Tuesday, June 1, 2010

Mirage Followup: Pakistani Prospects

Anonymous questioned my analysis on the prospects of Pakistan getting the 62 Mirage 2000s from United Arab Emirates. Rumor says that UAE wants to swap the Mirages in exchange for new-built Rafaels from Dassault. I said that Pakistan is not likely to be a recipient of these planes. Anonymous disagrees, because Pakistan is the largest operator of Mirage IIIs and Vs in the world today, thus a long-term relationship with Dassault and in need of replacements. In addition, Pakistan is looking for advanced systems to arm its future JF-17s, such as RC-400 radars and MICA missiles.

Yes, Anon, Pakistan would absolutely love to have 62 Mirage 2Ks. However, as an analyst, we always need to separate wishful thinking from analysis based on facts. I will be upfront myself and admit my personal bias to see a Taiwanese Air Force strong enough to deter the PLA Nanjing military district. Even taking that into account, though, Taiwan still remains the most likely candidate for these Mirage 2Ks, eventually.

The most important factor to understand here, is the business imperative of the Dassault corporation. Dassault has been searching for an export customer for the Rafale. Without an export customer, Dassault will have to shutter the Rafale production line, at least temporarily. Having to restart the production line would raise the Rafale unit cost dramatically, further hurting its export prospects. Despite all the hype of the armed UAVs, the end of the Rafale may mean the end of high-performance fighter airplanes for Dassault [either manned or unmanned], with the attendant loss of the engineers and the craftsmen. Without the human capital, it will take Dassault a generation to rebuild its in-house capability to design and build airplanes capable of high-Angle-of-Attack maneuvers. Therefore, getting a Rafale export, and thus keeping the line warm, is synonymous with Dassault surviving in the fighter business.

Therefore, Dassault absolutely does not want to endanger its Rafale sales prospects. According to Wiki, the Rafale is in the running in India. Brazil has also supposedly chosen the Rafale. With this stock of Mirage 2Ks, Dassault may now offer the Mirages as temporary stand-ins to India and Brazil, while they waited on the Rafales.

With the business consideration, Dassault is unlikely to offer Mirages to Pakistan, at least for now. Dassault needs India's MMRCA order. A sale to Pakistan right now will shut Dassault out of the Indian market. Pakistan may get Mirages later, after MMRCA award, but by then, JF-17 production will be in full-swing in Pakistan. A Mirage 2K acqusition will be competing for funding against a more indigenous JF-17 production program. Egypt is also discussing a co-production deal with Pakistan for the JF-17s, which elevates the political importance of the JF-17 program. If JF-17 is fighting for funding against Mirage 2Ks, JF-17 will probably come out ahead. Pakistan may well buy RC-400s and MICAs, but that does not translate into Mirages.

Based on the business case, Dassault is unlikely to offer the UAE Mirages to Pakistan. Based on the timing and politics, Pakistan is unlikely to seek Mirages. Therefore, Pakistan is not a prospect for the UAE Mirages.

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