A Questionable Statement Which Circumstances & Facts Demolish: Arun Jaitley’s note on Rafale

Gandhinagar: Presented below is the yet another note by Finance Minister Arun Jaitley ( who had been Defense minister too for quite a long time during present term of BJP led NDA government in Centre) on Rafale. Also presented below are other notes on Rafale published by Shri Jaitley during this year.

A Questionable Statement Which Circumstances & Facts Demolish

23 September 2018

A controversy is sought to be created on the basis of a statement made by the former French President Hollande, that the Reliance Defence ‘partnership’ with Dassault Aviation was entered at the suggestion of the Indian Government. In a subsequent statement the former President has sought to suggest that Reliance Defence emerged on the scene after the agreement with the Indian Government was entered into. He has, in a subsequent statement, said that he is ‘not aware’ if Government ever lobbied for Reliance Defence and that ‘the partners chose themselves’. Truth cannot have two versions.

The French Government and M/s Dassault Aviation have categorically denied the correctness of the former President’s first statement. The French Government has stated that the decision with regard to the offset contracts of Dassault Aviation are taken by the company and not the Government. Dassault Aviation itself has suggested that they have entered into multiple contracts with several public sector and private sector companies with regard to the offset contracts and the decision is entirely theirs.

Without commenting on the correctness or otherwise of a controversy in the French media, it may be mentioned that the former French President, Hollande, is countering statement made against him with regard to a conflict of interest in his dealing with the Reliance Defence.

The accuracy of the statements made by the individuals may be questioned but circumstances never lie. This is evident from the following facts:

There is no ‘partnership’, as suggested by the former President, with regard to the 36 Rafale aircrafts to be supplied by Dassault Aviation to the Government of India. It was a Government to Government agreement under which the complete weaponised aircrafts are to come to the Indian Air Force. No manufacturing is to be done in India. It is, therefore, erroneous for anybody to suggest that there is a ‘partnership’ in the supply of the 36 Rafale aircrafts.

M/s. Reliance Industries Ltd., in February, 2012, had entered into an MoU with Dassault Aviation. This was reported by the PTI on 12.2.2012. This was at a stage when the contract relating to 126 Rafale aircrafts, of which 18 were to be manufactured in France and 108 in India, was at an advance stage of consideration by the UPA Government. Rahul Gandhi’s misplaced criticism could equally apply to the 2012 MoU.

The offset contract ensures investment by the original equipment supplier i.e. Dassault Aviation, in India, in as much as they make purchases from Indian companies to the extent of fifty percent (in this case). The choice of the offset partner under the 2005 offset policy is of M/s Dassault Aviation and they have selected several public and private sector companies to make the supplies.

The offset partner is selected entirely by the Dassault Aviation, the original equipment manufacturer, and neither the French Government and nor the Indian Government has any say in the matter.

It is no coincidence that on 30.8.2018 Shri Rahul Gandhi had tweeted that “Globalised corruption. This #Rafale aircraft really does fly far and fast! It’s also going to drop some big bunker buster bombs in the next couple of weeks.”

The former French President’s first statement rhymes with Rahul Gandhi’s prediction.

The Congress Party’s official handle on 31.8.2018 had carried the tweet of one of its leader “It is evident that Anil Ambani bribed President Hollande through his actor-partner to get the Dassault partnership.” For the Congress Party to allege that a former President had been bribed by an Indian business group and then use him as a primary witness, particularly when he is facing criticism for an alleged conflict of interest within his own country.

The former French President’s first statement that the Indian business group’s name was proposed by Government of India has now been substituted by him to the effect that the suggestion he is ‘not aware’ of the Government of India ever lobbied for Reliance Defence. He further said that the ‘partners’ chose themselves (AFP Report dated 22.9.2018).

Rahul Gandhi has made an absurd suggestion that the interest of Indian soldiers has been compromised with. By whom? The UPA which delayed the acquisition which would have added to the Military’s combat ability or the NDA which expedited the same at a lower cost.

