IX - SOURCES OF ATTACK AIRCRAFT

The broad range of aircraft capabilities is matched by the equally diverse means of acquiring these weapons. At least four routes are available. A growing number of countries have indigenous design and production capabilities. Today over twenty nations build sophisticated aircraft of their own design, while an additional eight countries build such aircraft under license. An additional sixteen countries have some form of domestic aviation industry. In addition, a range of first-rate aircraft are for sale in the international market-place, with a growing secondary market for used or refurbished aircraft. And some entrepreneurs are offering their skills for hire. Over 90 countries in all operate combat aircraft with range and payload capabilities above the MTCR threshold. Because of the "force multiplier" effect AEW and aerial refueling aircraft have on modern attack missions, the proliferation of these weapons is also of concern and will be detailed separately at the end of this chapter.

Number of Supersonic Combat Aircraft Delivered (1985-1989)(1)


Supplier		Total	Africa	N.East	S.Asia	E.Asia	Lat.Am.	



United States		412	10	142	16	188	56		

Soviet Union		763	220	270	150	110	13		

Other WTO		1	-	1	-	-	-		

China			85	12	18	55	-	-		

France			118	-	55	50	-	13		

UK			66	6	60	-	-	-		

Other NATO		7	-	-	-	-	7		

Other Developed		-	-	-	-	-	-

Other Developing	82	25	1	20	30	6

Total			1534	273	547	291	328	95


SALES

The United States, the former Soviet Union and various European countries all have active international sales efforts for their combat aircraft. And this traffic is not limited to these countries, as newer suppliers such as China, Czechoslovakia and Argentina enter the marketplace.

The near-term future of the aircraft market is extremely turbulent. On the one hand, defense budgets are declining globally as a response to the end of the Cold War. On the other hand, Operation Desert Storm seems to have created an increased demand for US technology and a world-wide emphasis on air power. The eclipse of the Soviet Union has created another aircraft market dichotomy. While a glut of top-of-the-line Russian aircraft are now being sold at fire sale prices, the Russians are a capricious supplier. Thousands of MiGs and Sukhois may have to be serviced with no guarantee of replacement parts. In addition to their chronic industrial infrastructure problems, the Russians are grappling with business and factory ownership questions that have shut down huge complexes devoted to aircraft manufacture.

One study projects that 8,543 attack and jet trainer aircraft will be manufactured through 1999 for a total market value of $182 billion 1991 dollars.(2) Other experts see the production of attack aircraft plummeting due to the reduced tensions and defense budgets described above.(3)

The following chapter will provide a synopsis of recent and impending sales, illustrative of the market for attack aircraft.

United States

There are several compelling economic reasons to sell combat aircraft. In light of termination of domestic F-16 sales, for example, the US Air Force is encouraging foreign sales as a way to mitigate the dramatic cost increases that will result from these service cutbacks. The F-16 currently costs approximately $20 million per aircraft. If current plans to purchase the aircraft at the reduced rate of 48 units per year ensue, the F-16 could rise by at least $3 million, or 15 percent per unit.(4)

Other US manufacturers depend on sales to recoup expensive R&D expenditures. McDonnell Douglas, for example, puts great emphasis on current and future foreign sales. Company executives estimate that 33 percent of F/A-18 sales are foreign.(5) They assert that the aircraft represents the strongest US export candidate in the late 1990s.(6)

Australia received 75 F/A-18s in 1990.(7)

Bahrain is one of several countries to increase its demand for attack aircraft in the wake of Iraq's invasion of Kuwait. Although it began receiving the first of an eight aircraft order of F-16s in March 1990, industry analysts predict the Sultanate will try to increase this procurement.(8)

Egypt recently purchased 46 F-16D fighter aircraft complete with advanced munitions for an estimated $1.6 billion as the most recent phase in its "Peace Vector" program.(9) The McDonnell Douglas F/A-18 was also a candidate.(10)

Finland is currently undergoing one of the largest single acquisition programs in its history. The Finns looking for 67 aircraft, worth approximately $3 billion, to replace their squadrons of MiG-21 and J-35 aircraft and several US and European aircraft companies are vying for the deal. The United States is purportedly trying to sweeten the deal by offering a variety of sophisticated systems on F-16 and F/A-18 fighters.(11)

The European contestants have been somewhat handicapped. The Finns have required that Dassault and Saab-Scania AB of Sweden, must conclude counter-trade agreements with Finnish manufacturers covering the total value of the contract. Dassault offers the Mirage 2000-5 and the Swedes offer the JAS-39 Gripen. The Russian's candidate is the MiG-29. Dassault has agreed that if selected for the contract, it will coordinate the world-wide promotion of the Finnish trainer aircraft; the Redigo.(12) A final procurement decision is expected by the end of 1992.

Great Britain has been considering buying the Lockheed F-117. The Stealth Fighter's production line was to have been closed last year but may be reopened to supply two more squadrons to the US Air Force.(13) The British were offered, and declined the aircraft several years ago. The F-117s performance in Operation Desert Storm has probably led the RAF to re-evaluate its requirements.

Israel. A regular recipient of US military hardware, Tel Aviv is currently deciding on its next acquisition fighter aircraft. General Dynamics and McDonnell are competing to sell approximately 60 of their respective multirole fighter aircraft to the Israeli Air Force for use in the late 1990s and beyond.(14) The package is estimated $2 billion to $3 billion and initial delivery is planned for 1994.(15) Before the Persian Gulf War, the Israeli Air Force (IAF) reportedly was leaning toward increasing its current inventory of 210 F-16s with more of the same aircraft. The F/A-18's multimission, fighter-attack/- night-attack performance in Operation Desert Storm has made Tel Aviv think twice.(16) Israel currently has no F/A-18s.

Kuwait is rebuilding its armed forces after the destruction wrought by Iraq. The United States is assisting, and a delivery of approximately 40 F/A-18s will do much to rebuild the Kuwaiti air force.(17) The Sheikdom is expected to request up to 35 more Hornets.(18)

Morocco requested additional F-16s shortly after the Iraqi invasion.(19) The United States complied, with a sale of one squadron of the single engine multi-role aircraft.(20) This sale sparked Algeria, which has had longstanding territorial disputes with Morocco to voice concerns about the balance of power in that region.(21)

The Philippines has expressed interest in acquiring a dozen F-16's to replace its aging F-5A's, but the nearly $400 million price tag has prompted interest in the F-5E, A-4, or Hawk 200.(22)

Portugal will receive 20 F-16 A/Bs as part of the "Peace Atlantis" Long Lead Program. The contract is expected to be completed in June 1992.(23)

Saudi Arabia. In the wake of the Iraqi invasion of Kuwait, the United States agreed to sell Saudi Arabia as many as 48 F-15C/Ds,(24) and as many as 24 more capable F-15E's would be sold later.(25) This would satisfy estimated Saudi air defense needs of 120 F-15s, which under the Congressionally-imposed Metzenbaum amendment Saudi Arabia had been limited to no more than 60 F-15s.(26) Last year President Bush waived a congressional limit on the number of F-15s the Saudis could purchase.(27) The relaxation of this restriction was a real boon to the moderate Arab state. In addition to the F-15 transfers, the Royal Saudi Air Force is looking at F/A-18 Hornets, F-16 Falcons and Mirage 2000s as replacements for its aging fleet of Northrop F-5 Freedom fighter aircraft.(28) In the midst of the US/Soviet brokered Middle East Peace conference, Saudi Arabia announced that it had ordered 72 F-15Cs and Fs, worth approximately $4 billion. This would effectively double the oil-rich kingdom's F-15 inventory.(29) The timing of the proposed sale, as well as the raw number of aircraft drew considerable flak from Israel's supporters in Congress. Senators Packwood and Metzenbaum convinced 65 of their colleagues to sign a letter to President Bush condemning the sale, and Saudi Ambassador to the United States Prince Bandar parried by announcing that the sale was off. Whether the sale was really annulled or just postponed remains to be seen.

