Cover Story

Cover Story : Rafale deal – Mess by Politicians

by MK Shukla

For hundreds of years, and even today, wars are strategised and fought in the boardrooms of the large industrial-military complexes, mostly privately-owned. Such conglomerates, along with their well-funded think tanks, create convincing scenarios, which are palatable and immediately accepted by policymakers across the globe. The result: a constant trade in expensive equipment, and huge and regular billion-dollar deals, which grease the wheels and gears of the global corporate-military-political nexus. Rest assured, great wars are decided largely by great captains of industry, and only implemented by great generals.

There is an anecdote about a powerful American media owner who, when told by his journalist-photographer friend, that there was no war in a nation in South America, roared, “You give me the photographs, and I will give you a war.” The same is true about the attitude of global equipment suppliers, both government and private. ‘Buy the guns, tanks and planes from them, and they will give you a sure-shot war.’ While the logic of being prepared for any onslaught, any attack from an enemy, seems sound in theory, in practice the moment one is so armed, one subconsciously seeks a battlefield to test them, deploy them, and use them.


From the perspective of an equipment-maker, there are two other critical components, apart from the mechanical, electrical, electronics and computer-aided ones. Both relate to the capitalist greed for money and the mindset to spend money to earn much more. The first is the investment required to implant the seeds of impending wars among the political and military decision-makers. And nurture them with enough nutrients and chemicals. From these come the opportunities to earn unbelievable profits in terms of arms sales and purchases. A single deal, in many instances, can sustain a company, its township, and thousands of employees.

Once the deals are sealed, the grease has to be distributed among the scores of individuals and consultants, who made them possible. They oiled the various machineries involved in the decisions, they reduced the frictions between policymakers and government-military departments, and they rendered the smoothness and ease of inking the agreements. Even in inter-government purchases, these people need to be paid, even if the governments themselves are transparent and honest. And it’s not the main suppliers, who make these pay-offs. It is done by the hundreds of their vendors, situated in small towns and townships, with hundreds of employees. The vendors fudge the data, and money, and help the latter reach the right hands and accounts.

In the good old days, this was done through legal (and illegal) commissions, and hidden bribes. Despite the sellers’ commendable roles in selling equipment, the buyers had a huge say to decide the recipients. But once the investigating agencies became adept to trace such monies, even if the paper trail was complex as long as it was there (remember Bofors!), the route was changed. The new name of the game, at least one of the several names, is the “offset” clause. It’s no longer hip and cool to receive money, either in wads of cash or in secret bank accounts in global tax havens. It’s better to get vendor contracts in the form of offset clause, which allows local manufacturers in the buyer nations to make certain components and goods. To be frank, it doesn’t matter if the buyer nation is corrupt or not. Clause by clause, the offset goes to favoured companies, be it the Tata Group, Anil Ambani Group, and Baba Kalyani Group.

As someone once proclaimed ‘Military Keynesianism’ has “proved to be a bust”. ‘Military Extravagance’ had led to more wars, and depleted nations’ wealth. What is at work over the past few decades is a sense of ‘Military metaphysics’, which subconsciously and unconsciously favours wars, conventional and unconventional, real and rhetorical, which encourage nations to spend more and more, all the time, and through the decades. MK Shukla reports.

THE Bofors gun proved its efficacy and lethality in the Kargil skirmishes. And the Rafale will prove its undisclosed virtues in the battle for Tibet whenever that happens. But what about our virtuous politicians who invest so heavily in domestic politics, selecting candidates, wasting time and resources on campaigning and misguiding people, and raising funds by crook to win elections and rule the people, half of whom are more malnourished than people of sub-Saharan Africa.


The blacklisting of Bofors turned out to be a truly disastrous administrative and political decision…it set the worst administrative precedent in free India’s history—of blacklisting each and every foreign arms vendor if the slightest charge of corruption was made

When will India’s politicians prove their virtue by spending some time in understanding military matters and issues of national security?

Perhaps Never. Look at their track records.

As soon as Swedish Radio alleged on April 16, 1987, that Bofors bribed India’s politicians and defense officials to seal the $1.4 billion deal for the supply of 410 pieces of 155mm field howitzer to the Indian Army, the country’s politicians backed by a section of media set out to make the wildest allegations against the gun as well as ruling party members.

While their accusations against ruling party members could be ignored as essential components of electoral politics, their knowledge about the gun was suspect from the beginning to the end.

