- The Washington Times - Wednesday, April 16, 2003

WASHINGTON, April 15 (UPI) — Condoleezza Rice, President George W. Bush's national security adviser, is reliably said to have summarized post-war policy to the non-allies with the phrase: "Punish France, ignore Germany, forgive Russia."

It makes a pungent sound bite, while begging several questions. How, for example, does one "ignore" the world's third-largest economy, when German finance ministers take a prominent place at those regular G-7 meetings that are the nearest we come to a system of global financial governance? And "forgiving" Russia sounds hollow when the one hard proposal so far to come from victorious Washington is that France and Russia should write off the $20 billions they are owed by Saddam Hussein's regime.

Oddest of all is the idea that France can and should be punished. It makes little sense to take steps against, for example, Evian mineral water when it is 51-percent owned by Coca-Cola. And raising tariff walls against Airbus would also hurt the loyal British, who are partners in Airbus, and also hurt Boeing, who is Airbus's biggest contractor (as Airbus is Boeing's biggest contractor).

Almost any trade sanction against France would either be illegal under the rules of the World Trade Organization or would hurt France's partners in the European Union, like Britain, Italy and Spain, who backed the American position on Iraq.

The one idea that has been circulating around the Pentagon that might work, and is scaring French diplomats, is for the United States to let it be known to all its friends, clients and customers around the world that any future purchases of French weaponry would be frowned on by Washington.

This could hurt Paris, not because the sums are great but because the industry is already in serious decline. France last year sold weapons worth $1.2 billion, about 15 percent of U.S. arms exports, but that was a sharp fall from the $43.1 billions of the year 2000. The French arms industry is in trouble.

The 6,200 workers at state-owned Giat Industries were warned last week of new cuts that are likely to drop jobs by more than half. In 1990, Giat employed 18,000 Frenchmen, and its Leclerc tanks and Famas assault rifle were seen as reliable cash cows for the future. Not so. The French government is having to fork out $1 billion in new subsidies to keep Giat alive, after the fat $3.5 billion export contract of Leclerc tanks to the United Arab Emirates ran into quality problems.

Then comes Dassault, the French aviation group, which is being slowly squeezed out of the global market by U.S. pressure. Most of its profit these days comes from its Falcon business jet, accounting for almost two-thirds of sales revenues. Its Mirage-2000 and Rafale warplanes are slumping in the face of American competition.

Serge Dassault, the company chairman, denounced Poland's decision last year to buy American F-16 fighters rather than the Mirage 2000 to be "scandalous, making a mockery of Poland's desire to join the EU. "Either Poland comes to Europe and buys the Mirage 2000 or else it remains outside and buys F-16s. One can't do both," he said.

Dassault's loss of the $3.5 billion Polish deal followed the decision by South Korea to buy F-16s, even though the Dassault contender had won the competition run by the South Korean Air Force among the various warplanes competing for the $4.2 billion deal. Again, Dassault was furious at being "cheated" by U.S. political pressure.

The point is that the French defense industry reckons it has already been punished by the Americans long before the latest row blew up at the United Nations. Indeed, one reason why the French have been so difficult diplomatically is their sense of grievance at American bullying — not least in the highly competitive arms markets.

This is about to get a whole lot worse. The Pentagon officials who insist on making Paris pay are looking steely-eyed at the world's fattest arms market for the immediate future, India, which seems poised to modernize its air force with as many as 120 Mirage 2000-5s, and to upgrade its navy with eight French-designed Scorpene submarines. The combined deals are worth over $10 billion. The French submarine and warplane industries would be hard put to continue alone as French champions without them.

How much and how hard does the Bush administration want to punish the French? The way to find out is to watch what happens to the arms deals with India. They are France's sensitive spot.

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