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The Indian contract is the end of a long saga which started in 2001. India on Friday concluded an Inter-Governmental Agreement (IGA) with France for the purchase of 36 Rafale fighter jets at a cost of €7.87 billion ($ 8.84 billion). The IGA and associated commercial protocols has been inked in the presence of defence minister Manohar Parrikar and his French counterpart Jean-Yves Le Drian.

The deal includes aircrafts in fly-away condition, weapons, simulators, spares, maintenance, and Performance Based Logistics support for five years. France will indeed provide logistics and ground support to ensure that 27 aircrafts (75% of the 36) are operationally available at any time.

The weapons package includes Meteor radar guided Beyond Visual Range (BVR) missile which is considered as a game changer and the best in the class with range of over 150 km. Scalp long range air to ground missiles are also expected.

Dassault will begin aircraft deliveries after 36 months and complete in 67 months. By April 2022, India will have the 36 aircrafts in its inventories. The original but deadlocked $20 billion MMRCA (medium multi-role combat aircraft) project to acquire 126 fighters is still in mind. India needs more Rafale jet to match China and Pakistan.

The Indian Air Force (IAF) has declared it needs at least 42 squadrons to protect its northern and western borders from Pakistan and China. However, it currently has around 33, each comprising 18 aircraft. India needs over 300 new combat jets in the next 15 years. This number will not be achieved for sure. Nevertheless, and despite the Tejas and Russian Fighters, India will have to order more Rafale and eventually setting up a local supply chain.

What is there in the offset clause?

There is a 50 percent offset clause under which French industry will invest half the contract value back in the country. This is quite usual in nowadays defence contracts. This clause is expected to help acquiring more expertise domestically in the aerospace sector.

Last year, the Indian press reported that Dassault and its two main partners, Safran and Thales, will achieve a technology transfer to the DRDO (Defence Research and Development Organisation). In the latest contract, the Indian press indicates there would be a six percent technology sharing component for €236 million.

It seems Safran could help India revive the unsuccessful Kaveri engine project. The French company is ready to invest €1 billion by 2020 to revive India’s combat jet engine project. The Kaveri engine powers the indigenous Tejas fighters.

To ensure 75 percent of all aircraft are operationally available at any time, Dassault will probably rely on two main Indian actors. The favourite partner of Dassault for maintenance is Reliance Industries (RIL). In December 2013, Dassault made an agreement with Indian authorities to create a production center for Rafale’s wings in Bangalore (an investment of €120 million). Added to that, Dassault Aviation has opened a new branch in New Delhi in late 2012, as the 6th aircraft maintenance center of the group. This was to support the growth of the business aviation market in Asia with its civilian Falcon aircraft.

Hindustan Aeronautics Ltd (HAL) may be also concerned by the Rafale maintenance. In March 2015, Dassault has delivered the first two modernized Mirage 2000. The modernization process of the last remaining 49 Mirage 2000H is taking place in HAL’s site in Bangalore.

Initially for the 126 medium multi-role combat aircraft (MMRCA), the RfP mandated that the technology for the AESA radar (which is the AESA RBE2 from Thales) is to be transferred to India. This may lead to see that radar equipping the Tejas Mk2.

Finally, materials for a value of €2.91 billion should be exported from India over the next 7 years (representing 74% of the 50 percent offset value).

The Rafale, a threat to the Russian and American industries

If the Rafale initially struggled to attract foreign buyers before, the last two years have been a breath of fresh air for Dassault. Egypt bought 24 of the jets in 2015 with Qatar purchased 24 the same year. India has finally concluded the acquisition of 36 aircrafts in 2016 after several years of discussion.


France is the only country that is able to compete with the USA for making fighter jets, and Washington has done everything it could to hamstring France’s aviation industry because of that. In the 1970s, the Pentagon ordered a RAND report on Dassault, as they were seeing the French company as a threat. The USA and Russia are keen to maintain their hegemony in the fighter jet industry.

So far, the Rafale has been several times rejected for purely political, not technical, reasons. On a technical and technological point, the Rafale is the best fighter jet money can get.

