Taiwan – Future Submarine

Rewritten – October 2001 HOT NEWS: October 2001

Program Status: Planned – likely.

Operational Requirement: The Republic of China Navy (ROCN) has a requirement for a modern force of diesel-electric submarines to oppose an amphibious invasion or a naval blockade of Taiwan by the People’s Republic of China (PRC).

Program Background: The ROCN has been attempting to acquire new diesel-electric submarines since it acquired its two Hai Lung (Zwaardvis) class submarines from the Netherlands in 1987 and 1988. A number of attempts to acquire submarines from Dutch, German, French, Australian, Argentine, Russian and US suppliers have come up short due to Taiwan’s political isolation. Most supplier’s will not attempt to do business with Taipei due to their government’s laws against such endeavors. Over the past decade, a number of initiatives have been pursued, including:

• Dutch construction: In 1992, the Dutch Government refused to allow Dutch shipyards permission to build submarines destined for the ROCN. This action was reportedly taken to avoid offending the PRC while the aircraft company Fokker was negotiating a large aircraft sale to the mainland. At the time, there were rumored offers in place involving six Walrus or Moray class submarines for Taiwan in deals variously reported to be valued at US$1.5B. No transaction was ever realized, and incidentally; the sale between Fokker and the PRC never occurred.

After 1992, rumors involving Rotterdam Dockyard Company Submarines (RDMS) also surfaced in connection with Taiwan’s submarine requirements. RDMS has been unsuccessful in its efforts to offer the ROCN Moray design for nearly ten years, and since 1996, has been trying to sell the two Zwaardvis class submarines decommissioned by the Dutch Navy in 1995 after 23 years of service. Additionally, RDMS is in desperate need of work and would welcome the opportunity to export submarines to Taiwan, or simply transfer technology and assist Taiwan in building submarines themselves in country. Most recently, RDMS has been linked with Ingalls Shipbuilding (now owned by Northrop Grumman) and Lockheed Martin to sell Moray class submarines to Egypt (see below).

RDMS has also been engaged in quite detailed negotiations with Taiwan's China Shipbuilding Corporation (CSBC) for a plan to build Moray-class submarines at Kaohsiung (Taiwan). Ever since the Bush Administration announcement of its intention to assist Taiwan in procuring up to eight diesel-electric submarines, CSBC has greatly stepped up its lobbying for local construction, with RDMS obviously as the preferred technical partner. The political difficulties are, of course, enormous. The ROC Navy is also very skeptical of the feasibility of such a plan in practice, citing concerns about the reliable sources of supply for key systems and components, as well as the availability of technology and technical assistance. Lack of Navy interest in local construction is also being attributed to concerns about the very real possibilities of significant schedule and cost impact, in addition to technical risks.

• German construction: In 1993, the Federal Security Council blocked the export of German-built submarine hulls to Taiwan. This was probably in response to a German consortium’s effort to sell submarines (produced by Howaldtswerke Deutsche Werft (HDW) and MEKO class corvettes (produced by Blohm + Voss) to Taiwan.

• French construction: Direction des Constructions Navales International (DCNI) has probably offered Taiwan its Scorpene design, which it sold to Chile. However, any French attempt to sell submarines to Taiwan runs in direct opposition to stated French policy (frequently violated) prohibiting arms sales to Taiwan. France also prohibits defense-related sales to the PRC as a result of the Tiananmen Square massacre, but continues civilian sales to the PRC, which is seen as a growth market. France’s official policy precludes arms deals with Taiwan to avoid offending the PRC, even though the Taiwan defense market probably represents a larger near-term economic opportunity than does the PRC. The one exception to French policy was the La Fayette class frigate, which incidentally, ended with a big kick-back scandal that was embarrassing to both sides. This is a difficult policy for France since its defense industry is realizing major layoffs due to major cutbacks in French naval construction programs and decreased export opportunities.

• Argentine construction: In the early 1990s, funding shortfalls led Argentina to suspend work on two TR 1700 class submarines being built under license at Astilleros Domecq Garcia in Buenos Aires. The availability of these two units led to rumors that Taiwan might purchase them. However, in 1996, when the shipyard was sold, the two submarines were 52 and 30 percent complete. Both units were cannibalized for spare parts to support Argentina’s two active duty TR 1700 class submarines.

• Russian construction: Taiwanese interest in acquiring Kilo class submarines from Russia is occasionally reported, once even at the highest level of government.