The conclusion

One Reliance Group was a part of this deal since 2012. It dropped out of defence production. The other Reliance Group was already in defence. They are not partners in the Rafale deal. They have no contract with either Government of India or Government of France. They were not selected as one of the many offset partners by any Government. ‘The partners (Dassault and Reliance) selected themselves’ as former President Hollande now says. This contradicts his first questionable statement which the French Government and Dassault have denied. The facts contradict the same. His second statement in Montreal, Canada to AFP makes the veracity of his first statement even more questionable.


Earlier notes of Jaitley on Rafale

15 Questions that Expose Congress Party’s Falsehood on Rafale

29 August 2018

Why these questions?

Considering the security environment around India, the highest standards of defence preparedness are required. After the Kargil experience, the Armed Forces and the Raksha Mantralaya were of the opinion that combat ability of the Indian Air Force to strike at targets needs to be radically improved. This need was first recorded by the Raksha Mantralaya in the year 2001.

Considerations of the national security demanded that the IAF has the best available aircraft with the appropriate weaponry loaded on it. In principle approval for acceptance of necessity of procurement of 126 replacement aircrafts was recorded by the Raksha Mantri way back on 1st June, 2001. After the UPA Government came into power, the Defence Acquisition Council (DAC) approved the Acceptance of Necessity (AoN) for procurement of 126 medium multi-role combat aircrafts. An aircraft without weaponry is of little use in a war. It is only a flying instrument. It adds to the combat strength of the forces only when it is loaded with the requisite weaponry, which enables it to strike targets. The UPA Government issued a request for proposal on 28th August, 2007 and found two vendors, viz., M/s Dassault Aviation and M/s EADS to be compliant to the RFP requirements. It took the UPA five more years to commence the negotiations and in January, 2012 the Contract Negotiation Committee (CNC) determined Dassault Aviation to be L1.

For reasons best known to the UPA Government, on 27th June, 2012, the deal was directed to be re-examined, which effectively meant that the entire eleven-year exercise was abandoned and the process was to be undertaken afresh. India’s squadron strength was depleting because of age. This slow and casual approach of the UPA Government seriously compromised national security requirements.

The NDA approach

On 10th April, 2015, the Government of India and the French Government issued a joint statement where India decided to procure 36 Rafale aircrafts from the French Government on terms better than the ones conveyed by Dassault in the L1 bid of 2007. The same was approved by the DAC on 13th May, 2015 and finally the agreement, after a detailed procedure, was signed on 23rd September, 2016.

The false campaign

A false campaign based on untruth has been launched by the Congress Party casting a cloud on the Inter-Governmental agreement. The principal arguments of this campaign are the following:
(i) The NDA Government paid higher price than what the UPA would have paid if the deal would have completed on the basis of the 2007 offer of Dassault.

(ii) Proper procedures such as negotiations by the Contract Negotiation Committee and approval of the Cabinet Committee on Security (CCS) were not obtained.

(iii) A private industrialist in India was favoured and the interest of public sector undertaking was compromised.

Each one of the above issues raised is based on complete falsehood. It is expected from national political parties and its responsible leaders to keep themselves informed of the basic facts before they enter a public discourse on defence transactions. The Congress Party and its leader, Shri Rahul Gandhi, are guilty on three counts:

(i) The UPA delayed the deal by over a decade and seriously compromised national security.

(ii) Every fact that Shri Rahul Gandhi and the Congress Party has spoken on pricing and procedure are completely false.

(iii) Its effort of raising these issues is to further delay a defence procurement so that India’s defence preparedness further suffers.

The questions

I have, therefore, decided to ask the following questions to the Congress Party and its President. Needless to say that if replies are received in the public space or even if there is an issue diversion and no reply is received, I would be constrained to come out with further specific facts which establish truth as a victim of Shri Rahul Gandhi and his party merely peddling his falsehoods. Needless to say that I am constrained by the secrecy clause, which exists in the Contract and whatever I ask or respond to would be constrained by that limitation. My question to Shri Rahul Gandhi and his Party are as follows:

On Delay

(1) The UPA was a Government which suffered from a decision- making paralysis. Do you agree that the delay of over one decade was only on account of the incompetence and indecisiveness of the UPA Government?

(2) Did this delay seriously compromise national security? Is not the medium multi-role combat aircraft required by our forces to identify and strike at targets particularly when two of our neighbours have already enhanced their strength in this area?

