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Busting Modi Govt’s Lie: Defence Deals With US & Russia are Not With Private Companies, Unlike Rafale

Modi government should stop making an excuse that supply protocols with two private French companies under an Inter-government agreement are the same as Government-to-Government deals with US and Russia.

Modi government has been misleading the country when its ministers and officials argue that there is nothing wrong with granting a waiver from all the anti-corruption clauses to the supply protocols being executed by private French defence companies, Dassault Aviation and MBDA France because government-to-government deals signed with the US and Russia also don’t have the same clause.

There are two fundamental points on which Modi government is obfuscating the facts. The first and foremost is that the government-to-government defence deals with the US and Russia are not done with private defence companies in these countries, but with sovereign governments or fully state-owned entities.

All the defence deals with the US are done through the Foreign Military Sales (FMS) programme, which is a law of the US Parliament, and contains an implicit sovereign guarantee for the buyer. FMS is managed and operated by the US government on a no-profit and no-loss basis. Moreover, the agency which does the selling under the FMS is the Defense Security Cooperation Agency (DSCA) which is a fully state-owned entity. It is only through this state-owned institution that a US private company or the US government makes any sales to a foreign country, which includes India.

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In the case of Russia, Rosoboronexport is the only state organization in Russia for exporting the entire range of military, dual-use products and services and technologies. It operates as the exporter of all defence exports from Russia, and as a state-owned entity, carries all the implicit guarantees provided by a sovereign government.

This is not the case as far as the Rs 60,000 crore Rafale deal is concerned. Modi government has not signed a deal with a French government organization like DSCA or Rosoboronexport through which it will be dealing with Dassault and MBDA. Therefore, the question of not having a sovereign or a bank guarantee from France, and not even letting the payments be made through an escrow account operated by French government, is materially different from the cases with the US and Russia. It harms the interests of the Indian taxpayer and puts huge sums of public money at undue risk.

The second point is that the non-inclusion of major anti-corruption clauses is not from the Inter-government agreement (IGA) signed with the French government, but from the two supply protocols which are to be executed by two private French defence companies, Dassault Aviation and MBDA France. No sovereign or bank guarantee, and no anti-corruption clauses either – it makes no sense at all.

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It is not hard to guess why Modi government would give these exemptions from anti-graft penalties to the private companies, unless it knows that huge amount of corruption has taken place in the Rafale deal. As has been stated by the then French President Francois Hollande, PM Narendra Modi presented a ‘new formula’ to him in 2015 which forced them to choose the tainted businessman, Anil Ambani.

That new formula also perhaps included removal of anti-corruption clauses so that Modi could shield and protect the corrupt. And he came to power shouting, ‘Na khaaonga, na khaane doonga’. Well, the country knows the truth now.

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