Government still hopeful of Eurofighter deal with UAE

LONDON Tue Mar 20, 2012 2:11pm GMT

A British Eurofighter EF-2000 Typhoon takes off from Gioia del Colle NATO airbase in southern Italy March 22, 2011. REUTERS/Giampiero Sposito

A British Eurofighter EF-2000 Typhoon takes off from Gioia del Colle NATO airbase in southern Italy March 22, 2011.

Credit: Reuters/Giampiero Sposito

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LONDON (Reuters) - European defence group Eurofighter is still in the running to sign a multi-billion dollar deal for fighter jets for the United Arab Emirates, ministers said on Tuesday, following reports that France is close to clinching the contract.

The Gulf Arab state had been expected to reach a $10 billion (6.3 billion pounds) agreement with France's Dassault (AVMD.PA) last year, but the talks faltered after the UAE called the proposed terms "uncompetitive and unworkable".

A French newspaper reported in February the Dassault deal was back on, with the UAE ready to buy 60 of its Rafale jets in March or April.

That would be another boost for the French company after India gave it preferred bidder status for a fighter deal.

However, two British ministers said they still hoped to be able to persuade Abu Dhabi to choose the Eurofighter Typhoon, built by a consortium from Britain, Germany, Italy and Spain.

Asked if there was still a chance of a deal, Trade and Investment Minister Stephen Green told Reuters: "I certainly think there is a real possibility, (although) there is a significant competitor, as we all know.

"There has been a lot of ministerial engagement," he added on the sidelines of a meeting of business leaders aimed at boosting Britain's trade links with the UAE in sectors ranging from defence and infrastructure to health and technology.

Gerald Howarth, minister for international security strategy, said the UK government continued to back Eurofighter's campaign in the UAE, an ally of the United States and one of the world's biggest oil exporters.

"There is real hope for substantial partnership should the UAE select the Typhoon," he said. "It is now a real possibility thanks to both the intervention of the prime minister and of course the response from the UAE."

Prime Minister David Cameron visited the UAE shortly after taking power in 2010. Britain hopes manufacturing and exports will help to kickstart its sluggish economy, improve the trade balance and ease the pain of public spending cuts.

Eurofighter faces tough competition for contracts from Dassault as well as Lockheed's (LMT.N) F-35 fighter and Boeing's (BA.N) F/A-18 Super Hornet.

The Eurofighter is built by Britain's BAE Systems (BAES.L), Finmeccanica (SIFI.MI) of Italy and European aerospace group EADS EAD.PA on behalf of Germany and Spain.

Declining Western defence budgets have made companies more reliant on orders from Asia and the Middle East.

BAE Systems said Britain and the UAE had the best chance in a generation to reach a deal that would help both countries.

"We see Typhoon as a potential catalyst not only in the defence relationship but in the industrial relationship," Alan Garwood, group business development director, told the meeting.

(Editing by David Cowell)