Far Eastern Economic Review
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Taiwan may yet get fleet of submarines from US

By David Lague in Hong Kong
Issue cover-dated December 5, 2001

FROM THE BEGINNING, it seemed a United States offer to supply a $4 billion fleet of eight conventional submarines to Taiwan was in danger of sinking in a diplomatic and technical minefield.

Almost immediately after the offer was made in April, most of the world's major submarine-building nations including Germany, the Netherlands, Sweden and Australia ruled out providing Taiwan with submarines or the use of their designs for fear of antagonizing Beijing. Sceptics pointed out that the U.S. hadn't built a conventional submarine for more than 40 years and would need to buy blueprints or undertake the expensive exercise of developing a new design.

However, strong interest from U.S. and other shipyards in bidding for the contract and clear signals that the Bush administration is determined to supply the submarines suggest the deal is likely to go ahead. "I think this is a project that will go ahead inside two years," says the managing director of the Australian Submarine Corporation, Hans Ohff.

Defence industry sources say that the U.S. Navy invited domestic and foreign specialists in submarine design and construction to Washington on October 17 for briefings on the proposed Taiwan contract. Earlier, a specialist U.S. team visited Taipei for talks with government and military officials.

There is no shortage of interest in building the fleet. The U.S. Navy confirmed on November 20 that seven domestic and overseas companies had submitted design and construction proposals.

Some industry analysts believe it would even be possible to assemble a team to build a world-class submarine in Taiwan, particularly if some of the best talent from Russia and Europe could be recruited. Senior officials in Taipei suggest that Taiwan would want at least half the submarines built in a local shipyard.

A defence analyst at Taiwan's National Chengchi University, Yuan I, agrees evidence is emerging that the U.S. intends to honour its submarine offer. He adds that Taiwanese navy officials told local lawmakers in an October briefing that the first submarines would be delivered from 2010. "It looks like the submarine sale is a done deal," he says.

While most submarine builders are refusing to discuss their plans, the U.S.-based Northrop Grumman Corp. has confirmed that it had delivered a letter of intent to the Pentagon. Northrop has reportedly offered Taiwan the same Dutch-designed submarine it plans to build for Egypt's navy.

According to the authoritative Jane's Defence Weekly, another U.S. submarine builder, General Dynamics Electric Boat, may also offer to build Taiwan a variation of the Swedish-designed Collins Class submarines built by the ASC and now in service with the Australian navy.

In Taiwan, the conviction is growing that the submarines will be delivered, particularly with U.S. prestige at stake. "If the deal does not go through, the credibility of the Bush administration will suffer," says Lin Cheng-yi, the director of the Institute of European Studies at Taipei's Academia Sinica.

For Beijing, which has experienced some difficulties with its own 70-strong submarine fleet, these are troubling developments. A potent fleet of modern conventional submarines under the Taiwanese flag would have a major impact on the balance of power in the Taiwan Strait. Taiwan currently has only two relatively modern Dutch-built submarines and two older U.S. boats. "Submarines are a critical weapons system," says Lin. "If Taiwan does not have the new submarines, it will easy for the PRC to consider the blockade option to coerce or intimidate Taiwan."

Predictably, Beijing has recently renewed its opposition to any submarine deal. With China so strongly opposed, it remains unclear how submarine builders or designers from countries where governments have pledged to shun the project will win approval to take part.

The assertiveness of the Bush administration, particularly since it launched its war on terrorism, may reshape attitudes among some key allies. "It changes the whole equation," says one senior Australian naval officer who asked not to be named. "If we do it, the Chinese will be angry. If we don't, the U.S. will be angry. Which is the lesser of the two evils?"

The knowledge that Taiwan is willing to pay an attractive price at a time when the global military shipbuilding industry is depressed could also become a factor. In any case, it seems clear that the Bush administration is working to clear a path through the minefields for Taiwan's submarines.