Monday, April 25, 2011

Report: Arms to Taiwan Help U.S. Economy

Defense News


Report: Arms to Taiwan Help U.S. Economy


TAIPEI — Amid new calls for an end to U.S. weapons sales to Taiwan, proponents argue that the lucrative arms market here is a boon to a shaky American economy that continues to suffer. Taiwan spent $16.5 billion on U.S.­built arms and equipment from 2007 to 2010, according to a new report by the Congressional Research Service (CRS).

In January, a roundtable discussion at the University of Virginia’s Miller Center of Public Affairs recommended the U.S. “re-examine” continued arms sales to Taiwan in an effort to improve ties with China. Members of the roundtable included Joseph Prueher and Timothy Keating, both retired U.S. Pacific Command commanders, and James Shinn, a national intelligence officer for East Asia at the Central Intelligence Agency. The roundtable report said arms sales to Taiwan had damaged Sino-U.S. ties and had become a “vicious circle.” The report further recommended that Washington re-evaluate the Taiwan Relations Act.

The CRS report, “Taiwan: Major U.S. Arms Sales Since 1990,” by Shirley Kan, indicates that Taiwan arms sales generate big revenue for U.S. defense companies despite the absence of a defense treaty with Taiwan. In 2007, Taiwan bought $3.7 billion in U.S. arms; in 2008, $6.4 billion; and in 2010, $6.4 billion. No sales to Taiwan were approved in 2009. Among customers of U.S. arms worldwide, Taiwan ranked fourth behind Egypt, Israel and Saudi Arabia from 2002 to 2009.

From 2000 to 2010, under the U.S. Foreign Military Sales program, Taiwan procured Patriot Advanced Capability-3 missile defense systems, UH-60M Black Hawk helicopters, Harpoon missiles, Osprey-class mine-hunting ships, Kidd-class destroyers, AIM-120 ad­vanced medium-range air-to-air missiles, Standard Missile-2 Block IIIA air defense missiles, a surveillance radar program for early warning of Chinese missile launches, AH-64D Apache Longbow attack helicopters and P-3C Orion anti-submarine patrol aircraft.

“These foreign military sales provide the United States with important commercial and military benefits,” said Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council, noting that it is advantageous — to operations, maintenance and lifecycle support costs — when U.S. allies use the same equipment.

“When it comes to our own military requirements, the ability to export systems we also buy allows companies to reduce the unit costs charged to the U.S. military and provides important financial savings for an already overstretched defense budget,” he said. “Foreign military sales produce profits, which are reinvested in research and development for upgrades to present systems or in the development of the next generation.”

Despite the economic advantage of continued U.S. arms sales to Taiwan, “we have never had any traction pitching the industrial base issue at U.S. administrations,” Hammond-Chambers said. “It’s partly the fault of companies that have cried wolf too many times and partly bureaucratic dislike for defense companies, particularly on the Democratic side of the political line.”

Due to Chinese pressure, the U.S. is holding three sales to Taipei totaling $20 billion. These include eight diesel-electric attack submarines, promised by the George W. Bush administration in 2001; 66 F-16C/D Block 50/52 fighters, on hold since 2006; and an upgrade for 146 F-16A/B Block 20 fighters, on hold since 2009. China has called the sale of new F-16C/Ds to Taiwan a “red line,” but it is unclear what China will do in retaliation.

Lockheed Martin urged a release of the F-16C/Ds to Taiwan in a March 2010 briefing on the issue. In the brief, Lockheed said the release would sustain about 11,000 jobs in 43 states and keep the F-16 production line open for other potential foreign customers.

One advantage of the U.S. building diesel submarines is that Taiwan is paying for the research and development of a platform the U.S. has not built since the early 1960s. This would create a new defense product for the U.S. to export to other countries, and perhaps move the U.S. Navy to buy less expensive, quieter diesel submarines for half the cost of a nuclear-powered boat.

Besides F-16s and subs, Taiwan has discussed with the U.S. the procurement of two signals intelligence aircraft; six C-27J Spartan medium transport aircraft; 60 F-35B and 150 F-35A Joint Strike Fighters; Stryker armored vehicles; AV-8B Harrier jump jets; CH-53X minesweeping helicopters, trainer aircraft KC-135 Stratotanker refueling aircraft; the Phalanx Close-In Weapons System; CBU-97 Sensor Fuzed Weapon cluster bombs; armored security vehicles; HH-60G Pave Hawk search-and-rescue helicopters; upgrades of six Lafayette-class frigates and two Sea Dragon submarines; an air traffic control system; Perry-class frigates; Newport-class landing ship tank; Athena C4ISR Multi-Domain Awareness System; and Sky Warrior tactical UAV.

Taiwan’s interest in the F-35 is serious. The island received a technical briefing on the F-35 from the U.S. Department of Defense in 2002 after a request was submitted by Wang Chi-lin, director of the Defense Procurement Division, Taipei Economic and Cultural Representative Office, in Washington. Having a short-takeoff-and-vertical-landing aircraft would allow Taiwan to continue operating fighters in the absence of runways, which China’s 1,300 DF-11/15 short-range ballistic missiles aimed at the island would quickly destroy.