Hai Lung II [Sea Dragon]-class Foreign Purchase Submarine
In the 1990s the United States had ruled out the possibility of selling submarines to Taiwan, but was not certain whether or not it will export submarine construction technology to Taiwan. Key technologies for the submarine, including the torpedo fire control system and electronic radar system, still have to be obtained by Taiwan through the arms sale channel. Taiwan explored obtaining the parts to build submarines from other countries in the face of strict regulations on the export of submarine parts. Taiwan's Defense Ministry was concerned that there would be technical problems if Taiwan builds the submarines without support from other countries, and consequently has refused to approve a budget for more submarines. If Taiwan built conventional submarines, their performances would approximate those of "Hai Lung" and be inferior to the Chinese Kilo-class submarines bought from Russia.
The Netherlands submarine builder RDM provided Taiwan with a pair of Zwaardvis [Swordfish] class submarines, and remained in the running for Taiwan's planned construction of up to a dozen diesel submarines (despite the Netherlands government's prohibition of military sales to Taiwan). And RDM announced in September 2000 that agreement had been reached with Egypt for assembly of two 1,600-ton Moray-class diesel submarines at Ingalls Shipbuilding in Pascagoula. Although this could lay the groundwork for Ingalls building submarines for Taiwan, construction of the two units for Eqypt was dependent on US government approval.
In January 1999 a plan to fabricate German-designed submarine sections at Electric Boat for delivery to Taiwan for final assembly was made public. General Dynamics, the parent company of Electric Boat, would build as many as 10 diesel-electric submarines for the Taiwanese Navy. The German shipbuilding company HDW approached General Dynamics about building the submarines under an export license, which is allowed under State Department rules passed in 1994, when Ingalls Shipbuilding was seeking approval to build diesel boats for the Egyptian Navy.
Electric Boat has long pushed to produce diesel submarines for export, but production would likely not take place in Groton. The Navy does not want to see export diesel submarines produced at the same yard as advanced nuclear submarines, given concerns about technology transfer. The submarines would be equipped with sonar and defensive weapons systems jointly developed by Europe and the United States, while submarine parts would be supplied by General Electric, and after the subs were commissioned the US would provide training, technology and support.
In early 2001 the Bush administration considered a report from the United States Pacific Command that concluded that Taiwan needed new submariness. On 24 April 2001 it was announced that the Bush Administration had decided to help Taiwan acquire up to eight diesel submarines. Although the United States does not build diesel submarines, it would facilitate their production for Taiwan by manufacturers in Germany or the Netherlands, since these countries may wish to avoid angering Beijing by selling submarines to Taiwan directly. The Bush Administration indicated that the US might build the submarines at Pascagoula using either German or Dutch designs. However, German officials immediately stated that they would not permit such a sale. And Dutch officials indicated that their agreement with China not to sell weapons to Taiwan would preclude sales to third parties for transfer to Taiwan.
In August 2001 it was reported that the US Navy had encouraged General Dynamics Electric Boat to purchase a 40% stake in Australian Submarine Corporation [ASC], which had built six Collins-class conventional submarines for the Royal Australian Navy. In November 2000 the Australian Federal Government had acquired that portion of the shareholding in Australian Submarine Corporation that it did not then own. At the same time, the Government announced that it intented to divest all of its interests in ASC, once suitable arrangements have been put in place.
Seven companies presented plans to build eight diesel submarines for Taiwan, despite protests from China. The companies included three shipyards owned by Northrop Grumman, three owned by General Dynamics and Taiwan's China Shipbuilding Corp., which together with Lockheed Martin attended an initial 16 November 2001 meeting at the US Navy's Naval Sea System Command (NAVSEA). The project, estimated to be worth up to $4 billion, calls for eight subs to be built.
In March 2002 an American company, American One Equity Partners, announced plans to buy 75 percent of Germany's largest shipbuilder, HDW, a sale approved by the European Commission in May 2002. Leading American defense contractor Northrop Grumman is a partner in the HDW acquisition. In June 2002 German Chancellor Gerhart Schroeder reiterated his position barring submarine sales to Taiwan.
In May 2002 Taiwan's legislature passed a resolution requiring that at least six of the proposed eight subs must be built in Taiwan with US help.
In late June 2002 the cost of the eight submarines was reported as being as much as US$6 billion, making them the most expensive weapons system Taiwan has ever bought from the United States.
In late July 2002 Taiwan's navy completed talks with the US Navy International Programs Department on the purchase of eight diesel-powered submarines from the US. The two sides reached an agreement on the type of submarine that the US will provide to Taiwan. The US delegation tried to persuade Taiwan's navy to accept Israeli-built submarines, but Taiwan insisted on submarines designed and manufactured by Germany.
In late 2002 Taiwan provided an initial payment of $400,000 to the US for studies of the type of submarines to be built. Designs reportedly included a redesigned, 1950s-era diesel submarine based on the USS Barbell-class of boats, and the Spanish Galerna-class submarine, which is similar to the French Agosta-class submarine. The German Type 209 was said to be unlikely to be picked, given the German government's fear of retribution from China.
