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Analysis: European defense contracts

By LEANDER SCHAERLAECKENS, UPI Correspondent

BRUSSELS, Feb. 25 (UPI) -- Sarkozy eyes elite EU defense force

Once the European Union's Lisbon Treaty has been ratified by all countries, French President Nicolas Sarkozy would like to use a clause in it to create a 60,000-strong, high-level intervention force with the EU's five other biggest nations, according to European Voice.

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The participating nations -- France, Germany, Italy, Poland, Spain and the United Kingdom -- would have to adhere to a minimum defense spending level of 2 percent of their respective gross domestic products. The money would be spent through a common procurement program.

However, at the moment, only France and Britain meet the 2 percent requirement. Spain is the furthest from the target -- it spent approximately 1.18 percent of its GDP on defense in 2006.

Sarkozy envisions the countries sharing their foreign military bases and the new force becoming the "European pillar" of NATO. Sarkozy and British Prime Minister Gordon Brown will discuss the idea during a summit between their countries at the end of March.

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Russia breaks national post-Soviet defense sales record

Russia has announced that its total arms exports in 2007 amounted to more than $7 billion, setting a post-Soviet Union record, Defense News reports.

Of that $7 billion, about $6.2 billion was earned by government-controlled Rosoboronexport. Reports estimate Rosoboronexport's order backlog between $25 billion and $32 billion.

Sixty-one percent of the income was generated by aircraft and helicopters. Weapons and land equipment brought in 21 percent. The additional income was made by air defense systems (10 percent) and navy sales (8 percent), according to the Center for Analysis of Strategies and Technologies.


Algeria returns inferior Russian fighter jets

Fifteen MiG-29 fighter jets, purchased by Algeria in 2006 in return for a cancellation of Soviet-era debt to Russia, are being returned to Russia because of their poor quality, according to Kommersant.

Russia agreed to take them back on the condition Algeria replace the fighter jets with the MiG 29M2 or MiG-35.


BAE enters Indian artillery contract race

BAE will be joining the race for a $2.5 billion ultralight artillery guns contract with the Indian army, according to the Pakistani Daily Times.

Others believed to be in the race for the highly coveted contract are several Russian companies and the Israeli Soltam Systems. The race is said to be wide-open with no leaning from the Indian military yet apparent.

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The tender for 140 guns was opened in January. A second tender for 155 heavy guns is expected to be announced in March.

India is in the process of opening tenders for some $30 billion worth of modern equipment for its aging army inventory. The process is expected to be complete by 2012.


BAE teams with DSME for six fleet tankers for U.K. RFA

BAE and Daewoo Shipbuilding & Marine Engineering of South Korea have entered a joint bid for the $1.57 billion contract to supply Britain's Royal Fleet Auxiliary with six Fleet Tankers, according to Jane's.

The tender is part of a larger Military Afloat Reach and Sustainability program that will open another $3.34 billion in tenders for two new fleet support ships and three joint sea-based logistics vessels.

Under the agreement, BAE would be the lead contractor and manager, BMT would handle design and DSME would build the ships in South Korea.

So far, the BAE-DSME combo is the only one to apply for the contract, but another dozen or so applications are expected. Deliveries are expected to start in 2012.

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