And the ruling party, whose feet was on fire, made no sensible effort to douse the fire. Instead of instituting a criminal inquiry and proceedings to uncover the truth, the Rajiv Gandhi administration opted for blacklisting Bofors—a move that compromised the Indian Army’s genuine requirement for advanced artillery systems for years to come. The logic that seemed to have prevailed over the administration was that the blacklisting of the firm would melt the corruption charge altogether. That never happened. Even in 2018, Congress’s rival BJP has found it politically lucrative to reopen the Bofors scam.

The blacklisting of Bofors turned out to be a truly disastrous administrative and political decision: it didn’t convince the opposition or the people of the non-involvement of Congress Party’s first family, but it did set the worst administrative precedent in free India’s history—of blacklisting each and every foreign arms vendor if the slightest charge of corruption was made against them.

AS wild allegations continued to fly thick and fast, the Rajiv Gandhi administration turned more defensive—a gesture that further convinced the opposition that the administration had something to hide.

To deal with the raging political storm, the Congress administration agreed to an inquiry into the matter by a Joint Parliamentary Committee (JPC). On August 6, 1987, the JPC was accordingly set up. Two years later, it submitted its report—finding nothing and revealing nothing.


So the opposition rejected it and kept the issue alive. It exploited it the whole hog to trounce the Congress Party at the hustings in November 1989. And its accidental Prime Minister Vishwanath Pratap Singh, who in his earlier avatar as Rajiv Gandhi’s Defense Minister had signed the Bofors agreement, barred Bofors on December 26, 1989, from entering into any defense contract with the GoI. At the same time, he also canceled the HDW contract. At one single blow, in his attempt to project himself as a ghost slayer, he compromised India’s security on land and high seas and laid to waste billions of dollars worth of infrastructure created with the taxpayers’ money to domestically produce Bofors howitzer and HDW submarines.

It wasn’t until 10 years later in the summer of 1999 that the GoI was shaken back into senses and lifted the ban on Bofors. The trigger was the June-July Kargil skirmishes in which the Indian Armed Forces were given a task—that any other army in the world could have justifiably defied—to dislodge Pakistani Army regulars from the icy heights of the Himalayas with their outdated infantry assault weapons. Faced with a lack of suitable weapons system, Indian Army commanders woke up and deployed the Bofors to pound the Pakistani positions and free its land from intruders.

The guns’ performance was so outstanding during that operation that the political leadership of the country was constrained to remove the official ban on Bofors.

In fact, the Army had maintained all through—ever since the Bofors scandal hit the headlines—that the gun met all their requirements and had no technical deficiency. And yet, it was the Indian Army that was made to pay the huge cost for the games that politicians gleefully played on the Bofors issue. Its artillery wing still remains critically weak.

The same Bofors saga is sought to be replayed again in 2018 against the Rafale fighter jet. The only difference is that the accuser this time is the Congress and the accused is the NaMo administration.

As in the case of Bofors, the accuser against the Indo-French Government-to-Government Rafale deal has no substantive point. But Rahul Gandhi and his cronies have been repeating the charges so often that one is reminded of the attitude and behaviour of the entire opposition on the Bofors deal. Having been badly trounced in the 2014 national election because of its corruption and love for scandals, the Congress Party has come to believe that it must act the same way as the opposition did and raise controversy on each and every issue, whether they are sustainable or not. It may be a bad p

olitical strategy, but one can’t deny the Congress its right to commit suicide, however criminal that move may be in the light of the emptiness gripping the country’s opposition space.

ARE the Congress Party’s points against Rafale substantive and credible?

Briefly, Team Rahul seems to question the price, propriety and offsets parts of the deal.

On price, it argues that the final agreed price represents a huge escalation and that the government’s claim of saving taxpayers’ money is a lie.

On propriety, it has made three points. The first is why the second bidder (L2), Eurofighter, was not played off against Rafale; the second is why the entire initial contract for the purchase of 126 units was dropped abruptly; and lastly, why the cabinet approval was not sought for the new deal, which involved no competition and reduced numbers.

On the implementation of the offset clause, the question raised is why Reliance, with ‘no experience in defense projects’, was favoured over Hindustan Aeronautics Limited (HAL).


