Taiwan has broken an impasse that has threatened the US sale of diesel-electric submarines to the nation with an agreement to pay the up-front costs of the evaluation of competing de-signs, and has sent the Pentagon the first installment of nearly US$500 million, Pentagon officials said.
The money, which will be used to finance the assessment of various ideas for designing and building the submarines, was sent by Taiwan about a month-and-a-half ago, Pentagon East Asia spokesman Jeff Davis told the Taipei Times.
But Davis could not confirm reports that the payment was the first of a series of installments over coming months that will total several millions of dollars and culminate in a US$500 million downpayment on the first submarine.
President George W. Bush in April last year agreed to sell Taiwan as many as eight diesel submarines as part of a massive arms sales package. Depending on the design and manufacturer of the submarines, and the way they're equipped, the sale could total as much as US$6 billion.
After April 2001, questions immediately arose about how the Bush administration was going to fulfil the promise to sell the submarines. The US has not built diesel submarines for more than 40 years -- having opted in favor of nuclear submarines -- and no US diesel submarines exist.
Speculation originally centered on German and Dutch designs, but both governments, under pressure from Beijing, said they would not issue export licenses for their countries to supply submarines to Taiwan.
Over the past year, the Pentagon has been soliciting and receiving "concept papers" from several US defense contractors on how the submarines might be designed and built, Davis said. The money sent by Taiwan will go toward formal assessments of each of these concepts, on which Taiwan will base its acquisition decision.
The Pentagon has received "several viable proposals," Davis said. While he would give no details, it is understood that the proposals could entail either the contractor building the vessels on its own or subcontracting out to another firm, foreign or domestic.
Before any decision is made, there "will be fairly substantial up-front costs," Davis said. These costs cannot be amortized over the life of the project, so they must be paid now. Under US law, American taxpayers cannot pay for these costs: Taiwan must do so.
However, for months, the Taiwan military has balked at the high costs, perplexing US officials who complained about what they saw as Taiwan's intransigence, and warned that the sale was in danger unless Taiwan started paying up. With the Taiwan navy having made the submarines' acquisition its top priority, the issue aroused inter-service rivalries and budget battles in Taipei.
The issue came to a head when a Taiwan Defense Ministry team headed by Vice Admiral Wang Li-shen (王立申) visited Washington for two days of intensive talks at the Pentagon over the submarines and other weapons-sale issues.
A month later, the issue was settled when the US sent a delegation to Taiwan, which ended with Taiwan agreeing to send the money.
Meanwhile, among the de-signs being considered by Taiwan is the Spanish Galerna-class submarine, which is based on the French Agosta-class submarine, according to a report in the Washington Times, which first reported Taiwan's up-front money payment.
RSS