Defence Industry Bulletin - January 2015 (#4)

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Defence Industry Bulletin is designed for professionals in the commercial security and defence sector that need the latest market intelligence and industry news with contributions from leading defence journalists around the globe covering topics from all corners of the industry.

Text of Defence Industry Bulletin - January 2015 (#4)

  • 1 :: Defence Industry Bulletin 1

    Issue #4, January 2015

    Insider knowledge for the discerning defenceand security professional






    $3 BILLION




  • :: Defence Industry Bulletin1 :: Defence Industry Bulletin

    We start the year amid a turbulent time. The Paris attacks have fanned the flames of the freedom of speech debate in Europe. Aside from the increased focus on counter-terror capabilities, governments in the West are also considering new data and privacy laws to weed out would-be terrorists. In the UK, the Spying Charter proposed by David Cameron was shot down by the Liberal Democrats in 2010 but events in France have led the PM to revive the legislation, which is being met with robust opposition from privacy advocates. President Obama is calling for stricter cyber security laws to protect companies and individuals from cyber attacks after the North Korean government allegedly hacked Sony in retaliation for producing screwball comedy, The Interview. In this months issue, Angus Batey explores the issue of privacy vs. security in

    cyberspace further.

    In The Briefing Room, George Mader interviews Ulf Hammarstrm, Director of the controversial Swedish Defence and Security Export Agency (FXM). The agency was axed by the Swedish government last year before being recently granted a new lifeline following increased national security concerns and an increasing defence budget. Lena Erixon, Director of FMV, is also interviewed to help readers understand more about Swedens future defence priorities and requirements.

    Also in this months Defence Industry Bulletin, Iigo Guevara explores opportunities in Chiles defence sector in 2015 and provides an update on the Uruguayan Armys new ground surveillance system; Victor M. S. Barreira flags up a new 6x6 Guarani deal in Brazil and Frances new armoured vehicle development programme;

    while there are also important updates from our team of global correspondents on a range of issues from Turkeys new programme announcements to Perus investment in its future naval capabilities. As ever, if you have any comments you would like to share, dont hesitate to get in touch.

    Andrew Elwell and Richard de Silva

    Cyber 17The Briefing Room 19More Information 30

    Welcome toDefence IndustryBulletin!

    Welcome 1Global Budgets & Requirements 3Land 7Naval 11Air 15

    Front cover images courtesy of Lance Cheung (USAF), U.S. Army, Stuart Miles/

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    Global Budgets & Requirements

    Chiles delayed 2015 defence procurement decisions Iigo Guevara

    The 2015 defence budget totals CLP 1.633 trillion ($2.65 billion), which includes funding for new vessels and the acquisition of assault rifles, however several procurement decisions expected for 2015 have been delayed. After more than a decade of significant defence spending, which has led the Chilean armed forces to be one of the best equipped in the region, defence procurement will slow down in 2015 and move away from big ticket conventional equipment. This is due mainly as a result of the incorporation of significant new defence equipment over the last decade. This included over 500 armoured vehicles including the Leopard 2 main battle tank, Marder infantry fighting vehicle and YPR-765 armoured personnel carriers, M109A3/A5 self propelled howitzers, 46 Lockheed-Martin F-16 Fighting Falcons, 12 EMBRAER Super Tucanos, and three

    Kongsberg NASAM medium-range air defence systems. The Navy procured a new surface fleet in the form of Type 23, L and M frigates as well as the new OPV-80 ocean patrol vessel and second hand armour for the marines. In 2015 the Chilean Army will adopt the Galil ACE 5.56 mm as its standard assault rifle with some 22,000 to be built locally by FAMAE. However, procurement of a new attack helicopter to replace the MD530 and up to four new fixed-wing medium transports from either the Airbus Military C295M or Alenia C-27J Spartan, is expected to be delayed. The Chilean Navy expects to fund construction of a new ice breaker that will replace the Viel, which is nearing the end of its service life, and procure a fourth Fassmer-designed OPV80 ocean patrol vessel at the local ASMAR shipyards. It is now apparent that

    procurement of Siroco ( L 9012), the second French Foudre-class LPD, will not proceed. Retirement of the Almirante Merino BMS-42 submarine support ship and the last two Type 148 (Tigre) fast attack craft (missile) will go without replacements. Chilean Marines will take delivery of the 1,800 SCAR 5.56 mm assault rifles.

