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Reprinted with permission from AMI HOT NEWS; an internet publication AMI International, PO Box 30, Bremerton, Washington, 98337.

From the October 2006 Issue
UNITED STA TES-2007 Defense Budget Approved, USN Gets 7 Hulls

  • One Virginia class submarine at US$ l .8B.
  • One Lewis & Clark dry cargo ship (T-AKE) at US$455M.
  • Two Littoral Combat Ships (LCS) at US$52 l M.
  • Two DDG 1000 class destroyers at US$2.6B. The DOG 1000 class destroyers are being funded over a 2-year period in 2007 and 2008 in order to begin both hulls at Northrop Grumman Ship Systems (NGSS) and Bath Iron Works (BlW) under the USN’s dual-ship strategy.
  • One LHA-6 (LHA-R) class amphibious assault ship at US$ l .1 B. The LHA-6 was moved forward from 2010 to 2007 and a San Antonio class LPD was pushed back to 2008 from 2007.

Current planning under POM-08 also calls for a total of seven ships in 2008 that will include one CVN-21 aircraft carrier, one Virginia class submarine, three LCS, one Lewis & Clark T-AKE and one San Antonio class LPD. Beginning in 2009, the shipbuilding plan becomes much more aggressive with a total of eleven units to be built, increasing to 12 units in 2010 and thirteen units in 2011 before leveling off at 12 units in 2012 and beyond. This aggressive plan is expected to help grow the fleet from the current 281 vessels today to back over 300 by 2035.

In order to attain these numbers through POM-08 and beyond, the USN will need to increase SCN funding from today’s level of around US$ l l B to an average of US$ l3.4B. The question remains, will the USN be able to receive the increased funding required to meet the POM-08 shipbuilding plan?

SOUTH KOREA-Six More Type 214 Submarines
In late October 2006, AMI received information that South Korea decided to move forward with the acquisition of six additional Type 214 submarines under the KSS-11 submarine program. Negotiations between South Korea and HOW will commence by the end of 2006. Unlike the first three units that are being built at Hyundai Heavy Industries (HHI), the six additional units will be split between Daewoo Shipbuilding & Marine Engineering (DSME) and HHI. The entire class is expected to be commissioned by 2017.

This information substantiates earlier reports received by AMI that the Type 214 program would be extended to nine units and the later units of the class would be built in conjunction with a newly designed 3,500-ton South Korean submarine under the SSX program.

It must be noted that DSME built eight of the nine units of the Chang Bogo class submarines (Type 209/1200) from 1992 through 2001 and HHI was selected to build the initial units of the Type 214. With the continuation of the Type 214 submarines in conjunction with the beginning of the SSX program, it appears that South Korea fully intends on keeping two qualified submarine construction yards in business.

GREECE-First Type 214 Continues to be Delayed
In late October 2006, AMI received infonnation that the first Katsonis Class (Type 214) submarine PAPANIKOLIS remains at HOW in Germany as the Greek Ministry of Defense (MoD) and Hellnic Navy (HN) refuse to accept the submarine. AMI sources indicate that the HN has identified the following continuing problems with the first unit of the class:

  • The submarine is reportedly highly unstable while surfaced
  • The AIP system has lower output power than specified, the unit must be shut down after several hours of sailing due to higher than nonnal operating temperatures
  • Increased propeller cavitations
  • The CMS ISUS is not functioning to specification
  • Attack periscope vibrates at speeds greater than three knots making it difficult to Jock onto targets
  • Seawater leakage into hydraulic systems
  • Problems with the proper function of the flank arrays

HN sources indicate that the sea service will not accept delivery, until at a minimum the stability problem is resolved. The delivery of unit one is now more than 18 months behind schedule and the second unit (built at Hellenic) is expected to be launched by the end of 2006. The question that must be considered is will the second unit experience the same problems as unit one? Further, it could be these problems are being over-inflated due to contractual or relationship problems between HOW (ThyssenKrupp) and the HN. AMI will continue to follow and update this story as it progresses.

FRANCE-Defense Budget Increases for Fifth Straight Year to Lock in Programs
In mid-October 2006, AMI received information that France would increase its 2007 defense budget to US$46.3B, 2.5% over 2006 levels. This is the fifth strait year that the budget has been increased and is in line with President Chirac’s promise to increase the defense budget every year under Military Program Law (MPL) 2003-2008.

