By Avascent Analytics team
A quick look at the biggest stories of the week
US • Denmark • Turkey
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.
A Banner Week For F-16s in Europe
Hamilton Cook, Research Associate
In the span of a few days, Lockheed Martin secured two F-16 sales worth over $2 billion in Eastern Europe and set the next stage of the fourth-generation fighter sales competitions. The first of these was an $800 million contract with Slovakia for 14 F-16 Block 70s. The sale, conducted under the Foreign Military Sales program, will see the jets assembled at the new production line in Greenville, South Carolina, and delivered by the end of January 2024. Many analysts have been shocked by the relatively small size of the deal, which see the jets priced at $57.1 million per aircraft, far below the typical pricing of the aircraft. At this time, Avascent assumes that this sale purely covers the purchase of 14 “green” aircraft, and that as the final delivery date of the aircraft approaches, Slovakia will make additional purchases of country-specific modifications, additional weapons and equipment, and support packages that will bring it more into line with traditional fighter pricing baselines.
The other major win was when the Bulgarian Parliament chose to override the veto of its President and approve $1.28 billion for the purchase of eight F-16 Block 70s. The override came after Bulgarian President Rumen Radev chose to veto the deal over concerns that there had been insufficient debate in Parliament over the sale, which will be about $228 million above the initial $1 billion budget limit set for the project, and will result in Bulgaria restructuring its budget to accommodate the purchase, with a $400 million loan necessary to cover the lump sum payment. However, Prime Minister Boyko Borisov and Parliament chose to override the veto in favor of replacing the country’s aging MiG-29 fleet amid rising threats and interference from Russia. The aircraft are set to be delivered in 2023 and 2024.
These sales mark a turn in the fighter market in Eastern Europe and has implications for the worldwide market as well. For years, fighter contractors have been awaiting the mid-to-late 2020s when Eastern Europe would be forced to recapitalize their Air Forces as their Soviet-era equipment become obsolete. For many contractors, it offered a bridge between the continued stretching and reorganization of existing fourth-generation domestic production lines and the near-mythical promise of an Indian fighter recapitalization program. While such sales were generally not seen as a good fit for the advanced European fighters (Rafale, Typhoon), US fighter sales to Poland, Slovakia, and Bulgaria will likely be a blow to Saab. Saab has historically seen some of its strongest fighter successes in the region as it has set up various leasing arrangements and support partnership that have allowed its customers the financial flexibility to field the Gripen fighter. However, these F-16 sales show that Lockheed is able to wield a pair of advantages which are particularly dangerous for Saab: the ability to bid against Saab in a price competition while still leveraging the long-run premium of being an American prime contractor under a US administration that increasingly focuses upon arms sales as a cornerstone of its foreign policy. Finally, these sales, along with an existing F-16 sale to Bahrain, will likely provide the new Greenville, SC Block 70 line with enough past performance necessary to be seen as a credible threat in the speculative Indian fighter competition.
On August 2, the US withdrew from the Intermediate-Range Nuclear Forces (INF) Treaty with Russia, following accusations that Russia had not been adhering to the treaty for years. Since 2014, the US has filed several reports that alleged Russia violated the treaty by being in possession of, producing, and/or testing ground-launched cruise missiles with a range of 500-5,500 kilometers or possessing/producing launchers for such missiles. The treaty was first signed in 1987 during the Cold War which sought to ban “nuclear and conventional ground-launched ballistic and cruise missiles” in Europe that can reach between the aforementioned kilometer range. Russia has denied violating the terms of the INF; however the US and other NATO allies claim Russia’s possession of the Novator 9M729 (also known as the SSC-8 by NATO) violates the treaty. Despite concerns over the collapse of the INF, NATO Secretary General Jens Stoltenberg was quick to announce that the NATO alliance would not engage in an arms race with Russia, and that there were no intentions to procure ground-launched nuclear missiles in Europe. President Trump announced a new INF should be established, this time including China into the pact, and seemed optimistic that a new deal would be signed with the two countries in the near term. However, it remains uncertain whether China or Russia would actually agree to a new nuclear treaty or when one would be signed.
On August 7, the Danish Defence Acquisition and Logistics Organization released a request for information (RFI) for a ground-based air defense system (GBAD). In addition to radars, C4I equipment, and support vehicles, the RFI also requires the use of a ground-based launcher for the AIM-120B and CROWS system (remote weapon system) for Stinger missiles. The RFI also requires the system to be able to launch existing stocks of AIM-120B and Stinger missiles. Currently, Denmark does not have any ground-based air-defense outside of the C4I and radar systems that formed part of the Royal Danish Army’s low-level air-defense system (DALLADS). DALLADS had used Stinger missiles before, but these were stood down in 2009 as part of cost-cutting efforts. Some of these Stingers were sold to Latvia. This RFI would point to interest in not only rebuilding earlier Stinger-based capability, but also expanding air defenses beyond the capability of DALLADS. Requiring the use of AIM-120B would suggest that the Kongsberg/Raytheon NASAMS would be a strong favorite, while Raytheon has tested launching Stingers from a CROWS mounted atop a Stryker. Only one battery is being sought for delivery between 2022-23, but further development of the system may be considered afterwards. The cost to Denmark, at least for the AIM-120B and C4I component may end up being similar to Lithuania’s $123 million NASAMS purchase, as Lithuania also upgraded from a solely MANPAD based air-defense capability, and only has a small amount of territory to cover.
On August 3, Turkey announced plans to use a cruise missile it developed for the F-35 with other locally developed aircraft. The SOM-J cruise missile was originally developed by Turkey for use with the F-35, but Turkey’s acquisition of the F-35 is highly unlikely following its decision to accept the S-400 air-and-missile defense system from Russia. Turkey was recently removed from the F-35 program following its acquisition of the S-400, with the US stating that Turkish involvement with the program will cease in March 2020. Given this, Turkey has determined that the SOM-J could be compatible with the indigenously built fighter aircraft dubbed the TF-X, as well as the Akıncı unmanned aerial system. The TF-X is still in the development phase and is not expected to enter production before 2030. According to reports, Turkey would also be open to selling the cruise missile to other countries that are still part of the F-35 program.
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