PARIS - The United Arab Emirates (UAE) is now talking with Lockheed Martin about buying more F-16 fighter aircraft because France's offer of an advanced version of the Rafale combat jet is seen as too expensive, said a source familiar with the negotiations in the gulf.
"The UAE is finding the Rafale offer to be too costly compared to the capabilities of aircraft and other technologies on the market," the source said. "The negotiations with France are still ongoing and both sides are looking for a compromise."
The UAE has been seen as a potential first export buyer of the Dassault Rafale in a deal estimated at $10 billion. Meetings on the Rafale sale were held at the Paris Air Show, which ended June 26.
But price resistance has led UAE officials to open discussions with Lockheed Martin to buy more F-16s with the latest "weaponry and targeting sensors," the source said.
Last year, UAE officials asked for technical information on the Boeing F/A-18 E/F Super Hornet, following a political chill at the highest levels between Abu Dhabi and Paris.
In negotiations with the French, the elements said to be stretching the UAE's planned budget are the co-development costs for a more powerful "special" Rafale version, plus maintenance and spare parts. The UAE wants its Rafales powered by uprated Snecma M88 engines, whose 9 tons of thrust provide 1.5 tons more than the version flown by the French Air Force. Other improvements requested include a longer range active electronically scanned array (AESA) radar and a more capable Spectra electronic warfare suite.
The upgrades previously have been estimated at 2 billion euros ($2.9 billion) by then-French Defense Minister Hervé Morin.
Dassault Aviation declined to comment.
Shortly before the Paris Air Show, Dassault Chief Executive Charles Edelstenne said of the Rafale offer to the UAE, "the talks are advancing."
The gulf source said, "Lockheed Martin is offering a very attractive financial package."
A UAE sale might help Lockheed keep its F-16 assembly line open, after India rejected the U.S. fighter from its short list for the Medium Multirole Combat Aircraft competition.
Lockheed officials were unable to comment by press time.
France badly needs export success on the Rafale, a showcase of military technological competence, as the national defense budget assumes foreign contracts to help pay for a steady rate of production.
Dassault has said it must build 11 Rafale units a year to keep the line working at an economic rate.
Large companies depending on the Rafale include Safran subsidiaries Sagem, for the forward looking infrared gear, Snecma for the twin engines, Thales for the electronics and RBE2 AESA radar, and MBDA, which hopes to sell the Meteor long-range missile.
In the 1990s, the UAE bought 80 F-16 E/F fighters with distinctive conformal fuel tanks, under a $7.3 billion foreign military sales (FMS) contract, of which a reported $3 billion went to co-develop the Block 60 Desert Falcon, widely viewed as the most capable of the F-16s worldwide. As co-developer, the UAE is co-owner of some of the sensitive military technology on the Block 60 version. As part of the deal, UAE personnel worked on the co-development program, and Lockheed trained Emirati nationals to service the Block 60 aircraft.
The 1990s also saw the UAE buy Dassault Mirage 2000-9 fighters, which were more advanced than the 2000-5 version flown by the French Air Force. Older Mirage fighters were also upgraded to the more capable variant.
The Mirage 2000-9 fleet still has a long life ahead of it, but the UAE could start taking delivery of the new F-16s in under five years while keeping the existing Mirage aircraft, the source said.
France has previously offered to buy back the Mirage fleet and resell the fighters in export markets to encourage the sale of the Rafale to the UAE.
The UAE has purchased the Black Shaheen cruise missile for the Mirage. In long-range strike, the UAE also has the Hakim, which was shown under the wing of a Rafale model displayed on missile manufacturer MBDA's stand at the IDEX arms show in Abu Dhabi in February.