Selling Eurofighter in the Middle East

Bloomberg is reporting a Saudi defence contract:

Saudi King Approves $5 Bln BAE Aircraft Upgrade, Digest Says

Oct. 9 (Bloomberg) — Saudi King Abdullah approved a plan to upgrade and replace 96 Tornado fighter aircraft made by BAE Systems Plc at cost of as much as $5 billion, Middle East Economic Digest reported.

Saudi Arabia will upgrade 64 of the aircraft delivered under the 1985 Al Yamamah agreement and replace another 32 in the biggest agreement for BAE in the Persian Gulf kingdom in a decade, the London-based weekly magazine reported today, without saying how it got the information. Still, the contract hasn’t yet been signed, MEED said.

BAE has about 2,000 U.K. workers in Saudi Arabia. Under Al Yamamah, BAE supplies weapons to the kingdom in return for payments linked to the price of oil. Average annual revenue from the weapons sales amounts to almost 1.7 billion pounds ($3.1 billion). BAE’s customer solutions and support unit, which oversees the program, generated a fifth of the company’s sales in 2003.

The news item doesn’t say what the 32 Tornados will be replaced with, but if they are being replaced with new jets from BAe, the natural candidate would be the Eurofighter Typhoon. So is Saudi Arabia buying the Eurofighter? It isn’t confirmed yet, but if it’s true, it is to be welcomed.

The more export sales the Eurofighter gets the more aircraft the R&D costs get spread over, reducing the unit cost. Furthermore, high technology goods such as fighter aircraft are where Europe has its biggest comparative advantage. In today’s competitive world economy, Europe must become as high-tech as possible, because the alternative is to compete on price with factories in the far east where workers get paid 50p an hour. The Chinese trade minister pointed out recently during negotiations on Chinese textile exports to Europe, that China has to sell Europe 800 million tee shirts in order to buy one Airbus airliner; since it would require Europeans to work more man-hours and put in more effort to make 800 million tee shirts than to make 1 airliner, we are obviously gaining from these terms of trade (as the the Chinese, of course).

At the moment only two economies can produce world class fighter aircraft — the USA and Europe, and two more — Russia and China — are getting there. The USA is slightly more advanced than Europe and its F-35 aircraft is likely to be very competitive when it starts being exported in the next decade.

This is bad for Europe because every F-35 sold is one European fighter (Eurofighter, Rafale or Gripen) not sold, so we Europeans should take steps to make sure that our military aviation industry is as successful as possible. So, how can Europe boost its exports, at the expense of the competition? One advantage of the F-35 over the European fighters is that the F-35 uses stealth whereas the European planes don’t. But if Europeans freely sold ground-based sensor systems that detect stealth aircraft, a lot of the advantages of stealth would disappear (and therefore stealth aircraft would become less attractive). The sort of sensors I have in mind are exemplified by the Czech ERA company’s VERA-S product, which tracks Stealth aircraft by detecting the radio-frequency radiation they emit.

Europe has an advantage over the USA in that it isn’t aiming to be a hegemonic power: the USA says to countries “do what we want, or we’ll invade you”, but the EU just says “do what we want, or we won’t let you join us”. So the USA wants to prevent many countries from getting powerful weapons, as it would then be harder to invade them, and this means the USA can’t sell weapons to them. But since Europe doesn’t want to invade anyone, it doesn’t need to care if foreign countries get modern weapons (of course, the EU will still have many times more modern weapons than any potential adversary, because it has a larger economy and can afford to buy more — so it isn’t as if EU weapon sales could allow someone to attack the EU).

So the EU could profitably have a policy of selling Eurofighter to all sorts of dodgy regimes, safe in the knowledge that doing so won’t affect our interests. Take Saudi Arabia, for example. They are a major country in the Middle East, and if they bought Eurofighters they would have an aircraft better in air-to-air combat than any other country in the area has. This would lead other countries in the region to consider their air defences, and some of them might buy Eurofighters too. So it’s quite likely that sales to one country in a region might lead to sales to other countries in the same region.

Other countries in the Middle East which might want to buy Eurofighters include Syria and Iran. Syria is currently armed with Russian aircraft, and Iran has ageing American F-14 fighters, plus a few miscellaneous ex-Iraqi aircraft which flew to safety during the 1991 Gulf War. Both countries therefore lack modern fighter aircraft and are potentially threatened by Israeli air power. But if either bought the Eurofighter, the balance would change, since Eurofighter is a much more modern and better aircraft than the F-15s and F-16s that Israel uses. Some people might reply that sales of Eurofighters to Syria and Iran will harm Israel, because it’s a better plane than anything Israel has. But the answer to this isn’t to refuse to sell to Syria and Iran, it’s to offer to sell to Israel too! Israel’s economy is about the same size as Iran’s, and bigger than Syria’s, so they certainly have the money to afford Eurofighter. Furthermore, while European policy shouldn’t aim to harm Israel (or other countries), neither should it put Israeli interests before European interests.

(One thing we can say for certain about Israel, Syria, Iran, Saudi Arabia, the USA, and indeed most other countries is that they put their own interests above Europe’s interests. It is of course quite proper that they should do so, and similarly Europe should put its own interests first.)

Because the warplanes that Israel buys from the USA are heavily subsidized, it’s unlikely that Israel would want to pay the full price for Eurofighter instead. However, if Europe offered to sell them, Israel couldn’t say they weren’t offered. And if the USA wanted to continue to guarantee Israel’s military dominance in the region, they could either give them the F-22, or subsidise Eurofighter on Israel’s behalf (more F-15, F-16 or F/A-18 aircraft probably wouldn’t cut it, because Eurofighter is a generation more advanced). They wouldn’t want to do the former, because they’d be concerned that China would get its hands on the F-22’s technology; so even though the USA wouldn’t want to subsidise the European aviation industry, they might do so as the least worst option.

And Israel might decide to buy the Eurofighter anyway, with their own money. The whole experience — with America publicly deciding what aircraft to sell/give Israel — would demonstrate to Israel that relying solely on American support has its downside. This would be likely to increase European influence within Israel.

[This article was originally published in Cabalamat Journal]