Meteor & A400M

[ORAC]

The Times - August 31, 2002

Hoon steps in to save missile plan as Germany backtracks
By Russell Hotten

GEOFF HOON, the Defence Secretary, has intervened to save a multibillion-pound European missile programme amid signs that Germany may pull out of the project.

Mr Hoon wrote a private letter to his German counterpart earlier this week expressing frustration at the country’s delay in agreeing its share of funding for the Meteor missile project.

With thousands of jobs dependent on Meteor, and hundreds of millions of pounds already spent, there have been fresh signals recently that Germany is backtracking on the programme.

Mr Hoon’s intervention will be welcomed by Europe’s defence companies, including BAE Systems, as they desperately want to make progress on Meteor’s development.

But, with a general election imminent and Germany facing huge clear-up costs after floods, any attempt to press the Government into sanctioning big defence spending is highly sensitive.

Mr Hoon seems prepared to risk opening a rift with Peter Struck, the German Defence Minister, for the sake of the project, warning him that Meteor is “vital for our defence needs”.

He wrote: “This contract needs to go ahead now since it has been ready for some months. Meteor is an example of European determination to stay in the forefront of technology.”

The letter also reveals the British Government’s impatience at Germany’s failure to agree a budget for the A400M military transport aircraft.

But it is approval for Meteor that is most urgent, as without Germany’s participation the project would have to be abandoned. Five governments have already signed up to help to develop the missile, which is needed for Europe’s three principal combat aircraft.

The UK is providing 34.6 per cent of development funding for Meteor, which will create about 1,200 jobs in Britain alone. Germany was supposed to be the next largest contributor, at 21 per cent.

But comments from Herr Struck have dismayed the defence industry. In a recent speech in Hamburg he said that Germany’s contribution needed further study. “We saw this as a threat to put the programme into cold storage,” a defence industry executive told The Times yesterday.

Paul Beaver, a leading defence analyst, said: “There’s bewilderment within the MoD over Germany’s delays. The whole project was predicated on Germany buying a set number of Meteors for its air force.”

Mr Beaver believes there could now be a powerful lobby within the German Government fighting to halt Meteor.

MBDA, owned by BAE, the Franco-German defence group EADS and Italy’s Finmeccanica, is the main company behind Meteor. It acknowledged last night that the project could not go ahead without Germany’s involvement.

[sangiovese.]

Well none of us could foresee this I suppose.........

EUROPE: A400M delay as Germans miss budget deadline
By Karin Nink and Haig Simonian in Berlin and Alexander Nicoll in,London
FT.com site; Sep 06, 2002


Production of the A400M military transport aircraft, a centrepiece of European efforts to boost defence capability, will be delayed after the German defence ministry admitted yesterday it would miss a crucial parliamentary deadline.

There are fears that further delay could force Britain, which urgently needs to replace ageing Hercules transporters, to reconsider its choice of the A400M over competing US aircraft.

The German defence ministry said it would not be possible to seek approval for the A400M at next week's meeting of parliament's budgetary committee. As this will be the final session before general elections on September 22, Germany's international partners will have to wait until the formation of a new government before a decision is reached.

The delay could last until the start of next year, given the time that will inevitably be taken for coalition negotiations after the elections and the formation of new parliamentary committees.

The A400M is the most prominent of several collaborative defence projects sidelined because of budgetary problems and the impending elections. An ý18bn (ý11.6bn) production contract was signed last December with Airbus, the manufacturer, but has yet to be activated because of the German delay - the latest of many during 16 years of discussions on the project.

UK officials yesterday said they recognised Germany had financial issues following last month's devastating floods, but would continue to press Berlin to commit the necessary funding.

Decisions are also pending on the Meteor, the main air-to-air missile for the

Eurofighter Typhoon aircraft. A UK official said: "We do need early progress on both programmes."

The German defence ministry said the definitive contractual papers could not be put to the budgetary committee for final approval as negotiations among the participants and with the manufacturer were continuing. However, Germany remained committed to its order, he said.

Germany's problems in financing its share of the eight-nation A400M project have antagonised its international partners and cast doubts on Berlin's credibility as a participant in multi-nation defence programmes.

[ORAC]

AW & ST:

...Amid demands from the partner nations that Germany clarify its position on the program as quickly as possible, the newly elected German government is to embark on a wide-ranging program review, including the A400M.

Recently appointed Defense Minister Peter Struck has put all major acquisition programs such as the A400M up for review, which could lead to Germany reducing its planned order for 73 aircraft significantly.

Struck is aiming to come up with a new procurement plan by the end of November, making a final go-ahead for the A400M this year all but impossible. The Bundestag's budget committee is due to meet in the first week of December and is highly unlikely to sign off on any new proposal by the German Defense Ministry that quickly..........

If Germany cut its A400M order, it would face having to compensate partner countries for the increasing unit prices under the current Memorandum of Understanding (MOU) signed in January.

While the Defense Ministry did not comment beyond saying that all projects were being evaluated, other sources indicated that Germany might even be looking at scrapping the original MOU and replacing it with a revamped agreement that would match the country's new requirements............

There is a palpable sense of exasperation among some of Germany's A400M partners as to its dithering over the program. If Berlin seriously slices procurement numbers it might yet see the program collapse.....