SIGNS OF THE TIME: Indo-EU Defence Relations

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India’s defence relationship with the European Union is less multilateral and more bilateral, in terms of proximity with individual members.

These are the best of times. These are the worst of times. On the one level, India’s relationship with Europe is on a high as New Delhi gets ready to redeem the pledge of awarding the biggest ever armaments contract in the world, to France – the contract for the 126 medium, multirole combat aircraft, Dassault’s Rafale. The total deal could be worth upwards of $ 20 billion, with a rupee touching the depths.

On the other hand, the ministry of defence (MoD) continues to grapple with its relationship it established in Italy with the large conglomerate, Finmeccanica. As is well known, MoD contracted to buy 12 AW101 helicopters from one of the subsidiaries under the Finmeccanica umbrella, Agusta Westland. But the deal came under a cloud with Italian independent prosecutors’ investigation revealing corporate malfeasance, in terms of using middlemen and bribery.

These two examples, in effect, define, for this moment in time, the Indo-European Union (EU) defence relationship, especially underscored by the crisis of the fiscal imbalances of member nations of the EU, affecting the future of the Union and the fate of the common currency, Euro.

Yet, India’s strategic relationships with individual countries of the EU are some times – as in the case with France – even older than the country’s strategic ties with the USA. India has a strategic relationship with the EU but it’s sans defence and security issues.

That is not reflective of any disinclination on the part of either of the parties to indulge in those issues. But considering that the EU, headquartered in Brussels, was not empowered by its member nations to define a sort of a ‘European Concert’ that could create a collegiality on issues of joint defence and foreign policy.

The EU did make an effort in 2010 to create a form of intervention in making joint security policy architecture that could represent all interests of the region. Brussels created the structure, European External Action Service (EEAS). As an Institute of Defence Studies and Analyses (IDSA) researcher noted the same year, “It would host an expert’s pool by bringing in desk officers working at the European Commission, area experts at the Secretariat of the European Council and officials from the foreign ministries of the member states under one roof in Brussels.”

Baroness Catherine Ashton, a British Labour Party politician was appointed as the High Representative for Foreign and Security Policy as well as the Vice President of the European Commission. She visited India and held discussions during a four-day visit to India in June, 2010 and she depicted a picture of the EEAS as a “one stop shop,” which would tackle the challenges of the 21st century, the IDSA researcher noted.

It is important to note that the EU-India strategic partnership was symbolised by the presence of the team accompanying Baroness Ashton, which comprised of Giles de Kerchove, the EU Counter Terrorism Coordinator and Lt Gen Ton van Osch, Director General, EU Military Staff. If that could not provide content to the relationship, what could?

Of course, the EU-India strategic engagement is largely based on talks…and more talks. There are also attempts at individually and jointly influence other nations for institutional changes that can help bar terrorism from being launched from their territories, besides working in concert at the international institutions like the UN to bring in resolutions that would delegitimise terrorism totally, and remove the confusion about freedom fighter/terrorist paradigm.

But the EEAS has still remained in the background with member countries still preferring to work both through the North Atlantic Treaty Organisation (NATO) and/or bilaterally.

Take the case of the MMRCA deal. There were two contenders, as is known, from Europe – the Eurofighter and Rafale. While the manufacturing companies of the two aircrafts were of European origin, it was not so much the EU that campaigned for them, but France (for Rafale) and Germany and Britain (for Eurofighter), on their own.

This was despite the fact that EADS, the European consortium that manufactures Eurofighter, had cross holdings in Dassault of France. So, effectively, even though EADS lost the race to the French company, it actually did not lose out on the deal!


European Bilateralism

France had a long-standing good relationship with India. Even after the 1998 nuclear tests and India declaring itself a ‘nuclear weapon state’, when almost all the Western powers were busy imposing economic sanctions on New Delhi, the French did not fall in line. Not only did they not sanction India, they were the first to get into ‘strategic relationship’ with the country.

Besides, even earlier, in the mid-1980s when India, under Rajiv Gandhi began looking for diversifying the sources of its defence supplies, beyond then Soviet Union, the French were one of the first to jump in. They supplied the country with the frontline fighter aircraft, Mirage 2000, which they had made. After Gandhi’s decision to weaponise the nuclear capability of the country, for a long time the Mirages were the only means of nuclear weapon delivery, in the unlikely event of a nuclear exchange.

