Thales raps cable leak and dampens UAE row


France’s Thales said on Friday it was close to an agreement with the United Arab Emirates over rules for future arms contracts and hit out at an embarrassing Wikileaks-style leak to a French newspaper.

The company effectively confirmed a report in La Tribune, based on a leaked diplomatic cable, which disclosed recent disagreement over the terms for any future sale of Rafale jets.

But Thales said the dispute over offsets, or counter-trade clauses built into arms deals, was close to being resolved.
“We are surprised that elements of an international negotiation should be placed in the public domain,” a spokesman for the French company said.
“This negotiation has been going on for several months and, like all negotiations, has experienced some highs and lows. We are currently in a state of convergence,” he said.
“The negotiation should be completed in coming weeks.”

Thales makes radar for the French Rafale warplane, which is built by Dassault Aviation.

La Tribune reported that French diplomats had complained in the cable that the company’s hardline stand on changes in offset rules required by the UAE was putting French interests at risk.

Agreement on the offset rules would not automatically lead to a long-awaited sale of Rafale jets, but would mark a step forward. The UAE has also been studying Boeing F/A-18s.

France has been looking for its first export buyer for the multi-role combat jet after losing competitions in Singapore, South Korea and Morocco, but has been hit by a series of slips

Last year, the UAE broke off talks over a possible Rafale purchase after objecting to progress reports in the French press, including a daily belonging to the owner of Dassault Aviation, according to sources familiar with the matter.

France suffered another setback in Brazil when the country’s recently elected president was reported to be leaning toward a rival US offer, eroding French confidence in a deal.

Thales’ unusually forthright reaction to Friday’s newspaper report appeared to signal impatience with a spate of negative media reports about Europe’s largest defence electronics firm.

After a series of criticisms about his management of Thales, Chief Executive Luc Vigneron has attacked what he describes as a campaign of destabilization being waged through the media.

Vigneron took the helm of Thales in May 2009 after Dassault became the largest industrial shareholder through a pact with the French government. The company has been at the centre of numerous quarrels within France’s fragmented defence sector.