France: No. 3 arms merchant to the world

Gilt dress swords, finely tooled pistols cushioned in blue velvet-lined cases , shining armor, and other glinting relics of France's glorious past reflect the early morning sun in the shop windows of l'Aigle Imperiale on the Rue de Miromesnil in Paris.

No more than a stone's throw away, guarded by blue, red, and gold uniformed guards, is the establishment responsible for selling the highly sophisticated French weapons of today: the Elysee Palace, residence of the President of France.

France now is the third-largest manufacturer and exporter of arms in the world -- after the United States and the Soviet Union. Sales of French combat aircraft, ships, missiles, and electronic weapons systems represent 12 percent of the world arms market. (The Soviet Union and the United States share 75 percent.)

And French arms sales are booming.

In the past four years, French arms exports have more than doubled -- from 11 .6 billion francs ($2.5 billion) in 1976 to an estimated 24 billion francs ($2.5 billion) for 1980. According to official government statistics, military hardware represents only about 5 percent of the total French exports for 1980, worth some 470 billion francs ($102 billion). But one expert here says 5 percent is the "mini mini minimum." He suggests the figure is closer to 20 percent.

"Many exports are hidden by civilian camouflage," says another source. "Radars or other arms-related hardware can be mixed in with washing machines and show up as basic commercial exports."

But while the 280,000 or so people directly employed in the arms industry are enjoying the success of the past few years, both the nationalized arms industry and the heavily subsidized private one are undergoing several significant changes.

In the past, two-thirds of the arms produced here were sold to other industrialized nations. That was before Middle East oil replaced Western gold as the commodity dearest to the French. More recently, the French government has made a determined effort to nurture ties with the Middle East. And it appears to be paying off.

Today between 80 and 90 percent of French arms exports go to wealthy Arab oil-producing countries such as Iraq, Saudi Arabia, Libya, and the Gulf emirates -- helping to pay for 25 percent of France's annual oil bill of some 100 billion francs ($21.7 billion).

One of the reasons for increased interest in French weapons -- aside from their reputation for quality -- is that arms sales with the French are carried out discreetly, without the glare of publicity that surrounds such sales in other countries. In the United States, for example, arms deals must have congressional approval -- in France they need only the administration's nod.

"We are merchants," a general at the French Ministry of Defense told the Monitor. "If the clients want to announce a sale or not, that's their business. We never say anything -- it's our golden rule. We leave the client free to do whatever he wants."

But along with France's retargeting of arms sales to the Mideast, another significant change has evolved. Instead of the government-supported arms industry offering client countries credit to purchase weapons, clients are for the first time actually providing money up front for research and development.

The Mirage has traditionally been France's breadwinner in arms exports. But the success of the Mirage and its sophisticated missiles and guidance systems sold to various nations around the world has by now saturated the market. The French also are faced with growing competition in the arms market from West Germany, Belgium, and countries such as Brazil and Israel who have followed the example set by the French of specializing in aircraft or heavy armor systems.

"The French are selling few tanks because they are just not that good and the [West] German ones are better," said one expert here. "You can imagine an Arab stuck in the desert with a faulty French transmission."

These developments have directly influenced another new trend in French arms sales abroad: growing sales of naval exports.

With the extension of territorial waters to 200 miles, nations are discovering new defensive needs. As a result many countries are coming to France for naval armaments to protect their costs and sea lanes. The French Navy is now the big seller.

In October 1980 France signed a 16 billion franc ($3.4 billion) contract with Saudi Arabia -- 14 billion ($3 billion) of which was for ships. The deal, spread over a 10-year period, includes delivery of four 2,000-ton frigates, two oilers, and 24 Dauphinm anti-surface helicopters. The Societe Navale Francaise de Formation et de Conseil (NAVFCO) will provide maintenance and technical assistance to Saudi Arabia.

But what is truly unique about the "Sawari" deal (named for a Muslim-Byzantine naval battle 800 years ago) is that for the first time a foreign country will be receiving equipment such as Areospatiale's MM 40 missiles and Matra's over-the-horizon Otomat missile beforem the French Navy.

How, and who makes all these deals?

French officials vaguely describe the process as resting solely in the hands of the Ministry of Defense. But according to Western defense specialists, the French have a well-organized, hierarchical system starting with "commercial agents" at the lowest level, moving up through administrators, technicians, government ministers, ultimately reaching as high as the Elysee Palace itself.

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