Singapore is moving ahead with plans to purchase $800 million worth of F-16's by 1995. This acquisition would consist of 30 F-16 C and D models to augment Singapore's existing fleet of eight F-16 A and Bs. The Singapore Air Force reportedly is interested in the C and D models because of the US Air Force training and instruction that would come with the purchase.(30) This acceleration plan has proved controversial, and certain US elements are working against the deal.(31)

South Korea recently signed a $5.2 billion deal for 120 F-16s to with deliveries to begin in 1994.(32) Twelve of the single engine aircraft will be built in the United States. Thirty six others will be assembled in South Korea from kits produced in the United States. The remaining 72 F-16s will be built under license at Samsung Aerospace in South Korea.(33) In January 1992 it was reported, however, that the sale is still in a state of flux. In light of warming relations with the North, some within the Republic of Korea are agitating to reduce the buy from120 to 48 aircraft. This reduction would probable make the investment in tooling to co-produce such a small number of aircraft prohibitive.(34)

The $5.2 competition between the F-16 and F/A-18 was fraught with controversy. The Korean's were originally leaning towards McDonnell Douglas, but changed their minds. Korean officials have said the decision was based on runaway price increases to the F/A-18 package. Other factors are likely to have swayed the Koreans, however. General Dynamics officials contend that the F-16's impressive combat performance in Desert Storm, and 93 percent mission capable rate, played a major role in Korea's decision."(35) There are also considerable practical considerations that weighed in the F-16's favor. South Korean pilots, for example, already know how to fly the Fighting Falcon. The aircraft is flown by US forces in South Korea. Sharing spare parts would be easy.(36) Perhaps the primary motivator for choosing the F-16 was General Dynamics agreement assist the Korean aerospace industry with R&D and production of an indigenous trainer as part of the F-16 deal.(37)

The sale was controversial for several reasons. First, several F-16 sub-systems were deemed to by Congress too sophisticated to export; especially the radar jamming system. Second, South Korea's cancellation of the F/A-18s deal irked several lawmakers -- especially those from McDonnell Douglas' home state of Missouri -- and finally because as of July 1991 South Korea had not fulfilled its Desert Shield/Desert Storm financial obligation.(38)

Similar to the FSX controversy, several sources find the sale to Korea distasteful because of the potential application of technology to Korea's commercial programs. One analyst called the deal "a springboard for developing a multifaceted aerospace production base that can serve both markets."(39) Furthermore, in the early 1970s South Korea abrogated a licensed production deal with Colt Industries by producing the M-16 rifle well in excess of the agreed upon number and selling it to third parties. (40) This breach of contract provided additional ammunition to those opposed to the impending aircraft sale.(41)

Spain purchased nearly 100 McDonnell Douglas F/A-18s last

year.(42)

Switzerland has opted to purchase 34 McDonnell Douglas F/A-18s for about $2 billion.(43) Competing offers of a similar number of General Dynamics F-16 or 36 to 40 Dassault Mirage 2000-5 are still under consideration.(44) Switzerland had earlier rejected a Russian offer of MiG-29s.(45)

French lobbyists are working hard to persuade the Swiss Parliament to overturn the government's decision to procure the F-18 over Dassault's Mirage 2000-5. The Parliament must still approve $2.4 billion in funding for the procurement.(46)

Turkey wants to purchase 80 F-16s from the United States. Since 1984, Turkey has co-produced 70 of a projected 152 Fighting Falcons scheduled for completion by 1994. The 80 F-16s currently being negotiated represent the first half of an eventual 160 Turkey would like to acquire.(47) In addition to an increase in number of units, the deal would also increase the percentage of the aircraft manufactured in Turkey from 70 to about 95 percent.(48) Some US law-makers, however are against such a large increase in Foreign Military Sales (FMS) to Turkey, and the fate of the agreement is unclear. The Ankara government is soliciting funds from Persian Gulf countries for the second 80 aircraft. Turkey reportedly manufactures up to 70 per cent of each F-16. Under the new project the Turkish share will increase to 95 percent.(49) The Turks have postponed the purchase of Patriot antimissile systems in order to give top priority to the financing and production of the multirole aircraft.(50) This prospective sale comes at a time when F-16 producer General Dynamics is struggling to keep the production line open.

United Arab Emirates is trying to strike a deal for 26 McDonnell Douglas F-16 Fighting Falcons for approximately $3 billion.(51)

Western Europe

European Industrialists are gearing up to recover from a six year dip in aircraft exports. Officials at the French aerospace manufacturer Dassault Aviation estimate they will sell 200 to 300 new fighters by the year 2000, out of a world market of approximately 2,000 units.(52) They feel confident that their share of the export market will increase relative to the American. If this increase in relative market share takes place, it will complete a cycle that began in the 1970's. During this period, European sales of attack aircraft were brisk because the United States limited its exports to older aircraft such as the F5. When the United States made its front-line aircraft, the F-15, F-16, F/A-18 available for export in the 1980s, however, European sales plummeted. While the United States enjoyed the lion's share of the aircraft market, the Europeans made there money on the margin. Those countries that could afford to diversify their imports, did so by buying European. Today, Serge Dassault predicts that in three or four years no US fighters will be cleared for export in production; the high-end American aircraft will be unsuited for export.(53)

The sophisticated avionics, stealth technology, and high performance propulsion systems that the United States is pursuing will be inappropriate for export; perhaps for decades. Furthermore, once the F-117A, the F-22 and other advanced aircraft do become available for export, their high costs will be extremely unattractive to prospective customers. In addition to the high purchase price, these sophisticated systems will be very difficult to maintain. It is doubtful that many countries would have the infrastructure to support such high risk technology.(54) This trend also applies to aircraft subsystems that the United States will try to peddle along with aircraft. The French, for example, are marketing an air-to-air missile that costs and weighs about half the amount of the US AMRAAM. For most developing countries, the cheaper system is the better system.(55)

European offerings, on the other hand, range from the high-end Tornado to less-expensive options such as the AM-X, Hawk and Alpha-Jet. The Hawk is being Hawks solely for export.(56)

New European fighter projects are increasingly oriented toward international sales. France declined to participate in the European Fighter Aircraft (EFA) project in preference to its own Rafale, in part because of a belief that the lighter Rafale would have greater appeal in the international market.(57) Concerns about the high cost of the EFA project have led Germany to reduce its requirement for the EFA by 90 aircraft(58) This will certainly increase pressures for foreign sales. Although officials at Eurofighter claim that Germany will not pull out of the project, the SPD has announced its opposition to the aircraft, which does not portend well for German participation.(59) Interest in international EFA sales prompted requirements that subcontractors (such as American companies) certify that only COCOM restrictions would apply to export sales.(60) While several politicians are beginning to question the requirement for such an expensive fighter program, in light of the diminished Russian threat, strong support in Italy, Spain and the UK indicate that the program will probably survive a German withdrawal.(61) Other's are more skeptical. McDonnell Douglas officials say that at $60 million per aircraft, the EFA has priced itself out of the export market.(62) The official estimate is $35 million per copy, indicating the view from St. Louis MO may be slightly biased.

