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UPDATE 1-French arms exports highest since 2000

Published 09/28/2009, 07:54 AM
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(Corrects ranking of French arms export markets to show Morocco second and Saudi Arabia third)

* Shift away from heavy reliance on Middle East

* Brazil tops list of French arms export markets

* Report coincides with new U.S. air tanker contest

(Recasts, adds details)

By Tim Hepher

PARIS, Sept 28 (Reuters) - Deals with Brazil, Saudi Arabia and Morocco pushed French arms sales up 13 percent last year to their highest level since 2000, the government said on Monday.

The increase follows a drive under President Nicolas Sarkozy to support defence export companies that, according to the government, directly or indirectly provide 50,000 jobs in France.

French companies took new orders worth 6.6 billion euros ($9.7 billion), strengthening France's grip on fourth place in the league table of global arms exporters behind the United States, Britain and Russia, the defence ministry said.

France has about 7 percent of the global arms market, which is shifting away from a heavy reliance on the Middle East.

Sarkozy this month led an arms export delegation to Brazil, which finalised a deal to buy four conventional submarines and is pondering whether to buy French Rafale warplanes, built by Dassault Aviation.

"We are getting away from the classic idea that France only exports to the Middle East and we are doing what is necessary to respond to the needs of Europe, Asia and Latin America," defence ministry spokesman Laurent Teisseire told a news briefing.

Brazil and France signed a defence accord in December last year worth up to 8.6 billion euros, including the supply of 50 EC725 Super Cougar helicopters built by EADS subsidiary Eurocopter.

France had seen its defence exports come under pressure for most of the decade as it struggled to repeat the success of Dassault's previous generation of Mirage warplanes with the multi-role Rafale, which has not yet found a buyer.

France sold weapon systems worth 8.2 billion euros in 2000.

Morocco was France's second-largest client in 2008 with a contract to buy FREMM frigates built by a state-controlled company 25-percent owned by electronics firm Thales.

France suffered an embarrassing setback at the end of the previous year when Morocco snubbed a French offer of Rafales in favour of Lockheed Martin F-16 fighters, prompting Sarkozy to order a shake-up of France's arms export system.

In third place last year was Saudi Arabia, thanks in part to a deal to buy air refuelling tankers converted from passenger planes built by EADS subsidiary Airbus.

Details were presented to the French parliament as EADS and U.S. partner Northrop Grumman embarked on a fierce battle with U.S. contractor Boeing to secure a far bigger order of mid-air tankers for the U.S. Air Force.

Washington published draft bidding rules on Friday for a contest now said by a senior U.S. military official to be potentially worth as much as $50 billion.

Shipments of arms sold in previous years fell in 2008 to 3.17 billion euros from 4.6 billion in 2007, but the figures are not final because of bureaucratic delays in compiling data.

"The orders we are seeing now will lead to an increase in deliveries in future years," Teisseire said. ($1 = 0.6810 euro) (Editing by David Holmes and Simon Jessop)

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