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Rafale: Congress gets new ammunition

Rahul says absence of French guarantee is the ‘latest skeleton to tumble out of Rafale cupboard’

Referring to the absence of a guarantee by the French government for the 36 Rafale jets deal, Congress president Rahul Gandhi on Thursday called it as “another skeleton out of the Rafale cupboard”, while his party alleged that Prime Minister Narendra Modi had “compromised” national interest by ignoring concerns flagged by Union Law Ministry.

The party, at a press conference addressed by its spokesman Randeep Surjewala, released file notings of the Law Ministry which had argued that a government/sovereign guarantee was necessary.

Pricing controversy

The Congress also alleged that Prime Minister Modi increased the benchmark price – threshold price for sellers/manufacturers to bid – for the 36 Rafale jets from 5.2 billion Euros (₹39,422 crore) to 8.2 billion Euros (₹62,166 crore).

“The latest skeleton to tumble out of the RAFALE cupboard: No Guarantee by the French Government backing the deal. BUT, our PM says there’s a letter from the French promising to be faithful. That’s enough to call this a ‘Government to Government’ deal?” tweeted Mr. Gandhi.

On Wednesday, Attorney General K K Venugopal had told the Supreme Court no “sovereign guarantee” was given by the French government but it had issued a “letter of comfort” that was good enough to be “governmental guarantee”.

Echoing his party chief, Mr. Surjewala said the Prime Minister had not only waived the clause for sovereign guarantee but also increased the benchmark price. He said neither the then Defence Minister Manohar Parrikar was willing to endorse a higher benchmark price nor was the Defence Acquisition. “There were disputes in the negotiations committee, constituted to negotiate the Rafale price over the benchmark price. Three people recorded their dissent. The matter was then referred to Mr. Parrikar who refused to endorse a higher benchmark price,” Mr. Surjewala said.

He also claimed that Mr. Parrikar had refused to accept the “letter of comfort” in place of a sovereign/bank guarantee and cited an August 18, 2016 note in which the Air Acquisition wing of the Defence Ministry stated, “Bank Guarantees may be insisted from French side as required under our procedure and Indian side may bear the Bank Guarantee charges”.

The Congress also said that the Law Ministry had on two occasions — December 9, 2015 and August 23, 2016 –— flagged its concern for a sovereign guarantee.

Law Ministry’s dissent

“And I am reading out the relevant portion only and I quote ‘The contract involves huge payouts of value of procurement without actual delivery which virtually means advance payment for which adequate Government/Sovereign Guarantees appear to be necessary’. So the Law Ministry said this is our view but if the administrative ministry wants to ignore it, then it’s their choice,” said Mr. Surjewala.

The Congress also alleged that the government changed the venue of arbitration (in case of a dispute with the manufacturer) to Geneva from India and accused National Security Adviser Ajit Doval of getting involved in the negotiations.

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