France gets military base in Gulf

President of the United Arab Emirates Sheikh Khalifa bin Zayed Al Nahyan (L) welcomes French President Nicolas Sarkozy at Abu Dhabi airport January 15, 2008.

ABU DHABI (Reuters) - France and the United Arab Emirates signed deals on Tuesday granting French troops their first permanent base in the Gulf, across the water from Iran, and agreeing to cooperate on a peaceful nuclear programme.

French President Nicolas Sarkozy, on a Gulf tour aimed at securing billions of dollars worth of contracts for French firms, has already offered Saudi Arabia, the world's biggest oil exporter, help in developing civilian nuclear energy.

On Monday, French power giant EDF signed a memorandum with Qatar "to engage discussions on cooperation in the areas of nuclear power production and renewable energy generation", according to a document made available to Reuters.

Sarkozy, who has already signed civilian nuclear deals with Arab oil producers Algeria and Libya, has made no secret of his view that Muslim and Arab states have a right to atomic power.

Tuesday's agreements set a framework for future cooperation on nuclear energy and allow France to establish a military base with an official capacity of 400-500 people in the UAE, which lies across a short stretch of Gulf waters from Iran, a document distributed by Sarkozy's office said.

The base comes as part of a 1995 defence agreement between the two countries and will eventually include air as well as infantry and naval forces. A French military official said the base would be fully functional in 2009.

"As part of this accord's extension, our UAE friends asked us to open a base ... which shows our friendship and strategic partnership with the UAE and is a signal to all that France participates in the stability of this region," Sarkozy said.

France's Total also confirmed on Monday it would develop two third-generation nuclear reactors in the UAE with Suez as its main partner and state-owned nuclear reactor maker Areva.

"This is the first time an inter-governmental nuclear accord of this importance has been signed in the Gulf and it is a very big development," Areva CEO Anne Lauvergeon said in Qatar.

No value was given for the UAE nuclear contracts but Lauvergeon said it would be "much higher" than the 4 billion euro figure that had been mentioned by Paris last week.

REGIONAL ARMS RACE?

The Gulf Cooperation Council -- a loose economic and political alliance of six Gulf Arab states -- has said it was studying a joint nuclear energy programme and has already been in touch with the U.N. atomic energy watchdog.

The GCC's plans raised concern of a regional arms race, with analysts saying the bloc wanted to match Iran's atomic programme. The United States suspects Iran is secretly aiming to develop nuclear arms, a charge Tehran denies.

The UAE lies near the sensitive Strait of Hormuz waterway, a major oil shipping route where U.S. ships had a close brush with Iran earlier this month.

Washington, whose Fifth Fleet is based in the Gulf Arab island of Bahrain, says Iranian boats aggressively approached three U.S. naval ships and that the incident almost led to an exchange of fire. Tehran has dismissed the incident as routine.

The UAE is talking to the International Atomic Energy Agency individually as well as with the GCC, a UAE official said.

"We are talking to France, several other countries and the (IAEA)," the official, who declined to be identified, said on Monday. "We are talking about how best to develop a safe, clean, peaceful and transparent nuclear programme."

The U.S.-allied UAE, like Saudi Arabia and Qatar, needs nuclear energy to meet rapidly rising demand for power and desalinated water, the official said. Electricity demand in the Gulf Arab state has rocketed, straining the country's power grid, as record oil revenues fuel economic expansion.

(Additional reporting by Simon Webb in Dubai and Francois Murphy in Paris; Writing by Lin Noueihed; Editing by Ibon Villelabeitia)