The French Military Sales Market Runs Underwater

Previously covered here, DCNS has worked out all the contract details to support the refit of a pair of Type 209/1300s for the Ecuadorian Navy. DefenseNews reports the refits will take place in Chile.

The contracts, signed Dec. 22, were worth more than 10 million euros ($14.8 million) to DCNS, the French company said.

Under one of the contracts, signed by DCNS' wholly owned subsidiary, UDS International, a German-designed combat system will be replaced with DCNS' Subtics system, which comprises a combat management system supplied by DCNS and Chilean company SISDEF. The new system will link up with a Thales sonar suite and a new-generation torpedo system from WASS of Italy.

Under the second contract, teams from DCNS' Cherbourg shipyard will provide technical assistance to Asmar in cutting the hulls of the Ecuadorian submarines in half to allow overhaul and replacement of the diesel engines and generators. Asmar will do the cutting work at its yard in Chile.

This is good for Chile, who will be able to utilize this experience in maintenance of their new Scorpene submarines. This comes a day after DefenseNews reports on a possible joint nuclear submarine program between Argentina and Brazil. However, that does not appear accurate as first reported, as The Sub Report is highlighting, there is an article out in the International Harold Tribune that claims there is a misquote in the original story.

Brazil is working with Argentina to develop compact nuclear reactors to generate power — not to build a nuclear submarine — the Defense Ministry said Monday in denying a newspaper report.

So did the Defense Minister really discuss nuclear reactors or nuclear submarines? It is unclear, but I don't know many defense ministers that get involved in discussions of joint ventures for civilian nuclear power, perhaps in Brazil things are different.

However, France is certainly involved in the Brazil nuclear program, as we have previously covered here. In our internal discussions, we can't help but notice that France has really stepped up under Sarkozy regarding defense related sales, a trend we expect to see continue. This line of thought has led us back to another recent discussion, in particular, the Indian defense industry.

In thinking about the various angles of Russian-Indian relations, we observe many programs that are interlocked between India and Russia. Joe Katzman at Defense Industry Daily has done a fantastic job covering all angles.

• HAL and Irkut’s Joint Tactical Transport Project
• India, Russia Cooperating re: “Fifth-Generation Fighter”
• India Issues RFI for “Stealth Frigates”
• India’s Fighter Modernization: Add MiG-29s to the List (updated)
• India’s ATV SSN Submarine Project

As we observe the list, there is an alternative to each current project if relations between Russia and India turn south in a hurry over the Gorshkov. Note, for the HAL there is the C-130J, for the "Fifth Generation Fighter" there is the F-35A, for the Stealth Frigates there is the LCS-I, for the Fighter Modernizations there are options all over the 3rd world, but the hard part is building the ATV, as Russia is a major contributor to assisting with the nuclear reactor and the Akula class submarine lease is no small part of that deal.

However, with India already looking at purchasing 6 more Scorpenes in the future, which would add to the existing 10 Russian Kilo-class, four German HDW-class and two Foxrot-class submarines; one wonders if the French would step up to fill a void should Russia decide to play hard ball. France and India have had very good military relations for a long time, in fact as far as exercises go, France and India have been working together for far more years than the US and India.

Given the recent history of French military sales under Sarkozy and its desire to export submarine technology, one wonders how long India would have to wait should relations between Russia and India go sour before France comes knocking at the door. Probably not long, and given the choice between French nuclear power and Russian nuclear power, which would you prefer? I'll take the country where 88% of all civilian power generation is nuclear.

Just one more reason why Russia will find a way to work out the problems between them and India on military deals, although we admit to being impressed with the way the French continue to expand their influence in the submarine market, a market that has been dominated by Russia over the last several years. The next big submarine export opportunity will be in the late summer, when Saudi Arabia makes a bid for submarines. Should be interesting, as it could be France, or Russia.

The Rise of a Southern Partner

Meanwhile in South America, completely under the radar, a Navy moves at full speed into the 21st century. While it is true Brazil and Venezuela have recently captured headlines for their Naval moves, the real mover and shaker in South American maritime affairs is Chile.