Abu Dhabi recently acquired 35 Dassault Mirage 2000 EAD/RAD/DAD Mach 2 fighters. In 1989, Abu Dhabi was the first customer in the Persian Gulf to purchase the two-seat Hawk 100 Mk. 102s.(63)

Brunei wants to buy L 150 worth of British Hawk fighter aircraft. The two-seat aircraft will be Brunei's first squadron of fixed wing aircraft.(64)

Eastern Europe may be the recipient of over 400 old Russian aircraft that united Germany inherited. Finding little use for the aircraft, which include MiG-21s, L-39s, and transport aircraft, Germany will give them away if they cannot sell them.

India has considered purchase of the British Aerospace Hawk or Dassault Mirage F-1, given continuing difficulties with the indigenous Light Combat Aircraft project, which had previously prompted consideration of the Alpha Jet or F-5.(65) India has also purchased 49 Mirage 2000s from France for an estimated $1 billion. (66)

Jordan canceled a purchase of Tornados from Great Britain and has not decided on a replacement.(67) Jordan has also been forced to cancel an order for 12 Mirage 2000s(68) since Jordan and Saudi relations have cooled. Before the Gulf War Saudi Arabia funded numerous Jordanian defense purchases, including About 35 Mirage F1s they jointly operate and this money is no longer forthcoming. The Jordanian armed forces have been scaled back and it appears that Jordan may sell 65 of its F-5s to Greece.(69)

Malaysia has agreed to purchase ten single seat Hawk 200 fighters and 19 two seat Hawk 100 combat-capable trainers for $770 million. The negotiations originally involved 32 aircraft. The Malaysians chose the Hawk over the more expensive Panavia Tornado.(70)

Oman also snubbed the Tornado, and recently signed a contract for 16 Hawk 100/200s for an estimated $284 million.(71)

Pakistan is currently negotiating with France for purchase of 44 Mirage 2000 fighters.(72)

Saudi Arabia has, in recent years, purchased 72 Tornados. The Sheikdom has been negotiating a purchase of 48 additional aircraft.(73) The deal jeopardized, however, by the Tornado's high cost. Instead the oil-rich Saudis are considering replacing their existing F-5's with the less expensive Hawk-200.(74)

South Korea is another nation considering purchasing the Hawk. In July it was announced that Seoul could buy as many as 20 during the next.(75) Panavia is currently negotiating a sale of 50 electronic-warfare Tornados to Seoul. Since the Tornado's production is winding down, the consortium is keen on a sale.(76) The South Koreans are reportedly also considering the F-4G Wild Weasel and the Grumman EA-6B.

Taiwan has been striving to acquire a front-line attack aircraft in response to China's purchase of Russian Su-27 Fencers. Since the United States has refused to sell them the F-16, hopes to purchase between 80 and 100 Mirage 2000-5 fighters.(77)

Thailand is considering purchase of two squadrons of the Italian AMX, at $15 to $20 million each, and one squadron of the Panavia Tornado, at between $30 million and $40 million per copy.(78)

UAE is also purchasing ever popular British Aerospace Hawk. Eighteen of the fighter variant, as well as 16 trainers are part of the deal worth $100-million.(79)

Former Soviet Union

The economic woes facing the states of the former Soviet Union are too numerous to chronicle. Earning hard currency through increased military sales, including attack aircraft, will undoubtedly be a high Russian priority. In addition to the economic incentive, Moscow possesses of a large stock of surplus arms after several East European states, in particular East Germany, decided to terminate weapons contracts.(80) The Su-37 about to enter engineering and development is designed solely for export. Among other potential markets, the Russians hope to convince the Indian Air Force that the Su-37 would be a more sensible purchase than continuing with the development of the LCA.(81) The most recent Russian entry in the international market is the MiG-29. The Fulcrum's sales are facilitated by its low price. Reliable estimates put the MiG-29 at $11 million per unit compared to the $39.6 per unit price of the F/A-18.(82) The former Soviets' merchandizing will probably be hurt by the impressive showing US aerospace technology gave in the Gulf. Most countries would prefer to acquire the aircraft that the US Air Force was flying to the Russian aircraft that were either being shot down or fleeing.

China is expected to purchase 24 Sukhoi Su-27 all weather counter-air fighter aircraft from Russia. The price tag has been estimated between $700-800 million.(83) The Chinese government also considered purchasing MiG-29s.(84)

Cuba was slated to receive as many as 36 MiG-29s by early May 1990.(85)

Germany. It has been reported that the German Ministry of Defense is negotiating with the Russians over the purchase of 200 MiG-29s as an alternative to EFA. If true, this would represent a change of German opinion concerning the Fulcrum. Germany's interest in the MiG-29 Fulcrum is unclear. Last year, the Federal Republic was unsure of what to do with 32 MiG-29s that the former East Germany had planned to purchase for a total cost of $628 million.(86) In October 1991 the German MOD announced that a MiG-29 purchase would make little sense since the aircraft was based on obsolete technology. Financial concerns, however, may now make the Fulcrum more attractive. The MiG-29s would reportedly cost 10 billion marks less than the same number of EFAs.(87)

India is likely to acquire Russia's latest vertical/short take off and landing (V/STOL) fighter, the Yak-141.(88) India and Russia also agreed that India would also be the first country to purchase the MiG-31.(89)

Iran and Russia have been negotiating the sale of advanced aircraft, such as the MiG-29 and the Su-24, in addition to the 14 MiG-29s they acquired last year.(90) It is believed that the US arms embargo has grounded the majority of the Iranian F-4s, F-5s and F-14s for lack of spare parts. Thus, Tehran wants the Russian aircraft as replacements. In a bizarre turn of events, Iran acquired an estimated 120 Mig-29s and Su-24s when Iraqi pilots fled their American pursuers. It is believed that only about 70 are operational.(91)

Israel was also involved in an unusual event in the summer of 1991. At the Paris Airshow, the Soviet Aircraft Industry Minister purportedly offered to sell Tel Aviv any defensive equipment it required, including MiG-31 fighters.(92) Officials later denied that the offer had been made. Vitaliy Churkin, head of the USSR Ministry of Foreign Affairs Information Administration: "I want to emphasize that the sale of arms to foreign countries, including, of course, Israel, is a prerogative of the government. The statement at the Le Bourget airshow which has been mentioned does not reflect the policy of the Soviet Government."(93)

Malaysia. The Malaysian Prime Minister Mahathir Mohamad announced that since the Russia is no longer a communist country, he would consider purchasing aircraft and other military equipment from that country.(94)

The Philippines is considering leasing, rather than purchasing, Russian military aircraft to upgrade its ageing US-supplied fleet.(95)

Romania has received as many as 10 MiG-29s.(96)

Switzerland rejected a Russian offer of more than 20 of the East German MiG-29s, in place of the previously selected F/A-18.(97)

Syria. As part of a $2 billion arms package including tanks, surface-to-surface missiles, and other weapons, Syria will purchase 48 MiG-29s and 24 SU-24s from Moscow.(98) The Syrians already own approximately 40 MiG-29s and 20 Su-24s.