However legitimate and plausible these questions may appear prima facie in political terms, they betray a complete lack of understanding of the government’s new and old defense procurement and acquisition policies and procedures. And, therefore, they smack of political malice and a complete contempt for the IQ level of the Indian people.

According to open-source information, the acquisition cost of 126 Rafale units during the UPA-2 regime was first put at $10.4 billion in January 2012. In April 2013, the cost escalated 50 per cent to $15 billion; and in January 2014, while the UPA-2 was preparing for the election, the costs were shown in the range of $28-30 Billion (300% escalation).

In their piece for The Economic Times, Abhijit Iyer-Mitra, senior fellow, Institute of Peace and Conflict Studies, and Angad Singh, air power analyst, wrote that “the final negotiated per-unit price including programme costs (simulators, training, and infrastructure) and India-specific modifications of $247 million is well within the ballpark figure. What is remarkable is that this figure has been reached despite losing economies of scale and cutting the order to almost a quarter of its original size.”

THEY arrive at this conclusion after analysing the baseline estimate cost per unit, factoring in inflation since 2009, India-specific modifications such as Active Electronically Scanned Array (AESA) radar, helmet-mounted sight as well as programme costs (simulators, training, and infrastructure). The writers contend that UPA’s so-called deal (which was actually a projection) lacked in serious due diligence and therefore its base price was absurdly low.

In another piece for the same paper, Abhijit has contended that “The best way of judging, though, is to look at what other countries paid. Qatar bought its Rafales at $292 million PPU (Position Pick-off Unit), with an extensive training maintenance and weapons package, but without offsets or workshare. Egypt bought their Rafales for $246 million PPU and India paid $243 million, with a less extensive package than Qatar, but with 50 per cent offsets and significant India-specific modifications”. He concludes “On balance, this looks like an exceptionally well-negotiated deal”.

Further, on the issue of propriety, the Congress hasn’t been able to cite a single point of deviation from the UPA-2’s 2013 Defence Procurement Policy (DPP) when the Rafale contract was signed in 2016 and the DPP was in operation.


Defense Minister Nirmala Sitharaman told CPI leader D Raja in the Rajya Sabha: “No Public Sector Undertaking or private sector industry is involved in the Inter-Governmental Agreement with France

Another charge hurled at the government is that the approval of the Cabinet Committee on Security (CCS) was not secured before the signing of the new contract. According to official sources, the relevant sections that deal with the Inter-Governmental Agreement for the Rafale purchase in 2016 lie in Articles 71and 72 of the 2013 DPP. Reading of the relevant sections makes it abundantly clear that no prior approval is required from the Defence Procurement Board (DPB), Defence Acquisition Council (DAC) or, indeed, CCS approval, for any purchase under this category. All that is needed is the approval of a competent financial authority (CFA).

Can the Congress Party stand on its honour and say that the approval of the CFA was not taken?

Finally, why Reliance and not HAL? Because the final negotiated contract is for offsets of industrial defense goods, and not an agreement to co-produce planes—which is HAL’s sole specialisation. The Defense Research and Development Organisation (DRDO) has reportedly got Rs 9,000 crore worth of offset work from Dassault, while ADAG may be the biggest, but not the only beneficiary of the remaining Rs 21,000 crore.

May it be noted that under the discussed offset clauses, it is Dassault’s prerogative to select its industrial partner/s. As it is, Reliance ADAG (Anil Dhirubhai Ambani Group) along with L&T, Kalyani, Tata, Mahindra Defense, and Bharat Forge happen to be the few ones who are actually engaged in producing some defense equipment. So if Dassault prefers ADAG or any other company, the matter ends there.

Further, the inter-governmental agreement between the governments of India and France provides for 50 per cent offsets. On February 5, 2018, Defense Minister Nirmala Sitharaman told Prof M V Rajeev Gowda “The quantum of offsets in 36 Rafale IGA is 50 per cent which includes investments in terms of Transfer of Technology (ToT) for manufacture and/or maintenance of eligible products and services. Details of Indian Offset Partners have not yet been provided by the French Industrial suppliers and as per the provisions of Defence Procurement Procedure (DPP) – 2013 they need to do so at the time of seeking offset credits or one year prior to discharge of offset obligations through their Indian Offset Partners. As per the provisions of DPP-2013 the Indian offset partner need not be a Public Sector Undertaking.”