Most current Naval observers would likely associate the Chilean Navy with its recent Partnership of America's deployment. For the first half of that deployment, the Chilean Frigate Almirante Latorre (FFG 14) deployed with the USS Pearl Harbor (LSD 52), USS Mitscher (DDG 57), and the USS Samuel B Roberts (FFG 58). That deployment only tells half the story.

The Chilean Frigate Almirante Latorre (FFG 14) is one of 4 recently refurbished Dutch frigates incorporated into the Chilean Navy, which also includes the Captain Prat (FFG 11), the Almirante Blanco Encalada (FFG 15), and the Almirante Riveros (FFG 18). These 4 Dutch ships are being joined by an existing Type 22 (Batch II) frigate Almirante Williams (FF 19), the recently acquired Almirante Lynch (FFG 07), and the soon to be received Type 23 frigates Almirante Cochrane (ex- HMS Norfolk) and Almirante Condell (ex- HMS Marlborough).

These 8 ships represent the most powerful naval surface force in South America. They will soon be joined by 2 Scorpene submarines recently commissioned, the O'Higgins and the Carrera.

While impressive, this doesn't make Chile very popular in South America. The increasingly good relationship between the United States and Chile has drawn the ire of countries like Venezuela, who points to Chile's 3.8% of GDP on defense budget as a troubling sign of the region. This increase in defense spending actually has an interesting reason behind it. Military Power Review, a think tank that focuses on affairs in South America recently published a report called "Rearming: The Paradigmatic Cases of Chile and Venezuela and Their Regional Impact." In reviewing that paper the Center for International Policy (CIP) cites Military Power Reviews conclusions saying

There is a permanent rise in the price of copper, parallel to that of petroleum, which increased by 400% between 2002 and 2006 in the international market. This explains to a large degree what the Instituto Nueva Mayoría in Argentina assesses as a "steady but gradual process" of rearming in the last 15 years, accelerated since 2003. In its report "Rearming: The Paradigmatic Cases of Chile and Venezuela and Their Regional Impact," the above mentioned think tank maintains that the Chilean Defense Ministry retains a large degree of autonomy when it comes to formulating its policies thanks to the Secret Copper Law that earmarks a certain percentage of the exports of the metal to the armed forces.

The Chilean military reduced its personnel in the last decade from 120,000 to 40,000, and it reorganized and created eight brigades, giving priority to mobility and fire power. Chile acquired 100 German Leonard II heavy tanks, retaining the ability to acquire several more, and 28 F-16 airplanes equipped with AMRAAN missiles and air-air laser bombs, unknown until now in the region. Of even larger impact is its purchase of two modern Scorpene Franco-German submarines as well as eight missile frigates, maritime patrol airplanes, and oil tankers. "Media experts have concluded that taking into account the relative sizes of Brazil and Chile's GNP, the latter spends six times more economic resources on military equipment than the main power in the region," says Nueva Mayoría.

That is sort of accurate, but the Copper Law isn't a secret, what CIP is missing here is that Democracies don't make defense policy a secret like say Venezuela does.

Venezuela has raised legitimate questions with its behavior, while at the same time it has become the 3rd largest importer of oil to the United States behind Canada and Mexico. Venezuela has close ties to Bolivia, a country with a number of disputes with Chile, foremost being the loss of territories to Chile in the 1879-1883 War when Bolivia lost its access to the Pacific. Peru was also engaged in that war, and disputes stemming from the maritime border between Peru and Chile exist even to today.

There is no shortage of alarmist attitudes in South America regarding Chile, with much of it stemming from the Chilean economic boom of Copper combined with the massive modernization of the military. However, none of these concerns appear to be shared with Western nations, all of whom have excellent and improving relations with Chile.

United States policy for South America has been largely an afterthought under the Bush administration, but events are happening despite the apparent absence of US interest in the region. The United States needs to get publicly engaged, and with booming economies in Brazil and Chile, combined with expanding maritime roles for both in maintaining peace in the Global Commons, opportunity for establishing close ties to South America is knocking.