Washington has ended up authorizing the exportation of American electronic components integrated in the satellites sold to Abu Dhabi. Problem: The contract signed last year for more than 700 million euros must be renegotiated.
Business is business. Although Barack Obama has very well increased the testimonies of friendship toward François Hollande and France, the United States has not expressed any sentiments in the commercial field. Latest example: The "Falcon Eye " contract for spy satellites sold last July by the European Aeronautic Defense and Space Company* (EADS) and Thales Alenia Space for more than 700 million euros to the United Arab Emirates will have to be … renegotiated. Because Washington has done everything [to make it so].
The contract has, however, been well and truly signed by the CEOs of two French industrialists, in the presence of Jean-Yves Le Drian and Sheikh Mohammed bin Zayed Al Nahyane, crown prince of the kingdom and great patron of the defense. The French minister for defense has a lot to do with it, he who has had to make several trips there to wrest the case facing Lockheed Martin, supported as it should be by the American administration. Beyond its amount, this contract has signaled the graceful return of France to this country in the field of armaments. The party was short-lived.
The problem came from electronic components used in manufacturing the satellites, which were manufactured in the United States. Not that these components bear the slightest sensitivity — they are even completely banal, Les Echos assures you. It still remains that they are on the list of the so-called ITAR (International Traffic in Arms Regulation), the name of the set of American regulations that submits their export to Washington for authorization, and it would not be economically profitable to produce them in Europe to avoid this constraint.
The French obviously knew that they needed this authorization. But they never visibly expected that the White House would take so much time to give the green light. "As soon as the ITAR components come into play, it requires efforts of conviction regarding the United States," summarizes an expert on the issue. The matter is so sensitive that it was sent back to the Elysée — until the U.S. administration broke the good news on the occasion of François Hollande's state visit.
New Negotiations To Predict
Everything would be back to normal, except that in the time it took to get the authorization, the date of validity of the contract, signed in July — which even included a safety margin to take the ITAR regulations into account — has been pushed back. Abu Dhabi has therefore logically terminated the contract, so we will have to sign a new one. Even if it takes time, this would be the case: All financial and local administrative processes having already been validated, the probability that Abu Dhabi launches a new call for tenders is low. Except the Emiratis, whose reputation as fierce negotiators has already been proven, will certainly take the opportunity to extract additional concessions.
Therefore, Jean-Yves Le Drian may have to work up a sweat again. In the meantime, the United States has shown all its power on this issue. Not only have they forced the French to restart a round of negotiations, which is always a risk. Worse, they have reminded all countries, especially Saudi Arabia, who wants to develop spy satellites, that they call the shots — especially as this market is expected to strongly grow to such an extent that some evoke a new El Dorado of space, for which France has a rare skill. The first to win contracts will therefore be in a position of strength.
*Editor's note: EADS is now called the Airbus Group.