United States. While just a few years ago the United States intelligence agencies offered bounties to those who could provide them with Russian military hardware, Moscow is now actively marketing its wares to its former rival. Russian entrepreneurs are trying the sell the MiG-29, for $25 million each, to US services to fill "aggressor squadrons" they use in training pilots in dog fight techniques.(99)

Other Exporting Countries

Although the United States, Western Europe and the former Soviet Union export the lion's share of attack aircraft, several other countries are vying for a piece of the pie. Several of these countries sell indigenously produced aircraft. Others sell aircraft co-produced or produced under license from one of the "big three." The motivations, however, are similar to those of the primary suppliers: money, influence, and benefits for indigenous aerospace endeavors.

CHINA

China has a large arms industry, markets its merchandise aggressively, and will sell to anyone. Recent sales of aircraft include two squadrons of Chinese-built F-6 attack aircraft and one squadron of F-7 air superiority fighters to Myanmar,(100) and FT-5 trainers and F-7 interceptors to Sri Lanka.(101) Beijing is reportedly offering the aircraft at cash "friendship" prices."

In 1988 China delivered the first 20 of 60 F-7M Skybolts to Pakistan. Some co-production of the aircraft may be part of the deal. (102) As upgrades, Karachi reportedly is leaning to a totally indigenous Chinese aircraft over the Grumman-influenced Sabre II, or F-7P.(103)

ISRAEL

In January 1992 the Philippines announced its intentions to buy 18 Israeli Kfir fighters for approximately $144 million. The unit price for the 16 single-seat aircraft is reportedly $7 million and the two-seat trainer versions run $16 million.(104)

Israel has requested US approval of the sale of 34 single seat and six two seat versions of the Kfir Israeli-built fighter. The US ok is required because the fighter employs a General Electric J-79 engine. Taiwan, developing its own fighter, has been trying in vain to augment its air force with either F-16 or Mirage 2000 fighters.(105) The tension between the United States and Israel over the export of American technology via Israeli sales is likely to grow. In December 1991, US intelligence officials announced that Israel was planning to open a government coordinated and sponsored "arms office" in the PRC. In light of what the Israelis have to offer, and what the Chinese need, it is most likely that a transfer of avionics and other technologies developed in the Lavi program will ensue. Since this program was largely funded by the United States, transfer of this technology without American approval would be impact very negatively on US/Israeli relations. Furthermore, since there is a void in the Chinese avionics and fire control system capability due to the 1989 termination of a US/Chinese program in response to Tienanmen square, any Israeli to take advantage of this opening would be particularly unwelcome in Washington.

TAIWAN

Taiwan is negotiating a deal to sell Thailand 14 single seat Northrop F-5Es and five two-seat F-5Fs.(106) Thailand is its air force.

TURKEY

Egypt recently announced that it will buy 46 Turkish-made F-16 fighters worth about $1.3 billion. This is contingent upon the US/Turkish deal going through and would be financed by US Foreign Military Sales credits to Egypt."(107)

YUGOSLAVIA

Yugoslavia is expected to enter the export market by delivering approximately 10 G-4 Super Galeb light attack/trainer aircraft to Myanamar. Great Britain, which produces the Super Galeb's engine, has also banned defense exports to Myanamar. London is trying to distance itself from the sale.(108) It was recently revealed that Yugoslavia is upgrading the Super Galeb's combat capability. It is unknown if the more combat capable aircraft are to be transferred.(109)

Secondary Sales

The primary market of sales by manufacturers of combat aircraft is not the only source for these weapons. In the two decades after the Second World War surplus used aircraft were routinely transferred from the United States and Britain to a host of recipient countries. As the operating lives of aircraft lengthened in the 1960's this practice declined, but in recent years a growing secondary market has emerged in which the initial purchaser subsequently transfers the aircraft to a third country. The advent of major negotiated arms reductions in Europe may further accelerate this process.

One of the most extensive secondary markets arose during the war between Iran and Iraq, during which Iraq obtained second-hand Chinese aircraft from Egypt and Jordan.(110) Turkey is a major recipient of used aircraft, including F-104's from Germany, F-5As from the Netherlands, and F-4s from Spain and the United States.(111) In the summer of 1990 Australia announced that it had agreed to sell Pakistan 50 second-hand Mirage air-defense fighters.(112) And Finland has considered and rejected the possibility of obtaining second-hand aircraft from Eastern Europe to replace its aging fleet of Saab 35 Drakens and MiG-21s.(113)

On May 31 the United States announced that it was transferring 10 used but upgraded F-15A and Bs to Israel. The package is worth about $65 million.(114) What is noteworthy about this transfer is that the Pentagon had been seeking to fulfill the Israeli request, which was in excess of earlier agreements, through the "Southern Region Amendment" of excess military equipment. Through this vehicle, the United States transfers, free of charge, "excess equipment" to several Mediterranean nations. The recipient pays only for shipping.(115)

Entrepreneurs

Missile proliferation concerns have focused on the activities of private entrepreneurs, and similar private undertakings are also afoot in the combat aircraft arena. Missile proliferation concerns were fueled in the 1970's by the operations of the German firm OTRAG in Zaire and in the 1980's by the activities of the Consen consortium in support of the multinational Condor project.

Venga Aircraft of Canada is working on a joint venture to produce its TG-10 light attack trainer in Malaysia, and projects a world-wide market of about 160 aircraft, although the current status of this project is uncertain. Other projects advanced by private developers in the past decade, such as the Swedish TW-02 Virus and the Swiss Piranha,(116) as well as the IML AX of New Zealand,(117) have not yet achieved fruition. In contrast the roughly $1 billion(118) to $2 billion(119) required for development of a high-end fighter, the development costs for some of these low-end simple projects can be as little as a few million dollars. For a relatively cheap investment, developing countries can tap entrepreneurs for surprisingly advanced technology. In August, for example, the world's first supersonic home-built jet was displayed. Using a General Electric CJ610 engine the aircraft can achieve a maximum speed of Mach 1.4 at altitudes up to 45,000ft. The cost is a bargain at $197,500 minus engine and avionics.(120) It appears that entrepreneurs will be able to bring very capable aircraft well within the price range of the poorest countries. An entrepreneur has recently produced the first propeller driven aircraft to fly faster than Mach 1.(121)

Co-production/Licensed production

Licensed production and joint development agreements are widespread, and the motivations for entering into them are increasing. Arms Negotiator Richard Burt, for example, recently advocated increasing US co-development and co-production programs with allied nations as a means of addressing trade imbalances. While the US-European defense trade ration was seven to one in the early 1980s, he notes, today it stands at 1.6 to 1. This changed ratio is a result of defense trade protectionism detrimental to both parties. Ambassador Burt would drop these barriers and form a "defense GATT."(122) Most developing are eager to co-produce or produce aircraft under license since the engineering experience they acquire is much more precious than the aircraft itself. In fact, it is often difficult to determine when a particular deal is a sale, co-production agreement, since countries such as Turkey, Japan and South Korea have been successful in winning co-production rights when negotiating aircraft purchases from the United States.

American production of the F-16 has been supplemented for several years by license co-production in Belgium, the Netherlands, and Turkey. The United States will produce 300 Hawks as the T-45 Goshawk, and Chile, India and Indonesia have been offered licenses to produce the Hawk as well. While there is considerable historical data on aircraft co-production, the following section will focus on recent agreements.

