In an outing to defend his partner Julie Gayet, the former president has revived a huge controversy in India around the contract for 36 Rafale signed in 2016. And weighed down the French fighter when he is aiming for new contracts with Delhi. Explanations.
Two sentences were enough to set Franco-Indian relations on fire, and to seal the Rafale on future Delhi calls for tenders. Two short sentences pronounced by François Hollande, when asked about the choice of the Indian conglomerate Reliance as Dassault’s partner during the contract for 36 Rafale signed with India in September 2016. “It is the Indian government that offered this group of services, and Dassault, who negotiated with Ambani (CEO of Reliance), assured François Hollande to Mediapart in an article published on September 21. We had no say in this, we had no choice, we took the interlocutor that was given to us. ”
Seemingly insignificant, these two sentences sounded like a bomb in Delhi. And for good reason: they contradict the version of Indian Prime Minister Narendra Modi on the case. Accused by the Congress Party, the main opposition formation, of having favored the leader of Reliance Anil Ambani, boss to whom he is known to be close, during the offset negotiations (industrial compensation) around the contract for 36 Rafale signed in 2016 , Modi has always denied intervening in the case. It is Dassault and he alone, assures the Indian government, which made the choice of Reliance. A position that has also always been that of the French government and Dassault Aviation.
Heaven’s gift for Gandhi
The exit of François Hollande has cast doubt on this official speech, and fueled the fire of a controversy launched at the end of 2017 by the boss of the Congress party Rahul Gandhi. Main opponent of Narendra Modi, Gandhi has not ceased, since the end of 2017, to make the “Rafale affair” the spur of his electoral offensive against the Prime Minister, speaking of “swindle” and “capitalism” cronyism ”about the choice of Reliance. The conglomerate, underlines the Indian opposition, had no aeronautical experience before being chosen by Dassault to benefit from “offsets”, these industrial compensations that must be granted by any beneficiary of a defense contract. If Reliance was preferred to the public giant HAL (Hindustan Aeronautics Limited), a long-standing player in the sector in India, it is therefore because of the close ties between Modi and Anil Ambani, accuses Rahul Gandhi. The exit of François Hollande came at the right time for Gandhi, who took the opportunity to again demand the resignation of Narendra Modi.
The French camp, for its part, immediately dissociated itself from the words of the former president. The Quai d’Orsay cracked a press release on Friday evening to indicate that “in accordance with the Indian acquisition procedure, French industrialists have complete freedom to choose the Indian industrial partners that they consider the most relevant” for offsets projects. Clearly, it is Dassault, and no one else, who made the choice of Reliance. The French aircraft manufacturer is on the same line: Dassault assured in a press release published on September 21 that this choice was indeed “the choice of Dassault Aviation, as Eric Trappier (CEO of Dassault Aviation) had already explained in an interview published by the MINT newspaper on April 17, 2018 ”.
Dispute with HAL
Eric Trappier had detailed the reasons for the choice of Reliance – and the non-selection of the other big Indian actors – during an interview with Challenges in March 2017, part of which had not been published. HAL? The public group seemed to him to be already operating at full capacity, between the development of the local hunter Tejas and the production under license of Russian Sukhoi aircraft. Relations between the two groups were also difficult: Dassault had not managed to reach an agreement with the public group during contract negotiations known as MMRCA for 126 aircraft, HAL not wanting to take responsibility for the Rafale that it would have. assembled in India. Tata, another Indian giant? “Too close to American competitors, especially Boeing,” assured Eric Trappier. The two groups have, in effect, created a joint venture in defense. So there remained the famous Reliance, a novice in aeronautics, but eager to diversify there for several years. The ideal candidate, assured Eric Trappier: “We bring our aeronautical experience, Reliance brings us its knowledge of India, explained Eric Trappier. In particular, they directed us to the city of Nagpur for our future joint factory. ” This one, under construction, must assemble parts of Falcon 2000 at first, then possibly parts of Rafale.
What credit can be given to Rahul Gandhi’s accusations? On closer inspection, Dassault’s relationship with Reliance began long before the Rafale contract in 2016. The first discussions with Mukesh Ambani, big brother of Anil Ambani and boss of one of the group’s two branches, took place in 2007 , eight years before the famous contract. Narendra Modi was not in power at the time: it was the Gandhi family’s Congress party which then ruled the country. A MoU (Memorandum of Understanding) was even signed in 2012 between Dassault and the defense branch of the conglomerate. This agreement had fizzled out due to Mukesh Ambani’s decision to leave the military sector. The defense division had been taken over by his younger brother Anil, at the head of the other branch of the Indian family group. This long relationship between Dassault and Reliance, if it does not prove the absence of Modi’s intervention, weakens Rahul Gandhi’s accusations.
The shadow of Julie Gayet
The amounts mentioned by the leader of the Indian opposition, who speaks of a “contract of several billion dollars” granted to Reliance, also appear questionable. The Rafale contract was a little less than 8 billion euros (7.87 billion exactly), of which 50%, or about 4 billion, must be reinvested by Dassault in India through the famous offsets. However, the joint plant of Dassault and Reliance in Nagpur, spearhead of the alliance of the two groups, has only been the subject of an investment of 100 million euros on the part of Dassault, proof that Reliance is far from being the only beneficiary of the famous offsets. “Partnerships have also been signed with other Indian companies such as BTSL, DEFSYS, Kinetic, Mahindra, Maini, SAMTEL, underlined Dassault Aviation in its press release of September 21, adding that“ negotiations are underway with a hundred of other potential partners ”.
Why, then, has François Hollande been so affirmative? Did he realize the scope of its release, when Dassault is targeting two new contracts in India (114 fighters for the Air Force, 57 for the Navy)? The former president seems above all to have wanted to defend himself from a possible accusation of conflict of interest. Part of the Indian press had indeed brought together the sale of Rafale in India, the choice of Reliance as a partner, and the fact that the Indian group had partially financed in 2016 a film by Julie Gayet, companion of the former president. By asserting that Reliance had been imposed by the Indian government, François Hollande probably wanted to nip this beginning of controversy in the bud. He unfortunately relaunched another one, a hundred times bigger. “A former president shouldn’t say that,” quips an industrialist.
The former head of state himself quickly operated a rather pitiful back-pedaling. Asked by AFP on the supposed pressures of the Indian government so that Reliance is the partner of Dassault, François Hollande kicked in touch, assuring that he was “not in the know” and that “Dassault is only able to say it ”. A speech significantly different from that delivered to Mediapart, but which had little echo in the general hubbub.