In 2002, the Rafale lost against the F-35 because the Netherlands wanted to reinforce their position within NATO. From 85 aircrafts initially planned the Dutch air force will get only 37 F-35As starting in 2019.

In 2002, again the Rafale competed against an American fighter and again the same decision. A leak into South Korean medias of documents detailing the technical evaluation results showed the Rafale was awarded the highest marks. In 2005, Singapore took the same decision.

In 2008, Switzerland undertook flight tests to evaluate what aircraft could fulfil completely the Swiss Air Force expected capabilities. By far, the Dassault Rafale won the evaluation with the best effectiveness in all criteria like strike missions (Air to Ground), escort missions, defensive counter air, air policing and reconnaissance. All this has been stated in the SAF/OT&E Flight Test Effectiveness Report NFA Evaluation 2008/2009.

Finally, on 27 April 2011, after an intensive and detailed technical evaluation by the IAF, Eurofighter Typhoon and Dassault Rafale were declared finalist of the competition with the later announced as the winner early in 2012. Conducted by the Directorate of Air Staff Requirements, each of the six initial contenders was flight-tested by IAF pilots on 660 separate performance aspects!

So we understand technically the Rafale is a must but what is behind the French jet fighter bashing?

For Boeing, with only the F-15 and the F-18 fighter jets left on its combat jet order book, the issue is the production. The last of which are expected to be delivered to customers in 2018 and 2019, respectively. This situation raises questions about Boeing’s position in the jet fighter market and the future of its employees in St. Louis. The Dassault Rafale being with the Boeing F/A-18E/F Super Hornet, the only one to be effectively used from aircraft carrier. If the Super Hornet’s production ends, the Dassault’s fighter will be the remaining contender for India and Brazil. The Rafale M would be a good choice to be one of the jets on the future INS Vishal. And the Indian Navy may need up to 54 naval fighters. On 26 June 2012, it was revealed that the Rafale M (naval variant) could be used on a STOBAR aircraft carrier without any modification of the planes or installation of catapults on the flight deck. Later in January 2016, the Indian government directed the Indian Navy to undertake detailed briefings with Dassault regarding the Rafale, in a potential start to procurement of the naval version for its aircraft carriers.

On September 28, 2010, Boeing was awarded a $5.3 billion U.S. Navy multi-year procurement contract for 124 F/A-18E/F Super Hornets and EA-18G Growlers. Boeing had to deliver 66 Super Hornets and 58 Growlers to the Navy from FY 2012 to FY 2015. Five units may be purchased in FY2016 for $350 million and a further 2 in FY2017 for $184.9 million.

Lockheed Martin expects to export between 720 to 850 F-35s and produce as much as 2,443 F-35s for the U.S. military. The new Justin Trudeau’s government who took the reins in Ottawa, has already declared it will cancel its order of more than 60 F-35 JSF from Lockheed and opt for a better suited aircraft for the country’s defense needs. If the Rafale fills the role as Canada’s next fighter jet, it would be a tremendous shock in the jet fighter market and will dramatically impact the Lockheed F-35 with its cost escalation. Other countries may though opt out for its French rival. Even Australians declare “It has all the hallmarks of a Ponzi scheme”.

Australia is scheduled to bring its first two planes home in 2018. Up to 26 fighters are expected to be operational in 2020, and the number is expected to reach up to 72 by 2023. The project has a $17bn price tag.


For Russia, the Dassault Rafale endangered the Sukhoi PAK FA (T-50), Russia’s first fifth generation fighter aircraft. The aircraft is supposed to compete with aircrafts like the U.S.’s F-35 and F-22 and China’s Chengdu J-20 and Shenyang J-31.

Early in September, India and Russia have concluded negotiations to jointly develop a Fifth Generation Fighter Aircraft (FGFA). As said Jane’s “both sides had agreed to contribute $3.7 billion – down from Russia’s earlier $5 billion demand – to jointly develop the Sukhoi T-50 combat aircraft based on Indian Air Force (IAF) requirements”. Nevertheless, many senior officers in the IAF remain skeptical about the aircraft’s affordability and capabilities.

