Eric Trappier, CEO of the French aviation giant, Dassault, appears to be one of the bravest in the world of laissez-faire (free market economics) to make the sensational claim: “I don’t lie”. It is sensational because he operates in the world’s murky arms bazaar where undercutting and bribing are accepted and acknowledged norms for doing business. Its narrative consists of operators and their unethical operations ~ all for profit by any means.
Assuming, without conceding, that a non-government European arms manufacturing company paid money to a private Indian company to buy land for a potential bilateral arms deal, which could be construed as non-bona fide by those who matter, what is surprising is the naïve and gullible Indian mind in matters military. Little wonder that the government faces frequent crises in the wake of arms deals, resulting in a political earthquake.
There are a few salient features of the hazy world of arms bazaar. The government ought not to be negligent, ignorant and innocent in future when imported arms deals are likely to be even more difficult, and politically volatile, for whatever and whichever the colour or complexion and whosoever represents the political party and the government in power.
The world of armaments consists of a dozen major producer- countries and four dozen important consumer/buyer states. And, in between, there exists “distributors”. So far as producer (supplier) and consumer (buyer) are concerned, it follows the fundamental principle of economics ~ the “supply and demand ratio”. In commercial jargon it could be referred to as “buyer’s market or seller’s market”.
If there are multiple producers chasing few customers, the advantage will lie with the latter (customer/consumer) which would be known as the “buyer’s market” owing to availability of multi-choices. However, when the opposite happens in which suppliers are few in comparison to a large base of buyers, it is “advantage former” (supplier), thereby making it a “seller’s market” in which the buyer understandably is at the mercy of supplier/seller.
Of all military hardware, however, the aeroplane continues to be prone to endless controversy, complications and corruption thereby creating a headache for both producer and consumer. This is because of technology and pricing. Thus, whereas technology takes aircraft to quality performance in combat, pricing thereof follows owing to the capability of the craft as well as the supply-demand ratio.
Understandably, therefore, as aviation is a high tech, multi-billion dollar industry, it is natural that makers of the flying machine would constantly be on the lookout for sale of their product for the export market, to avoid financial loss. Hence in a “buyer’s market”, to cut a deal by all means is not only a challenge but can turn out to be a “matter of survival”, for avoiding unemployment and the consequential economic downturn of the producer/ state.
In real life, however, virtually all major defence/aeroplane manufacturing countries of the world have had erratic and dubious records, following unethical trade practice with serious charges of corruption/bribes levelled against them as well as buyer countries. Hence the developments of 2003. Lockheed Martin despite the fact that it sold F-16s worth $3.8 billion to Poland, its bidding was mired in corruption from the start.
On July 7, 2001, Poland’s Deputy Defence Minister, Romuald Szeremietiew was suspended, and his assistant, Zbigniew Farmus, was arrested on July 10, while trying to escape to Sweden. Thereafter, “in a revised process”, F-16, French Mirage-2000 and Swedish SAAB Gripen were considered, and a Polish commentator wrote: “Lockheed didn’t win contract, US government did, with pressures from very highest levels.”
Nearer home, in West Asia, the Al Yamamah deal comes to mind. A deal signed in 1985, between the UK and Saudi Arabia worth 43 billion pounds for supply and support of 96 Panavia Tornado fighter ground attack (FGA), 24 air defence variant (ADV), 50 BAE Hawk and 50 Pilatus PC-9 aircraft and other equipment. In return “the Saudis would supply 400,000 barrels of oil per day”. Subsequently, the Al Yamamah deal created tremors in British polity with allegations of corruption.
Who can forget the US Lockheed Corporation corruption scandal in Japan during the 1950s? Operated through Yoshio Kodama? Who, after spending three years in jail on charges of war crime, post-Second World War, “helped found and fund the dominant Liberal Democratic Party?” The US aviation company paid bribes between $ 1.5 million and $ 2 million to various Japanese officials to secure an order for 230 F-104 Starfighters (known as “flying coffin” and “widow maker”). The craft was sold to what was then West Germany as well and over a ten-year period. It crashed as many as 178 times, killing a total of 85 German pilots.
Back to Dassault. World armament manufacture is “economics of employment, influence, profit, technology” which is in relentless search for the market and the consumer, the buyer and the flier. Thus Dassault, in 2015, had “global employees” numbering “11984, of whom 9189 were at nine French industrial sites ~ St Cloud, Argenteuil, Argonay, Biarritz; Merignac, Martignas, Cazaux, Poitiers, Seclin” (Jane’s All the World’s Aircraft).
During 2015, Dassault received net orders for 48 Rafale fighter aircraft and by the first half of 2016, seven were delivered. However, the most striking feature of Dassault’s “consolidated order trends” is the percentage of export order vis-a-vis overall production. Thus, according to Jane’s All the World’s Aircraft 2017-2018, Dassault aircraft order-card for the 21st century speaks for itself ~ “77 per cent of aircraft production were exported in 2001; 66 per cent in 2002; 82 per cent in 2003; 83 per cent in 2004; 93 per cent in 2005; 90 per cent in 2006; 89 per cent in 2007; 81 per cent in 2008; 43 per cent in 2010; 83 per cent in 2011; 78 per cent in 2012; 71 per cent in 2013; 89 per cent in 2014; and 96 per cent in 2015”.
Clearly, Dassault operates in a “buyer’s market”. The option of the seller is comparatively limited and restricted, as it has to constantly feed and pay heed to the need of its foreign buyers. Customer satisfaction reigns supreme. The seller has to keep foreign clients in good humour, listening and attending to their smallest fads. In 2001, Dassault exported 77 per cent of its aircraft production. That dipped to 43 per cent in 2010. Obviously that must have been quite a trauma.
However, in six years, Dassault not only recovered but its performance showed spectacular upswing, as 96 per cent of its product were exported to foreign buyers. And surely, India too is one of those countries to come within 96 per cent as indisputably Dassault twin-engine is a time-tested multi-role combat aircraft. However, the most spectacular of all deals is Rafale CEO’s ability and steadfastness to stick to the claim ~ “I do not tell lies” ~ in a turbulent market like that of combat aviation. This is indeed commendable.
The writer is alumnus National Defence College, and author of China in India. Views are personal.