The Weekly Wire: For Your Situational Awareness 3.29.19

 In Weekly Wire
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Will Taiwan Finally Get New Fighters?

Aaron Lin, Senior Market Analyst

The Trump administration has given tacit approval to Taiwan’s request to buy 66 F-16Vs in a deal that could be worth up to $13 billion. This comes a few days after Taiwanese President Tsai Ing-wen confirmed that Taiwan had made a formal request to buy new F-16Vs in a statement that followed a Taiwanese request for new fighter jets from the United States. However, this initial request did not specify a type in what was seen as an attempt to give the US more flexibility in what it was willing to export to Taiwan. Despite persistent calls by American officials for Taiwan to “get serious” about its defense and to increase defense spending, the US has been reluctant to meet Taiwanese requests for new fighters. While concerns about repercussions from China are usually given as the first reason for US reluctance to sell new fighters to Taiwan, there are also concerns about advanced technology falling into Chinese hands as Chinese intelligence assets have operated throughout Taiwan, including within the military, for decades.

It remains to be seen whether this is a serious deal that will move forward, or whether this will be used as a bargaining chip in tense US-China trade negotiations. US-China and Taiwan-China relations have been deteriorating, and hawkish voices have been reacting more vocally to China actions in the region and around the world. President Tsai has taken a tough stance on China, whereas her predecessor, Ma Ying-jeou oversaw a détente of sorts with Beijing. Since Tsai came to power in 2016, that détente has deteriorated, meaning that Taiwan would have less to lose from Chinese backlash against new fighters. The Tsai administration’s tougher stance also means that they may be more receptive to Taiwanese Ministry of National Defense (MND)efforts to import weapons and modernize the force. On the US side, President Trump’s historic phone call with President Tsai signaled an increased willingness to engage Taiwan and take actions that China would object to.

Key international issues that could stop this increased willingness from turning into a sale (not just of fighters but also of M1 Abrams tanks), are the US-China trade negotiations and North Korea. The US needs Chinese cooperation on these two issues and China can refuse such cooperation in reaction to a sale of fighters to Taiwan. If the Trump administration feels that trade and North Korea are more important policy goals, then the potential sale would appear to be a bargaining chip. But if progress on trade and North Korea comes to a standstill, the Trump administration has less to lose from a sale and could seek a policy/diplomatic victory in an arms sale to Taiwan. There is also the issue of how Taiwan would pay for such an expensive purchase. While the exact price tag is still to be determined, if there is a sharp defense budget increase at the expense of economic initiatives, it could raise questions in Taiwan’s legislature about whether the fighter acquisition is worth the heavy cost. The result could be a delay in the procurement.

In summary, the political environment is such that the chances of a successful sale of fighters to Taiwan is the highest it has been in a long time. For Taiwan’s fighter fleet, the need for recapitalization is growing more apparent, which should provide a sense of urgency. Most of the fighter fleet was delivered in the 1990s. Taiwan nominally has a 5th generation fighter development program, but will certainly have immense difficulty in developing all the component technologies.

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US

On March 26, the US Air Force (USAF) released its unfunded priorities list to Congress, with additional F-35s, KC-46s, and funding for M-code technology at the top of its list. In the FY20 President’s Budget Request, USAF is receiving 48 F-35s and 12 KC-46s. Under its wish list, the Air Force is seeking an additional 12 F-35s and three KC-46s, bringing the number of fighters to 60 and tankers to 15. More funding for M-Code, also known as Military-Code, is a high priority for the Air Force as well. M-Code is being developed as a secure GPS signal for military applications to prevent against jamming, a highly valuable asset for the military especially when used in contested environments. Other unfunded priorities mentioned include more funding for hypersonics development, artificial intelligence development, directed energy prototypes, Navigation Technology Satellite-3 prototype, Agility Prime funding, and funding for various weapon sustainment programs. Hypersonic development continues to make headlines as government officials fear that the US is behind Russia and China in developing hypersonic weapons, which can achieve Mach 5 speed. US government officials are not only pushing for more funding to develop hypersonic weapons but also to develop technology to counter them as well.

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India

On March 25, the Indian Air Force (IAF) formally inducted four Boeing CH-47F Chinook helicopters at Chandigarh Air Force Station. The commissioning comes six weeks after the aircraft first arrived at Mundra, an Indian port city in Gujarat. This initial delivery is part of a $941 million contract for 15 CH-47F Chinook utility helicopters signed in 2017, with the remaining rotorcraft expected to be delivered over the next few years. Indian media reports suggest that the Chinooks will be used immediately. Tensions with Pakistan remain high weeks after the two sides exchanged missile strikes following a terrorist attack in India. Small arms and shelling are a daily occurrence along the disputed border in Kashmir, and the IAF is expected to ferry artillery guns, troops, and materiel to high-altitude Indian Army posts in the Himalayas.

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UK

On March 22, the UK announced it will procure five E-7 Wedgetail Airborne Early Warning aircraft from Boeing under a deal worth $1.98 billion. The aircraft will replace the UK’s fleet of E-3 Sentry AEW aircraft following a decision to procure a new platform rather than upgrade the aging aircraft, which would have extended its service life from 2025 to 2035. The five Boeing 737-NG aircraft will be modified to the E-7 Wedgetail standard by UK based Marshall Aerospace, addressing initial concerns that UK industrial participation in the program would be limited.

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