Initial expectations called for the acquisition of 250 PAK FAs for Russia, 144 for India, and an unknown number for other countries. Figures are nowadays much lower.


And the belief South Korea might acquire the aircraft vanished with Korea’s Future Homegrown Jet. Due to the crisis in Ukraine, the Russian industry is unable to produce performant engines. Russia’s defence industry is indeed still facing technical (as well as financial) hurdles in designing a new engine for the aircraft. The PAK FA prototypes are currently using engines also installed on Sukhoi Su-35s. Not very stealth…

According to the Indian Media Catch, “India has been offered some very lucrative deals by the Americans”, through Boeing’s F-18 Super Hornets, and Lockheed Martin’s F-16s. Lockheed Martin have even offered to bring in their whole assembly line to India if assured contracts are given.

Defence Minister Manohar Parrikar is expected to leave for Sweden next month to explore several options.  Buying Swedish Gripen fighters is excluded as it will condemn the Indian made Tejas aircraft.

So, the future of the Dassault Rafale is bright. In the next two years 5 countries will give their decision concerning the aircraft. In 2017, the Canadian may opt for the Boeing’s F-18 Super Hornets instead of the Rafale for political reasons but that decision will cause anyway a severe issue to the entire F-35 program. Depending who wins in Canada, 2 other NATO countries will have to decide accordingly, Belgium and Poland. Malaysia and the United Arab Emirates remain the two main market for the French aircraft.


Other left opportunities

  • Argentina: Due to continuous calls vis-à-vis the Falkland Islands, France does not wish to positively respond in the current context to the request for Mirage III and other Super Etendard’s replacement. After the United States (F-16), Israel (Kfir), Spain (Mirage F1) and Brazil (vetoed by the United Kingdom for the Gripen aircraft), the country would be looking at China or Russia despite battered finances;
  • Bulgaria: Since 2004, Sofia intends to renew its Soviet origin’s aircraft, but its limited resources did not allow it. The Bulgarian Defence Ministry has reportedly shortlisted three offers. These comprise the US F-16, which was withdrawn from service: Sweden’s Gripen and the Eurofighter Typhoon. A contract may be expected by the end of 2016 or early 2017;
  • Croatia: The Croatian government is considering the purchase of new fighter jets at the 2019-2024 horizon. The two leading contenders for the designed deal reportedly include Lockheed Martin’s F-16 and Saab’s JAS-39 Gripen;
  • Denmark: On 9 June 2016 the Danish Government has entered into an agreement on new fighter aircraft to procure 27 F-35 fighter aircraft (initially 48 in replacement of the ageing F-16 jets). Despite its cost F-35 (Lockheed Martin) won against other contenders like the Boeing F/A-18 F Super Hornet and Eurofighter Typhoon (BAE Systems, Airbus, Finmeccanica). Copenhagen is already a third-tier supplier for the JSF program;
  • Kuwait: In April 2016, Kuwait signed a definitive contract to acquire 28 Eurofighter Typhoon jets from Leonardo for €7.957 billion (US $9.062 billion). Moreover, the approval for 28 F/A-18 F Super Hornet fighters in a deal estimated to cost $3 billion is still pending;
  • Libya: The current situation of the country does not allow such purchase;
  • Saudi Arabia: Despite good relations between Paris and Riyadh, the kingdom has chosen to get equipped with American F-15 aircrafts (Boeing) and British Eurofighter Typhoon jets (BAE). However, rumors persist about the sale of the multi-role aircraft from Dassault;
  • Slovakia: Bratislava has recently rejected the Saab’s offer for a lease agreement for six JAS 39Cs and two JAS 39Ds Gripen;
  • Venezuela: Rumors persist about the ability of the country to acquire the Rafale despite its latest Russian acquisitions.




