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Analysis: the fight between the US and Europe for the endowment of the Romanian army
The increase of the budget allocated to the Defence by Romania to 2% of GDP starting with this year and the launching of several programmes for endowment of the army generated a tight competition for contracts between the big European companies and the American ones in the sector, supported by the states where they have their headquarters, including during the visits at high level. Until now, the PSD-ALDEgovernment announced several important contracts with American companies and none with European companies even if they continued an agreement signed last year by the government with the Germans from Rheinmetall for the fabrication of armoured transporters in Moreni, still under discussion due to a similar contract announced recently with the Americans from General Dynamics.
On1 August, the Supreme Council for Defence (CSAT) approved the Plan for the endowment of the Romanian Army 2017 – 2026 which includes eight endowment programmes with multiannual funds worth 9,8 billion euro.
Out of these, four big endowment programmes have already been started out of which three have also signed contracts.
In all cases, the fight for contracts is between European companies (mainly France and Germany which have competitive military industries) and the US as the military technology market is one of oligopoly type ( some big suppliers on each market) and is influenced by the political and military alliances between states(NATO and the strategic partnership with the US in the case of Romania).
Another special feature of the contracts for military endowment is connected to the possibilities for production and the local maintenance of the equipment, the ownership of an industry which represents an asset for any state in case of conflict.
In case where the local production is not possible, internationally speaking there are arrangements of offset type, mechanism included by the Romanian legislation.
An arrangement with offset means that in the case of acquisition of armament abroad, a part of the value of the contract should go to the state where the acquisition is made through investments, locally subcontracted or with technological transfer.
The Romanian legislation includes, for the military acquisitions from abroad, a percentage of offset, at least 80%.
Missiles – anti-missile defence
One of the most important and most costly programme for endowment is that connected to missiles, chapter where Romania is lacking.
Now, the Romanian army has systems of missiles Hawk, bought in 2004 from the Netherlands but non-modernised and considered to be outdated, plus the missile systems from the Soviet epoch (Volhov).
In exchange, Romania has modern radars (FPS, GapFiller) which means that the army has at present a system of early warning and response, not one of anti-missile defence.
The publication ‘ Air and missile defence in Europe’ made in November 2016 by the British trust Jane’s Information Group showed that the main vulnerability of Romania is connected to the lacking endowment with anti-missile systems, as Russia has sophisticated ballistic systems which they use as disincentive.
Romania needs anti-missile defence at three levels: long-range, medium-range and short range defence.
For these contracts there were prepared offers of the European group MBDA which have the system ground-air Aster 30 with long-range anti-missile and air defence system (up to 120 km) used at present by the armies in France,Italy and the UK. For short range and medium range MBDA proposes the system Aster 15.
The MBDA representatives had discussions over the last years with the Romanian officials about the integrated system of defence anti-missile and air defence of Romania.
Moreover, MBDA has missile systems for military ships (Exocel) including for the present fregates or the future corvettes of the Romanian marine.
On the other side, the Americans proposed the system MIM 1014 Patriot,produced by the group Raytheon starting with 19576 with medium and long range (PAC-2 – 160 km, PAC-3 20-35 km) and the systems of mobile launchers M142 High Mobility Artillery Rocket System (HIMARS) produced by Lockheed Marrtin and with long range of action.
This summer, the American authorities announced and the Romanian ones confirmed later, that Romania will buy missile systems Patriot, contract worth 3.9 billion dollars and the mobile systems HIMARS worth 1.25 billion dollars.
More exactly, Romania will buy within the first contract 28 launching stations M903 from Raytheon with radar and control systems, 56 missiles Patriot MIM-104E Guidance Enhanced Missile – TBM (GEM-T) from Raytheon and 168 missiles Patriot Advanced Capability -3 (PAC3) made by Lockheed Martin.
In the second contract, Romania will buy 54 missile systems for artillery of high mobility, the services and the necessary equipment.
The contract includes 54 vehicles of resupply (RSV) HIMARS type M1084A1P2 – a medium tactical transport vehicle of 5 tons equipped with material handling equipment – 54 MTV trailers with RSV kits, type M1095 and ten maintenance kits FMTV of type M10891P2 –medium tactical maintenance vehicles of 5 tons – 30 practice missile LCRR, support equipment, communication equipment, sensors, spare parts and repair parts, testing sets, batteries, laptops, publications and technical data, projectors, training and training equipment, support in the system integration, quality ensurance teams, technical assistance team on the field, technical engineering and logistics systems on the part of the American government and the American contractors and other elements of logistics and support programmes.
The Romanian authorities did not announce any offset option, as these systems are produced in the US.
Moreover, the Romanian authorities did not say if they started the negotiations for technology transfer, as did Poland who has more and more difficult discussions with Raytheon for the acquisition of eight missile systems Patriot.
Initially, the Polish government expected to sign a contract of 7.6 billion dollars with Raytheon until the end of 2017 but a person close to the discussions stated recently that the deadline is not realistic, due mainly to the differences between the parties connected to the transfer of technology.
Besides these systems, Romania needs the short rang and very short range defence systmes (SHORAD/VSHORAD), the battle being between MBDA and the American companies.
On this segment, MBDA proposes missile systems Mistral and VLMICA for which the Romanian authorities even to the level of agreement for purchase after a decade, annulled later due to budgetary causes.
The American offer could include AN/TWQ Avenger systems produced by Boeing.
Armoured transporters for infantry
Last year,the government announced an important contract which includes the production in Romania through a joint company Romanian Military Vehicle Systems – made between the state-run company UM Moreni and the German group Rheinmetall of the new armoured amphibious transporters 8x8 for the Terrestrial Forces.