In another reply the same day, Sitharaman told CPI leader D Raja in the Rajya Sabha: “No Public Sector Undertaking (PSU) or private sector industry is involved in the Inter-Governmental Agreement with France. In order to meet the ‘Critical Operational Necessity’ of the Fighter aircraft in the IAF, the Government decided to procure 36 Rafale aircraft through Government-to-Government route. The Inter-Governmental Agreement (IGA) was signed for supply of direct flyaway 36 Rafale aircraft on September 23, 2016. It does not envisage any manufacturing of platforms in India”.


Rafale’s selection is as sound as Bofors
IN the melee of ideas and viewpoints and contesting politics, the prime reason for Rafale’s selection versus other contending aircraft has been lost.

What was the ‘Critical Operational Necessity’, mentioned by the Defense Minister in her above-cited reply to Raja, that persuaded the government to opt for Rafale?

To unravel the Minister’s statement, one has to refer to previous Defense Minister Manohar Parrikar’s statement in Parliament in March 2015. He revealed that as many as 35 instances of Sukhoi’s engine failures were reported in 2013-14—that’s nearly three a month.

He added overall, there were 69 instances of engine failure in the last four years. “Inquiries by the Air Force revealed that in as many as 33 instances, the engines failed because of impure fuel, in another 11 cases, the problem was caused by excessive vibration and in eight others, engine failures were reported because of low pressure in the lubricant tanks”.

In view of unending operational problems encountered with Sukhoi-30 MK1, its most important function—the ability to air-deliver a nuclear payload deep inside China—came to be suspected.

Sukhoi’s operational problems and limitations dictated the selection of Rafale: heavy payload, range advantage, and the highest single-nation content among the competing aircraft. The last factor was as powerful a tilting factor as the first two because France has traditionally supported India’s nuke project and turned a blind eye to the IAF fusing its nuclear ammunition with French platforms like Mirage 2000.

In an article in The Diplomat, Vasabjit Banerjee and Prashant Hosur wrote: “In terms of the Air Force and India’s nuclear capacity, the French Mirage 2000 provides India’s primary air-launched strike force, because the British SEPECAT Jaguars are slower at high altitudes and unable to deploy the unguided (gravity dropped) nuclear bombs used by India. The Kargil War of 1999 reaffirmed the capacities of the Mirage 2000-5 in ground attacks as well. However, Indian trepidation about corruption allegations prevented it from shifting the entire production facility, which France was shutting down, to India. Ironically, France has recently offered to donate 31 mothballed Jaguars, which India could upgrade with new radars, avionics, and even engines”.

But why did India opt for only 36 Rafale aircraft at the cost of Euros 7.8 billion versus 126 units for $30 billion or so? That’s because the IAF considered 36 aircraft as the bare minimum to maintain its option and ability to gravity-deliver nuclear weapons in the heartland of two veritable enemies. Second, the government didn’t want to block as much as $30 billion for the purchase of just one weapons system while the Army and the Navy also have the dire need for funds to meet their equipment requirements. So the government has been under usual pressure to balance the requirements of each service given the shortage of funds. And it did.

Without referring to what the UPA did in 2005, at a seminar on “bridging gaps and securing borders” on February 21, former National Security Adviser Shivshankar Menon, appreciated the way the NaMo administration handled the Doklam incident

Tackling China’s low-cost mischief
On the basis of its three-year track record, the NaMo administration is seen in defense circles as far more sensible and pragmatic on the issue of national security compared to the UPA-1 and 2 regimes. If any evidence is required, India’s response to the Chinese adventure in Doklam in mid-2017 is cited as one.

In a similar but largely unreported case in 2005 and 2007, the UPA-1 government is said to have left the Bhutanese government shamelessly to the mercy of the Chinese.


ON November 13, 2005, Chinese soldiers entered Bhutan’s northern districts, including Paro, and marched 20 km inland, claiming that they had been forced by melting glaciers and heavy snowfall in Tibet to breach the border. But they also went on to infiltrate remote places like Haa, Boomtang and Wangdi Phudrang, which have no human habitation. And then the Chinese built pucca bridges in Paro and Haa districts, prompting concern among the people’s representatives from Paro, Haa, Laya, Lunana, Zhemgang, and Thimphu. But the UPA-1 administration, despite military and intelligence inputs and call for help from Thimpu, declined to checkmate the Chinese. And this emboldened PLA soldiers to not only further intrude into Bhutan at will but also in the Indian territory.

