With the introduction of three new submarines, the Navy retired the four older Daphne class subs in January 2006, which left a capability gap. The Navy began looking to select a new and a more up to date platform with the hope to construct the new subs indigenously. Pakistan's Navy has requirements for a further six submarines and there was an open tender for thise. The French firm Armaris, a subsidiary of France's Thales group, lobbied for the sale of three Marlin type submarines, the latest version of the three Agosta 90-B boats, the last of which the company handed over to Pakistan in 2006.
Funds were allocated in Armed Forces Development Programme (AFDP-2019) for early purchase of new submarines to counter the growing Indian Navy threat in Pakistanís Area of Interest. The process of acquisition was initiated in 2004, when a Naval Service Requirement (NSR) based on Pakistan Navyís threat perception and operating environment was prepared and subsequently approved at Naval Headquarters. The German Type 214 submarine was finally selected after a technical evaluation process.
In February 2008 Germany declared that it may approve the sale of Type 214 submarines to Pakistan despite calls to pull out of the potential USD1.5 billion deal from the German political opposition. However, the German government said that an agreement with Pakistan - should the platform be selected by Islamabad for its next-generation submarine requirement - would be based on "political principles". Any export of the ThyssenKrupp Marine Systems Type 214 would be examined by an inter-ministerial group.
On 26 November 2008 it was reported that Pakistan had decided to buy three Type 214 German submarines under a more than 1 billion dollar deal that the two countries were expected to sign within a few months. Pakistan had traditionally relied on French submarines for its Naval defence and it is first time that the South Asian country had opted for German boats. The decision to acquire Type 214 over the French submarine was made not only because the submarine was more advanced than the French Marlin, but also because many countries had deployed the Type 214 submarines, so there would be no issue of spares.
The German shipbuilding company Howaldtswerke-Deutsche Werft GmbH (HDW) was to construct the diesel-electric submarines in a shipyard in Pakistan's southern port city of Karachi. "The commercial contract has been finalised up to 95 per cent," Walter Freitag, the chief executive officer of the HDW, the largest conventional submarine maker in the world told Pakistan's English-language daily The News, hoping that the final agreement will be signed soon. Freitag said that the first submarine would be delivered to Pakistan Navy in 64 months once the contract is signed. "The rest would be completed in the next 12 months," he added. If the contract were finalized in 2009, that would imply delivery of the first unit in 2014, with the other two following in 2015 and 2016.
The German government on 31 October 2008 denied a television report about the imminent sale of three conventional U-214 submarines to crisis-hit Pakistan. Talking to the press in Berlin, German Economic Ministry spokesman Steffen Moritz stressed no government permit had yet been issued to the HDW dockyard, based in the north German city of Kiel, to build the submarines. There has been "no new development" in the case, said Moritz. An initial request by the German builder of the submarines to engage in contract talks with Pakistan was responded positively in November 2004, he added. Any sale of the three submarines to Pakistan would have to be authorized by the German National Security Council, taking into account "political and regional aspects," according to Moritz. Political observers say it is highly unlikely that the German government would give green light to the controversial deal in the near future amid Pakistan's deepening political and financial woes.
On February 2, 2009 Indo Asian News Service (IANS) reported that Pakistan Navy confirmed their intention to acquire drones, spy planes and submarines. Admiral Noman Bashir said a contract would soon be signed for the German-designed HDW Type-214 submarines to enhance the navy's 'subsurface defense capabilities'. Pakistan had agreed to buy three Type 214 German submarines under deal worth more than $1 billion (775 million euros) that the two countries were expected to sign in 2008.
As of May 2009 the sale of three type 214 submarines to Pakistan had been approved in Germany, and an export credit of 1 billion Euros ($1.3b ) offered, but no contract had been signed yet. As the sale negotiations were dragging out, the German national security council decided to adjourn further deliberation on sale till after the September 2010 German general elections.
In the summer of 2009 there were reports that the President of Pakistan had rejected the plan to buy the Type 214s, and decided to purchase submarines from France. Not surprisingly, there were allegations that strong lobbies in Islamabad wanted to buy more French vessels because Paris was willing to pay heavy bribes. To ensure a deal was sealed with France instead of Germany, in late June 2009 a junior bureaucrat was appointed as Pakistanís ambassador in Paris, bypassing the Pakistani foreign office. The government appointed a Grade 20 DMG officer non-diplomat of Joint Secretary rank with no eminence at any level, who was then serving as secretary livestock in the Punjab Government, as the new ambassador to France. Reports accused President Asif Ali Zardari of orchestrating this appointment.
In France, the investigators and the judge in the case of the 11 French engineers killed in Karachi in 2002 asked the French Defence Ministry to reveal documents which allegedly attributed the murders to a former minister in Benazir government and others. At that time the French government headed by Jacques Chirac had outlawed the payment of commissions. These commissions were being paid by Edourad Balladori. At the time, Mr. Sarkozy was budget minister in Mr. Balladur's government and spokesman for his campaign bid. Pakistan's newly designated Ambassador to France was a relatively junior officer of DMG who had served as commercial counsellor in Paris from 2002-07. The nominee's claim to fame was his personal contacts with the younger brother of Mr. Sarkozy. The prime minister cancelled the appointment of Jahanzeb Khan as the new ambassador to France later in July 2009. The news of cancelling the appointment of Mr. Jahanzeb Khan was generally well received.
And in late 2010 there were reports that Pakistan's government was considering acquisition of smaller and less expensive Chinese submarines.
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