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Mideast arms boom gives BAE $792M boost
by Staff Writers
Riyadh, Saudi Arabia (UPI) Apr 16, 2012

Argentina aims to develop defense exports
Cordoba, Argentina (UPI) Apr 16, 2012 - Inspired by neighbor Brazil's resurgent arms industry, Argentina is hoping to revive its defense manufacturing with the successful launch of production of Pampa combat and training aircraft.

Initially the production will meet domestic demand for the aircraft in Argentina's air force and the navy but government planners are looking ahead to Argentina entering defense export markets, analysts said.

The government-run FADEA aircraft factory in Cordoba, a former Lockheed Martin facility, plans to roll out at least 100 Pampa II training and combat aircraft in association with German Grob Aircraft AG over the next five years.

Plans are also afoot to produce a new upgraded model, tentatively called Pampa NG, industry reports said.

FADEA President Raul Arganaraz said the 100 units are planned to be built with several key components supplied by Grob.

The current FADEA operations employ more than 120 experts, technicians and workers but the labor force is set to increase as FADEA expands, officials said.

Argentina took over the aircraft maker formerly known as Lockheed Martin Aircraft Argentina and relaunched it in 2010 as Fabrica Argentina de Aviones "Brigadier San Martin" S.A.

The revival of the divested factory in agreement with the United States has also involved a wider quest for better and more competitive components.

These include the U.S.-made Honeywell engine for the Pampa range. Grob, too, says it is happy with the arrangements and plans to help FADEA build at least 60 advanced training and attack IA-63 Pampa II aircraft plus another 40 aircraft of the older version.

At least some of the new Pampa aircraft will join the inventory of Argentine naval forces, which want to be better equipped against increasingly powerful narcotics smuggling gangs.

It wasn't immediately how the upgrade aircraft will be priced. Argentine media reports said each aircraft could cost $9 million-$12 million. Whether that is a list price or the price to be paid by the Argentine military remains unclear.

The IA-63 is seen by the Argentine military as an answer to the well-resourced criminal gangs' increasing maneuverability. Results from government anti-narcotics efforts have been lackluster.

Meanwhile, FADEA is still pursuing plans to develop a next-generation Pampa NG that is likely to include an air-to-air refueling feature, redesigned air intakes, strengthened landing gear and a radar or laser rangefinder.

FADEA is also upgrading the Argentine air and naval forces' older Pampas to near Series II standard. Only about a dozen of the 16 still reported to be on the military inventory are operational.

Plans are also afoot for Argentina to enter into cooperation with Brazilian aircraft maker Embraer. Current trade tensions between the neighbors have put the project on the back burner.

Britain's defense titan BAE Systems could get a $792.16 million boost from the revision of a contract for 72 Eurofighter jets amid forecasts the Middle East and North Africa will increase defense spending in 2012.

BAE said the change centers on upgrading the capabilities of the final batch of 48 Typhoon aircraft to be built for the kingdom under a $7.21 billion contract signed in 2007. This includes the addition of new missile and radar technology to the final Typhoons included in the agreement.

The first squadron of 24 jets has been delivered to the Saudi air force.

Negotiations for other contract changes are under way, including having BAE establish a maintenance facility for the jets in Saudi Arabia, part of the kingdom's drive to build a domestic defense industry.

A Saudi decree finalized in December authorizes the release of $2.4 billion for advanced technology over and above the terms of the 2007 Typhoon contract.

Some defense sources say Riyadh might increase its Typhoon order by another 48 aircraft.

The kingdom, along with the neighboring United Arab Emirates, is engaged in beefing up its air force's offensive capability, particularly to counter Iran's expanding ballistic missile forces and alleged quest for nuclear weapons.

The Saudi moves reflect expectations of a significant increase in defense spending in the Middle East and North Africa, amid the region's ingoing political tensions that include upheavals in North Africa and the confrontation between Iran and the United States in the Persian Gulf.

The International Institute for Strategic Studies, a leading London think tank, observed in its recently published "Military Balance 2012" that this is largely driven by high oil prices.

These are at least partly the result of Western economic sanctions against Iran for its refusal to abandon its uranium enrichment program, a key element in any effort to acquire nuclear weapons, and Tehran's threat to close the Strait of Hormuz, the only maritime gateway to the gulf and a strategic oil artery.

Defense spending in the MENA region stayed fairly high in 2010, at 5.01 percent of regional gross domestic product, slightly down from the 5.09 percent recorded in 2009.

But while the region's defense spending has fallen steadily from 6.48 percent of GDP in 2001, it's still the top global spender on defense as a percentage of GDP.

That puts it ahead of the United States with 4.77 percent, Russia at 2.84 percent, South and Central Asia at 1.94 percent and sub-Saharan Africa at 1.58 percent.

"Oil exporting states made up nearly 75 percent of total regional defense expenditure and in 2011 their collective spending rose to $95.57 billion from $87.97 billion, a nominal increase of 8.6 percent," the report explained.

"Adjusting for inflation, this amounted to a … real-term increase of 0.08 percent.

