Monday, April 12, 2010

Taiwan Apache Deal Moving Forward

Defense News


Taiwan Apache Deal Moving Forward


TAIPEI — A $2.5 billion purchase of Boeing AH-64D Apache Longbow attack helicopters by Taiwan will not be suspended or canceled, say sources in Taiwan and the United States.

Since the October 2008 U.S. congressional notification for the sale of 30 Apache Block III attack helicopters to the Taiwan Army, there has been speculation that Beijing will force Boeing to cancel or delay the sale. The helicopters, powered by T700-GE-701D turbine engines, will be armed with Stinger Block I air-to-air missiles and AGM-114L Longbow Hellfire missiles.

The deal is being handled by the U.S. Defense Security Cooperation Agency under the Foreign Military Sales (FMS) program.

A U.S. government official confirmed the Apache program was going forward and had no knowledge of threats from Beijing. Boeing, based in Chicago, declined comment on the issue and referred all questions about the Apache deal to the U.S. government.

A letter of offer and acceptance was signed in 2009 between the U.S. and Taiwan governments and a joint U.S. government-Boeing team will be in Taipei in mid-May to finalize the deal, said sources in the Taiwan and U.S. defense industries.

Rupert Hammond-Chambers, president of the Washington-based U.S.-Taiwan Business Council, said there was no reason to “believe that the first of the Apaches won’t start arriving late 2012/early 2013 as ordered” and that “further announcements through the rest of this year as the orders are placed with prime and subprime contractors by the U.S. Army.”

However, Beijing has successfully influenced Boeing in the past. In 2006, the company closed its Taipei offices and moved them to Singapore in an effort to placate Beijing. Boeing has significant investments and business deals in China’s commercial aviation industry.

The decision was seen by many as evidence of growing efforts by China to directly influence U.S. companies that sell arms to Taiwan by threatening their commercial business interests in China.

Though Boeing declined to comment on direct threats by Beijing, a local U.S. defense industry source said, “I can, however, guarantee that Boeing is getting heat in Beijing. … It’s the rules; they have to complain, threaten, badger, spew forth.”

In January, the U.S. government released a $6.4 billion FMS arms deal to Taiwan that included utility helicopters, surface-to-air missiles and naval vessels. China responded by threatening to punish U.S. companies involved in the sale.

In February, a Chinese defense official openly advocated direct punitive economic measures against the United States.

“While China’s position on [Taiwan] arms sales is well-known, the position of all contracting parties is this is a government-to-government sale,” Hammond-Chambers said. “Therefore, there’s no reason to believe that Boeing would not follow through on a transaction/order from the U.S. Army irrespective of any pressure China may try to bring. I am unaware of any Chinese effort to pressure Boeing.”

Taiwan’s Army has been modernizing its aviation capabilities with new helicopters, forming new aviation brigades and special operations units. The Army is still operating aging Bell UH-1H utility helicopters procured during the 1960s and 1970s, and has two squadrons of Bell AH-1W Super Cobra attack helicopters and Bell OH-58D Kiowa Warrior observation helicopters procured in the 1990s.

Bell pitted the new AH-1Z against the Apache for the attack helicopter bid and the UH-1Y against the Sikorsky UH-60M Black Hawk for the utility requirement. Bell lost both bids, and many see this as evidence Taiwan is moving away from Bell aircraft and toward Boeing and Sikorsky helicopters now favored by the U.S. Army.

In January, the United States released 60 Sikorsky UH-60M Black Hawk utility helicopters to replace Taiwan’s Vietnam-era UH-1H utility helicopters.

In the 1990s, Boeing sold nine CH­47SD Chinook transport helicopters to replace three Boeing-Vertol commercial Model 234 Chinooks for the Taiwan Army.