    The Air Force (FACh) expects to procure a new satellite that will replace the existing EADS Astrium FASAT Charlie earth observation satellite, which has been in service since 2011 and will be retired in 2016-2017. However, a political decision to go ahead with procurement of FASAT Delta is reportedly delayed. FACh procurement of new medium multi-role helicopters and medium transport aircraft again from either the C295M or C-27J- is also delayed. Selection of a new fighter to replace its ageing fleet of Northrop F-5E/F Tigre III fighters is also unlikely to take place in 2015.

    Chile is investing in defence despite delays

    The Chilean Navy expects to fund construction of a new ice breaker that will replace the Viel

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    Indias procurement muddle Atul Chandra

    Indias defence procurement efforts have slowed over the last few years on the back of poor decision making, sluggish economic growth and what can only be described as the lack of decisive will to ensure that Indias armed forces are equipped to fight 21st century battles. A number of projects are no closer to fruition despite having being underway for years. Dassaults triumph in emerging as L1 (lowest bidder) with its Rafale for the IAFs Medium Multi-Role Combat Aircraft (MMRCA) tender has yet to land an actual contract for the privately owned French firm. While Dassault continues to maintain a stoic silence on the matter, Indian newspapers are rife with details of the difficulties facing the programme. Indias new Defence Minister Manohar Parikkar in a January television interview stated that, the choice of inducting more Su-30 MKIs remains, adding that, the terms of the Request for Proposal (RFP) cannot be diluted.

    The Su-30 MKI fleet however, has suffered from serviceability issues and was grounded late last year for fleet wide checks ordered by the IAF after another instance of uncommanded seat ejection on the type. At present the IAF has 34 fighter squadrons as against 42 squadrons sanctioned by the Indian Government. These consist

    of thrust vectored Su-30 MKIs, upgraded MiG-29 UPG interceptors and Mirage 2000 fighters (also receiving an upgrade) at the high end. Jaguars and ageing MiG-27 MLs used for interdiction and strike roles and the MiG-21 make up the lower end of the IAFs combat capability. The result of the procurement delays is that the IAF is unlikely to go beyond 34 combat squadrons for an extended period of time and will have to make do with legacy platforms (albeit upgraded) for a significant portion of its combat fleet. There appears to be a greater push towards Make in India, a slogan of the current government which has resulted in a number of defence procurements being steered in this direction. The shift towards Buy & Make (Indian) as per the Defence Procurement Procedure (DPP), where the foreign OEM has to form a Joint Venture (JV) with an Indian partner, is likely to further delay projects. Indias nascent aerospace ecosystem simply isnt mature enough at this stage and steep learning curve involved is likely to make programme slippages endemic. Certification is also likely to be a major issue for the foreign OEM, as ultimately they will be responsible for the products delivered to the Indian armed forces. A programme strongly supported by the IAF that has seen its chances dim is the AVRO replacement programme. Indias Defence Acquisition Council (DAC) had mandated last year that the programme would be handled by the private sector, keeping out HAL. Unfortunately, Airbus Defence and Space with its Indian partner, Tata Advanced Systems Limited (TASL), emerged as the sole bidder for the tender for 56 aircraft, with their C-295W. As a result of a single vendor situation, the Defence Acquisition Council (DAC), which is

    led by Indias Defence Minister, has yet to take a decision either for or against the programme. Two major helicopter acquisition programmes will now proceed under the Buy & Make (Indian) category as stipulated by the DPP. For both the Indian Army (IA) and IAF, the decision to restart the long running tender for a Reconnaissance &Surveillance Helicopter (RSH) means that replacement of their obsolete Hindustan Aeronautics built Cheetah and Chetak light helicopters is at least a few years away. The previous tender for 197 helicopters was split between the IA (133) and IAF (64). The final contenders for the contract were the AS550 C3 Fennec from Airbus Helicopters and Kamov Ka-226T from Russian Helicopters. Also looking for a replacement for its long serving Chetaks is the Indian Navy, which has released a Request for Information (RFI) for more than 100 Naval Utility Helicopters (NUH). The NUH must have capability for roles such as full SAR & Utility, HADR and limited Maritime Surveillance & Targeting capability. As per the RFI, the helicopters offered must be twin-engine, have wheeled landing gear and b