The joint company would produce almost 550 amphibious transporters and almost 5 Boxer armoured (non-amphibious) of Rheinmetall will be imported from Germany.
The 600 transporters will equip the infantry battalions endowed at present with old TABs, outside a battalion which is equipped with light transporters Piranha.
The implementation of the contract depends on the decision of the present government which did not annul the contract.
The Germans had the surprise to hear the minister of defence Gabriel Tutuianu announcing at the beginning of August that they discussed with the representatives of the American company General Dynamics for the setting up of a joint company to produce military vehicles in Romania starting with the summer of 2018.
Later, the minister of economy Mihai Fifor said tha the government will sign on 23 August a memorandum with General Dynamics for the productin of armoured transporters in Uzina Mecanica Bucuresti, but he said that the Romanian authorities intend to sign a partnership with a German company Rheinmetall for the contruction of armoured transporters in Moreni and for the production of missiles in Electromecanica Ploiesti.
It is not clear how realistic for a country of the dimensions of Romania and an army of almost 70,000 people to produce two different armoured transporters with different producers to equip their army.
Military helicopters
A similar situation is for the contract or the contracts for the endowment of the army with modern helicopters.
Initially, the contract taken into account was for a multitasking helicopter ( which could be used for multiple tasks: troops transport, search-save, special troops assault and attack – through equipment with missile systems, machine guns and guns) as by comparison to the US (which use three main types of military helicopters: attack, transport, utilities – UH) Romania cannot afford for such a diversity.
For a multitasking helicopters two producers were aimed: Airbus Helicopters – preferred for a long time,with the model H215 M as they have already built a new factory for helicopters in Ghimbav, inaugurated in 2016 in the presence of the president of France – and the American company Sikorsky controlled by the Lockheed Martin group which took into consideration the possibility to produce helicopters S-70 Black Hawk in Romania in Brasov or Craiova in case the army chooses this model.
The third produced interested in the contract Bell Helicopter proposed the assembly in Romania of the model AH- 1Z Viper, a helicopter for attack and not multi-tasking.
Surprisingly, the government announced on 3 August that they signed a letter of intention in which they announced the United States on the availability to purchase attack helicopters.
The minister of defence stated, later, that the attack helicopters which Romania intends to acquire will be produced in Romania, the producing company Bell Helicopter giving their agreement.
It is not clear how many helicopters will be produced,, where, how many will be bought by Romania and if the government has in mind to buy multi-tasking helicopters as well.
Normally, the producers of helicopters aimed at a contract for the replacement of the Puman helicopters of the Romanian military aviation from a generation of 45 years ago, even if some of them have been modernised at SOCAT standards.
‘ If you have in mind the necessities of Romania – nobody knows better than the ministries about the necessary number of helicopters – our estimate is that, for the modernisation of the whole military fleet ( of Romania) it is necessary to have 40-50 helicopters’ stated Olivier Michalon, vicechairman for Europe with Airbus Helicopters, in a discussioin with the Romanian journalists.
The representatives Airbus Helicopters, company considered for a long time the preferred one for the contract, say that the modernisation of the fleet of military helicopters may be made in time.
The interest is growing especially after Romania committed to allocate, starting this year, the equivalent of 2% of the GDP for Defence, which means, at the value of the estimated GDP for 2017 (almost 180 billion euro) a budget for the army of almost 3.6 billion euro or 4 billion dollars out of which the sums available for the endowment contracts are significantly higher than in the previous years, when the budget of the ministry of defence was of almost 1.4%of GDP.
The price of an apparatus H215 of Airbus Helicopters is different depending on the endowment with equipment, but the representatives of the producer show the flexibility of the model, which could be used both as troops transporter, civilians or commando troops, and air supervision, the support of the infantry or even for anti-submarine fight.
Over the last months there were more discussions in Romtehnica, the company through which military technics is acquired of the representatives of the producers interested in the contract for the new helicopters and the representatives of the military aviation and other Romanian institutions.
Corvettes and modernisation of the fregates
Another contract with delay and where surprise winners could appear is the one for the corvettes for the military marine.
Last year, the government reached an agreement with the Dutch in Damen which included the acquisition of four new corvettes from the Dutch group Damen, which were to be produced until 2020 in the Damen Galati shipyard.
The corvettes are meant to ensure the anti-submarine protection in the context of the Russian fleet of submarines which is growing in the Black Sea.
The contract negotiated by the army and which had to be signed for direct production was blocked in the parliament.
Recently, the ministry of defence launched in debate a draft of government decision regarding the new conditions for acquisition of the four multi-tasking corvettes, with estimated value of 1.6 billion euro.
The corvettes have to be built in Romania, they have to have a displacement between 1600 – 3500 tons with fighting capacities in at least two domains (anti-air war –AAW and fight against the surface ships – AsuW/ anti-submarine fight – ASW) and system of management of fight integrated with the sensor systems and armament, including the systems of missiles ship-air/ship-ship.
An important element is the fact that producers have to bring a draft which has already been implemented – corvettes which are already in the endowment of some armies.
In this case, the fight will be between the European producers – Damen, the Netherlands Naval Group ( the former DCNS), France and Germany (corvette K130 Braunschweig ) and the Americans (corvette Littoral Combat Ship Freedom), the Damen group being considered favoured with the corvetter Sigma 10514.
Who gets the contract will modernise the present fregates of the marine, contract which means the installation of modern radar systems of missiles and fight.