Kanwal Sibal, the former Foreign Secretary, and a current chair at the Vivekananda Foundation, wrote in late 2012 that France, which had no colonial hangover of maintaining the balance between India and Pakistan, was far more forthcoming in providing the newly independent India with defence materiel. He wrote: “India acquired from France, in the 1950s itself, Ouragan, Mystere and Alize aircraft, AMX tanks and air to surface and anti-tank missiles. In the 1960s, India went in for licensed production of French Alouette helicopters, to which were added Lama helicopters for high-altitude operations in the 1970s.”

Indian air force’s relationship with French aerospace companies like Dassault and Thales is longstanding. About a couple of years ago when the requirement was a felt-need for life extention of Mirage 2000 aircrafts, the country found that even if a Israeli offer was cheaper, it still had to remain tied to Thales as the source codes of the aircrafts’ avionics was proprietary and it could only go to the French to get the upgrade. Hence, a $ 2.4 billion contract with Dassault and Thales was entered into to refurbish 51 Mirage 2000s.

All the French contracts have not favoured India. Take the $ 3 billion contract with the French naval construction giant, DCNS, for building six conventional submarines that it developed with the Spanish company, Navantia, in the mid-2000s. The submarines were to be built under technology transfer by the Mazagon Docks (MDL). Amidst the usual reports of bribery by the French company and their use of middlemen, the construction began in 2009.

But four years hence, in 2013, there is no sign of the first submarine to be delivered to the Indian Navy. The current schedule of delivery begins in 2016, continuing till 2021, with one submarine being produced every year. There has also been a cost escalation in the process, which is not detailed by either the government or the French company’s side. Meanwhile, the time delay that led to exchange of angry missives between DCNS and MDL, have not culminated in helping the Navy’s submarine arm counter its rate of depletion.

Of course, the MMRCA deal is the icing on the cake of the Indo-French relationship. The choice of Rafale as the chosen aircraft have been after a grueling process of selection that encompassed all the three major players in the Indian defence market, the USA, Russia, and the various European consortia.

The IAF is admittedly proud of the fact that they have kept the biggest deal ever in the history of the country scrupulously clean. The current contract negotiation process has been going on without much of a hiccup.

The British have been the old colonial masters of the country, and they had bequeathed much of the early military equipments and weaponry of the Indian armed forces. Till the 1950s, the island nation had been the primary source of military supplies. But that tapered off once the military rivalry between Pakistan and India sharpened, culminating in the 1965 war.

However, in recent times, the British were hot on the heels of the Indian military planners as they took two decades to decide on a jet trainer for the air force. The British part of the BAE Systems (formerly British Aerospace), that included the USA as a partner broke, the logjam in the area with a contract for the Hawk advanced jet trainers.

They won the contract worth $ 1.5 billion for 66 Hawks, of which 42 were to be made by HAL in the country. The two companies faced a few teething problems at the beginning of the Indian build part, but they have obviously now been ironed out. The BAE Systems delivered the 24 that are to be supplied by them directly, on time.

The BAE Systems’ adroit placement as an Anglo-American joint venture make them intervene in the Indian market, that has been variously described as one with $ 150-200 billion to be spent over a decade, in various shades. For example, the BAE Systems is also close to snapping up a deal for Light Howitzers for the Indian Army through the US government route of Foreign Military Sales.

This shows how the world’s few armaments majors have positioned themselves through complicated inter-corporate relationships for cornering the big ticket items on which even if they compete with their collaborators, they end up benefitting all.

On India’s part, ever since the United Progressive Alliance government has taken office, it appears to have decided not to deny any of the majors – backed by their governments – a share of the cake, but instead, satiate them at least partly, by spreading the money thin. Considering that the total volume of the money is humungous, even the smaller packets can be substantial for individual corporate bottom-line.

Besides the big ticket items, MBDA, the European missile manufacturer – a combination of the French, Italian and British companies – is waiting for the negotiations for Rafale to end, so they can provide the missiles the aircraft will carry. Already, they have made some major headway in the form of selling their MICA missiles for the refitted Mirage 2000s; and providing their Mistral for the weaponised ALH, Rudra.

