Problems Surface over
Submarines Pledged for Taiwan (16
Despite Bush's promise, Chinese hostility makes
selling arms to Taipei difficult.
For Taiwan's China Shipbuilding, a chance to build
submarines would be just the thing to ensure that a company which
has turned a profit in only four of the last 20 years stays afloat.
CSBC is eager to play a role in the construction
of eight diesel-electric submarines promised last year by US president
George W Bush, a procurement deal that has won close attention
from leading US defence contractors.
In Taiwan, however, weapons procurement is never
a simple business. Indeed, some on the island doubt that the promised
submarines will ever be built, despite what officials say is the
urgent need to beef up the puny underwater forces.
Officials say the island's four submarines - including
two second world war survivors - are no match for the threat posed
by rival mainland China, which backs its claim to sovereignty
over the island with threats of military force.
A Pentagon report at the end of last week warned
that preparation for conflict in the Taiwan Strait was the "primary
driver" for china's military modernization, saying Beijing
was steadily developing more potent submarine forces.
China's own diesel submarines boast German engines
and its Song-class vessels ae thought to have French-designed
sonar, the Pentagon says, while its has also purchased Russian
Kilo-class diesel-electric submarines that are among the quietest
of their type.
Beijing has taken delivery of four Kilo vessels
and its most recent purchase, a US$1.6bn deal to buy eight more,
is directly tied to its determination to tip the cross-strait
military balance. Along with purchases of Su-27 and Su-30 aircraft,
destroyers and air defence systems worth about US$10bn altogether,
the submarines cement China's status as the largest buyer of Russian
Such procurement challenges the qualitative advantage
that Taiwan's military relies on to deter the much larger mainland
Underlining the difficulties, Taipei is finding it extraordinarily
difficult to acquire its own advanced submarines.
Mr Bush's offer was hailed in Taiwan as a break
through, but more than a year later the US government, military
and industry have yet to decide how to deliver.
The all-nuclear US has not made diesel submarines
for decades, making the project hostage to technological, diplomatic
and even corporate issues.
And while a number of western European nations produce
non-nuclear submarines, fear of offending China makes them reluctant
to sell to Taiwan.
Mr Bush's promise provoked tensions with Germany
and with Netherlands, which bore the brunt of such Chinese outrage
when it supplied Taiwan's only two modern submarines in the 1980s
that it promised never to repeat the sale.
A Chicago -based investment company, One Equity
Partners, emerged as a potential stalking horse when it moved
to take a 75 percent stake in Howaldtswerke Deutsche Werft (HDW),
a German submarine producer.
Part of the purchase is being contested by shareholders
in HDW's parent company, and German officials have warned that
their ban on sales to Taipei will hold even if HDW comes under
However, some observers believe the deal could allow
a US contractor to use HDW's technology to build vessels for Taiwan.
One of the directors of One Equity is James Crown,
whose family owns 8 percent of General Dynamics, US defence contractor.
And Northrop Grumman, another US potential submarines supplier,
has expressed interest in an alliance with HDW.
The alternative to overseas technology - developing
a diesel submarine from scratch in the US - also faces problems.
US development would be expensive - a big concern
in Taiwan, which has been hit by an economic slowdown and where
many suspect US contractors use their virtual monopoly status
to raise prices.
Industry insiders say the most recent delay to the
project was caused by Taiwan's laxity in paying bills incurred
by the US navy in preparing detailed bids and promotion.
Others suggest the Taiwanese top brass is relatively
sanguine about the threat from China, even though President Chen
Shuibian often reminds the military that defence is a matter of
"life and death".
For all the difficulties, Tang Yiau-min, Taiwanese
defence minister, insists the submarine deal is going very smoothly.
Since the US government's announcement, it has repeatedly
made assurances that it has the confidence and ability to complete
this deal according to Mr. Tang.
Even if such faith is well founded, Mr. Hsu at China
Shipbuilding could still struggle to win a role.
Taiwan's legislature has ordered the military to
push for CSBC to build six of the eight vessels under licence,
but the defence ministry has expressed doubt about the company's