Egypt Is Possible First Export Customer For French Rafale

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Dassault Aviation is poised to win its first export sale for the Rafale combat jet, thanks to Egypt –- maybe.

Under the terms of a deal first reported by French newspaper Les Echos Feb. 6 –- a contract that is still being finalized –- Cairo would buy up to 24 aircraft and a FREMM frigate for up to €5 billion ($6.8 billion).

To pay for the agreement, France and Egypt are negotiating a loan guarantee with France's export credit agency, Coface, which would back half of the deal outside of a 15% downpayment, an arrangement agreed to this week by the French finance ministry.

But the reality is that France has little choice but to help foreign countries buy the Dassault-built Rafale.

According to the French military planning law (LPM) –- a six-year spending scheme that covers 2014-2019, the French government will have to continue shouldering the burden of producing 11 Rafale aircraft a year startin in 2016 if an export deal fails to materialize, a situation that risks busting France's annual €31.4 billion defense budget.

The deal with Egypt could be signed quickly, as Cairo wants the ship and the aircraft to parade during the inauguration of the Suez Canal expansion in August. But in order to get its aircraft, Egypt needs to deposit an advance payment, an amount that would signal the number of aircraft they are really ready to buy.

Egypt already has a a long history with French fighters, as Cairo was the first to sign up for the Mirage 2000 in 1981. The Rafale, which was introduced into service to the French armed forces in 2002, has yet to win an export deal, though 136 have been delivered to the French navy and air force, and Dassault has been in exclusive negotiations with India for the sale of 126 aircraft since Jan. 31, 2012.

 

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