France and Britain step up arms co-operation

PARIS, June 9 (Reuters) France and Britain today agreed to boost co-operation in missiles and a fast-growing military technology -- pilotless ''drone'' aircraft.

Western Europe's top two military powers also vowed to work together to keep control over secret technology amid a renewed race for consolidation in the fragmented defence industry.

Britain and France are already involved in building missiles through industrial stakes in MBDA, a missile maker owned by France-German-Spanish aerospace group EADS, Britain's BAE Systems and Finmeccanica of Italy.

In a declaration on security and defence during a one-day Franco-British summit, the two nations said they would expand recent plans to work together on aircraft carriers by exploring ways of ''improving the efficiency of our missile industry''.

French President Jacques Chirac told a joint news conference with British Prime Minister Tony Blair that France and Britain made up 50 per cent of Europe's defence capabilities and accounted for 80 per cent of its arms research and development.

The leaders announced a working group to look at ways of boosting existing arms co-operation, to report by 2007.

France and Britain are rivals for many defence contracts but took a step towards co-operating on a major proposal to build joint aircraft carriers with a design agreement in January.

French firm Thales is also a major arms supplier to Britain.

''In research and defence we would like cooperation between our two countries to help us to maintain on our territory the technologies that are essential for our sovereignty,'' the joint declaration said.

Analysts say European defence firms remain under pressure to reorganise because of tight defence budgets, increasing demands for integration between ships or aircraft and the systems they carry, and competition from the United States and Asia.

France recently took steps to preserve satellite secrets by arranging for Thales to take control of equipment firm Alcatel's space business ahead of a planned merger between Alcatel and Lucent of the United States.

Several drone aircraft projects are underway in Europe and the defence chief of EADS, Stefan Zoller, said this week he was confident European nations would announce a new order soon. Arms buyers are expected in Paris next week for a trade fair.

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