The economic situation in Greece is dire. Walk the streets of Athens and you will see Greeks digging in trash cans for food. With no jobs and withdrawal limits imposed on locals, hard cash is elusive and hard to come by. Those situated outside defence circles will therefore be surprised (and perhaps a little shocked) to discover that according to NATO Greece is a large defence spender with 2.38% of its GDP for 2015, second to the United States who spends 3.59 % of its GDP on defence.

Despite the austerity measures, defence launches and acquisitions continue and include the Hellenic Navy P-3B maritime patrol aircraft modernization and upgrade programme, the commissioning of the HS Katsonis – a Type 214 submarine (Greece now operates 11 submarines), and funding for 10 ex-U.S. Army Boeing CH-47D Chinook helicopters. Military personnel salaries, for the most part, have been exempt from cuts however in July 2016, a proposal surfaced aiming to cut salaries by 200 to 400 Euros per month depending on rank. Greek military leaders are concerned that salary cuts could affect morale, and coupled with the current economic climate, may fan the fire of a number of grievances.


Greece is positioned strategically in the Balkan Peninsula with ease of access to three continents. It borders Bulgaria and the Former Yugoslav Republic of Macedonia to the North, Turkey to the Northeast, Albania to the Northwest, and three seas – the Ionian Sea to the West, the Mediterranean Sea to the South, and the Aegean Sea to the East. There is no doubt that with the current refugee crisis gripping Europe security concerns have escalated. According to John Nomikos, Director of the Research Institute for European and American Studies (RIEAS), Greece is in the middle of what he calls a “security thunderstorm”. According to the UN Refugee Agency, in 2016 Greece recorded 164,730 refugee sea arrivals with 856,723 in 2015. Mr Nomikos added that the increase in transnational organized crime, human trafficking, and the Islamic terrorist threat as well as the disintegration of Greek social cohesion requires drastic reform and restructuring of the Greek defence and intelligence community with increased cooperation amongst agencies.


Refugee crisis aside, one has to wonder if the base of Greece’s defence spending may still be rooted in the decades-long conflict with Turkey compounded by the Turkish occupation of Cyprus in the 70s. You can ask any Greek why their defence spending is high and they will tell you that Greece will not let the events of the past recur in future. Turkey has a habit of unnerving the Greeks by violating their airspace without submitting flight plans and at times with armed fighter jets, keeping them on constant alert. For instance, on 15 February 2016, Turkish fighter jets violated Greek airspace 22 times within a 24-hour period.


Greece is often overlooked because of its current economic crisis however the significance of its geostrategic location instantly establishes it as a key defence player. Evidence of this lies in Crete, which has assumed great strategic significance for NATO and the U.S.

Crete hosts the following NATO operational and training infrastructure:

  • NATO Maritime Interdiction Operational Training Center (NMIOTC).
  • NATO Missile Firing Installation (NAMFI) – with a range of more than 14.440 Km2 of ground, sea, and air space.
  • NATO FORACS Greece (NFG) near Souda Bay where all multinational operational units joining NATO formations have to use FORACS to ensure interoperability for joint-service and multi-national operations. The site performs precision dynamic calibration measurements of the accuracy of target and navigation sensors (sonar, fire control, navigation radar, electronic surveillance, electro-optic sensors, inertial navigation systems, etc.) against common geographical references to satisfy national requirements and meet NATO material readiness standards.

Crete hosts the following U.S. operational infrastructure:

  • The U.S. Naval Support Activity (NSA), providing operational support to U.S, allied, and coalition forces.
  • The U.S. Naval European Meteorology and Oceanography Detachment

As a gateway to Europe, the Middle East, North and Sub-Saharan Africa, and Southwest Asia, Greece’s defence budget (if spent wisely), is essential in protecting not only its territory, but that of its allies.


Written by Sylvia Caravotas (Satovarac Consulting) for OIDA



The South African Navy’s, Project Biro, has attracted the attention of local and foreign shipyards that are currently competing to build three inshore patrol vessels (IPVs) and three offshore patrol vessels (OPVs) by 2024/25 at an estimated cost of R6 billion. The patrol vessels specifications include armament with a 30mm gun for inshores (IPVs) and 76mm gun for the offshores (OPVs). According to Jane’s Defence Weekly, South African Navy sources stated that the new vessels will replace the strike craft and minehunters acquired in the 1970s and 1980s, and will undoubtedly boost South African maritime efforts.