(3) Was this delay and eventual abatement of the purchase by the UPA based on collateral considerations as had been witnessed in earlier transactions such as the purchase of the 155 mm Bofors gun?

Unsure of facts

(4) How is it that Shri Rahul Gandhi quoted a price of Rs.700 crores per aircraft in Delhi and Karnataka in April and May this year? In Parliament, he reduced it to Rs.520 crore per aircraft, in Raipur he increased it to Rs.540 crores; in Jaipur he used the two figures – Rs.520 crores and Rs.540 crores in the same speech. In Hyderabad, he invented a new price of Rs.526 crores. Truth has only one version, falsehood has many. Are these allegations being made without any familiarity with the facts of the Rafale purchase?

(5) Is Mr. Gandhi or the Congress Party aware of price comparison? Is Mr. Gandhi aware of the aircraft price, which was quoted in 2007 in the L1 bid? Is he aware that there was an escalation clause, which by 2015 when the NDA struck the price deal, would have further escalated the price? Would not the escalation clause have continued to escalate the price till each of the aircraft was supplied? Have the significant exchange rate variations between Rupee and Euro during the same period been considered?

(6) Is he aware of the fact that if the basic aircraft price on which UPA was to purchase the aircraft along with the escalation clause is compared at the price with the better terms on which the NDA Government signed the deal. The basic aircraft price itself is 9% cheaper under the NDA than it was under the UPA?

(7) Can Shri Rahul Gandhi deny that when the add-ons such as India-specific adaptations, weaponry, etc. are installed on the basic aircraft, the UPA price, which was mentioned in the 2007 L1 offer, would be at least 20% costlier than the more favourable price negotiated by the NDA?

(8) Can Shri Rahul Gandhi and the Congress Party deny if the total contract cost, that is, basic aircraft plus add-ons, including weaponry, etc., Indian adaptations plus future supplies and maintenance are all added, the NDA terms become far more favourable than the 2007 L1 offer?

Role of private industries

(9) Can Shri Rahul Gandhi and the Congress deny that the Government of India has no contract whatsoever with any private industry in relation with the Rafale aircraft supplies? In fact, 36 of the Rafale aircraft with their Indian adaptations are going to be sent to India and there is no manufacturing of these 36 aircrafts in India.
(10) Any Original Equipment Manufacturer (OEM) under the offset policy of the UPA can select any number of Indian partners, both from the private sector and the public sector, for offset supplies? This has nothing to do with the Government of India and, therefore, any private industry having benefitted from the Government of India is a complete lie. Can Shri Gandhi and his Party deny this?

On procedure

(11) Are Shri Gandhi and his Party aware of the fact that there are two ways of acquiring a defence equipment, i.e., either by competitive bidding or by an Inter-Governmental Agreement?
(12) Can Mr. Gandhi and his Party deny that the UPA Government in 2007 itself had shortlisted the Rafale as technically- acceptable and L1 in price competition?
(13) Can Shri Gandhi and his Party deny that considering the urgency of the defence requirement, the Government of India and the French Government agreed to execute the supply of 36 Rafale aircrafts at terms better than the 2007 offer of the UPA?
(14) Can it be denied that both the Price Negotiation Committee and the Contract Negotiation Committee negotiated for 14 months before concluding the deal?
(15) Can it be denied that before the deal was executed, the Cabinet Committee on Security approved the transaction?
I am asking the above questions and I hope Shri Rahul Gandhi and the Congress Party would respond immediately.


The Rafale Falsehood Repeated

8 August 2018

I have seen today another attempt at maligning the Government by spreading falsehood and paddling fabricated facts regarding the 2016 Inter-Governmental Agreement for the procurement of Rafale fighter aircraft. It is even more reprehensible that this fresh attempt to tarnish the image of the Government should come less than two weeks after the miserable failure of a similar effort in the Parliament.

There is not a grain of truth in the wild allegations repeated today nor anything substantiating in the purported facts and voluminous documents marshalled to corroborate the baseless accusations.

The unsubstantiated allegations against the Government constitute nothing but reprocessed lies by forces increasingly desperate to prove their relevance. The Government had already responded effectively to each and every distortion and misinformation on the issue.

Meanwhile, those raising alarm about the alleged danger to national security ought to realise their responsibility and refrain from politicising for narrow individual ends those very matters pertaining to defence of the nation that were consistently ignored by them and by those with whom they sympathise.


