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Thursday, October 18, 2007

Reuters: Thailand Will Buy Swedish-Made Gripen Fighters

By Nopporn Wong-Anan

BANGKOK, Oct 17 (Reuters) - Thailand's Air Force will buy six JAS-39 Gripen fighter jets from Sweden's Saab (SAABb.ST: Quote, Profile, Research) for 19.5 billion baht ($574 million) to replace ageing F-5E fighters, Air Force chief Chalit Pukphasuk said on Wednesday.


A member of the selection panel had said on Tuesday the Air Force would buy 12 Gripens in two batches, but Chalit told a news conference approval of the second batch would have to wait until a new government took office after a December general election.


The first six would be bought between 2008 and 2012 and the second batch "as soon as possible", Chalit said.


"We still prefer to have Gripen for the rest of the fleet, but it is up to the next government and the economic conditions then," he said.


The Air Force said in a statement 15.4 billion baht was set aside for the second phase of the purchase between 2013 and 2017.


Bangkok Post

The cabinet yesterday agreed the air force could buy 12 Gripen multi-role fighters from Sweden at a cost of 34.4 billion baht. The procurement plan has been kept low-profile, with air force chief ACM Chalit Phukphasuk refusing to comment.

Government spokesman Chiya Yimwilai said details would be announced by ACM Chalit today.


The new Gripen-JAS 39C/D aircraft will replace the air force's ageing American-made F-5E fighters.


It is the second major arms procurement approved by the cabinet recently. On Sept 25 it endorsed the Defence Ministry's 7.7-billion-baht plan to buy 96 armoured personnel carriers (APCs) from Ukraine and 15,000 TAR-21 assault rifles from Israel for the army, C-802 surface-to-surface missiles and launch systems for the navy from China, and new avionics for the six C-130H aircraft operated by the air force.


An air force source said the Swedish purchase will be made in two batches.


The first six jets, including spare parts and training programmes, will be bought with a five-year budget of 19 billion baht starting this fiscal year. The 15.4 billion baht cost of the other six planes will be met from the 2013-2017 budget.


This is very interesting.

Do the math: It comes out roughly to $90 million plus change a plane.

$90 million is a lot of money for one fighter craft.

According to Wikipedia, one Gripen jet should be $45-50 million.


Defense-Aerospace.com's July 2006 report attempting to estimate the true cost of western fighters placed the JAS-39C Gripen at over $68.9 million per plane based on the offer to Poland, and estimated the plane's program cost (R&D amotized) at $78.7 million. To give the reader a quick idea of how that benchmarks, costs for the F/A-18 E/F Super Hornet were estimated at $ 78.4/ 95.3 million, the Eurofighter at $ 100-120/ 120-145 million, and the F-35 Lightning II at $ 115 LRIP / 112.5 million. Read the full report here. The report also noted Saab's official response of $35-40 million per plane flyaway costs, however, and acknowledged the problems involved in calculating per-plane figures based on foreign orders due to other costs and terms


The
Saab JAS 39 "Gripen" has been plagued by corruption scandals in Hungary and the Czech Republic and South Africa. Each of these countries has its own particular Gripengate.


Knowing the Thai military and its procurement process, somebody at the top is getting paid.

Of course, the worthless Thai media will take the military's word as gold and won't do an independent analysis on its own concerning the procurement process.


Also, here is a link in the Swedish press to the story:

Thailand's air force confirmed on Wednesday that the country is preparing to buy six Swedish Gripen fighter planes in a deal worth 3.7 billion kronor ($560 million). Air force chief Chalit Phukphasuk also told reporters that a decision would be made after December's general election on whether to buy a second batch of six Saab Gripens.


Notice the discrepancy in the price from the other stories. In the top story, it say $574 million dollars, and in the Swedish story it says $560 million.


The head of one of Sweden's human rights groups regarding the sale:

Ola Mattsson, secretary general of the Swedish Peace and Arbitration Society (Svenska Freds), was considerable less enthusiastic.