Armscor, the South African state-owned entity who is in the process of evaluating tender submissions, strictly requires that the vessels be built in a South African shipyard with 60% local content, providing foreign companies the opportunity to access the lucrative African market by partnering with South African shipyards.

There have been several acquisitions within the South African shipyard industry most notably for The Nautic Group, specialists in the design and construction of highly customised ships. Paramount Group, a global leader in the defence industry, acquired a majority stake in The Nautic Group. In 2014, Nautic acquired Veecraft Marine to consolidate the manufacturing of naval vessels in Cape Town, South Africa. Therefore Paramount Naval Systems and Veecraft are now subsidiaries of The Nautic Group who has partnered with a number of foreign shipyards for Project Biro.

For Project Biro, Paramount Naval Systems is teaming up with Spanish company Navantia and Australian company Austal. Navantia is offering its three offshore patrol vessels (OPVs) also known as the Avante 3000 (maritime action vessel) or BAM design. The vessels will be built in South Africa combining Spanish expertise and design with a South African cost structure. The Avante 3000 has an overall length of 93.90 metres, a maximum beam of 14.20 metres, a full load displacement of 2 840 tons, and a helicopter flight deck. Austal is offering its three inshore patrol vessels (IPVs) based on the Austal Cape Class patrol vessels, which are currently used for maritime border security by the Australian Border Force.

French company DCNS has partnered with Paramount Naval Systems to offer the Gowind offshore patrol vessels (OPVs) for Project Biro. DCNS has a long naval history for maritime protection missions. James Fisher, CEO of Nautic, stated that: “The Gowind is the most technologically advanced of all vessels proposed for the South African OPV programme.” However, it is unclear as to whether DCNS is still competing for Project Biro as the company no longer views South Africa as a strategic country. It seems as if the partnership signed between both companies remains in place for the rest of the continent.

German company, Abeking & Rasmussen, has partnered with DCD Marine to offer a 66-metre-long vessel for the offshore patrol vessel (OPV) component based upon the OPV Bad Bramstedt. For the inshore patrol vessel (IPV) component they are offering a 25 metre long SWATH (Small Waterplane Area Twin Hull) vessel. SWATH’s innovative hull delivers maximum performance in rough seas. Abeking & Rasmussen are set to build the first ship in Germany to ensure all specifications are met with the remainder of the vessels to be built in South Africa.

Lurssen, another German Company, has partnered with Southern African Shipyards to offer its Lurssen Patrol Vessel PV 80 with a length of 80 metres, a speed of 22 knots, a displacement of 1 486 tons, and a helicopter landing deck. Lurssen has a sound reputation spanning more than 140 years in the shipbuilding industry.

Other shipyards competing for Project Biro include Damen, Vard (Fincantieri), Istanbul Shipyard, ThyssenKrupp Marine Systems (TKMS), and Poly Technologies. Partnerships with local South African shipyards are crucial for foreign companies looking to diversify globally and pursue maritime opportunities in Africa. For local South African shipyards, foreign partnerships pave the way for the transfer of skills and technology. Together with sound defence relationships, these partnerships can only amplify and provide a much needed boost to the industry, which according to Southern African Shipyards CEO, Prasheen Maharaj, remains uncompetitive.

2016-09_Project Biro

Securing the South African coastline with modern patrol vessels is long overdue. The newly acquired patrol vessels will assist with a number of maritime functions such as monitoring, search and rescue, logistical and medical support, and an array of collateral tasks. The inshore patrol vessels (IPVs) could patrol the coastline for criminal activities while the offshore patrol vessels (OPVs) with their helicopter decks, could operate further out in rough seas. The completion of Project Biro will place the South African Navy in a prime position to promote cooperation, peace, security, and stability in the region.

Written by Sylvia Caravotas (Satovarac Consulting) for OIDA Strategic Intelligence



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