Negotiations with US over AEGIS to be postponed

Taiwan is to postpone talks with the US on its request to buy four advanced AEGIS-equipped guided-missile destroyers from April to June, a defense source told the Taipei Times yesterday.

The postponement is prompted by several factors, including divided opinions within the navy over whether to buy the AEGIS-equipped ships, as well as failure by the two sides to reach agreement over the price of the ships, the source said.

"The navy is still divided now over whether to buy the AEGIS-equipped ships or not. One camp supports the AEGIS purchase plan, while the other camp holds an opposition stance, urging for the purchase of smaller missile boats instead," he said.

"Navy Commander-in-Chief Admiral Li Chieh (李傑) represents the call for the AEGIS-equipped ships. Followers of Li's predecessor and incumbent Minister of National Defense Wu Shih-wen (伍世文) believe missiles boats will better serve the defense needs of Taiwan in the future," the source said.

The price of the destroyers is another major factor for the postponement of the scheduled talks between Taiwan and the US on the deal.

Taiwan plans to buy four of the radar-equipped warships, which are estimated to cost US$1 billion each.

"The US now asks for a price of US$800 million for each of the AEGIS-equipped ships to be built for Taiwan. We want the price to be cut to US$600 million. There will be a lot of room for negotiation between the two sides," the defense source said.

"The price does not cover the Standard-III air defense missiles, which are to become a standard weapon for the ships the US is to sell to Taiwan. If the Standard-III missiles are taken into consideration, the total price for each ship will be around US$1 billion," he said.

KMT lawmaker Chou Cheng-chih (周正之), a retired lieutenant general, said the total amount Taiwan is to spend on the destroyers would be more than Taiwan's defense budget can afford.

Chou estimates the total costs for the ships will be higher than the navy's estimate.

"We will spend around NT$160 billion [US$5 billion] on buying the four AEGIS-equipped ships. It will amount to over half of our annual defense spending [of around NT$270 billion this year.] And just think about how much more money we will spend on the maintenance of the ships. I estimate the maintenance costs will be triple the price for the four ships and their weapon systems," Chou said.

In addition to the AEGIS-equipped ships, the navy has to spend another NT$60 billion on four decommissioned Kidd-class destroyers, which the US has agreed to sell to Taiwan as an interim weapons platform before the delivery of the AEGIS-equipped ships.

The delivery of the AEGIS-equipped ships is not expected to happen before 2008, while the Kidd-class destroyers can be delivered to Taiwan in two to three years.