PARIS Nov 28 (Reuters) - French industrialist Serge Dassault attacked a parliamentary move to buy unmanned military aircraft from the United States, saying it would cost jobs and stifle France's arms industry.
A French Senate committee voted last week to chop funding for Israeli Heron TP drones, which Dassault Aviation SA (AVMD.PA) plans to adapt for use by France's military in Afghanistan. It opted instead for the cheaper MQ-9 Reaper from General Atomics.
If approved, the move would overturn a decision in July by Defence Minister Gerard Longuet to favour the Heron TP from Israel Aerospace Industries on the grounds it would give France a step up in developing key drones technology.
The Senate foreign affairs and defence commission found the Israeli platform offered by Dassault would cost an extra 109 million euros, or 50 percent more than the U.S. alternative.
But Dassault, who sits in the French Senate as a member of President Nicolas Sarkozy's ruling conservative UMP party, said the decision to buy American would end up costing France more.
"We proposed the Israeli drone to meet an obvious gap in drones today," the 86-year-old head of the family group that includes Dassault Aviation SA (AVMD.PA) told Public Senat tv.
"That is just while we wait for a French drone. If we buy an American one, well then everything is screwed up and we'll spend more money, drive up unemployment and reduce exports - if that's what you want, I don't understand."
The number of jobless people in France rose in October to the highest in nearly 12-years in the latest sign of an ongoing deterioration in the labour market five months from a presidential election. [ID:nL5E7MS3ZD]
Israel and the United States dominate the technology for unmanned aerial vehicles and European defence companies are locked in a fierce battle for funds to develop a home-grown alternative from around the end of the decade.
Dassault Aviation is involved in a Franco-British effort together with BAE Systems Plc (BAES.L) to develop a future generation called Telemos, while European aerospace group EADS EAD.PA is struggling to win support for its rival, Talarion.
The immediate row is over a stop-gap purchase needed to meet shorter-term requirements from mid-decade. The debate has already dragged on for two years.
France's defence ministry weighed a choice between the Heron TP offered by Dassault, the U.S. Reaper reportedly backed by military commanders or an extension to the life of older Harfang drones supplied by EADS, also based on an Israeli platform.
The commission, whose findings were first reported by French magazine Challenges, said the Heron TP would cost 318 million euros instead of 209 million for the Reaper Block 5, expected to be delivered in 2015. It diverted the difference of 109 million euros towards other projects, including a new Harfang purchase.
The battle for drones funding has soured relations between EADS and the French government and put EADS directly at odds with Dassault Aviation in which it owns a 47 percent stake as a result of the complex history of French defence companies.
EADS and Dassault are also involved in bitter competition to sell fighter aircraft to India and the Arab Gulf.
Dassault's comments came as the French Senate prepared to vote on the 2012 French defence budget late on Monday. Funding must be discussed further by the lower National Assembly.
France has often been criticized by U.S. defence companies for blocking imports of U.S. systems to protect its industry. Longuet has said the country needs to develop vital technology. (Reporting by Marie Mawad, Elena Berton, Tim Hepher; editing by Andre Grenon)