Indeed, after the 2005 and subsequent PLA intrusions (all during the UPA regime), the Bhutanese have been feeling completely let down by India. And if New Delhi hadn’t dug in its heels in Doklam, China would have literally succeeded in driving a permanent political wedge between India and Bhutan because Bhutan, without help from India, would have had no choice but concede Doklam to China.

Without referring to what the UPA did in 2005, at a seminar on “bridging gaps and securing borders” on February 21, former National Security Adviser Shivshankar Menon, appreciated the way the NaMo administration handled the Doklam incident and thwarted China’s political goal to “split” India and Bhutan.

In fact, even the Bhutanese public opinion shifted from its initial disappointment as India ignored Chinese media and political and diplomatic filibustering tactics and remained steadfast in its demand that PLA must vacate the Bhutanese territory. Since educated Bhutanese could not figure out whether the Indian intervention in Doklam was triggered by India’s instinct to protect its ‘chicken neck’ or a genuine feeling of friendship for the Bhutanese people, the initial public opinion in the Himalayan kingdom was adverse on India’s role.

According to ENODO Global, a risk management firm that conducts population-centric analysis, its Doklam standoff analysis revealed that approximately 76 per cent of Twitter and 65 per cent of Facebook Bhutanese social media users questioned Bhutan’s over-reliance on India’s diplomatic channels to broker a deal with China. Messages on Bhutanese news websites, blogs, and Facebook revealed anxiety regarding the absence of a direct dialogue between Bhutan and China. For example, a cartoon on the Facebook group “Bhutanese Forum” indicates the scale of China’s incursion, while the associated hashtags #bullyingNeighbor and #China demonstrate the pervasiveness of Bhutanese frustration and a sense of abandonment by India.


The ENODO analysis further reveals that in less than 24 hours after Indian boxing champion Vijender Singh offered to surrender his award in exchange for India-China peace, thousands took to Twitter to support India’s might, which ultimately supports Bhutan. New hashtags emerged every hour including: #BattleGroundAsia, #IndiaProud, #BoycottChineseProducts, #DoklamHisaabBarabar, and #PeaceIsPossible.

To consolidate the post-Doklam groundswell of support for India in Bhutan and anticipating some sort of Chinese mischief in the coming summer of 2018, National Security Adviser Ajit Doval, Foreign secretary Vijay Gokhale, and Army Chief Bipin Rawat visited Thimpu in the first week of February to exchange notes and remove whatever doubts may exist between Thimpu and New Delhi.

IN fact, this kind of dialogue must be taken further and must be held between the two countries on a regular well-defined basis. It may also be helpful if the dialogue between the two countries is facilitated on each and every level. Despite geographical closeness, people of the two countries remain aloof from each other. And this is a matter of serious concern.

Let there be no doubt: China will keep engaging itself in the low-cost testing of our resolve to protect our frontiers as also those of Bhutan while keeping us preoccupied on our western frontiers with Pakistan. Paul Staniland writes: “The stand-off between India and China at Doklam initially seemed like an Indian victory. Yet as time has gone on, it looks instead like the first round of a recurrent series of mini-crises as China digs in for the long haul. There is little likelihood of a major conventional war between India and China, and India has some key advantages in specific areas of possible combat. Still, India will need to devote significant resources to holding its positions and fortifying its infrastructure along its borders with China. This is a defensive reaction to growing Chinese power, not a form of leverage”.

Indeed, India has steadily lost all the leverages against China ever since the latter set out to choke India in its own South Asian backyard from 2004-2005. Even in terms of hardware, the PLA, PLAAF, and PLAN have raced ahead of the Indian Army, Air Force, and Navy. That’s because every point increase in India’s GDP has not resulted in a proportionate increase in the lethal power of the armed forces. Decisions on vital acquisitions have been delayed on fear of corruption even as politicians invested heavily in domestic politics. And the Chinese have taken the full advantage of our queasy and mud-slinging politics.

In the given situation, whatever Team RaGa may say, the NaMo administration has shown the guts to acquire the much-needed fighting systems even at the risk of being accused of what he is being accused of by his political opponents. That’s wonderful news for the country and a bad one indeed for the Chinese.

Hopefully, the Indian Armed Forces would not be compelled to fight their enemies empty-handed—like they were forced to do in 1962.gfiles end logo



VOL. 11 | ISSUE 11-12 | MARCH 2018

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