Israel could gain from Korean bid for IAF contract

Tender to replace IAF's fleet of A-4 Skyhawks,used to train cadets in advanced pilot training, could net $5 billion in sales for Israeli companies.

By YAAKOV KATZ
Korean Aerospace Industries’ T-50 advanced trainer 311 (photo credit: Courtesy)
Korean Aerospace Industries’ T-50 advanced trainer 311
(photo credit: Courtesy)
SEOUL – A competition to sell the Israel Air Force’s new advanced combat trainers is heating up as a Korean defense delegation plans to arrive in Israel next month to sign an agreement paving the way for increased cooperation and potentially $5 billion in sales for Israeli companies.
The agreement is part of a South Korean effort to persuade Israel to select Korean Aerospace Industries’ (KAI’s) T-50 advanced trainer as the replacement for the IAF’s aging fleet of A-4 Skyhawks, which are currently used to train cadets in their advanced pilot training.
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Competing against the T-50 is Italy’s Alenia Aermacchi M-346 Master.
KAI alone has offered Israel over $1b. in industrial cooperation if its aircraft is chosen.
The remaining deals are expected from the Korean government.
“Potential cooperation could be on the T-50, our helicopters and other programs,” Enes Park, senior executive vice-president of marketing for KAI, told The Jerusalem Post last week during a visit to company headquarters.
Park said that KAI was also in talks with Israel Aerospace Industries and Elbit Systems about possibly establishing joint ventures that could lead to fat contracts for Israeli defense contractors.
IAI is interested in manufacturing the wings for all T- 50s sold throughout the world and Elbit has been offered to develop a new flight simulator for the aircraft.
The competition has received a great deal of media attention due to claims by Korea that Italy has received preferred treatment throughout the tender. Park said that KAI was surprised to hear that the Italian government was proposing additional deals to Israel before the request for proposal (RFP) had been issued.
The RFP – a mandatory stage in a tender – was supposed to be issued to the companies over the summer but has been postponed until early 2012. The IAF has conducted extensive reviews of both planes and the decision on the winner is up to the Defense Ministry. Industrial cooperation and economic benefits for Israeli companies are playing a key role in the ministry’s considerations.
“We were surprised to hear that the Italian government is already proposing deals to Israel before the RFP, against international standards,” Park said.
Italy had been a frontrunner in the tender due to Prime Minister Binyamin Netanyahu’s close ties with Silvio Berlusconi, who stepped down as Italy’s prime minister last week. It is unclear what effect his departure will have on the deal.
The Italians’ bid also took a hit last week after an M-346 crashed off the coast of Dubai. The cause of the accident is under investigation.
KAI has found support among leading Israeli defense companies which are lobbying the Defense Ministry to select the T-50 due to the potential contracts they stand to win in return from Seoul.
The Korean military is interested, for example, in purchasing the Iron Dome counter-rocket defense system, in upgrades for its combat aircraft, in new drones, anti-tank missiles and in new command-and-control systems.
Italy has also offered Israel an industrial cooperation package but it is estimated to be under $1b. In addition, some Israeli industry executives have cast doubt as to the viability of future deals with Italy which is facing a dire economic crisis.
Italy has also raised the possibility of conducting the deal with Israel by barter under which it would receive two airborne early warning and control aircraft from IAI and in exchange would provide Israel with the M-346.