Algerian Arms Deal Brings Russia $7.5 billion, Gas Market Leverage

Yak-130
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In an earlier February 1, 2006 report, DID noted that a $4 billion arms sale was brewing between Algeria and Russia involving fighter aircraft, tanks, and air defense systems, with the possibility of additional equipment. Those options would appear to have come through, as numerous sources are now reporting that a high-level Russian delegation in Algeria has closed $7.5 billion worth of arms contracts. The Algerian package would be post-Soviet Russia's largest ever single arms deal, and compares to annual Russian weapons exports to all customers of $5-6 billion per year over the last couple of years.

T-90 tank
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Reuters South Africa quotes Rosoboronexport chief Sergei Chemezov as saying that "Practically all types of arms which we have are included, anti-missile systems, aviation, sea and land technology." Reports regarding the exact composition of the deal vary, and many don't add up when measured against a $7.5 billion total. DID has found a package composition report that seems closer to the mark based on the package's value, and the structure of the deal itself is highly consequential and so worth discussing. We'll conclude with an updated note regarding Algeria's past pattern of arms acquisitions, which may help to explain the sophistication of the weapons to be found in this deal.

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India's Navy Holding Maritime Patrol Aircraft Competition

TU-142: on the way out?
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In an earlier article, DID noted India's $133 million deal for two P-3C Orion maritime-optimized patrol and surveillance planes. As it happens, that deal fell through on grounds of expense, support costs, and timing. Apparently, it would have taken 18-24 months for the US Navy to retrofit the two aircraft to the Indian Navy specifications once the lease had been finalized. DID noted that in an article update, but there has been a subsequent development.

India's navy has now floated an RFP for 8 new maritime aircraft. Lockheed is invited to bid again, and so are several other firms. Under the Navy's RFP, the bids have to be made by end of April 2006, with price negotiations to be completed by 2007 and first deliveries to commence within 48 months. India's Ministry of Defence has extreme problems with announced schedules, but their existing fleet is wearing out, international requests for India's maritime patrol help are rising, and some action is necessary. DID reviews the situation, the current fleet, and the competitors....

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Mirage 2000s Withdrawn As India's MRCA Fighter Competition Changes

Mirage 2000v5: Au Revoir
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"It's the biggest fighter aircraft deal since the early 1990s," said Boeing's Mark Kronenberg, who runs the company's Asia/Pacific business. DID has offered ongoing coverage of India's planned multi-billion dollar jet fighter buy, from its early days as a contest between Dassault, Saab, and MiG for a 126 plane order to the possible entry of American competitors and even EADS' Eurofighter. What began as a lightweight fighter competition to replace India's shrinking MiG-21 interceptor fleet appears to have bifurcated into two categories now, and two expense tiers.

That trend got a sharp boost recently, when Press Trust of India (PTI) reported a surprise pullout by the CEO of Dassault on the eve of the RFP. The Mirage 2000v5 will no longer be fielded for the India deal, despite the fact that India already flies 40 Mirage 2000Ds and its senior officials have touted standardization as a plus factor. So, what's going on?

In a word, lots. The participants are changing, India's view of its own needs is changing, and the size and nature of the order may be changing as well....

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Aeros Dreaming Big With WALRUS Project

Aeros' Russian concept
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DID's in-depth article covering DARPA's project for the 1-2 million pound (500-1,000 ton) WALRUS Hybrid Ultra-Large Aircraft (HULA) blimp-aircraft remains perennially popular. There's something about a 1,000 foot long blimp-like aircraft that can lift a full battalion and ship them 8,000 miles in a week, without requiring landing strips or in-depth infrastructure, that appeals to the imagination. DARPA expects to pick a winning design in September 2006, and award a $100 million contract for a prototype airship. The LA Times reports that if WALRUS works out, the total contract could be worth up to $11 billion over 30 years.