Italy’s shipbuilder, Fincantieri, have already provided two fleet tankers, ‘Deepak’ and ‘Shakti,’ the Indian Navy has procured. Finmeccanica, the giant sized Italian conglomerate may be a little at odds with the New Delhi at the moment, but the news that they have not been ‘blacklisted’ as yet keeps them in play in the Indian market. And they are looking at opportunities to break out.

Agusta Westland is in competition with Eurocopter for 56 light utility helicopters that the navy plans to buy. For another 14 choppers the Indian Coast Guards want to buy, the Italian company is in competition with Sikorsky. Finmeccanica has also an India office that is overseeing an order from the navy for 3-D air surveillance radar that is expected to be fitted on INS Vikrant, the indigenous aircraft carrier that was recently launched at the Cochin Shipyard in Kerala.


Indian Market

The ministry of defence, under AK Antony, has taken a few key decisions in the past eight years that will have long term impact on the Indian arms bazaar. One of those decisions relate to the ambition of emerging as the manufacturing hub for armaments and platforms for the Asian market.

The other stems from the first desire: foreign companies should not consider India as only a buyer, but think of Indian corporates as partners, either within the framework of defence offsets, post-contract, or earlier as another base for builds.

The opportunities in the Indian military modernisation market are many and varied. The trans-national corporations who have opened Indian operations are seeing that.

Cassidian, a new EADS entity, looks at its Indian engineering centre in Bengaluru with a lot promise, revealing its attitude towards India as a resource hub for itself. “This is the first defence oriented engineering facility opened by a foreign company in India and the only such engineering facility by Cassidian outside Europe,” a company spokesperson says.

Cassidian, describes itself as a worldwide leader in global security solutions and systems, providing Lead Systems Integration and value-added products and services to civil and military customers around the globe: air systems (aircraft and unmanned aerial systems), land, naval and joint systems, intelligence and surveillance, cyber security, secure communications, test systems, missiles, services and support solutions.

Safran’s presence in India started in the 1950s with the sale of equipment for airplanes and helicopters. Since then it has quickly evolved to include partnerships with Indian industry, based on joint developments, production and support licenses for airplane, helicopter and rocket engines (including the Shakti engine for the Dhruv Helicopter), landing gear, navigation systems etc., as well as the associated support services.

Safran S.A. is a French multinational aircraft and rocket engine, aerospace component and security company. It was formed by a merger between the aircraft & rocket engine manufacturer and aerospace component manufacturer group SNECMA and the security company, SAGEM. Headquartered in Paris, France, its worldwide operations leave a large footprint across many nations.

EADS with its newly redesigned division named according to the globally recognisable brand, Airbus, which integrates Airbus Military, Astrium and Cassidian into one Defence and Space Division. The group, the EADS board, expected in a strategic review undertaken recently, enhanced integration and cohesion by the renaming.

Airbus has already notched up its first success in the India by successfully winning the bid for Multirole Tanker Transporter (MRTT) contract. The company had a rather torrid time after bidding for the contract in 2009 and winning the sweepstakes. Its competitor was the Russian IL-78MKI, that lost the race. When the MoD proposal went for the finance ministry clearance it did not get the nod of then finance minister, Pranab Mukherjee. The ministry objected on the ground that the trials did not seem even handed, and the Airbus Military 330 aircraft seemed over priced. So the proposal was returned to the MoD.

But the second time around, the ministry again plumped for the aircraft and showed that the ‘life cycle cost’ of the aircraft was less when compared to the Russian aircraft, though the latter had a low base price. And this time the finance ministry did not seem to have too difficult a commitment to make. The Indian Air Force will buy 12 of these tankers for about $ 4 billion.

At the end, though it seemed all a bit chaotic, the Indian way of finding the rocks to cross the river (Chinese saying), history will still be possibly be kind to the ministry of defence under the stewardship of Antony, that he made experience to grow from a crawl to taking baby steps, rather exciting for all.

SIGNS OF THE TIME: Indo-EU Defence Relations - Defence and Security of India