailing its offer, the executive said. The agreement listed modifications, including a communications link developed by French equipment firm Zodiac for the Harfang UAV flying in Afghanistan.

General Atomics also wrote in June 2011 to French Sens. Jacques Gautier and Daniel Reiner, setting out a $209 million offer for seven air vehicles, ground gear and service support.

The government, however, sees Dassault as holding a key position on a strategic roadmap intended to ensure interoperability in observation, surveillance, targeting and air power. That position stems from its work on the Rafale and Anglo-French cooperation, in the government's view.

Longuet said risk-reduction work on the Heron TP would start in 2013.

Dassault and DGA were unavailable for comment.

On a proposed new MALE UAV to be developed with Britain, Longuet urged a pan-European rather than a strictly bilateral approach.

The project "should accept the construction of Europe," he said. "We can't ignore countries with industrial capabilities. We'll probably have an Anglo-French project, which cannot avoid opening to other European partners."

On the Anglo-French cooperation treaty, Longuet said, a new date for a summit meeting would be set for before his birthday on Feb. 24.

"There are no doubts on defense," he said on relations between London and Paris.

EADS and Finmeccanica signed a deal in December to team on UAV development, reflecting wider discontent in Italy and Germany over the Anglo-French defense accord.

France would not develop the EADS Talarion Advanced UAV, Longuet said.

One way of bringing a European dimension into the planned Anglo-French MALE UAV would be to integrate it into the European combat aircraft environment, dominated by the Eurofighter Typhoon and Rafale aircraft, Longuet said.

"If we're intelligent, we should say, 'You British work on Eurofighter with Germany, Italy and Spain, and we'll work on Rafale,'" he said. "It would be good if the MALE UAV were to be compatible with one and the other."

OTHER PROGRAMS

France will buy the A330 Multi-Role Tanker Transport (MRTT) from Airbus "in 2013 for delivery four years later," Longuet said, leaving Boeing out in the cold.

Longuet dismissed previous official denials that Airbus had been chosen as "semantic elegance."

The U.S. Air Force's $35 billion pick of Boeing over Airbus for its KC-X tender effectively shut the door on a French tender.

France is expected to order five to seven A330 MRTT units in a first-batch order that could total 14.

Paris had been considering leasing part of Britain's A330 tanker fleet, but the Libyan air campaign led French authorities to decide they wanted their own aircraft.

On domestic consolidation, Thales would likely take a 10 percent to 20 percent stake in Nexter in exchange for handing over its TDA Armements mortar and munitions business to the land systems specialist, Longuet said.

Thales' holding would be significant but would not leave Nexter "dependent," he said.

Answering a question on anxiety at DCNS, where Thales is raising its stake in the naval company to 35 percent from 25 percent, Longuet said, "Thales is not the obligatory supplier of systems. DCNS can choose its systems."

DCNS makes naval combat management systems, and executives fear Thales will impose its own products, relegating the company to being a platform maker.

Nexter and DCNS had to forge European alliances to compete with companies from emerging economies such as Brazil, but first they had to consolidate their domestic base, Longuet said. Nexter had to look to German partners, as that was where the land sector was strong, he said.

Asked about the health of French defense companies, Longuet said, "Thales is a company necessarily in more peril because it is innovative on creative subjects on a world scale. It is more difficult. It has to take risks and goes through periods of uncertainty."

Regarding arms exports, the 2011 total for France would be around 6.5 billion euros, helped by an Indian contract for modernization of its Mirage 2000 fighters, Longuet said. That compared with 5.12 billion in 2010.

In October, procurement chief Laurent Collet-Billon had told lawmakers in October he expected 2011 export sales to reach 7.5 billion euros.

On export prospects for the Rafale, Longuet said a UAE decision to pick the Rafale would help sell the fighter to Kuwait and Qatar, which want to be interoperable with their neighbor's Air Force.

"They are interested" but would not be the first to commit, he said. "If they think no decision is being made [by UAE], they will look elsewhere."

Kuwait is looking at acquiring 18 to 22 jet fighters, with Qatar potentially 24, industry executives said, according to La Tribune.

