The Weekly Wire: Week of 6/12/2015
Kuwait is expected to purchase 24 H225M (formerly EC725) Caracal helicopters for roughly €1B/US$1.1B, with an agreement to be reached as quickly as possible. A deal is expected to be finalized at the Paris Air Show this week following a phone call between French President Hollande and Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah. The Caracal acquisition will expand the Kuwaiti inventory of multi-role rotorcraft, which already contains an aging fleet of three SA-330 Pumas and five AS-332M Super Pumas. The contract has a potentially wide-ranging impact given ongoing discussions between Kuwait, Boeing, and Italy over the purchase of up to 40 F-18 Super Hornets and up to 28 Eurofighters. While a split buy of both fighter jets is a possibility, the €1B Caracal deal could reduce available funds for the Kuwaiti Air Force and force the selection of only one fighter aircraft if excess funding is not immediately available to fulfill the requirement. The contract follows close behind other recent successes for Airbus Helicopters, in particular, the Poland’s selection of the Caracal in April. More broadly, the contract adds to the list of French defense exports, with previous sales of Rafales to Egypt and Qatar.
The DSCA announced on June 10th that South Korea will purchase three more AEGIS combat systems for $1.91b. The AEGIS system will further bolster South Korea’s missile defense capabilities – a stated priority in response to the threat that North Korea poses with its portfolio of ballistic missiles. Already deployed on three Sejong the Great-class destroyers (Sejongdaewang, Yulgok Yi I, and Seoae Ryu Seong-ryong), the deal further cements Western defense contractors in the region and strengthens existing ties between the US and Korean militaries. Though likely to displease both the Chinese and the North Koreans, the sale is nowhere near as contentious as would be a more advanced system like THAAD. While South Korea has publically denied any formal interest in THAAD, China has proactively lobbied South Korea to stay away from any future purchases, citing concerns over the range of its radar and characterizing the system as offensive instead of defensive.