French state-owned arms manufacturer Giat Industries said it was suspending shipment of Leclerc tanks to the United Arab Emirates (UAE) because of "differences" over interpretation of the $3.4-billion contract.
Suspension of the contract will have a negative impact on 2000 sales, which will be "less than four billion francs (€610 million, $574 million)," compared with 5.7 billion francs (€870 million), the company said. It will also have "an important effect on the year 2001," the company added.
The statement did not say how many of the 390 tanks and 46 tank recovery vehicles in the original contract had already been delivered. Shipments were suspended "pending the conclusion of ongoing discussions," Giat added.
The CFDT trade union said that, under the contract with the UAE, Giat had undertaken to upgrade the tanks at no charge as new modifications were introduced.
The UAE "is asking daily for new improvements to be implemented and is now refusing the delivery of completed tanks," the CFDT charged, warning that the impact on the work force of a halt in the assembly line could be severe.
Giat said the suspension of deliveries to the UAE did not affect negotiations under way with other potential purchasers of the Leclerc, as the quality of the tank was not in question.
The French firm is currently trying to sell 250 Leclercs to Greece, 220 to Saudi Arabia and at least 250 to Turkey.
Giat is totally dependent on military orders and has been hard hit by arms cuts worldwide, forcing it to slash the workforce from 10,350 at the end of 1998 to 6,500 by the end of next year.
According to a French parliamentary report, its losses since it was set up in 1990 total more than 22 billion francs. Virtually all Giat's orders last year came from the French army. — (AFP, Paris)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