Two firms won the $3 million preliminary design contracts: Lockheed's fabled "Skunkworks," producers of "impossible" aircraft like the U-2 Dragon Lady and SR-71 Blackbird - and a small California firm called Aeros made up of Russian emigres. A recent LA Times story profiles Worldwide Aeros, noting their confidence ("In reality we don't feel Lockheed is our technical competitor.... There is only one solution, and we have that one solution."), quality of proposal ("seemed outstanding," said one evaluator), revenues ($10 million expected this year from selling ad blimps), and company origins. CEO Igor Pasternak and colleagues began designing mammoth airships in Russia as a way to transport heavy cargo to Siberia's remote oil fields, and future plans for their design also extend to "cruise ships in the sky." They aren't the only ones who can imagine extensive civilian spin-offs from this technology; of course, notes Pasternak, "it can totally change how you conduct warfare."

India's $500M Smerch-M Order: From Russia, With Love

Smerch 9K58 firing
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After nearly five years of negotiations, IANS reports that India finally signed a $500 million deal with Russia on December 31, 2005 for SPLAV's Smerch-M BM 9K58 long-range 300mm multiple launch rocket systems (MLRS). Compare them to India's older truck-mounted 122mm Grad rocket launchers, and the capability boost quickly becomes apparent. The Smerch-M contract includes 28 wheeled MAZ-543A vehicles with 12-tube 9A52-2 launchers, plus logistics supply and fire-control vehicles. The systems will arm two artillery regiments of 12 Smerch-Ms each, with 4 platforms being kept in reserve.

So, what kind of capabilities does this weapon bring to the table? It may not be the Soviet NKVD's dreaded World War 2 SMERSH ("death to spies") investigations units, who sometimes acted to stiffen defenders' resolve by waiting in vehicles with machine guns just behind the front lines. The Smerch 9K58s may stiffen resolve on the front lines for different reasons, however, and they may also end up being justly feared.

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Love on the Rocks: CASA's $600M Venezuelan Plane Sale In Heavy Turbulence

CN-235MP Persuader
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Back on January 19, 2005 , DID noted that US restrictions on resale of its technologies were blocking a EUR 500 million sale of 12 CASA aircraft to Venezuela - 10 C-295 light transport aircraft and 2 CN-235MP Maritime Patrol Aircraft. Sources were telling media outlets that the deal was dead. But DID waited. Good thing, too, because later reports revealed a possibility that Spain would go ahead and substitute non-US technology, despite the expense that would make the planes unprofitable. We could understand this for political and job-creation reasons, but we saw some US market implications for EADS and in any really involved drama, there's always another twist. This was starting to look like a real Latin American soap opera, so DID grabbed some popcorn. And waited.

Lo and behold, more twists have indeed followed. Including a side-story involving Brazil. Are we on, or are we off - and if the answer is "off," who might step into the breach? Since it's impossible to resist a rocky relationship like this one on Valentine's Day, DID decided to update our readers on this ongoing saga....

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To Belarus, With Love: India to Sell 18 Used SU-30Ks for $300M

Back at ya...
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As part of a USD $4.9 billion deal, Russia and India signed a contract in November 1996 for the delivery of 50 big Su-30 multi-purpose twin-seat fighters, the newest member of Sukhoi's SU-27 Flanker family. The first 18 aircraft had the same capabilities as the Su-30K air superiority variant, but follow-up aircraft offered the multi-role SU-30MKI configuration upgraded with thrust vectoring AL-31FP engines, improved avionics and canards. India received 18 of the early SU-30K standard, and they have been featured at COPE India 2004 and COPE India 2005 exercises with the USA. India has also received 32 of the later-model SU-30MKI aircraft from Irkut and has 140 more on order, to be produced under license by Hindustan Aeronautics (HAL) with some assistance from Sukhoi kits.

