Original URL: http://www.theregister.co.uk/2008/12/15/eurofighter_postponement_german_deal/

Germans offer MoD hope of Eurofighter postponement

Blighty tries to shift surplus '80s superjets

By Lewis Page

Posted in Government, 15th December 2008 13:29 GMT

Germany may offer a cash-strapped UK Ministry of Defence (MoD) a temporary reprieve on the cripplingly expensive Eurofighter superjet programme, according to reports.

German defence officials have suggested that the upcoming "Tranche 3" deal for the third and final wave of Eurofighter deliveries could be split into two waves, according to the FT. This would allow the UK to postpone some of the necessary spending commitments beyond the next few years, when the MoD budget is heavily overbooked.

Under Tranches 1 and 2, Britain has already ordered 144 Eurofighters, which is already all that the RAF really needs for its planned fleet of seven frontline squadrons and a training unit. The Tranche 2 deliveries have just begun.

However, the Eurofighter was originally designed as a pure air-superiority fighter. Some of the existing planes have been converted to drop smartbombs, but the RAF regards this as an "austere" capability, and would like future jets to be heavily modified so that they could tackle strong air-defence networks such as those of Iran, Syria and the major world powers. This would mean equipping the planes with an array of new electronic-warfare kit and weapons such as the "Storm Shadow" pocket cruise missile.

The unstated RAF plan would be to get a large number of fully-equipped multirole planes under Tranche 3, and mothball a large number of the unmodified Tranche 1 and 2 fighters forever, effectively scrapping them. This is what happened with the Eurofighter's predecessor, the Tornado F2/F3.

The problem is, however, that the UK's defence budget is overspent for the next few years, in large part because the Eurofighter programme has been so delayed - acquisition of the planes should have been over long ago. Britain feels unable to cut any existing projects, so it needs urgently to shift some bills into the future - even if this means they get bigger as a result.

Meanwhile the UK is locked into an international agreement with the other Eurofighter partner nations that it will take 88 more jets under Tranche 3. Unilateral cancellation costs would be ruinously high, but the deal can be amended if all the countries agree.

According to the pink paper, the German ploy of splitting Tranche 3 into two chunks has received a sympathetic hearing in Berlin, Rome and Madrid.

"We can start four-party talks as soon as we get a signal from London," an unnamed German source told the paper.

However, it is understood that the UK would like to take just 16 jets in the first bite at Tranche 3, while the other nations would prefer to take at least half of their quotas. This would mean Blighty ordering 44 aircraft.

The UK would also like it could sell on some of its surplus jets to other countries, but there are obstacles here. Such a deal is seen by the partner nations as taking away from export business they otherwise would have won - they would normally make money from overseas orders if the UK wasn't dumping its surplus on the market.

Thus, hopes that a recent order for 72 jets placed by the Saudis could be offset against the UK's buy seem to have been stymied, as the partners' entitlement to compensation under the consortium agreement would be too high for Britain to pay. Similar problems could handicap British efforts to shift surplus fighters to Oman or even Japan.

Even if such deals could be cleared with Germany, Italy and Spain, there would still be problems.

The UK would mainly like to sell off its earlier, fighter-only planes - and these will be harder to sell than fully kitted out multirole jobs. The recently-retired CEO of BAE Systems, the British part of the manufacturing combine, has recently said that the MoD needs "to finish the job" on Eurofighter before it can realistically bring in any export earnings.

The FT's sources believe the British government will try to persuade its partners to let it buy less than 44 Tranche 3 jets in the immediate future, and make up the numbers with export orders from Saudi Arabia or other customers.

Whether the Europeans will be willing to go along with that remains to be seen. ®