The Congress Party and the Fake Issue of Rafale

24 July 2018

Congress Party’s history of creating fake issues

In 1989, there was an outrage in the whole country against the Congress Party and its leadership on the Bofors issue. The Congress Party’s strategists invented a counter strategy of diversion by creating a fake issue. A bank account in St. Kitts was created in the name of Shri V.P. Singh’s son so that the Congress could now have a face saving argument – if we are corrupt, so are you. In 1999, when the NDA led by Shri Atal Bihari Vajpayee, in the backdrop of the Kargil conflict, was likely to sweep the poll, and the Congress Party was faced with a massive defeat, it manufactured an issue of sugar export to Pakistan. Some two dozen press conferences on the issue were organised to question the Government’s commitment to nationalism. The truth of the allegation was that a mid-level unknown Chandni Chowk trader had been exporting an OGL item -sugar to Pakistan. Needless to say that the Congress lost the election badly. Falsehood fell apart.

The Congress party and the present political situation

– The Congress Party realises that there a danger of the next election becoming a referendum on Prime Minister Narendra Modi’s performance. The popularity gap between the Prime Minister and his competitors is very wide.

– The Congress Party is either non-existent or a poor third or fourth in States like Uttar Pradesh, Bihar, West Bengal, Tripura, parts of North-East, Odisha, Andhra Pradesh, Telangana, Delhi and Tamil Nadu. These States account for 50% of the Lok Sabha seats. Of the balance seats, if it enters into some form of alliance, it may have to concede seats in several States to its allies. It is, therefore, faced with the prospect of effectively contesting only about 225 seats where it will face a direct clash with the BJP.

– If the first part of the Congress Mukt Bharat was scripted by the BJP, the federal front is more than eager to script the part-2 of the same. Its message to the Congress is clear – ‘you will have to support us; the other way is not possible.’ For the Congress the best case scenario is to become a tail-ender of the federal front and concede to it a large political space.

– Many in the Congress realise that 2019 is not their election. They should try and improve but concentrate as a priority on 2024. However, mid-level leaders of the Congress in the age group of 65 to 74 are unwilling to wait for 2024. They know that 2019 is their last chance and they will probably be time-barred by 2024. They are quite willing for a tail-ender’s role.

– Its attack on the economy are failing since India, under the Modi regime, continues to be the fastest growing major economy in the world. The Congress Party’s strategy of consolidating arithmetic against Prime Minister Modi’s chemistry is a double edged weapon for the Congress. It can push the Congress to the margins with the federal front occupying the opposition’s space.

The Congress strategy

– What does the party do if its leader has inherent and inbuilt limitations? It had been stigmatised by corruption and in contra-distinction Prime Minister Modi has led a scam free Government. Its strategy, therefore, is one of distortion. If you have no issue, manufacture one. Hence the Rafale’s fake controversy.

– The Congress’s strategy is, therefore, two-fold. It has manufactured the issue of the Rafale deal. The issue is failing to cut much ice. It’s a Government to Government agreement with no private group involved. It involves national security and it is the armed forces which have preferred this aircraft for its improved combat ability. The UPA Ministers also never disclosed the cost breakup of the weaponry because that is not in larger national interest. The supplier/ OEM manufacturers of defence equipment appoint their own offset manufacturers. The Government has nothing to do with it. The truth always holds together. It is falsehood that falls apart. So when Rahul Gandhi’s statement that President Macron told him that there is no secrecy pact got smashed into pieces, the next day the Congress Party shifted the Rafale issue to other extraneous grounds.

– The second strategy of the Congress Party is directed against the federal front. By attacking the BJP on certain issues, it is engaged in an implied battle with the federal front in order to reclaim the minority vote. Comparison of Hindus with ‘Taliban’ and phrases such as ‘Hindu Pakistan’ are intended to help it against the federal front to reclaim the minority vote. This strategy also is likely to backfire. As equal participants in the Indian electoral process, the minorities have a constitutional right of a vote. But so does the majority. By redefining secularism as a euphemism for majority bashing, the Congress Party is antagonising the majority against itself. This will always happen in an election where you have an inadequate leader and no real issue.