COPE India 2004: SU-30K,
F-15C, Mirage 2000
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As HAL production of the SU-30MKI begins, India is now selling off its 18 SU-30K fighters to Belarus for a reported $300 million. At under $17 million per plane, that figure represents a significant bargain to Belarus, which currently operates 23 related SU-27P aircraft and will upgrade the new planes to an SU-30KN standard. India, meanwhile, earns money it can put to other uses, and avoids the need to add an SU-30K upgrade program to its existing full pattern. India Defence has further details.

India's Fighter Modernization: Add MiG-29s to the List

IAF MiG-29B on afterburners
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DID has covered India's updated MiG-21 'Bisons' before, and noted the trouble they have caused American opponents at COPE India 2004 & 2005. Deliveries on that $600+ million program continue; meanwhile the delivery date for the winning aircraft in India's forthcoming light-medium fighter tender remains up in the air, and India's indigenous Light Combat Aircraft (Tejas) program has been beset by numerous problems and ongoing delays.

By 2010, the IAF will phase out most of its 300-or so MiG-21s, the 16-18 aircraft in its only remaining swing-wing MiG-23 ground attack squadron, around 100-110 related swing-wing MiG-27M Bahadur ground attack fighters that are not being upgraded, and the two MiG-25 Foxbat strategic reconnaissance jets that are still in service (out of an original fleet of eight). 125 MiG-21 Bis interceptors and 40 upgraded MiG-27ML fighters will remain.

As the timelines for replacements stretch, India's defense planners have decided that more upgrades will be necessary in order to keep their existing fleet viable. The decision has been made to upgrade India's existing fleet of 67 MiG-29B, MiG-29S, and two-seat MiG-29UB aircraft as well, in order to give them multi-role capabilities and improve their ability to carry advanced weapons....

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Russia & Algeria Nearing $4+ Bn Arms Deal

MiG-29 (click to view full)

The Moscow Times reports that Russia's state arms trader Rosoboronexport and leading Russian defense industry enterprises have prepared a package of $4 billion package of contracts to sell advanced weapons and military hardware to Algeria. "Work to draw up the package is nearly over. All contracts have been negotiated and some initialed, and they are likely to be signed in February 2006," a source in the Russian defense industry told Interfax-Military News Agency. This would be post-Soviet Russia's largest ever single arms deal, and compares to annual weapons exports to all customers of $5-6 billion over the last couple of years.

Weapons rumored to be on this list include 36 upgraded MiG-29SMT multi-role lightweight fighters and 28 two-seat Su-30MK fighters, eight sets of Russia's advanced S-300MPU2 Favorit (upgraded S-300) air defense missile systems with a 200km range, and T-90 main battle tanks. Interfax's source noted that the weapons would be paid for in a complicated scheme involving striking off part of Algeria's Soviet debt. Other contracts are also rumored for the upgrade of Soviet-made arms already in Algeria's possession, and additional arms are reported to be under consideration. For instance...

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Indonesia Considers Buying Up to 12 Submarines

Indonesia

Agence France Presse reports that Indonesia is considering buying submarines from Russia, South Korea or China, and plans to buy 12 of them before 2024. Navy spokesman First Admiral Malik Yusuf was quoted as saying that: "We have received offers from several countries, including Russia. If we can buy them at cheaper prices, why not? We don't want to depend on one country." The navy currently operates two German-made Cakra Class (Type 209/1300) submarines delivered in 1981; Adm. Yusuf said Indonesia's capability to defend its waters remained weak due to a lack of submarines, frigates and corvettes. See Hazegrey's listing of the ships in Indonesia's current navy.

DID recently covered the US State Department's decision to waive the US embargo on supplying Indonesia's military, just as that nation seeks to modernize is forces despite serious procurement corruption issues. They had initially given priority to buying C-130 Hercules aircraft, which aroused little controversy as they have a key secondary role in areas devastated by the December 2004 tsunami. Recent moves toward Sukhoi SU-30 fighters and now submarines, however, risk unease among neighbours. Plans for a fleet of 12 submarines are likely to be especially controversial in the region, as their value for standard coastal patrol and important anti-piracy activities is low and a 12-submarine fleet would be twice the size of Australia's.