By Avascent Analytics team
A quick look at the biggest stories of the week
Poland • Taiwan • NATO • UAE
Avascent Analytics introduced a segment to the Weekly Wire called “Beyond the Headlines.” Each week, we will provide an in-depth look on various defense topics, ranging from country-specific defense news to emerging technologies impacting defense.
Prime Minister Modi Reelected For Second Term
Shane Mason, Senior Market Analyst
On May 23, Prime Minister Narendra Modi and his Bharatiya Janata party (BJP) won a decisive victory in India’s general elections. The BJP expanded its single-party parliamentary majority, giving the government more freedom to pursue its agenda during a new, five-year term. The result was a partial upset. Negative economic data in recent months suggested Modi would win reelection but with diminished support. Ultimately, Modi’s broad personal appeal, perceived incorruptibility, and hardline stance against Pakistan were key to victory. The win has been seen as truly historic as what was seen as the old political establishment was defeated and replaced by Narendra Modi with his unapologetic views on Indian society and nationalism.
Modi’s reelection has implications for India’s defense market. The prime minister’s strong mandate will make it somewhat easier for the government to make decisions on high-profile defense imports. A defense procurement scandal toppled one Indian government in the late 1980s, and corruption allegations surrounding the 2016 procurement of 36 Rafale fighter aircraft afflicted the Modi campaign in its final months. With the election over, the government now has some political space to approve defense orders from international firms. Most importantly, the Air Force has a requirement for 110 fighter aircraft worth an estimated $13 billion. India faces a severe fighter shortfall, and Avascent expects New Delhi will award a contract for new fighters by 2022.
Important aspects of Indian defense procurement will remain unchanged by a Modi victory. First, defense spending will increase with economic growth but is unlikely to top 1.4 percent of GDP. The prime minister has no political incentive to increase the country’s defense burden, particularly given India’s economic and social challenges. Next, if the government makes the defense procurement process more efficient, it will only be able to do so at the margins. Procurement decisions are ultimately shaped by powerful stakeholders in the defense and finance ministries, as well as the state-owned defense companies like Hindustan Aeronautics and Bharat Electronics. The government is probably uninterested in using political capital to take on these actors and their constituencies in any meaningful way. Lastly, foreign firms will need to negotiate offsets and technology transfer with Indian defense firms as part of larger contracts. New Delhi’s efforts to leverage military procurements to support the country’s industrial base may become even more assertive given some troubling trends in the Indian economy.
On May 29, Defense Minister Mariusz Blaszczak announced that Poland plans to acquire 32 F-35As as part of its Harpia program and has submitted a Letter of Quotation. The move comes as Poland seeks to defend itself against a resurgent Russian threat in the region by modernizing its military and forming closer defense ties with the United States. The Harpia program has taken a sudden urgency for the Polish Air Force as its aging fleet of SU-22s and MiG-29s has been ravaged by age, with three MiG-29s crashing in the last year alone. As a result, the Polish government likely seeks to kill two birds with one stone by buying the premier American fighter jet, and hopefully paving the way for increased US involvement and basing in the region. Before the program was accelerated, other Western fighter aircraft were considered (F-15, F-16V, F/A-18E/F, Typhoon, and Gripen), though it was generally assumed that the F-35A was the preferred candidate for a Polish requirement. Based upon the number of aircraft to be purchased, Avascent assumes that the potential sale could be worth approximately $4.5 billion before accounting for any associated deals for weapons and infrastructure to support operations.
On May 24, Taiwanese President Cai Ing-Wen presided over a ceremony marking the beginning of construction of eleven 685-ton Tuo Jiang-class corvettes and four 347-ton high speed minelayers. The corvettes are scheduled to be delivered between 2021-2026, while the minelayers should be delivered by 2021. These vessels, along with the construction of 60 fast attack missile boats, form important parts of Taiwan’s asymmetric warfare strategy in response to a potential invasion from China. The Tuo Jiang-class program has gone through a series of changes over the past year to get to this current point. In mid-2018, Taiwan planned to build eight corvettes by 2025, with the last three to be fielded by 2039 following a modification program. Taiwan had also planned to build the Tuo Jiang-class in two variants – an anti-surface warfare variant and an air defense variant, however the current program now plans to acquire 11 ships of the same variant. Weapons loadout has changed as well, with four HF-3 supersonic anti-ship missile launchers swapped out for 16 HC-2 (previously designated TC-2N) anti-air missiles. This is likely due to the decision against building two variants. Images from the ceremony showed the corvettes equipped with minelaying rails, which would be well in line with an asymmetric strategy against an attacking force from across the Taiwan Strait. Lung Teh Shipbuilding is building both the corvettes and minelayers. Altogether, Taiwan will be spending around $600 million for these 15 vessels.
Speaking at the Cyber Defence Pledge conference in London, NATO Secretary General Jens Stoltenberg discussed NATO’s ongoing efforts to strengthen its cyber capabilities, both defensively and offensively though it is still unclear what NATO’s offensive cyber posture looks like or how it would be coordinated across allied members. According to Secretary General Stoltenberg, the alliance has “agreed to integrate national cyber capabilities or offensive cyber into Alliance operations and missions.” Cyberspace has become an increasing focus for the Alliance, with members declaring that a cyberattack could invoke NATO’s collective defense clause known as Article 5. Following this declaration in 2014, NATO announced in 2018 that it would create a Cyberspace Operations Center with the center anticipated to be operational by 2023.
On May 24, the US Department of State approved the sale of 20 RQ-21A Blackjack unmanned air vehicles (UAVs) to the United Arab Emirates. The sale will not be subject to the normal congressional review, as President Trump has decided to utilize a provision within the 1976 Arms Export Control Act than enables the State Department to waive that review if the sale is needed to counter an emergency. In this case, the emergency is related to the threat of Iranian aggression in the region. The sale is valued at $80 million and includes eight ground control stations, four launchers, four receivers, and anti-spoofing systems. The armed forces of the UAE will likely use these UAVs for reconnaissance in support of ground operations.
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