June 27, 2001. Copyright 2001. Graphic News. All rights reserved.

New ÒoffsetÓ deal pits Eurofighter against Boeing for South Korean sales

LONDON, June 27, Graphic News: South KoreaÕs controversial hunt for a next-generation fighter threatens to start a dog fight between Eurofighter and U.S. plane makers Boeing and Lockheed.

Eurofighter, a consortium from Britain, Germany, Italy and Spain, believes the latest twist over the US$4 billion fighter order gives it the upper hand.

ÒWe think itÕs favourable for us,Ó said Tom Gargett, Korea general manager for BAE Systems, one of EurofighterÕs four partners.

Seoul has stepped up its demands for ÒoffsetÓ -- locally made components that would create jobs and transfer technology -- to 70 percent of the contractÕs value from 30 percent.

ÒThe 70 percent has opened the door on commercial work,Ó Gargett said.

Eurofighter members have agreed to buy 620 aircraft. Over the next 30 years Eurofighter foresees an international market for next generation fighters of about 800 and the aim is to capture about 50 percent of that. This would bring the total production of the Eurofighter, or Typhoon, as export versions of the aircraft will be known, up to over 1,000 aircraft, which will be the largest military aircraft programme in Europe.

The Republic of Korea is looking for an initial purchase of 40 aircraft with a potential total purchase of about 150.

The TyphoonÕs competition comes from the Boeing/Lockheed Joint Strike Fighter, DassaultÕs Rafale, SaabÕs Grippen and BoeingÕs upgraded F-15 Eagle. RussiaÕs Sukhoi SU-35 is an outside contender because of incompatibility with KoreaÕs current weapons and operating systems.

ÒThis time we have a real opportunity to win,Ó said Francisco Verge, EurofighterÕs Korean office director. ÒThe ROKAF (Republic of Korea Air Force) really want a fourth generation fighter.Ó

KoreaÕs air force has made no official comment but Korean media has said it is keen to get its hands on the latest technology, indicating it prefers the Eurofighter or Rafale over BoeingÕs venerable but ageing F-15 Eagle, designed 25 years ago.

However, analysts point out that SeoulÕs close relations with the United States, which has 37,000 troops stationed in South Korea, may pose a problem in shopping for goods elsewhere.

The South remains technically at war with North Korea under a 1953 truce following the Korean War and Washington has kept troops in place here since.
/ENDS

Sources: Ken Petrie, Associated Press, Reuters