• Australian construction: In 1996, Taiwan expressed interest in buying Collins class submarines from the Australian Submarine Company (ASC), but the Australian Government has been firm in its stance that they will not grant an export license for a submarine sale to Taiwan.

• US construction: For the past decade, repeated reports have emerged of scenarios involving US manufacture of foreign designed submarines for the ROCN. However, the US Government has never officially supported the position of US built submarines for Taiwan due to the sensitivity for the PRC. Scenarios involving European designs and US shipyards are as follows:

1. HDW design (either a Type 209/1400 or a Type 2000 design) built by Ingalls Shipbuilding: By 2000, for the eighth year in a row, the US State Department denied Taiwan's request for Litton-Ingalls (now Northrop Grumman Ingalls) to build submarines to a European design (namely an HDW design ). Moreover, the US has also refused to allow US firms to assist in equipping, fitting-out, or participating in the mid-life upgrade of submarines built by other countries that are owned or destined for Taiwan. The official reaction from Taiwan's Ministry of National Defense (MND) was that ROCN would continue to pursue every channel to procure submarines from abroad (thus indicating the clear preference for foreign construction rather than an indigenous solution).

2. HDW design built by Electric Boat with fitting out by the China Shipbuilding Corporation. In February 1999, the Taiwan Defense Review reported that a proposal to build between six and ten HDW Type 209/1400 class submarines at Electric Boat (a division of General Dynamics) was being actively pursued and enjoyed considerable Congressional support. Taiwan's request for submarines was reportedly examined at length by the Clinton Administration, including inputs from the National Security Council, the State Department, the Department of Defense, and US Navy, with a basic consensus reportedly having been reached. This proposal, referred to as the "Indigenous Defensive Submarine (IDS)," envisioned an ASW-oriented platform with emphasis on coastal operations. The total value of the program was estimated at US$3-5B, with US content to nominally exceed 50% (in order to comply with the legal requirements for securing Foreign Military Sales (FMS) status). In addition to hull sections fabrication, US participation would almost certainly have included sensors, combat systems, and, possibly, weapons. Under this proposal, final assembly and fit-out would have taken place in Taiwan at the China Shipbuilding Corporation (CSBC) Shipyard in Kaohsiung, with assistance provided by the Chung-Shan Institute of Science and Technology (CSIST – the MND’s primary weapons system development organization).

3. Rotterdam Dockyard Company Submarines (RDMS) design built by Ingalls: At IMDEX ASIA-99 (May 1999) held in Singapore, RDMS teamed with Lockheed Martin Undersea Systems (producer of the SUBICS 900 combat system) and Ingalls Shipbuilding to offer Egypt a submarine solution based on the RDMS Moray design. Should the US approve the sale of submarines to Egypt this would make Ingalls the only US builder of diesel submarines and might open the way for approval of submarines for Taiwan. (See report on Egyptian submarine project). However, the Dutch Government has been adamant that it will prohibit the export of any Dutch designs or equipment for use in a Taiwanese submarine.

It must also be noted that the US Navy has been reluctant to support any of these initiatives, partially to protect US technology, and partially to prevent development of a US diesel submarine production capability that might threaten future US Navy nuclear submarine production programs. Whether or not the US Navy is for or against any construction programs is largely being swept away, first by the Egyptian Moray deal, and now by President Bush’s April 2001 decision to support a Taiwanese submarine program. The US Navy is fully aware that the submarines will more than likely be built at a US shipyard; the President has made the decision, and the US Navy is no position to challenge that decision. The USN has apparently reached an understanding with U.S. industry regarding the construction of export submarines. The principal provision states that work on submarines built for export can not be performed at a shipyard that is also undertaking the construction of nuclear boats for the US Navy. This would seem to impose some restrictions on certain facilities of General Dynamics-Electric Boat, but should not affect Northrop Grumman (Litton-Ingalls).

By November 1999, the Clinton Administration was unwilling to worsen its shaky relations with the PRC by approving the sale of a new major weapons system to Taiwan. The Republican-controlled Congress was decidedly more inclined to make such sales, but nothing would result unless a Republican administration won the 2000 Presidential election. In January 2001, George Bush Jr assumed the Presidency in the US, and in April 2001 announced that the US would in fact support the sale of eight submarines to Taiwan. The Taiwanese Government has not officially responded to the US proposal. However, due to Taiwan’s political isolation, they will more than likely accept the US offer. It is a matter of working out the details, which incidentally, may be very extensive considering the US has not built a conventionally-powered combat submarine since the late 1950s.

