Choosing Sides
An Israeli-Italian deal threatens to undo Israeli-South Korean work
Aviation Week & Space Technology, 02/27/2012
Authors : Andy Nativi and Alon Ben-David
An interesting quid-pro-quo military equipment deal between Israel and Italy may jeopardize Israel’s future contracts with South Korea, but it has also solidified Jerusalem’s relationship with Rome.
Israel is opting for the Alenia Aermacchi M-346 advanced jet trainer over Korea Aerospace Industries’ T-50 in an estimated $1 billion deal that will cover 25-30 aircraft plus ground-based training systems. This month, the director general of Israel’s defense ministry, Maj. Gen. Udi Shani, recommended his government authorize the order.
If it does so, the M-346 will replace Israel’s aging fleet of TA-4 Skyhawk trainers, which have logged close to 40 years of operations, and its F-16A/Bs, which now serve as advanced jet trainers. The trainers are meant to prepare pilots to operate the advanced F-16I and F-15I as well as the F-35 Joint Strike Fighter. The M-346 will be procured through a joint venture of Israel Aerospace Industries (IAI) and Elbit Systems.
The deal also will require the Italian defense ministry to acquire Israeli-made military systems worth roughly the same amount, therefore providing a 100% offset on the buy.
The Israeli defense ministry states that “the Italian proposal was the most efficient choice, due to the suitability of the training jets to the direct needs of the [Israeli air force], the cost and the significant offset package conditions.”
Israel fears its selection of the M-346 over the T-50 might result in South Korea canceling existing defense contracts and refraining from new ones with Israel. South Korea has not yet formally responded to the jet trainer contract decision, but it had threatened to suspend defense contracts with Israel, claiming the tender was tilted in favor of the Italian aircraft.
South Korea’s defense procurement from Israel has totaled some $300 million annually; it is considered to be the first potential customer for Israel’s Arrow missile defense system. “We ran an impartial tender and [South] Korea got more than a fair chance to compete,” a senior Israeli defense official tells Aviation Week. “I do hope that [South] Korea will understand our decision and will not realize the threats it made.”
A year ago, Israel required the two contenders to prepare proposals for offset procurement in Israel. South Korea, which already installs IAI’s EL/M-2032 multimode radar, Elisra’s electronic warfare suite and Elbit’s head-up display in its F/A-50s, offered a proposal totaling $1.6 billion, including the procurement of Israel’s Iron Dome counter-rocket system.
“While the Italian offer was lower, the [South] Koreans were not willing to commit beyond a letter of intent and the Italians were ready to sign a comprehensive contract,” the defense official says. “If the T-50 was preferable in all aspects, of course we would have selected it, regardless of the offset proposal, but the aircraft did not meet our requirements.”
Another important element in the selection process may have been a political one. While both South Korea and Italy maintain troops in the U.N.-led Unifil mission, which helps protect the northern Israeli border with Lebanon, Italy is commanding the mission and is deploying more than 1,200 troops, triple the size of the South Korean contingent. And Italy has taken a strong stance against Syria and Iran.
Still, it is not clear what the Italian defense ministry will acquire under the offset package. Italy has bought Rafael antitank missiles for both the army and naval infantry, selected an Israeli avionics package for the upgrade of the army AW129 Mangusta helicopters and bought Israeli smart bombs and electronic warfare equipment. In theory, the biggest item on the desk is a potential buy of Israeli-made and Gulfstream G550-based airborne early warning aircraft for the Italian air force, but this is on hold due to defense budget reductions. Also, any aircraft would have to be “NATO-compliant” to meet Italian air force requirements.
Both Italy and South Korea considered the Israeli trainer contest a significant precursor for the U.S. Air Force’s T-X competition.
Italian Air Force T-346A ⓒ Alenia Aermacchi