United States

China In 1986 China signed a $550 million agreement with Grumman to modernize 55 of its fleet of F-8 fighters, but this agreement was canceled in early 1990, in the wake of the cooling of political relations with the West, as well as in response to a 40% increase in the cost of the project.(123)

By 1991, however, the atrocities at Tienamen Square had dimmed in the Bush Administration's memory. Boeing And McDonnell Douglas announced that after nearly four years of negotiations China will soon choose one of them as a partner in the co-production of 150 aircraft. Boeing is offering twin-engined 737-300 versus McDonnell Douglas' MD-90 twin-jet. The deal is estimated at $4.5 billion and would last approximately 10 years. A primary factor in China's decision is which company will provide it with the most work and technology transfer. McDonnell Douglas has reportedly agreed to let the Chinese build nearly the entire plane and provide managerial support to boot.(124)

Japan produced a number of American aircraft under license, including the F-86. F-104 and F-4 fighters, the T-33 trainer, and P2V-7 and P-3 maritime patrol aircraft, with relatively little controversy.(125) But Japanese licensed production of the F-15 during the 1980's was viewed by some American critics as a source of innovation in commercial aircraft.(126) This led to considerable controversy over negotiations on arrangements for the FS-X fighter project, which envisions production of at least 130 and perhaps as many as 170 aircraft, starting in the mid-1990's.(127) The FS-X indicative of several aircraft development projects in that there is no clear consensus as to whether it is a co-development project or an indigenous program. In this analysis, the FS-X will be examined in the indigenous program section.

Israel's extensive arms industry has received important technology infusion by co-producing US products over the years. A good example of the impact of this collaboration on Israel's industry is F-16 program, which occupies over 40 Israeli firms.(128)

JPATS

The American Air Force and Navy Joint Primary Aircraft Training System (JPATS) competition has occasioned a remarkable reverse flow of aircraft, with American companies teaming with foreign builders in offering designs.(129) FAMA of Argentina is teaming with LTV to offer the IA.63 Pampa, which was originally developed with extensive assistance from Dornier of Germany. Romania's IAv Craiova is teaming with Jaffe Aircraft to offer the IAR-99 Soim (Hawk). Aeromacchi is offering its MB-339 with Lockheed, while Augusta is proposing the S.211 with Grumman. And Czechoslovakia is considering offering its L-39 Albatros.(130) Beech aircraft has joined forces with Pilatus of Switzerland to offer the competition's only turboprop, the PC-9. Rockwell International and Germany's RFB will offer a re-engined FanRanger called a FanTrainer.(131)

The Russians' Mikoyan even discussed the possibility of a joint bid with General Dynamics, but it was deemed too radical even for the new world order.(132) All in all there have been expressions of interest from at least 19 potential non-US aircraft manufacturers.(133) Although there have been several foreign candidates with out American partners, it appears unlikely they could compete with the US/foreign teams. One Air Force official noted "It boils down to pure and simple economics. If a foreign company lacks a US partner, then that usually means higher aircraft costs without any benefit to our own industrial base."(134)

The JPATS competition is for 842 aircraft -- 495 for the Air Force, 347 for the Navy at up to $3 million per unit.(135)

South Korean experience with combat aircraft production began with license-built F-5Es. Following abortive efforts in the 1980's to purchase F-16's or F-20's, Korea recently signed an agreement for a three-phase F-X Korea Fighter Program, leading to licensed production of the McDonnell-Douglas F/A-18 in Korea. The first 12 aircraft in this project will be built by McDonnell-Douglas, the next 36 will be assembled in Korea from American kits, and the final 72 aircraft will be produced by Korea.(136) Noting that in the past Korea has produced weapons in excess of licensed quantities, Congressional critics of the Korean Fighter Program have raised concerns about the effectiveness of limitations on subsequent transfers to third countries (supplies to Iran continued until 1984).(137) Critics also charge that South Korea has shipped military equipment to Libya, Iran and Iraq.(138)

Taiwan built nearly 300 Northrop F-5s under license from 1974 to 1986. But when a proposed $1 billion sale of 100 F-20 Tigersharks was blocked by the Reagan Administration in July 1982, which was interested in improving relations with China, Taiwan decided to go it alone.(139)

Western Europe

Perhaps a metaphor for European integration, the Europeans' co-development arrangements for aerospace technology has become an extensive web. In addition to several joint helicopter projects, which are outside the scope of this report, the Europeans have banded together to develop the EFA (European Fighter Aircraft) and TORNADO attack aircraft. The EUROFLAG consortium has also been established to develop a replacement for the C-130 transport aircraft.

Brazil and Italy began collaboration on the AMX ground attack/reconnaissance aircraft program in 1980. Aeritalia and Aeramacchi of Italy and Embraer of Brazil are the three companies involved. Aeritalia, now Alenia, is the project leader. The Italians produce the AMX at a rate of one per month -- although Alenia is reported to be able to increase this rate significantly -- and Embraer can attain half that pace. The partners have begun pushing exports as a way of increasing these inefficient production rates that are a product of declining defense budgets.(140) Indonesia and Thailand have expressed interest in the aircraft.(141) The aircraft was being designed as a new technology replacement for the McDonnell Douglas A-4. The AMX has a combat range in excess of 250nm while carrying six Mk.82 bombs, two AIM-9 Sidewinders. A total of 186 single-seat and 52 two seat AMXs are planned for the Italian air force.(142)

Chile's ENAER built 10 C.101 Aviojets under license from CASA of Spain in the early 1980's, and the two companies have jointly developed an attack version of the aircraft.

Egypt assembled 37 Alpha Jets under license from 1982 to 1985, built components for Mirage 2000s ordered from France in the late 1980's, and sought permission to build the F-16 or F-20 in 1982.(143)

India has produced a number of aircraft of foreign design under license, including over 30 SEPECAT Jaguars since March of 1982.

Japan has been negotiating with Panavia, the Tornado-building consortium, a deal that would allow Tokyo to produce a new variant of the company's successful Tornado fighter/bomber for Japan's air force. This variant is visualized as an anti-radar platform similar to the American Wild Weasel. Panavia is reportedly pushing for a minimum of 24 aircraft.(144)

Singapore began building the Italian SIAI-Marchetti S.211 jet trainers in 1985 using kits provided by the manufacturer.

Former Soviet Union

The Soviet Union fostered its share of ingenious aerospace industries through co-production and licensed production agreements. Although these agreements have primarily been with past satellites, communist fellow travellers, such as China, have been the recipients of Soviet aircraft production technology. India has also produced a notable number of Soviet aircraft including the MiG-21, -23, and -29. In 1987 India began the licensed production of the first of 165 as MiG-27 Flogger-D airframes and engines. Talks are currently underway between India and officials in the Former Soviet Union to strike a Yak-141 co-production deal.(145) The Russians are eager to sink the LCA in favor of a co-produced aircraft, which gives some indication of how strapped the Russians are for money. They have reportedly offered a co-produced Su-37 as an alternative to the indigenous Indian fighter.(146)

Other Co-production arrangements

The proliferation of aircraft manufacturing has proliferated to the extent that co-production no longer depends on the involvement of a "first-tier" producer like the United States or France. Several nascent aircraft manufacturing countries are pooling their resources.