"By contrast, although defense outlays by oil importers rose by 4.9 percent in nominal terms to $32.07 billion, this corresponds to a 3.16 percent real decline in expenditure," the report said.

Within the region, Saudi Arabia remains the leading military defense buyer, spending a total of $45.17 billion on defense in 2010, ahead of the United Arab Emirates with $16.057 billion and Israel with $14.043 billion.

Israel's military purchasing power is enhanced by the $3 billion a year in military aid it gets from the United States, along with significant loans and grants.

Middle Eastern demand for arms is a lifesaver for Western defense contractors grappling with shrinking defense budgets. For the United States and Europe, and Russia as well, boosting military exports has become essential to maintaining production lines as military budgets are cut because of global recession.

The add-on deal BAE's negotiating with Saudi Arabia underlines how arms sales have become critical tools of foreign policy for these industrialized states.

The $60 billion U.S. arms package for Saudi Arabia unveiled by U.S. President Barack Obama's administration in 2010 is a case in point, with major contracts for Lockheed Martin, Boeing, Raytheon and the like that will compensate for downsized orders from the U.S. military.

Even so, there's still deep gloom within the industry, particularly in Europe, that these austerity drives will inevitably mean production cuts and major layoffs.

"The trouble is that everyone's exporting," lamented Robin Southwell, chief U.K. executive with EADS, the European defense and aerospace group.

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Iraq hosts arms expo 9 years after fall of Saddam
Baghdad (AFP) April 16, 2012 - Iraq is hosting its first arms fair, replete with warplanes, tanks, missiles and telecommunications gear, since the 2003 fall of Saddam Hussein which saw the US completely dismantle the country's military.

Iraq is still rebuilding its security forces, which today they number some 900,000 people, including 650,000 employed by the interior ministry.

Baghdad allocated $14.6 billion, or about 15 percent of the budget, to security in 2012, second only to energy which takes up 20 percent as the country seeks to develop its oil sector and fix a chronic electricity shortage.

"This is the first exhibition since the fall of Saddam Hussein, as we need specialised companies to come to Baghdad to show their products to our ministries, so we choose the best," Deputy Interior Minister Adnan al-Assadi told AFP.

A pavilion at the Baghdad fairgrounds is hosting 40 companies from 13 countries, mainly from South Korea, China, Turkey and Bulgaria, for three days from Sunday, amid tight security measures that are paralysing the city, causing massive traffic jams.

Almost all Western countries, however, are absent from the expo.

South Korea and China are showcasing a full range of military equipment, from weapons of all calibres and military vehicles to communications, uniforms and riot gear.

"We came to win contracts, but also to develop our relations with this country, where we had the third-largest contingent in the multinational forces after the United States and Great Britain," said Lee Jong-Duk, director of international relations for the Korea Defence Industry Association.

Sang Choi, vice president of Korea Aerospace Industries, was hoping to sell Iraq 24 T-50 Golden Eagle aircraft which can be used in both training and combat.

"We made a proposal last year and we hope that the contract will be signed very soon. I am very optimistic," he said.

For Iraq, rebuilding its air force is a priority, and it has ordered 36 F-16 warplanes from the United States in pursuit of that goal.

Its air force virtually disappeared following the Gulf War in 1991, when it was destroyed or rendered inoperable by the international military coalition that pushed Saddam's forces out of Kuwait which he invaded the year before.

"We need many things but our budget is limited. Our principal concern is the air force and anti-air defence, while the interior ministry's is border protection and explosives detectors," Iraq's top military officer, Lieutenant General Babaker Zebari, told AFP.

In a highly competitive market, the Iraqi Raban al-Safina group began selling products from foreign companies three years ago, especially jamming equipment, robots to disarm bombs, and detection equipment.

"It is very important that we are here, because, dealing with terrorists, our country needs this type of equipment," said Ali Jawhar, an engineer in Raban al-Safina's electronics department.

Although Baghdad bought a large number of ADE 651 portable explosives detectors from a British company that turned out not to work, spending between $16,500 and $60,000 a unit, Raban al-Safina showed the HEDD1 detector sold by German firm Unival, which the BBC has reported is also ineffective.

"It is part of a programme for detecting explosive material," Hussein Ghanim, an engineer in the same department, said proudly.

The Iraqi army was considered one of the strongest in the Middle East before the 1980-1988 war with Iran, when it was almost exclusively equipped with weaponry from Soviet-bloc countries.

But since the 2003 US-led invasion, Baghdad has turned toward American equipment, from M-16 rifles to Abrams tanks and F-16s.

Bulgaria still sees opportunities for its military wares, however.


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Israeli defence minister heads to Colombia, US
Jerusalem (AFP) April 15, 2012
Israeli Defence Minister Ehud Barak on Sunday left for a five-day working visit to Colombia and the United States where he was to hold talks with top officials, his office said. His first stop will be in Bogota to meet Colombian President Juan Manuel Santos, his counterpart Juan Carlos Pinzon and Foreign Minister Maria Angela Holguin, Barak's office said. He will also meet Colombia's mil ... read more

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