Northrop Grumman's Ingalls shipyard is a candidate to build any US diesel electric submarines for Taiwan. Two Republican senators Trent Lott and Thad Cochran, both from Mississippi, wrote to Rear Adm. J. Phillip Davis, the Navy's submarine program officer, urging the Taiwan diesel boats to be built in the United States. "Fabrication of these submarines within the United States is consistent with Navy policy and would enhance the stability of our shipbuilding industry," the senators wrote 04 October 2002.
The US Navy hosted an invitation-only Industry Briefing on December 17 and 18, 2002 to inform selected qualified companies about the anticipated US Navy acquisition of diesel submarines for Taiwan. Consistent with 10 U.S.C. 2304 (c) (7), providing for "Public Interest" exception to the Competition in Contracting Act, the anticipated future competition will be limited to General Dynamics, Northrop Grumman, Raytheon Company and Lockheed Martin to compete as prime contractors. However, also invited to the industry briefing were known contractors possessing modern diesel electric submarine designs currently in use or under construction for use in navy arsenals. Spain, Germany and the Netherlands have all declined to bid on the project.
In 2003 the US Government suggested buying four Nazario Sauro-class refurbished submarines from Italy, that reportedly agreed to sell them plus an additional four other submarines, following their decommissioning by the Italian Navy. However, Taipei rejected the offer, saying it wanted new submarines.
In October 2003 Taiwanese legislators proposed that the state-run China Shipbuilding Corp (CSBC) would build one-third of the third and fourth submarines, and two-thirds of the fifth and sixth ones and build the last two on its own.
In November 2003 it was reported that the US estimated that the eight diesel-powered submarines could cost between US$8.6 billion and US$11.7 billion (NT$301 billion to NT$409 billion), depending on the displacement of the submarines - either 1,500 tons or 2,000 tons. The eight submarines would be completed in 2019 if the budget was approved by Taiwan's parliament in 2004.
In May 2004, Jane's Defence Weekly indicated that Northrop Grumman Ship Systems is offering Taiwan a modernized version of the Barbel - class submarine. NGSS would partner with Howaldtswerke- Deutsche Werft (HDW). The design of the submarine would use the Barbel's hullform fitted with an HDW pressure hull and modern components such as AIP. The submarine would have a submerged displacement of about 2,644 tons, a maximum speed of 21 knots, a range without refuelling of about 19,000nm and six torpedo or missile launch tubes. The likelihood of the deal is uncertain as elements in Northrop Grumman appears to be cool to the idea, and it is unclear if the German government would approve HDW's transfer. [Andrew Koch, "Taiwan-US Ship Deals Stalled" Jane's Defence Weekly 26 May 2004]
On 02 June 2004 the Executive Yuan approved the Defense Ministry's special budget allocations for major military procurement programs worth a total of NT$610.8 billion (about US$18.23 billion). The money to finance the special budget will come from NT$94 billion through the release of shares of state-owned enterprises, NT$100 billion from the selling of state-owned land, and the raising of the national debt of NT$420 billion. The proposed budget would cover six sets of Patriot Advanced Capability III anti-missile systems, eight conventional submarines and 12 P-3C anti-submarine aircraft. The procurement of eight conventional submarines will cost NT$412 billion (US$12.3 billion) to be carried out from 2005 to 2019.
In May 2005 Taiwan's cabinet approved a revised arms deal with the United States worth almost $15.5 billion over a 15-year period. The initial proposal had been rejected by parliament. The arms package, which includes eight conventional submarines, the Patriot anti-missile system and a fleet of anti-submarine aircraft, was sent back to Parliament for final consideration.
On 03 October 2008 the US Defense Department notified Congress that it had approved the sale of a US$6.46 billion package of weapons to Taiwan. The US did not approve diesel-electric submarines and Black Hawk helicopters that Taiwan had sought.
Mark Stokes wrote "Submarines, due in large part vehement PRC opposition, have traditionally been one of the most controversial potential arms sales to Taiwan. The ROC may soon find itself being forced to make a decision: If the ROC is unable or unwilling to press Washington to forward the Congressional notification as soon as possible, would submarines be of sufficient importance to warrant initiation of an indigenous program that would model past U.S.-ROC cooperative industrial successes? Or, after 40 years of searching far and wide for a submarine capability, and with more options available now than ever, has the time come to give up?"
Apparently not. In February 2012 it was reported that Taiwan's navy planned to buy eight new submarines to face off against China’s much larger submarine fleet, according to the United Daily News in Taiwan. The Taiwanese legislature was asked to approve the budget for the vessels within two months.
A report in the United Evening News on 14 April 2013 alleges that Taiwanese officials had discussed the possibility of a technological transfer from Japan during recent “private meetings.”
Michael Cole wrote "Although the defense ministry immediately denied that Taiwan had explored the possibility of acquiring submarine technology from Japan, the claims were confirmed by a Japanese defense official who spoke to The Diplomat on the condition of anonymity, citing the sensitive nature of the exchanges. Such talks, unofficial in nature, have indeed taken place, though the Taiwanese officials involved were well aware of the little likelihood that such exchanges could occur under the current circumstances."
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