The Defense Ministry appeared to harbor worries about Qatar raising its stake in Lagardère, the family-controlled company which owns 7.5 percent of EADS.

"There are fewer problems in football than in military aeronautics," Longuet said. "It's a subject."

But the decision on Qatar's shareholding in Lagardère was up to the Finance Ministry, not the Defense Ministry, he said.

A Qatari sovereign fund holds 10.07 percent of Lagardère stock, making it the largest single stockholder in the French company, and has asked for a seat on the board. Qatar bought 70 percent of the Paris Saint Germain football club for 30 million euros in May.

Julian Hale in Brussels and Tom Kington in Rome contributed to this report.

Bulgaria, Israel to Sign Cooperation Deals

SOFIA, Bulgaria - Bulgaria's defense minister will sign two accords with Israel while on a two-day visit to Israel that starts Jan. 16, his office said.

Anu Angelov will ink a deal on increasing cooperation on military training and another on closer ties between the two countries' armaments industries, the Bulgarian defense ministry said.

The defence industry is an important employer in Bulgaria, exporting $380 million (300 million euros) worth of arms in 2011, according to a newspaper report, although the sector is a 10th of the size of during Soviet times.

Bulgaria and Israel enjoy close ties, helped by Bulgaria having been the only ally of Nazi Germany to have saved Jews from the death camps during World War II. Angelov will also visit the Yad Vashem Holocaust memorial and meet with Israeli Defense Minister Ehud Barak on his trip.

India Casts Wider Net for Short-Range Missiles

NEW DELHI - The Indian Army has entered the global market to buy short-range surface-to-air missile (SRSAM) systems for $1.5 billion, a move that could further undercut a four-year effort to develop a system with MBDA of France.

The Army convinced the Indian Defence Ministry there is an urgent requirement for SRSAM, said Army sources, and did not want to wait for the Maitri project conceived four years ago. India and France have not been able to agree on details of the Maitri project, including funding arrangements, the source added.

The Army last month sent global tenders to defense companies in Europe, the United States and Russia including Raytheon of the U.S., Israel's Rafael, MBDA and Thales of France, Diehl Defence of Germany, KBP Tula and Rosoboronexport of Russia, Ukraineexport of Ukraine and LIG NEX1 of South Korea.

The requirements of the SRSAM are similar to those of the proposed Indo-French Maitri project, the Army source said.

The current tender is for two regiments (36 systems, 1,000 missiles) estimated to cost about $800 million each. The total Indian Army requirement is likely to be about eight regiments in the next five to seven years.

The Maitri project was proposed to be jointly developed by India's Defence Research and Development Laboratory and MBDA.

The selected vendor will have to transfer technology of the systems, as well.

The supply will be made in two batches and completed within five years of the signing of the tender, including the launchers, sensors, vehicles for transportation and the missiles. The system must have a service life of at least 20 years and the missiles of not less than eight years.

The SRSAM system should be able to engage multiple targets, including those flying up to 500 meters per second, and have a maximum range of not less than 15 kilometers.

In 2009, India bought two regiments of Spyder quick-reaction surface-to-air missile systems from Rafael. Another Indo-Israeli joint project is the $2.5 billion long-range surface-to-air missile project signed in 2009 and expected to be inducted in 2013, Indian Defence Ministry sources said.

Meanwhile, the Indian Army has begun inducting the homemade medium-range Akash, which has a range of up to 30 kilometers. In 2011, the Indian Army ordered the induction of two Akash regiments at a cost of about $3 billion.

The Army also has been negotiating the purchase of David Sling and Iron Dome missile interceptor systems.

Helsinki OKs Patriot Missile Shipment to S. Korea

HELSINKI - Sixty-nine Patriot missiles impounded in Finland after being found on a merchant vessel in mid-December were headed for South Korea, the Finnish government said Jan. 4, granting their transit through Finnish territory.

"The missiles in question had been sold to the Republic of Korea by Germany," the government said in a statement, adding that it had granted a license to Seoul's "Defense Acquisition Program Administration to transit through Finnish territory 69 Patriot missiles."

The surface-to-air missiles, produced by U.S. firm Raytheon, were discovered on December 15 aboard the British-registered Thor Liberty docked in the southeastern Finnish port of Kotka.

