Tuesday, November 20, 2018
Subscription Centre
Receive our free e-newsletter.
Click here for more information

Kuwait – French summer sales

An EC725 Caracal.Unlike its neighbours, Kuwait has not been a major customer for the French defence and security industry for the past three decades. Aside from a €450 million contract for eight patrol boats built by Cherbourg Constructions Mécaniques de Normandie (CMN) in 1995, the Emirate has traditionally acquired U.S. or British weaponry, and the bulk of its current Air Force consists of F/A-18 Hornets.

Kuwait officially ordered 28 Eurofighter Typhoons equipped with the Captor-E radar earlier his year, ditching the Rafale. From that perspective, Kuwait’s order for 30 H225M Caracal transport helicopters (24 firm orders and 6 options) in August was a breath of air for Airbus Helicopters and its Marignane factories, caught in the hardships affecting the entire helicopter manufacturing sector worldwide. The contract, worth $1.1bn, includes training of pilots and technicians along with support services for the next two years. And some specific contracts could follow suit, such as anti-ship missiles for the Caracals. To be operated by the country's air force and a new aviation unit of the National Guard, the H225M fleet will be used for a wide variety of missions including combat search and rescue, medical evacuation, transport and naval operations.

“This contract (…) reflects a strategic relationship between Kuwait and France built on more than 30 years of French commitment to the Emirate, notably in the conflict following the 1990 invasion of Kuwait,” stated Jean-Yves Le Drian, French Minister of Defence.

Among French defence manufacturers, Airbus Helicopters (Aerospatiale and Eurocopter before that) has nonetheless enjoyed good commercial relations with Kuwait since the 1970s, selling several models of rotorcraft to the Emirate. And when Kuwait announced the tender for new transport helicopters in 2013, Airbus Helicopters was said to be the favourite, ahead of both Sikorsky and Augusta, which had both submitted offers. According to Michel Cabirol, writing for the newspaper La Tribune and quoting officials of the French Ministry of Foreign Affairs, there was a clear willingness to grant the contract to French industrials, as a sign of “goodwill” wished by the Kuwaiti government and emir, sheikh Sabah Al Ahmad Al Jaber Al Sabah.

But will it be a “French breakthrough” in Kuwait, or a mere “one shot” victory? As Cabirol remarks, Kuwait has acquired $628mn-worth of defence and security systems between 1996 and 2014. 2015 had already been a milestone for French-Kuwaiti defence partnership: €196mn worth of exports.

And 2016 sets high standards, and the French Defense Ministry is confident that its partnership with Kuwait is sustainable, bolstered by the fact that large numbers of Kuwaiti officers are trained in France every year. Having already sold 120 Sherpa Scout tactical vehicles to Kuwait in 2015, Renault Trucks Defense is looking towards new sales, including a second batch of 120 Sherpas and VAB Mark 3 IFVs. And with Kuwait’s ongoing naval fleet modernisation programme, DCNS is seeking a contract for approximately 6 Gowing corvettes, along with upgrades of current Kuwaiti warships. In both cases, letters of intent were signed, although the contracts are yet to be confirmed. All in all, the deal (including the 30 H225s) could be worth $2.8bn.

To sum up the situation, one could point out to the numerous opportunities in Kuwait for French defence suppliers, backed by good bilateral relations despite the current tensions over the Areva file; indeed, the Kuwait Investment Authority, the country’s sovereign wealth fund, holds a 4.8% stake in Areva and has lost a lot of money since the company went through headwinds. Furthermore, Kuwait committed itself to invest up to €450mn in French SMBs active in health and high-tech sectors, in cooperation with BPIfrance investment bank.

Written by ADIT - The Bulletin and republished with permission.


Company News