Taiwan Might Delay F-16 Upgrade

05/07/2012

Defense News

Taiwan Might Delay F-16 Upgrade

By Wendell Minnick

TAIPEI — Angry at the cost of upgrading its existing 146 F-16A/B fighters and enticed by the possible U.S. release of new F-16C/D jets, Taiwan might delay signing a letter of acceptance (LoA) with the U.S. government to upgrade its existing F-16 fleet.

In September 2011, the U.S. released a $5.3 billion upgrade package that included an active electronically scanned array (AESA) radar. The U.S. Air Force has been pressuring Taiwan to pay for nonrecurring engineering (NRE) costs related to integrating the radar.

An NRE is the one-time cost to research, develop, design and test a new system. AESA refits are being competed in other Asian countries, and if Taiwan waited until South Korea made its AESA selection, Taiwan could save money on its deal, said a Ministry of National Defense consultant.

As the economy continues to shrink and defense budgets take hits, Taiwan’s Ministry of National Defense (MND) is facing huge hurdles as it struggles to pay for $13 billion worth of military hardware released by the U.S. since 2008. Taiwan is also implementing costly force structure realignment and moving from conscription to an all-volunteer system.

The White House breathed new life into Taiwan’s efforts to buy 66 F-16C/D Block 50/52 fighters when it acknowledged Taiwan’s need for new jets in an April 27 letter to U.S. Sen. John Cornyn, R-Texas. The letter said Taiwan’s fighter fleet was shrinking in comparison to China’s expanding airpower capabilities. Cornyn had been pressing for the sale.

The White House did not promise to sell F-16C/Ds to Taiwan, but the MND is no position to ignore calls from Washington supporters to push the envelope on securing the fighter.

Since 2006, Taiwan has attempted to submit a letter of request (LoR) for price-and-availability data for F-16C/Ds on four occasions but was convinced by U.S. State Department officials to retract the request due to timing issues and fears it would lead to a negative policy decision that could affect future arms sales.

However, supporters in Washington are now hopeful. The letter has generated momentum after a long period of inertia, said Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council. The next logical step is for Taiwan to issue the LoR to the American Institute in Taiwan (AIT). Otherwise, recent efforts will be in vain, he said.

Taiwan cannot afford both the A/B upgrade and new F-16C/Ds, said a Taiwan defense analyst. There is a lack of will within the Taiwan government to “fund such a costly new program, especially on top of the $5.3 billion F-16A/B upgrade,” since the government “has consistently failed to live up to the level of defense spending promised.

“Logically, therefore, it would seem to make the most sense for Taiwan to hold off making a final decision on the F-16A/B upgrade, at least until the situation vis-à-vis the new buy sufficiently clarifies,” he said.

“If the new buy does go ahead, there will be enormous pressure on the budget, and the Taiwan Air Force may be compelled to aggressively look for cuts and cost savings in the A/B upgrade program.”

There are also concerns in Taipei and Washington that the release of F-16C/Ds would destroy progress made to improve cross-strait ties with Beijing, which have grown to historic levels since 2008.

The other budget concern involves MND complaints over efforts by the U.S. Air Force to force Taiwan to pay for the NRE for the A/B upgrade AESA radar, which was not included in the original $5.3 billion price tag.

The Raytheon Advanced Combat Radar and the Northrop Grumman Scalable Agile Beam Radar are fighting over AESA refits for Singapore, South Korea and Taiwan F-16 programs.

If Taiwan pays for the NRE, it would save the U.S. taxpayer money when the U.S. Air Force begins integrating the new radar on 350 F-16 Block 40/50 fighters in an upcoming $2.8 billion program, said a U.S. defense industry source based in Taipei. If the MND just slowed down the negotiation process and refused to sign the LoA until South Korea made its AESA selection, he said, Taiwan would “save a ton of money.”

An MND consultant said Taiwan was “getting a raw deal” from the U.S., and the additional money Taiwan has to spend to pay for the NRE will “break the bank.” Getting the intellectual property rights or a reduction in the price would compensate Taiwan, he said. If not, MND policymakers will have to take into account the overall budget crunch before deciding on any additional spending.

But Taiwan might have little choice now but to go forward on the A/B upgrade, with or without the NRE price tag. Since 2006, the U.S. has consistently denied Taiwan’s request for F-16C/Ds, and the White House letter was “ambiguous” and did not “specify when Taiwan should make the pitch,” the MND consultant said.

He said, “We need to see beyond that letter if the Pentagon will have any additional guidance from the White House.”