Confusion initially surrounded the shipment.

Finnish police said the goods were bound for China but did not have the necessary authorization to pass through Finland, while a German defense ministry spokesman said the missiles came from the German military and were destined for South Korea.

The spokesman said it was a "legal sale on the basis of an accord between two states at the government level" and that export authorizations were in order.

However a senior Finnish defense ministry official said Finland had not received any transit license application for the missiles from Germany.

A joint team of Finnish customs and police officials removed and impounded the missiles during an investigation for suspected illegal export of defense material.

The vessel's Ukrainian captain and first mate were also detained for questioning and later slapped with a travel ban which is still in effect.

Last week the customs service said it planned to widen the investigation.

"Next week ... we will want to hear more suspects or persons of interest in the case. It is possible there may be others of interest," the head of the Finnish customs anti-crime unit, Petri Lounatmaa, told AFP.

Finnish transport safety officials have cleared the Thor Liberty to leave Finland, but the vessel has remained in port due to the travel ban imposed on its first officers, and the removal of its cargo.

Iran Keeps Tensions High Over Oil Strait

TEHRAN - Iran kept tensions simmering Dec. 31 over its threat to close the Strait of Hormuz to oil tankers by readying war game missile tests near the entrance to the Persian Gulf.

AN IRANIAN WAR-BOAT fires a missile Dec. 30 during the 'Velayat-90' navy exercises in the Strait of Hormuz. (Ali Mohammadi / AFP via Getty Images)

Washington has warned a closure of the strait "will not be tolerated" after Iranian Vice President Reza Rahimi's threat this week that "not a drop of oil" will pass through the channel if more Western sanctions are imposed over Tehran's nuclear program.

Iran has brushed off the warning from the United States, which bases its Fifth Fleet in the Gulf, with Iranian navy chief Adm. Habibollah Sayari saying it would be "really easy" to close the strait.

A spokesman for the Iranian navy, Commodore Mahmoud Mousavi, told state television on Dec. 31 that, "in the next days, we will test-fire all kinds of surface-to-sea, sea-to-sea and surface-to-air as well as shoulder-launched missiles" in the final stages of the war games.

He did not say exactly when the launches would start, but explained they would involve tests of "medium- and long-range missiles" to evaluate their operational effectiveness.

The navy exercises started Dec. 24 and are due to end on Jan. 2.

Twenty percent of the world's oil moves through the Strait of Hormuz, at the entrance of the Gulf, making it the "most important chokepoint" globally, according to information released Dec. 30 by the U.S. Energy Information Administration.

Around 14 crude oil tankers per day pass through the narrow strait, carrying a total 17 million barrels. In all, 35 percent of all seaborne oil transited through there this year.

On Dec. 29, a U.S. aircraft carrier and an accompanying missile cruiser passed through the zone where the Iranian navy was conducting its drill. U.S. officials insisted it was a routine passage.

No confrontation occurred, though an Iranian military aircraft flew in close to record video of the aircraft carrier, which was then shown on state television.

Analysts and oil market traders have been watching developments in and around the Strait of Hormuz carefully, fearing that the intensifying war of words between arch foes Tehran and Washington could spark open confrontation.

With tensions rising, the United States said it has signed a $29.4-billion dealto supply Iran's chief rival in the Middle East, Saudi Arabia, with 84 new fighter jets.

The sale was a "strong message" to the Gulf region, Washington said.

Iran is subject to four rounds of U.N. sanctions over its nuclear program, which many Western countries allege is being used to develop atomic weapons.

Tehran denies the allegation.

The United States and its allies have also imposed unilateral sanctions on Iran's economy.

The last lot of unilateral sanctions triggered a demonstration in Tehran that led to members of the Basij militia controlled by the Revolutionary Guards ransacking the British embassy. London reacted by closing the mission and ordering Iran's embassy in Britain closed.

More sanctions are on the way.

U.S. President Barack Obama is expected to soon sign into law additional restrictions on Iran's central bank, which acts as the main conduit for Iranian oil sales.

The European Union is considering other measures that could include an EU embargo on Iranian oil imports, with foreign ministers to meet on the issue in a month's time.

