France Boom Business

By Richard Lacayo

When French President Francois Mitterrand attended the biennial Paris Air Show in 1981, many of the bombs, cannons and rockets had to be hidden, and advanced Mirage 2000 jet fighters streaked overhead stripped of their air-to-air missiles. Things were different when Mitterrand visited the current air show and viewed the lethal products of France's armaments industry, from a variety of missiles to armed Mirages. The episode was evidence of how Mitterrand and his ruling Socialists have gone from criticizing France's arms trade as unprincipled to promoting a business that is sorely needed to boost exports. Declared Mitterrand last week: "I don't think that human rights are flouted when a country tries to protect its independence. It is, perhaps, the opposite."

French arms sales are booming today. Following a decline in 1983, export orders more than doubled last year, to about $6.66 billion, a record, and this year's orders show promise. "The government's instructions to the defense sector are sell, sell, sell," says a Western diplomat. France is now the world's third largest arms dealer, behind the U.S. and the Soviet Union.

The Socialists are promoting the weapons industry because armaments are an important source of earnings, accounting for nearly 5% of all French exports in 1984. Paris competes for sales by offering easy-term loans and by allowing countries to assemble aircraft, for example, with parts shipped from France. Arms manufacturing provides jobs, directly or indirectly, for 400,000 people, at a time when unemployment stands at 10.2%.

North African and Middle Eastern countries account for more than 76% of French arms revenues. Much of last year's spurt in orders came from a $3.22 billion deal with Saudi Arabia for surface-to-air missiles and an oil-for- aircraft arrangement that will send 18 Mirage 2000s to the United Arab Emirates. French arms also have been sold to Iraq for use in the war with Iran. Last year France probably sold more arms to the U.S. than it bought, and reportedly won two contracts worth $83 million to supply 4,000 runway penetration bombs to the U.S. Air Force. French officials were expected to announce soon that the first of a $3.3 billion order of 40 Mirages had arrived in India.

According to the U.S. Congressional Research Service, France ranked second only to the Soviet Union in arms orders from the Third World in 1984. Marcel de Picciotto, vice president of Matra, a French arms company, says that "any country that doesn't want to have its strings pulled by Washington and Moscow can come here without fear of meddling." But French government officials bristle at charges that the trade is opportunistic, or that they put weapons in the hands of radical governments. Says Francois Heisbourg, a former adviser to the Defense Ministry: "This country could probably be making several billion dollars a year more if it were willing to sell to just anybody." Paris claims to sell no weapons to South Africa, and direct deals with Libya, Chile and Iran have been ended.

After the Paris Air Show closes, the weapons bazaar moves on this week to Satory, a military field near the capital that since 1967 has provided what is probably the world's largest shopping display of ground-force equipment. Some 60 foreign delegations will stroll across lawns studded with tanks, guns and all manner of specialized battle gear. For the first time the French will also be taking potential buyers to the Champagne region to watch French troops demonstrate night-warfare tactics, complete with parachute drops and tank assaults. With business better than ever, France is dressing up the store.

With reporting by Adam Zagorin/Paris