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The Honolulu Advertiser
Posted on: Monday, February 20, 2006

Arms megadeals highly competitive

By CHRISTOPHER TORCHIA
Associated Press

Indian Defense Minister Pranab Mukherjee, right, listens to a sales pitch from an unidentified Lockheed Martin executive in front of a model of a P3 Orion during the Defense Expo 2006 in New Delhi, India.

ASSOCIATED PRESS LIBRARY PHOTO | January 2006

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SINGAPORE — When U.S. aerospace giant Boeing Co. won a bid last year to supply at least a dozen fighter jets to Singapore, its defeated French rival said America's superpower status had influenced the outcome.

"Bamboo always leans the way it's pushed the hardest," Dassault Aviation said in a statement that cited a Chinese proverb to argue Washington's political muscle had swayed Singapore, a close U.S. ally.

The setback echoed a bitter loss for Dassault in 2002 in South Korea, another staunch American ally that chose 40 F-15K fighter jets from Boeing over French Rafale combat aircraft.

Singapore, which hosts one of the world's biggest defense and aerospace conventions this week said its procurement process was rigorous and objective. But as China develops its own aircraft and as a megadeal for combat aircraft looms in India, the case recalled the murky mix of political, financial and military factors that often shapes major arms deals.

China, a growing rival to the United States in the Asia-Pacific region, is off-limits to the U.S. defense industry. Meanwhile, India wants 126 combat aircraft for an air force that has traditionally relied on Russian and, to a lesser extent, French and British planes.

"India is a very lucrative market for any arms supplier. Nobody buys like India does," said Rahul Bedi, a New Delhi-based analyst for the independent Jane's Information Group.

The deal is worth at least $8 billion.

Some contenders for the Indian contract, including Seattle-based Boeing, U.S. rival Lockheed Martin Corp., Bethesda, Md., and Sweden's Gripen, will be at this week's Asian Aerospace fair.

Singapore said its selection of Boeing's F-15SG jets, to be delivered in 2008-2009, was apolitical.

"We have used the same procurement system to evaluate the contracts for the La Fayette frigate, Aster missiles and Thales multifunction radar, which French defense suppliers competed for and won," Singapore's defense ministry said.

Dassault acknowledged that a weak U.S. dollar made the French offer less competitive.

Still, makers of the Gripen fighter jet, a relative newcomer in the international market, are casting themselves as a neutral partner for traditional U.S. allies concerned about perceived bullying in American foreign policy since the Sept. 11, 2001 terrorist attacks.

"Now there's a view: Maybe we want to keep our special relationship with America, but have a second option as well," said Bob Kemp, Gripen's head of international sales.

Kemp said some nations felt they were in a "challenging position" because of a U.S. foreign policy characterized by President George W. Bush's comment: "Either you are with us, or you are with the terrorists."

Gripen views Thailand — a leading importer of U.S. arms that is assessing whether to buy Swedish, American or Russian jets — as a test case of a country's willingness to deal with alternative suppliers.

Thai military officials have said they are more confident about maintenance of U.S. or Russian aircraft because they are more popular worldwide.

China has a long history of buying Russian military planes, and is developing its own aircraft.

"U.S. policymakers won't let U.S. (defense) companies send a bolt to China," said Matthew Schroeder, who monitors arms sales for the Federation of American Scientists, a Washington-based research group.

Analysts believe India is likely to be wary of the United States as a sole supplier, since Washington imposed sanctions on India in 1998 after it conducted nuclear tests. The restrictions were later lifted.