Iran's oil minister, Rostam Qasemi, told the Aseman weekly that sanctions "will drive up the price of oil to at least 200 dollar" per barrel.

Iran's top nuclear negotiator, Saeed Jalili, was quoted by the Iranian media telling Islamic republic's envoys who have been gathered in Tehran that "we will give a resounding and many-pronged response to any threat against the Islamic Republic of Iran."

But he and other officials also left the door open to resuming long-stalled talks on Iran's nuclear program.

Addressing world powers involved in the talks, Jalili said: "We officially told them to come back to the negotiation based on cooperation."

Iran's ambassador to Germany, Alireza Sheikh-Attar, told the Mehr news agency on Dec. 31 that "we will soon send a letter, after which (new) talks will be scheduled."

Foreign Minister Ali Akbar Salehi was also quoted by a website of the state broadcaster as telling a visiting Chinese foreign ministry official that "Iran is prepared for the continuation of nuclear negotiations" on the basis of a Russian proposal.

Finland to Widen Missile Shipment Inquiry: Customs

HELSINKI - Finland wants to widen an inquiry into the illegal transit of 69 Patriot missiles through its territory aboard a regular merchant vessel, Finnish customs said Dec. 30.

Two Ukrainians - the ship's captain and the first mate - remained in Finland and were subject to a travel ban during the ongoing investigation.

"Next week ... we will want to hear more suspects or persons of interest in the case. It is possible there may be others of interest," the head of the Finnish customs anti-crime unit, Petri Lounatmaa, told AFP.

The surface-to-air missiles, produced by U.S. firm Raytheon, were discovered last week on the British-registered Thor Liberty docked in the southeastern Finnish port of Kotka and bound for the Chinese port city of Shanghai, according to Finnish police. Finnish customs are investigating the case as one of illegal export of defense material.

Lounatmaa said customs and police investigators had "been in contact with several countries" and the information gathered would help them "focus ... investigations in the right direction."

He declined to provide any details on the nature of the information received, noting only that some of it had come in the form of intelligence briefs.

More official information would be needed as evidence if the case goes to criminal proceedings, he said.

Last week, a German defense ministry spokesman said the missiles came from the German military and were destined for South Korea, not China. He said it was a "legal sale on the basis of an accord between two states at the government level" and that export authorizations were in order.

However, a senior Finnish defense ministry official said Finland had not received any transit license application for the missiles from Germany.

On Dec. 26, Finnish transport safety officials cleared the Thor Liberty to leave Finland, after the missiles and most of the cargo of 150 tons of explosives had been unloaded from the vessel.

However, the vessel remained grounded by the travel ban on its first officers.

Finland: Missile Ship Free to Depart Port

HELSINKI - Finland has removed a cargo of 69 Patriot missiles found aboard a merchant ship that docked in the country and allowed the vessel to leave, transport safety officials said Dec. 26.

Thor Liberty was detained Dec. 15 in Kotka, southeast Finland, and was later found to be carrying 150 tons of explosive material, as well as the surface-to-air Patriot missiles and missile propellant charges.

"A Trafi check on 26.12.2011 has revealed that the improperly loaded explosive material has been offloaded from the vessel, with the exception of two properly loaded containers, and the detention order has been lifted," the Finnish Transport Safety Authority Trafi said in a statement.

However Trafi noted that the ship was still unable to continue on its journey because Finnish customs had placed the Ukrainian captain and first mate under a travel ban pending an investigation into the missiles.

Trafi added that customs had also impounded the explosives still on board the ship in two containers.

The missiles, discovered Dec. 21 aboard the British-registered ship, were bound for the Chinese port city of Shanghai, according to Finnish police. Finnish customs are investigating the case as one of illegal export of defense material.

A German defense ministry spokesman said the Patriot missiles, produced by Raytheon, came from the German military and were destined for South Korea.

He said it was a "legal sale on the basis of an accord between two states at the government level." He said the transaction had received an official export authorization and was reported to customs authorities.

However Finland said Dec. 23 it had not received the paperwork required from Germany.

China Rejects Link to Patriot Missiles in Finland

BEIJING - Beijing on Dec. 23 denied that a ship docked in Finland with more than 69 surface-to-air Patriot missiles on board had anything to do with China.