"It should be completely out of the question for Sweden to sell Gripen planes to Thailand. It's a military dictatorship," he told TT.


By the way, I just remembered something. Wasn't the Crown Prince, an Air Chief Marshal in the Thai Air force, in Sweden just a few months ago? It was rumored that he was doing some flight training.

Maybe he collects jet fighters just like he collects antique cars.


Update:

This story has become a John LeCarre novel, and I am the only one to have picked up on it.

After further investigating, it seems the company responsible for marketing and exporting Gripen jet fighter abroad is none other than BAE Systems, a British arms dealer, notorious for its corrupt business practices all over the world. BAE is at the heart of Gripengate.


Wikipedia speaks:

Criticisms of BAE System



HMS Coventry was one of two frigates sold to Romania. The terms of the sale have been controversial.

Like many arms manufacturers, BAE has received criticism from various human rights and anti-arms trade organisations due to the human rights records of governments to which it has sold equipment. These include Indonesia, Saudi Arabia, Zimbabwe, and Israel. BAE's US subsidiary makes several subsystems for F-16s, 236 of which have been supplied to the Israel Defense Forces.[92] In September 2003 The Sunday Times reported that BAE had hired a private security contractor to collate information about individuals working at the Campaign Against Arms Trade and their activities.[93]

BAE has been subject to allegations of corruption.[94] On 7 February 2007 the Solicitor General Mike O'Brien announced that BAE contracts in six countries were being investigated by the Serious Fraud Office (SFO) for "suspected international corruption"; Chile, the Czech Republic, Qatar, Romania, South Africa and Tanzania. In September 2005 The Guardian alleged that banking records showed that BAE paid £1 million to Augusto Pinochet, the former Chilean dictator.[95]The Guardian has also reported that "clandestine arms deals" have been under investigation in Chile and the UK since 2003 and that British Aerospace and BAE made a number of payments to Pinochet advisers.[96]

The SFO's Czech Republic investigation relates to alleged bribery as part of the deal to lease BAE/Saab Gripen fighters to that country.[97] BAE has been criticised for its role in disposing of surplus Royal Navy warships. HMS Sheffield was sold to the Chilean Navy in 2003 for £27 million, however the government's profit from the sale was £3 million after contracts worth £24 million were placed with BAE for upgrade and refurbishment of the ship. BAE is alleged to have paid "secret offshore commissions" of over £7 million to secure the sale of HMS London and HMS Coventry to the Romanian Navy. BAE received a £116 million contract for the refurbishment of the ships.[98]

In January 2007 BBC News highlighted concerns of arms campaigners regarding arms sales to South Africa, primarily in relation to the £2.3 billion deal which saw BAE supply Hawk trainers and Gripen fighters.[99] The Tanzania inquiry relates to the sale of a radar system to that country in 2002.[100] The sale was criticised by then Secretary of State for International Development Clare Short, opposition MPs and the World Bank.[101]

Further, it looks like BAE has a history of bribing royalty to get contracts. The BBC reports:

A Saudi prince who negotiated a £40bn arms deal between Britain and Saudi Arabia received secret payments for over a decade, a BBC probe has found.

The UK's biggest arms dealer, BAE Systems, paid hundreds of millions of pounds to the ex-Saudi ambassador to the US, Prince Bandar bin Sultan.


I can smell a huge story here. When I say huge, I mean huge. Do you think anybody in the Thai media will pick up on this? Nope. The worthless Thai media will obfuscate and cover-up like it always does.

This story has the potential to be Watergateesque, especially if the Crown Prince was bribed by BAE to get the contract.

All rights to the novel are reserved by me.

6 comments:

fall said...

By far, this is the best news analytical pieces on your blog.
May be the cost is high because they want the fueling truck and full option armament (or set provision for future baht depreciation)?

But seriously, do Thai really need this *? Even if we already have THE smallest carrier in the world (that largely inactive due to funding), but do border patrol really need this?. Our tank already used more often in a coup than in a fight. And when is the last time we win a war anyway?