Romania and Yugoslavia have jointly developed the IAR-93 Orao light-attack trainer, using Western engines and avionics.(147)

Yugoslavia is also searching for partners in developing its Jet-like Trainer program. Yugoslavia requires between $5 and $6 million to launch the program. The "jet-like" propulsion will be provided by a Turbomeca TP-319 310kw turboprop engine.(148) There is a high degree of similarity between Yugoslavia's NOVI AVION, and the Indian LCA. One explanation may be that France's Dassault has been intimately involved in both MiG-21 replacement programs.(149) Yugoslav officials would like to export between 400 and 600 NOVIs, in part to accrue hard currency.(150)

China and Italy have co-produced the A-5M fighter bomber. Alenia produces 40 percent of the aircraft -- mostly the avionics -- while China manufactures the remaining 60 percent. China is aggressively marketing the fighter-bomber, with Pakistan as a potential customer. Pakistan, in turn, is seeking involvement in the manufacturing as part of the deal for 100 A-5Ms.(151)

China and Pakistan have agreed to jointly develop the K-8 Karakorum jet trainer, which will incorporate significant American content, including Garrett engines, and Collins and Magnavox avionics.(152) At one point, the future of this project was jeopardized US restrictions levied by the United States following the June 1989 Tienanmen Square massacre. Whether there is enough life left in it now that Most Favored Nation status has been revived is unclear. The aircraft was originally priced at $3.6 million each.

UPGRADES

Upgrading an older aircraft is an effective means of improving one's aerial capabilities. After one upgrade, for example, the avionics suite of the venerable A-4 Skyhawk was transformed to the functional equivalent of the F-16.(153) Upgrades often serve as a vehicle for collaboration of between countries. For example, Rockwell International and FIAR of Italy agreed to join forces in upgrading the avionics of F-5 aircraft.(154)

Even the worlds top-line aircraft are upgraded. Because of delays in the ATF program, the F-15 will be in service well beyond 2005. Thus the US Air Force is considering retro-fitting the aircraft's radar.(155) A five nation consortium of Belgium, Norway, Denmark, the Netherlands and United States, will spend $2 billion to upgrade the capabilities of 533 F-16s.(156) This project is just a small slice of a very large and lucrative pie. Some estimate avionics upgrades alone to have a value of up to $25 billion over the next decade.(157)

Upgrading existing aircraft is not a money making bonanza for the superpowers alone. Israel Aircraft Industries (IAI) is currently using various systems and equipment developed for the Lavi to upgrade Chile's fleet of F-5E/Fs. ENAER is also collaborating with IAI on Chile's upgrade of the Mirage 50.(158)

Declining defense budgets are making upgrades attractive to several countries. Not only are upgrades more cost effective, but they often provide nascent aerospace industries a means of broadening their skills and testing their engineering. Chile, for example, is the first country to attempt to put a more advanced radar in its F-5E/Fs. It is collaborating with IAI on aversion of the multi mode-pulse Doppler radar used in the Lavi fighter prototype.(159)

Upgrading aircraft capabilities often results from attempts to enhance collective security. The United States is coming under increasing pressure, for example, to export top-of-the-line avionics equipment to foster inter-operability with allied aircraft. The ROK's indigenously produced F-16, for example, will sport an avionics suite that will be analogous to the Block 50, the US' most recent F-16 avionics upgrade.(160) While the ROK is an ally, the United States has lost control over the spread of a particular technology once it is integrated into another countries technology base. Declining defense budgets will pressure governments even further to reduce duplicative development efforts through collaboration.

While factors such as export controls make it possible to chart the volume and type of aircraft sales, it is easier for a country to upgrade the capability of its aircraft clandestinely, since strict non-disclosure agreements are standard in most upgrade programs.(161) Singapore is just one among many countries in Asia/Pacific region that requires non-disclosure agreements before it will let an upgrade contract.(162) Thus, secret upgrades of attack aircraft may add encourage regional rivals to initial aggression, since surprise is usually a primary consideration in attack.

Australia

Australia recently contracted Rockwell International to modernize its entire fleet of F-111 for an estimated $320 million. Rockwell will add a Pave Tack electro-optic/laser designator and give the F-111 the ability to carry the AGM-84 Harpoon anti ship missile in an attempt to keep the 18 F-111Cs and four RF-111Cs flying beyond 2010. Australia considered this improvement critical as the fleet represents a "unique force in regional terms."(163)

Canada

Consistent with several other countries, Canada is upgrading its F-5s rather than purchase new aircraft. Bristol Aerospace will provide a structural and avionics upgrade.(164)

Great Britain

Great Britain is considering an upgrade to the Tornado that would give it the stealth capability currently projected for the US Navy's AX strike aircraft. The "Tornado 2000 Penetrator" would make use of a faceting technique similar to that on the F-117 to reduce frontal RCS, would have a 50 percent longer combat radius, and carry two tactical air-to-surface missiles (TASM) for strategic strike.(165)

ISRAEL

Israel estimates that it should be able to add 20 years to the life of its F-4E fighters, the country's principal fighter-bomber. Outside sources estimate the upgrade to be extremely expensive, but Israel is reticent about the exact amount. The Israelis had hoped to use the Pratt & Whitney PW1120 engine as a replacement for the Phantom's original General Electric J79, but this hope died with the Lavi.(166)

Jordan

Jordan is undergoing an F-5 upgrade similar to the Canadian project.(167)

Norway

LTV has won a $20 million contract to apply its "digital core" avionics improvements to Norway's F-5 fleet.(168)

Pakistan

Pakistan's F-16 engine improvement program has come to a grinding halt due to a hiatus in US aid.(169)

Singapore

Singapore is letting a contract to install a new look-down radar in its fleet of F-5 Phantoms. It will be the first country to attempt this particular upgrade.(170)

Spain

CASA is collaborating with Bristol Aerospace on structural improvements to its F-5Bs.(171)

Taiwan

Taiwan flies more than one-fourth of the world's F-5E/Fs and will soon choose a contractor to perform a major avionics upgrade worth $1 billion.(172)

Thailand

Is installing a GEC HUD, ring laser INS and multiplex bus on its F-5s. Another goal is making the aircraft compatible with the Rafale Python 3 infrared-guided missile.(173)

Venezuela

Is in the midst of a $270 million modernization project. The French will deliver two upgraded Mirage 50 fighters with seven new Mirage 50 fighters, and the modernization of the 11 Dassault Mirage III, and Mirage 5Vs to come.(174)

INDIGENOUS PRODUCTION

A growing number of countries outside the traditional "developed world" have indigenous aircraft industries capable of designing and producing combat aircraft. In many instances this capability has been developed through building such aircraft under license from another country.

Probably the main catalyst for producing aircraft indigenously is the desire to be free of the external constraints that are usually part of the purchase agreement. Independent minded states such as France and India aggressively support indigenous programs. There are, however, other reasons to embark on building an indigenous aerospace industry. Aerospace industries create the demand for skilled technicians and engineers. Thus, an aerospace industry can serve as a focal point for investing in improving a country's workforce and technology base. For some states, such as Israel, South Africa and Taiwan, there are very formidable external pressures for building ones own aircraft. For these Pariah states, indigenously produced aircraft may be the only ones they can count on in a pinch.(175)

ARGENTINA

Prior to the Pampa -- which was developed with considerable help from German companies -- Fabrica Militar de Aviones SA of Argentina produced the IA 58A Pucara light attack aircraft which was canceled in 1986.(176)

BRAZIL

According to some estimates, by 1994 Brazil may produce more air force fighter aircraft than the United States.(177) In addition to its cargo and surveillance aircraft Embraer co-produces the AMX with two Italian companies. Embraer's Tucano trainer has been exported to Egypt, Iraq, Honduras, Iran, Paraguay, Peru and Venezuela.(178)

CZECHOSLOVAKIA

Czechoslovakia has a large arms industry. It addition to other aircraft, Czechoslovakia either produced or assembled at least half of the world's 10,000 military training planes. This industry, however, came head to head with Havel's velvet revolution. In 1990, for example, the new Czechoslovak foreign minister announced that his country would retreat from the international arms trade(179) Since then, Czechoslovakia's aircraft production lines have stood all but idle.

