Modi government still won’t say: Does it believe Hollande is lying on Rafale deal?

Nearly a full 24 hours after former French President Francois Hollande’s explosive remarks about the Indian government proposing Anil Ambani’s Reliance Group as Dassault’s offset partner in the Rafale deal, the government of India has finally responded. In a press release, followed by an address to the media by Telecom Minister Ravi Shankar Prasad, the government pointed to a different Dassault deal with a different Reliance company – one run by Mukesh Ambani, not Anil Ambani – in an attempt to change the narrative.

Hollande had said on Friday that the Indian government had proposed Anil Ambani’s name as the offset partner for Dassault, the manufacturer of Rafale jets, leaving the French government with no choice. The government has claimed all along that Dassault is free to pick its Indian partner, even as the Opposition led by the Congress has insisted that the Rafale deal unduly benefits “Modi’s industrialist friend” Anil Ambani.

For a full explainer on Hollande’s remarks and their implications, read this. Here is an annotation of the ministry press release:

Unnecessary controversies

“Unnecessary controversies are being sought to be created following media reports regarding a statement purportedly made by the former French President, Francois Hollande, concerning the selection of Reliance Defence as the Offset partner by Dassault, the manufacturers of Rafale aircraft.

The reported statement perhaps needs to be seen in its full context – where the French media has raised issues of conflict of interest involving persons close to the former President. His subsequent statements are also relevant in this regard.”

The release begins with “unnecessary controversies”, which is a wonderful phrase because it suggests there are some “necessary controversies”. More intriguingly, the government asks for Hollande’s statement to be seen in its full context. As pointed out earlier, Hollande’s comments came after reports that his partner Julie Gayet had a movie funded by Anil Ambani’s Reliance Group at the same time as the Rafale negotiations were on. This is the “issue of conflict of interest involving persons close to the former President” that the release talks about.

But its implication isn’t clear. Is the government saying that Hollande is just saying this to deny the allegations of conflict of interest? More specifically, is the government saying that Hollande is lying to get away from those conflict of interest allegations?

Hollande’s remarks were clear and ambiguous: “The Indian government proposed this group, and Dassault [the company that manufactured the jets] negotiated with Ambani... I could not even imagine that there was any connection to a film by Julie Gayet.”

Even if the statement is taken in full context, as the press release asks us to do, what conclusion can be drawn, other than that the Indian government believes Hollande is lying. But the government doesn’t say that. Why not?

Government’s role

The Government has stated earlier and again reiterates that it had no role in the selection of Reliance Defence as the Offset partner.  

This is the technical line, the one taken by the French government and Dassault. But it still leaves the question open: Did the Indian government propose Reliance Defence as the offset partner?

In fact, the wording here is quite specific. The government had “no role in the selection of Reliance Defence.” That could be read in many ways. If Hollande is to be believed, the Indian government put forward Reliance Defence’s name, and Dassault then made the decision. But, again, if the Indian government puts forward a name during negotiations, how “free” is that decision by Dassault?

For a rounded appreciation, it may be worthwhile to briefly dwell upon why and how Offset Policy came into play... 

The government then goes off into a long discussion of the history of offset clauses, which acts as filler. The operative bit is the last line, that reiterates the earlier statement, but doesn’t answer Hollande’s allegation: “As per Defence Offset Guidelines, the foreign Original Equipment Manufacturer (OEM) is free to select any Indian company as its offset partner.”

Distraction

It has been reported that a JV between Reliance Defence and Dassault Aviation came into being in February, 2017.  This is a purely commercial arrangement between two private companies.  Incidentally, media reports of February, 2012 suggest that Dassault Aviation, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the previous Government, had entered into a pact for partnership with Reliance Industries in Defence sector.

This is the sleight of hand that the government, and many right-wing commentators have sought to use to deflect from Hollande’s allegations. Dassault entered into a pact for partnership with Reliance in 2012. So how can Hollande make a claim that Modi insisted on going with Reliance in 2015, when he negotiated a new deal?

The answer to that is obvious and immediately reveals the absurdity of this reference. In 2012, Dassault, which was then looking to build the bulk of the jets with Hindustan Aeronautics Limited, entered into a partnership with Reliance Industries. That is Mukesh Ambani’s company. That partnership ended in 2014 with doubts remaining about the Rafale deal moving forward, and Mukesh Ambani exiting the defence business.

The current allegations have to do with Reliance Defence, which is an Anil Ambani company. These are two different corporate groups altogether, that only share a name because they split following a dispute in the aftermath of the death of Mukesh and Anil’s father, Dhirubhai.

So, how does bringing up the Dassault partnership with Mukesh Ambani explain away Hollande’s remarks regarding Anil Ambani? In fact, there were allegations of crony capitalism when Mukesh Ambani tied up with Dassault. Is the government suggesting that the same allegations should follow on to Anil Ambani in the current deal?

Which Ambani?

Ravi Shankar Prasad also brought up the fact that there was an earlier deal between Dassault and Reliance, as if to suggest Hollande was talking about that deal. But it is quite clear that Hollande is referring to the current deal between Anil Ambani’s Reliance Defence and Dassault. It was Anil Ambani’s Reliance that co-produce Julie Gayet’s film, and the press release tells us to read Hollande’s remarks in this context, so there is no ambiguity on the fact: Hollande was talking about Anil Ambani’s Reliance, which came into the picture when Modi renegotiated the Rafale deal.

In view of above, it is once again reiterated that the Government of India has no role in the selection of Indian Offset partner which is a commercial decision of the OEM.  

The one simple question that still comes up in conclusion: Does the Government of India believe Hollande, who negotiated and finalised the Rafale deal with Modi, is lying? If not, does that mean Modi did propose Anil Ambani’s name as a partner for Dassault? If yes, why is it not saying that Hollande is lying?