Finnish authorities are investigating after the missiles, produced by U.S. firm Raytheon, were discovered on a British-registered ship bound for the Chinese port city of Shanghai.

Finnish customs are investigating the case as one of illegal export of defense material. Two Ukrainians - the ship's captain and the first mate - have been detained.

"I don't see the ship transporting the missiles having anything to do with China," Chinese foreign ministry spokesman Liu Weimin told a regular briefing.

"I don't know why there is always someone who likes to link certain kinds of things with China and I have noticed the relevant report and I hope to clear up this event."

Germany's defense ministry has said the missiles came from its military and were destined for South Korea. A spokesman said the shipment was a "legal sale on the basis of an accord between two states at the government level".

He said the transaction had received an official export authorization and was reported to customs authorities.

Germany Prolongs Afghan Mandate

BONN - The German Cabinet decided Dec. 14 to extend the Bundeswehr's mission in Afghanistan by one more year, until Jan. 31, 2013, but also reduced the maximum number of troops to be deployed from 5,350 to 4,900 soldiers. The decision still has to pass the parliament.

The reduction is partly achieved by scrapping the flexible force reserve. However, the remaining 4,900 will also include German personnel of the Airborne Warning and Control System reconnaissance aircraft operated by NATO over Afghanistan. Before the end of this mandate's period, the government wants to further cut troop numbers to 4,400.

One day earlier, the control of the first of two German Provincial Reconstruction Teams (PRT) in the northern part of Afghanistan was handed over to a civil official. The Defense Ministry is no longer responsible for the PRT Feyzabad; instead, a diplomat of the country's foreign office in Berlin is in charge.

"This forms part of the changing nature of international commitments in Afghanistan," German Foreign Minister Guido Westerwelle said in a press statement. "They are increasingly taking on a civilian face, as is the case with the incremental transfer of responsibility for security to Afghan authorities and the reduction in international troop numbers."

However, German combat troops might stay in Afghanistan after the planned drawback in 2014. Defense Minister Thomas de Maizière confirmed this in a joint interview together with the foreign minister about two weeks ago. In the newspaper Bild am Sonntag, he mentioned the possibility that German troops would remain in the country to help train local forces.

Alenia, Cassidian To Explore UAV Cooperation

PARIS - In a bid become major industrial players, Italy's Alenia and EADS defense and security unit Cassidian have signed a preliminary agreement to explore cooperation in medium-altitude, long-endurance and combat UAVs, the companies said in a Dec. 14 statement.

"A Memorandum of Understanding was signed between Cassidian on behalf of EADS Deutschland GmbH and Alenia Aeronautica SpA to jointly investigate the potential cooperation in the field of medium-altitude long-endurance (MALE) unmanned aerial systems (UAS) and unmanned combat aerial vehicles (UCAV)," a joint statement said.

"Alenia and Cassidian are aiming to strengthen their technological know-how in order to establish a leading role in the UAS market," the companies said. "Thanks to this agreement, the two companies will analyze the requirements expressed by each of their respective governments in the UAS sector with the objective to create a strategic partnership and to expand their global UAS market share.

Cassidian sought the agreement with Alenia to extend its work on the Talarion advanced UAV.

"We look forward to investigating further collaboration with Alenia Aeronautica around a next-generation MALE UAS, like for instance the Talarion, which is of outmost importance for Europe's military aviation industry," Cassisian chief operating officer Bernhard Gerwert said in the statement.

France, Germany and Spain have shown no willingness to sign a development contract for the Talarion after EADS delivered its 60-million euro risk reduction study.

Alenia sees cooperation with EADS as a way of staying current in the UAV market.

"The UAS sector has a strategic importance for the future of Alenia Aeronautica's programs, and we are convinced that this agreement will allow us to become even more competitive in this quickly expanding market," Giuseppe Giordo, chief executive of Alenia Aeronautica and Alenia Aermacchi, said.

An Anglo-French cooperation military treaty, which includes collaboration in UAVs and UCAVs, has sparked concern in Germany, Italy and Spain that the agreement is exclusively bilateral and locks out other European partners.