FRANCE

France opted to produce its own fighter aircraft, the Rafale, over participating in the European Fighter Aircraft program. Development of Rafale is a high priority in Paris. Some estimate the price of developing the aircraft at more than $10 billion, which amounts to a whopping 75 percent of the defense expenditures France planned for 1991.(180)

INDIA

India maintains the third largest airforce in the world. The Indian Air Force (IAF) fields 833 fighter aircraft and has 110,000 personnel. The bulk of India's aircraft are indigenously produced.(181)

Based on its licensed production experience, India plans to build 200-300 Light Combat Aircraft (LCA). Initiated by Rajiv Gandhi's government, the project has slowed due to budgetary shortfalls and engineering problems since Prime Minister Singh entered office in 1989.(182) Prototype development should cost more than $2 billion and unit cost would be about $20 million.(183) The LCA is being developed with considerable outside assistance,(184) with about 35% of all components being procured from foreign suppliers.(185) Dassault-Breguet of France has provided technical assistance for the basic design and negotiations are under way with Allied-Signal Bendix and Lear Astrionics for assistance on the aircraft's avionics.(186) General Electric of the United States will provide engines for the prototypes, though Indian efforts to secure American engines for the full production lot were not successful.(187)

Two technology demonstrators for the Light Combat Aircraft program are expected to be ready in 1995-6,(188) and the first production LCA is expected to fly before 2005.(189) The five year slip in program was due to enhanced requirements imposed by the Indian Air Force.(190) The Indian Air Force reportedly is demanding that the LCA incorporate fly by wire, heavy use of composites, and an Indian-designed engine.(191) India has had trouble developing the alloys that are to make up the composites in LCA's airframe.(192) India had originally intended to develop a GTTS-35VSJ (kaveri) turbofan engine with full authority digital engine control systems indigenously.(193) This sub-project proved too challenging, however, and the Indians have settled on the General Electric F404 engine.(194)

In light of the LCA's slipping schedule, India is looking for something to fill the gap. It will either upgrade its fleet of MiG-21 fighters with US and European subsystems or procure a new aircraft as an interim measure.(195)

India is attempting to develop its own AWACS by integrating indigenously, and co-produced radars with a Avro-748 twin-turbo prop aircraft. Originally planned to undergo flight tests in 1991, the aircraft's deployment has now been delayed until mid 1994. The Indian AWACS project has been chugging along since 1980. At one point, India and Iraq collaborated on transforming Soviet Il-76s into the "Adnan" AWACS. That partnership produced only three aircraft of marginal utility.(196)

ISRAEL

Israel has developed an extremely capable aircraft industry, honed by combat experience unmatched in the world.(197) Israeli-built aircraft include the Nesher (a copy of the Mirage III), and the Kfir (which resembles the Mirage 5, using the American J-79 engine). In addition, Israel gained considerable experience in aircraft production from indigenous upgrade programs for its Mirage and F-4 aircraft.(198) In the mid-1970's, Israel sought agreement for coproduction of the F-16, but this fell through due to American concerns about potential third-party sales in competition with the American manufacturer.(199) Instead, Israel planned to build up to 300 Lavi dual-role combat aircraft to replace its fleet of A-4 and Kfir aircraft between 1993 and 2003.(200) But the Lavi was canceled in 1987 as a result of growing American concerns about the cost of the project.(201) One estimate puts the development cost at $3 billion.(202)

JAPAN

Japan's FS-X is a modified version of the F-16, and General Dynamics hopes to receive as much as 40% of the $7 billion project.(203) In contrast to other F-16 coproduction agreements, the extensive redesign in the FS-X will require transfer of detailed wind tunnel design information.(204) The project is jeopardized, however, by mammoth cost over-runs. Originally, Mitsubishi predicted that it could build the multi-role fighter for Y165 billion ($35 million) each. Recent estimates price the aircraft around Y8.4 billion per unit.(205) This makes the FS-X the world's costliest multi-role fighter aircraft. The development costs have risen accordingly, from an original Y16 billion ($1.2 billion) to Y310 billion.(206) In addition to the spiraling costs, the FS-X is three years behind schedule.(207)

The source of these potentially fatal cost overruns are unclear. The Japanese claim it is the American's fault. By not sharing the F-16's "source code" and making the Japanese develop their own engine, the United States has added considerably to the cost.(208) Another costly aspect is the small number of aircraft to be procured. Japan plans for approximately 130 FS-Xs, which it difficult to achieve economies of scale sufficient to lower unit price.(209)

It appears that a more central reason for the aircraft's escalating cost is the lack of an adequate technology base at Mitsubishi and other Japanese partners.(210) In question is also what has been considered Japan's technical pride and joy--its patented process for making the FS-X's entire wing from carbon-fibre composite. Quality control of the plastic wing during manufacture and service, and battle damage repair are surfacing as real worries.(211)

There is real concern that the project may even be retired after producing only a few prototypes. The rationale is that by the time the FS-X is deployed in 2000 (or later) it will be based on 30 year old technology, that will be seriously out of date.(212) Some sources say that the Japanese Self-Defense Agency is considering canceling the production, and turning the FS-X into a research program.(213)

ROMANIA

Romania's aircraft industry is struggling. Industrial Aeronautical Romania recently contracted Jaffe Aircraft, Inc. of San Antonio, TX to markets its IAR Hawk, turbojet trainer. Analysts consider this aircraft to have the greatest chances for export. Romania's goal is to increase subcontract work with Western companies.

SINGAPORE

Although it has a long way to go before it produced its own aircraft, Singapore Aerospace Limited, which currently secures 3/4 of its revenue from defense work, is aggressively expanding its reach internationally. Most of SAI's work so far has been upgrading Singapore's A-4 Skyhawks and F-5Es. SAI has been subcontracting to Boeing, McDonnell Douglas, and Airbus Industrie. Perhaps its most important work in the long-term, is its contract with United Technology, acquiring expertise in engine manufacture by making parts for Pratt & Whitney.(214)

SOUTH AFRICA

South Africa has canceled the indigenous development of the CAVA fighter; a twin-engine, two-seat, canard delta, similar in size and appearance to the Dassault 2000. Instead, Pretoria will purchase something off-the-shelf to replace its Mirage F.1s and Atlas Cheetahs. The South African government could not justify the cost of developing its own fighter in light of the changed political situation and diminished threat from Angola.(215)

SWEDEN

The Saab JAS 39 Grippen is the latest in a long line of indigenously produced Swedish combat aircraft. Despite the crash of the first prototype due to a software error, production work continues on initial order of 30 aircraft, with an additional 110 expected.(216) Sweden's total Gripen requirement has been estimated at approximately 350-400 units.(217) Although Sweden has had only a limited presence in the global marketplace in the past, the high development cost of the Grippen is expected to lead to international sales efforts.(218) The aircraft's original fixed price contract was for $8.4 billion, and this has been exceeded by $1.25 billion.

