Tuesday, January 15, 2013

Germany Might Scuttle French Vehicle Deal

Ties between France and Germany have become tense over doubts that Berlin will allow French industry to deliver on two vehicle deals to Saudi Arabia, raising questions over the viability of European defense cooperation, political sources said.

The problem: French industry needs Germany to authorize its Mercedes Unimog chassis for use with Nexter’s Aravis armored vehicle and the Multi Purpose Combat Vehicle (MPCV) from MBDA and the Lohr group, both under export contracts to Saudi Arabia, political sources said.

As problems emerged, and on advice from a German defense official, the heads of the French Senate and National Assembly defense committees, Jean-Louis Carrère and Patricia Adam, sent a letter to the head of the Bundestag defense committee, Susanne Kastner, asking for help on delivering on the Saudi deals Dec. 19.

But the high level parliamentary letter seems to have failed.

Kastner’s reply landed here Jan. 8, saying the Bundestag committee has no oversight of arms exports, which are the federal government’s responsibility, a French parliamentary official said. In addition, German deputies have tabled motions calling for timely, detailed information on arms exports, the source said.

“Relations are under strain,” a second French parliamentary official said.

Arms sales to Saudi Arabia generate political controversy in Germany because of human rightsconcerns. Krauss-Maffei Wegmann, however, is reportedly in talks to sell 30 Dingo armored vehicles and the Leopard 2 heavy tank to Riyadh.

The French Foreign Ministry, meanwhile, on Dec. 8 condemned the decapitation in Saudi Arabia of Mohamed Kheir Hussain Darwish, as part of Paris’ universal campaign against capital punishment. The Foreign Ministry noted on its website that Saudi Arabia executed 76 people in 2012.

For French industry, at stake are Saudi orders for 347 vehicles, with 279 Aravis units, including 15 in an ambulance version, and 68 MPCV air defense systems, armed with Mistral 2 missiles, business daily Les Echos reported.

Because the German government had not given clearances, Mercedes missed deliveries for Nexter on Oct. 15 and Lohr on Sept. 15, the French parliamentary letter said.

“Manufacturing has been disrupted, which carries a cost,” said Robert Lohr, chairman of the privately owned company. Lohr said he is optimistic clearance will be given, as the matter is still going through the procedure.

Lohr, based in Strasbourg, eastern France, integrates the Unimog chassis, a Rheinmetall turret and MBDA missiles on the MPCV.

European Cooperation

The parliamentary letter was sent in the framework of a Franco-German defense parliamentary working party, which mirrors a similar Anglo-French body.

As part of efforts to strengthen Franco-German ties, a Bundestag defense committee delegation visited Paris on Dec. 10. German Defense State Secretary Stéphane Beemelmans visited Dec. 12.

A German veto on the Saudi deals has sparked concern among political circles here.

A German refusal would be “amazing,” a parliamentary official said. “It would be a blow to Franco-German friendship.” There is talk among French senators of “retaliation” if Germany withheld clearance, the official said.

Some senators are still annoyed that Germany sank the proposed merger between BAE Systems and EADS last year, and in the restructuring of EADS’ capital , Berlin won the right to buy an equity stake without a countervailing concession for France.

Doubt over German cooperation on the Saudi deals raises questions over how far French hopes to relaunch a European defense system will go, the parliamentary official said.

“Cooperation with Britain makes sense because Paris and London are the two defense actors in Europe, while the other countries play their defense industry cards,” the official said.

French Defense Minister Jean-Yves Le Drian, pointing to the U.S. pivot to the Pacific and defense spending cuts across Europe, hopes to boost cooperation among the Weimar Plus group — France,Germany , Poland, Italy and Spain — and also work with Britain under the Lancaster House Treaty.

A mutual interdependence of capabilities, which would be part of the European defense framework, requires a level of confidence that a partner country will deliver when the need arises, but critics question the reliability of partners.

For Nexter, the clearance process is still underway, as the Aravis deal is to come this month before the Federal Office of Economics and Export Control, the licensing authority known by its German acronym BAFA, an industry executive said.

Nexter and MBDA declined to comment.

It is not clear why France needs German approval for the Mercedes chassis, as the European Union in 2009 adopted directives on defense and security, and intra-EU transfers of defense-related products, said Jean-Pierre Maulny, deputy director of think-tank Institut de Relations Internationales et Stratégiques.

The EU measures, which allowed two years for transposing into national laws, included a general license aimed at promoting an internal market for defense products, Maulny said.

Under the German system, the Federal Security Council decides on export licenses. The decisions of the council are treated as top secret. Sitting in the council are the chancellor, head of the chancellery, and ministers for foreign affairs, defense, finance , interior, justice, economics and development cooperation.

The German Ministry of Economics and Technology said, “The federal government does not, as a matter of principle, release any information on possible individual license applications for certain export projects.

“Those are protected by the operating and business secrets of the companies involved in accordance with [Section] 30 of the Administrative Procedure Act.”


Albrecht Müller in Bonn, Germany , contributed to this report.

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