Program Acquisition Plan: There is currently no submarine acquisition plan in place for the ROCN. Specifics will depend strictly on Taiwanese approval of the package, US Congressional approval, and whether the US will in fact build the submarines as announced. On 23 April 2001, the US Government announced that it had approved the sale of eight submarines to the Taiwanese Government. Apparently, the US Government is currently drafting a Request for Information (RfI) to be issued to industry in the Autumn of 2001. Responses will probably be due by 2002, and a contract design by 2003. Assuming that the new submarine will be built at a US shipyard, Request for Proposals (RfPs) will probably be issued by 2004, and a construction contract award by 2006. Based on these planning assumptions, the following acquisition plan, for a buy of eight units valued at US$500M each, is projected:

• Contract Design 2003

• Construction Contract RfP 2004

• Construction Contract Award 2006

• First of Class Commissions 2010

• Hull Two Commissions 2011

• Hull Three Commissions 2012

• Hull Four Commissions 2013

• Hull Five Commissions 2014

• Hull Six Commissions 2015

• Hull Seven Commissions 2016

• Hull Eight Commissions 2017

Design and Construction Considerations: Design and construction considerations are purely speculative at this point, since RfIs have not yet been released. Specific desires in particular submarine designs are of a secondary nature in Taiwan, due to the fact that it is politically isolated and must accept what is available. Additionally, the Taiwanese Government has demonstrated a clear preference for foreign construction rather than embarking on the long, expensive, and technically risky process of developing an indigenous solution. It has however, investigated the technical feasibility of developing critical submarine construction technologies and other submarine related technology including sensors, combat management systems, heavy weight torpedoes, torpedo launching equipment, and fire control systems.

The announcement by the US Government caught many submarine designers by surprise, particularly those that the Taiwanese were interested in for design support. The ROCN and the US were hoping that several foreign designers would allow US shipbuilders to construct their designs for sale to Taiwan. Currently, the two designs most favored by the ROCN are the HDW Type 209/1400 and the RDMS Moray. Historically, the German and Dutch governments have publicly expressed their displeasure of the idea of HDW and RDMS selling submarines or their designs to Taiwan. Other European nations and nations that build European submarines under license (Australia, Brazil, Greece, South Korea, and Turkey), may take similar stands.

Current options for the new Taiwanese submarine are very few due to its political isolation. Some governments that are traditionally against arms sales to Taiwan are already publicly stating that the transfer of their designs will not be permitted, even through a third party. However, these responses are public reactions, and may not constitute the official answer. Listed below are several options for the Taiwanese submarines:

· HDW Type 209/Electric Boat: Industry rumors and press reports over the past several years indicate that there may be a Taiwanese link between HDW and Electric Boat (a subsidiary of General Dynamics). Reports indicated that Electric Boat would in fact build the HDW design for the ROCN. This option will require German Government approval, which is against arms sales to Taiwan due to its One-China policy. The ROC Navy is reportedly also exploring the possibility of obtaining (from HDW) a newer and slightly larger design than the Type 209/1400 MOD that has been the baseline design under consideration for many years. The main candidate appears to be the Type 214, given its ability to accommodate an air-independent propulsion (AIP) system and accommodate other possible future growth features.

· HDW Designs/Ingalls Shipbuilding: Industry rumors suggest that the German Government reportedly approved the transfer of HDW designs to Taiwan via Ingalls Shipbuilding (now owned by Northrop Grumman) more than a decade ago. If in fact legitimate, the German Government may show public displeasure, while at the same time claiming no legal way to stop the transfer since the deal has already been completed.

· RDMS/Ingalls Shipbuilding: Ingalls Shipbuilding has teamed with RDMS and Lockheed Martin to build the Moray design for the Egyptians. There is a small possibility that the same team will form for the Taiwanese venture. However, this sale may be very difficult since the Dutch Government also claims it will not allow arms transfers to Taiwan due to its One-China policy. As demonstrated in 1992, the Dutch Government is very susceptible to pressure from the PRC.