Two more prototypes have joined the JAS 39 Gripen flight test program, and more are to follow. The decision to postpone the first large scale purchase of Gripens, due to technical problems, has turned into a political intrigue.(219) The Gripen accounts for 173 percent of Sweden's latest annual defense expenditures, the only European aircraft to cost more than its nation's annual defense budget.(220)

The Gripen's spiraling costs are partially due to the Swede's technical ambitions. The multi-role Gripen is designed to weigh about half as much as its Saab 37 forerunner, but can carry the same weapons load. According to engineers, the Gripen is the first inherently unstable aircraft to enter production.(221)

TAIWAN

Taiwan will produce the Ching-kuo Indigenous Defense Fighter which is being built with extensive assistance by American corporations, led by General Dynamics.(222) Manufacture of 250 IDFs is estimated at $4.2 billion.(223) Unit cost will be between $25 and $30 million. The IDF is to replace the country's Northrop F-5 and Lockheed F-104 fighters.(224) Initial versions of the IDF will have a top speed of Mach 1.2, using an engine jointly produced by Taiwan and Allied Signal Garret Engine Division. A higher thrust version of this engine would be incorporated into a more capable successor designated the Advanced Defensive Fighter.(225) At least $1 billion has been invested in this propulsion plus the avionics.(226)

The IDFs success is largely a result of a 1982 decision by the Reagan administration to bar export of new fighters to Taiwan, but leave technical assistance un restricted. Thus, Ching-Kuo has benefitted from intense outside collaboration.(227)

FORMER SOVIET UNION

Moscow announced in July 1991 that it will deploy follow-ons to the MiG-29 and Su-27 in the mid to late 1990s. Prototypes of these aircraft are either approaching, or in flight test. The Pentagon estimates that these aircraft, the Counter-Air Fighter and the Air Superiority Fighter would be upgrades rather than brand new designs.(228) The lion's share of the improvements would lie in changes to the aircraft's avionics.(229) The sheer chaos that has descended on the former Soviet Union's defense industry, however, makes it extremely difficult predict which, if any, R&D programs will come to fruition. The Mikoyan design bureau needs foreign assistance to complete its MiG-29M, and Sukhoi is actively seeking a foreign co-producer to begin working on the prototype of its Su-37 multirole fighter.(230)

Tightening purse strings have already truncated the Yak-141 advanced short take-off vertical landing (ASTOVL) naval fighter program.(231) The supersonic Yak-141 was estimated to be at least five years ahead of Western equivalents.(232) The aircraft, designed for air defense of Kiev class vessels, with a secondary ground role, had a top speed of 1,800km/hr and a range of more than 1,400km.(233) It appears that the Russian aerospace industry is in for hard times. Military conversion will result in a 33 percent reduction in overall defense production, and aircraft costs have tripled as a result of privatization and new procurement practices.(234)

THE SPREAD OF SELECTED "FORCE MULTIPLYING" AIRCRAFT

Aerial Tankers

The KC-130 is perhaps the most widely used tanker, with operators including Spain (5) and the United Kingdom (6), as well as Israel (2), Indonesia (2), Singapore (4), Argentina (2), Brazil (2), Morocco (3), Saudi Arabia (8), and Libya (2).

Other alternatives are also available. Following the 1982 Falklands campaign, the United Kingdom conducted surveillance flights over the South Atlantic using Nimrod AEW aircraft, refueled in flight by VC-10 tanker aircraft.(235) Iraq has four to eight An-12 tanker aircraft,(236) as well as centerline refueling pods designed to enable buddy-system refueling of Mirage fighters.(237) The Saudis (8) and the Brazilians (4) operate the KC-13 tanker. Australia has ordered four 707 tanker aircraft using the Israeli Aircraft Industries conversion kit.(238) This is a popular option with a number of countries, including Israel (15), Canada (2), Spain (2), Italy (4), Germany (4), and Japan (4), as well as Iran (4), Morocco (1), South Africa (4), Egypt (3) and Peru (1). The Royal Netherlands Air Force is seeking two DC-10-30CF aerial refueling aircraft to supports its fleet of F-16s.(239)

The Chinese have been considering converting their Xian version of the Tu-16 (the H-6) into an aerial tanker for some time. CATIC and a British aerospace concern signed an MoU on this project back in 1976.(240) In 1987 Airbus Industrie began studying the possibility of converting A300B4s into military transport and refueling aircraft. The A300B4 is estimated to be capable of dispensing 63 metric tons of fuel (138,850lb) at 500nm from base.(241)

AEW Aircraft

In addition to the 34 Boeing E-3s in the American Air Force, international sales of the E-3 include NATO (18), France (4), the United Kingdom (7), and Saudi Arabia (5). Italy has considered purchasing four to six E-3s, as has Australia.(242) Japan continues to anticipate purchase 5 to 10 E-3 AWACS,(243) although these may be dropped in favor of purchases of E-2Cs to supplement the 8 already on hand.(244) Iranian plans to purchase as many as 7 E-3s were dropped after the fall of the Shah.(245) Pakistan has expressed an interest in purchasing at least 3 E-3s.(246) South Korea is contemplating purchasing four E-3 AWACS.(247) While countries such as Peru are buying dedicated tankers, the $200,000 E-3 price tag makes it a more exclusive platform.

Economic factors are putting intense pressure on US companies to export AEW aircraft. Boeing is on the verge of shutting down its E-3 production line as wealthy countries such as Japan and Saudi Arabia cancel their AWACS orders to spend their defense funds on other systems.(248) Boeing was spending about $1 million per month to keep the line open. Recent E-3 sales to Great Britain and France were predicated on Boeing offsetting the cost of the AWACS by placing orders in the two countries that amounted to 130 percent of the sale. Thus far, approximately 1,200 firms in the two countries will benefit from the offsets.(249)

Grumman's less expensive E-2 Hawkeye is more widely distributed, with 86 in American service, as well as Israel (4), Japan (10), Egypt (5) and Singapore (4). Additional countries expressing an interest in the E-2 include Australia, Greece, Norway, Spain, Sweden, Switzerland, as well as Brazil, and Pakistan.(250) In June 1991 France made it known that it was considering a $650 Hawkeye purchase and South Korea, Taiwan, Thailand and Indonesia also expressed interest in a similar deal.(251) While the E-2 business appears to be booming, the E-2C production will end in 1996 and Grumman must keep its production line warm to perpetuate sales at reasonable prices to foreign customers.

Although the former Soviet Union operates both the Tu-126 Moss and Il-76 Mainstay AEW aircraft, the only instance of Soviet export has been use of Moss in the Indo-Pakistani war of 1971. India turned down a Soviet offer to sell the Il-76 Mainstay AEW aircraft, preferring to explore purchase of more capable E-2 or E-3 aircraft, or possible development of an indigenous hybrid of British GEC Nimrod radar on an American C-130 airframe.(252) The Iraqi Adnan AEW consists of Soviet Il-76 Candid transport aircraft carrying the french Thomson-CSF Tiger surveillance radar.(253) China has long sought to acquire an AEW capability, starting with an interest in purchasing E-3s.(254) Now China is considering purchase of up to 16 of the radar systems developed for the abortive British Nimrod AEW program. At least 5 aircraft, either the Il-18 or An-12 (Shaanxi Y-8), would be initially outfitted.(255)


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