Russian defense export agency Rosoboronexport is expected to announce a $2.2 billion order from Saudi Arabia for Mi-17 and Mi-35 military helicopters today.
The deal translates into another of a humiliating series of lost contracts for the French defense industry, which now appears certain to undergo a re-evaluation of its export policy.

The loss for Eurocopter comes on the heels of a recent setback for Thales in the same country. The Paris-based company had been for more than 10 years negotiating with the Saudis over Miksa, a multibillion-dollar border security project, without competition. Thales officials suffered their own version of shock and awe when they saw the Saudis launch an international tender last year.

Meanwhile, the attempt in recent months to place the Dassault Rafale fighter in Saudi Arabia resulted in another loss–to the Eurofighter Typhoon. Morocco also rejected the Rafale, whose purchase the Saudis would have funded.

On the eve of the show, neither Eurocopter nor Sofresa–the French defense export agency for Saudi Arabia–would confirm they had lost out to their Russian competitors in the Saudi helicopter negotiation. Although details over the exact types and numbers under negotiation have proved elusive, a Sofresa spokesman confirmed to AIN that the negotiations focused on the Fennec light helicopter and Super Puma and NH90 medium transports–discussions over which continue. Separately, an agreement on the supply of a few Airbus A330 tankers could still happen as well.

A source close to Eurocopter told AIN that the Saudis find the price of the NH90, in its TTH (army) version at least, much too high. Another obstacle, according to online defense newsletter TTU, was the fact that France wanted to offer packages that would not distinguish between the components of the Saudi forces–the National Guard and the Ministry of Interior, for example. This, however, might prove not the only diplomatic blunder.

Saudi Arabia’s choice comes a few months after the French government named a new head for Sofresa. The trouble lies with the fact that it did so without involving Saudi Arabian officials, which until then had always enjoyed at least a consultative role in such decisions. Moreover, president Nicolas Sarkozy, who took the helm from Jacques Chirac in May, is seen as less pro-Arab than his predecessor.

In February, Russia’s president Vladimir Putin, accompanied by a number of business executives, visited King Abdullah. Saudi Arabia may well view Putin as an ally with a renewed influence. So the Saudi decision to opt for Russian helicopters clearly carries political implications.

Eyes will now turn to India. There, Eurocopter is the “preferred bidder” for 197 Fennecs, but the contract remains unsigned. Dassault is understood to be offering the Rafale to answer a fleet renewal need.

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