· Australia Collins Class/Electric Boat: Although the Australian Government’s official policy is to not sell submarines to Taiwan, it is possible that the Collins design could be sold to the US for construction. Additional elements that may make this possible are Electric Boat’s interest and possible purchase of Australian Submarine Corporation (ASC), and closer strategic ties developed between the US and Australian in May 2001.

· Kilo Class/Ingalls Shipbuilding: The PRC is Russia’s biggest client concerning arms procurement. Any sale of the Kilo or any other submarine design to Taiwan would draw extreme protests from the Chinese Government. However, the fact remains that Beijing is isolated in many ways also, and the main avenue for technology transfer is from Russia. The PRC would be very displeased, and may temporarily embargo Russian weapons, however, this would be short lived due its dependency on Russia. Russia, on the other hand, is in desperate need of cash, and may allow a builder such as Ingalls, to construct the vessels under license. Additionally, this would not be the first time that Russia/Soviet Union sold weapons to both sides of a feud. Even though intermediaries in Taiwan and elsewhere have been trying to broker such a deal, the ROC Navy has pointedly shown little interest in the proposal. The overriding issue apparently is the ROCN's misgivings about a reliable and sustainable supply of spare parts and technical support over the life of the boats.

· Turkey Type 209: Turkey has the right to export the HDW Type 209 to third countries. However, Turkey is very dependent on foreign weapons purchases, and would probably not risk loosing its suppliers due to a transfer of its Type 209 design to Taiwan or to a prospective builder that will deliver the same to Taiwan.

· Taiwanese Hai Lung Class/Ingalls Shipbuilding: Taiwan has at least partial rights to the Hai Lung (Zwaardvis Mk 2) class already in commission. It is a possibility that a modified version could be built at Ingalls Shipbuilding in the event that no other design becomes available. Again, this is a remote possibility, since many of the necessary systems and components for building the Zwaardvis Mk 2 are no longer in production.

· US Design/Ingalls Shipbuilding/Electric Boat: This option appears to be the most favorable politically. Although the last US-constructed diesel submarine was the Barbel class at Ingalls over forty years ago, it is probably the most realistic option. The major hurdle of diesel boat construction in the US was cleared when the President made the decision to sell submarines to Taiwan. Now it is a matter of choosing the builder and the design. An improved Barbel design or new design will add several years to the program and will cost considerably more. Since European suppliers will prohibit the export of their submarine components for use in a Taiwanese submarine, virtually all of the submarine’s components will have to be made in Taiwan or the US. US suppliers will not be able to benefit from their experience in producing components for US nuclear-powered submarines due to US Navy regulations concerning the transfer of sensitive submarine related technologies. As a result, the components will be new initiatives, developed and produced at great expense. However, the Taiwanese Government has already estimated around US$500M per vessel, twice that of a diesel submarine. Taiwan fully realizes that it will pay considerably more on the market due to its political isolation.

Electric Boat and Newport News as the other major competitors, have never built a diesel submarine, and there are major concerns that technology from the nuclear construction and silencing programs will bleed over to the foreign diesel submarines. Ingalls Shipbuilding will not face that problem since it has never been involved with nuclear submarine construction, and will probably be cleared to build the Moray design for the Egyptians.

As of September 2001, General Dynamics and Northrop Grumman (Ingalls) are still actively engaged in discussions with both HDW and RDMS, attempting to secure respective cooperative arrangements that would allow each firm to pursue the Taiwan submarine business with one or more viable design packages. In its requirement, the ROCN has stated the preference for a proven submarine design that has sufficient growth potential to accommodate future capabilities. This would seem to give the advantage to HDW, which can offer not only the Type 209/1400 MOD, but also the Type 214 and other variants thereof, all of which have previously been built (or are at least under construction). By comparison, none of the technologically promising Moray-class designs have been built to date.

Key Personnel:

· Ministry of National Defense

Major General Chen Lan-Juen (as of 1 January 1999)

Director of Procurement

Military Procurement Bureau (MPB)

Ministry of National Defense

172-1 Po-Ai Road

Taipei, Taiwan

Tel: + 886 2 382 6078, 886 2 382 6079

Fax: + 886 2 383 6444

· Chung-Shan Institute of Science and Technology (CSIST)

Lieutenant General Liu Chin-Ling

President

Chung-Shan Institute of Science and Technology (CSIST)

Lung Tan

Post Office Box 9008-1

Lungtan

Taiwan

Tel: + 886 3 471 2201

Fax: + 886 3 471 1057

Website: http://www.csist.org.tw