(By the way, your link to Hungary corruption scandal is broken.)

svl said...

Good question fall. Just what kind of 'military defense' does Thailand need and specifically tuned to which enemy?

For example Thailand can merely embrace U.S. of America as its most steadfast friend, signing defense pacts and treaties to solidify the friendship, and that should provide substantial deterrence against expansive-minded neighbors like Vietnam or China . . . then work out from there what kind of minimum military hardware is needed. Or instead of U.S. of A, pick China as military ally and recalculate the defense budget needed.

Or is that being unrealistic and being un-nationalistic?

fall said...

Just read on the military spokeman about this deal in DailyNews, 18Oct07
The interview reporter really got skill and the military spokeman "Chalit" wont know he got served, even after published.

Excerpt from the piece (rough translation):

"Buying new F-16 AB require need to retrain our pilot... Griffin pilot need 1 years training"
(we currently have F-16)

"The current government (Surayud) can authorize the deal right away, because it use airforce budget."

"The government dont buy new F-16 AB because it involve lengthy negotiation that could last 4 years."

"The fact that US reluctant to sell to military dictatorship is only a composite part of the problem."
(combine the above three sentences,
= priceless...)

"F-16 AB was not design for sea operation... We will use it to protect the South."

"Griffin have modern technology, it's Bluetooth..." (OMG! So does my cell phone!)

This article is hilarious.

Kahve said...

Great digging. Ok, I know it is stereotypical but ok, all studies show that in general Scandinavians have one of the most "cleaniest" track records when it comes to bribes. So I was having hard time to believe that Swedish (government?) company would be mixing up in shady business with Thailand. But I knew the horrible reputation of this plane.

And knowing Thailand and the recent armored vehicle debacle, it was unfortunatly very probable that somehow there is money going to wrong hands, maybe mentally giving a break to Swedes and they not understanding that in the country of delivery someone will milk some to his own pockets. BUT now that you found out that it is not actually Swedes doing the deal, I am reliefed. There is so much shady things for sure going on. :-D

I might even start to hope that Swedes, they after all got ministers out of office when they had not paid TV licence fees or had employed illegal nannies (similar to what you have to pay in UK), might have an outrage about this. :) Hey, if there seems to be other "Jasgates" then....

(OK, second option is instead of bribes: BAE group just made a great deal and the price is higher because 1) they threw in some extra goodies 2) open source code 3) the price includes trainings, repairs etc....This might go some way to explain the price)

ps. I think they do need it. It is not always matter of "against what enemy". It is more a question of their fleet is dangerously outdated! And besides we are talking about only 12 planes! That is nothing! Probably they all could go to training use as really so that their air"force" is not sitting all idle and keep some touch in flying...Even Finland has more F-18 fighters, 62 in fact (ok, we got the big Russia next door, our handful of planes is the first and last defence ;))

Kahve said...

Just checked Dagens Nyheter, Swedens biggest daily paper. The heading of yesterday news said this, you can guess what it means:

"Det är en militärdiktatur""

http://www.dn.se/DNet/jsp/polopoly.jsp?a=705451
http://www.dn.se/DNet/jsp/polopoly.jsp?a=705160

I could try to make translation later to see if there is anything interesting but my Swedish sucks. Seems Thaksin was going to buy those SU-30 planes.

Corruption on the Czech deal:
http://www.dn.se/DNet/jsp/polopoly.jsp?a=702504

Hopefully Swedish government will block this deal untill they investigate any corruption charges. They have yet to approve it.

nic_tester said...

Dont confuse fly away price with total price. Buying fighter planes involves heaps of other stuff than the airframe itself. Like training of pilots, training of mechanics, spare parts, weapons, simulators, facilities etcetera etcetera.

My hunch is that the price is probably low for Thailand because Thailand is the first in the region to buy this plane, opening up a new market for SAAB as it were and an argument to land the mother of all defencedeals(Indias coming purchase of over 100 fighters). The small quantity might push up the unit price thou.