The increased budget is required in order to pay for continuing programs such as Rafale multi-role combat fighters, AS 665 Tiger combat helicopters, LeClerc main battle tanks and France’s new Armament Air-Sol Modulaire (AASM) bomb guidance kits. For the French Navy, the budget includes €700M (877.7M) for the new aircraft carrier (PA2) and approximately US$2.7B for the first three Barracuda class submarines.

This will be the last defense budget under the Chirac Administration as a new government will take power following
elections in May 2007. As with any election, the outgoing administration and defense officials are concerned that an incoming government could cut defense spending, making some programs susceptible to cutbacks or cancellation The French carrier, with an estimated cost of around US$2.4B,and the six Barracuda class submarines with an estimated cost of around US$5.5B would be attractive targets as both are very expensive and at such an early stage of the program. The government’s large financial commitments and attempts to formally launch both programs by May 2007 are clearly intended to make it much more difficult for the incoming administration to cancel either of the programs, both deemed necessary to maintain France’s shipbuilding workforce as well as a modem naval force.

It must be noted that while the majority of Europe was cutting back defense expenditures, force levels and procurement programs, France under the Chirac Administration was able to keep its promise by increasing the defense budget during the five-year period allowing for the modernization of the French Armed Forces. The French Navy for example, has been able to move forward on all of its planned procurement programs including the P A2 carrier, Forbin (Horizon) class destroyer, Multi-purpose frigate, Le Triomphant class SSBN, Barracuda class attack submarines and Mistral class LPDs.

INDIA-Seeking Defense Budget Increases from 2007 through 2012

In September 2006, AMI received information that India’s Planning Commission approved a defense budget for the eleventh five-year plan that covers the years 2007 through 2012. The budget is planned to increase from US$79B in the tenth plan (2002-2006) to US$142B in the eleventh plan. It must be noted that this plan assumes that the Indian economy will grow by eight percent annually during the entire five-year plan.

Although the budget is expected to increase from the current US$79B to US$142B, the Defense Ministry maintains that it will still be short by around US$22B to accomplish all the goals envisioned. Currently, India has very aggressive plans to modernize its army, navy and air force with the sea service taking the lead in programs that are underway or planned in the short-term.

The Indian Navy is currently involved in many procurement programs and will need its funding maximized if it intends to remain on schedule. The following programs are currently underway or planned:

  • Vikrant Class Aircraft Carrier (Air Defense Ship): Began in April 2002, with the first unit under construction and the second unit beginning around 2010. These two vessels cost around US$1.2B each considering the cost of the airwing.
  • Kolkata Class Destroyer: The first two units are under construction with the third unit commencing in 2007. These three units will cost around US$400M each with the first unit probably almost fully funded.
  • 1800-ton Corvette: This program is expected to start by the end of 2006 or early 2007 and involves the procurement of up to six units. The entire class is expected to be started by 2012 indicating that funds will be needed under the eleventh plan. Each corvette will probably cost around US$100M.
  • Talwar Class Frigate (Batch II): In 2006, the Indian Navy ordered three frigates from Russia under a US$1 B contract with the majority of the funding probably coming in the 2007-2012 time period.
  • Shivalik Class Frigate: The first three units of the 12-unit program are already under construction and have already been funded. During the 2007-2012 timeframe, the sea service will probably begin construction on four additional units costing around US$300M per ship.
  • Nuclear Powered Attack/Guided Missile Submarine (Advanced Technology Vessel): Estimated to cost around US$1B per unit, this program could start over the next several years and will
    entail at least five units with only the first unit starting in the eleventh five-year plan.
  • Scorpene Class Submarines: The first unit began construction in early 2006 and will be followed by five additional units in the first batch. The vessels cost around US$300M per unit. Some of the cost was paid for in the tenth five-year plan with the remaining under the eleventh.
  • Landing Platform, Dock: The sea service is planning for the acquisition of two large amphibious ships of a foreign design. The program will probably begin before the end of the decade
    and will cost at least US$500M.
  • Magar/Modified Magar Class LST: A fifth unit of the class is under construction and a sixth unit will probably be funded and started in 2007. The sixth unit, at around US$50M will be funded under the eleventh five-year plan.
  • Future Mine Countermeasures Vessel (MCMV): This program is expected to begin by the end of the decade and will entail up to eight units, with the first four beginning by 2012. Each unit will probably cost around US$75M.
  • Maritime Patrol Aircraft (MPA): The Indian Navy is expected to make a decision on a new MPA over the next several years. This program is expected to cost US$800M.

Assuming current construction rates for ongoing and future procurement programs, it is estimated that the Indian Navy will require a minimum of US$2.1 B annually for procurement purposes under the eleventh plan (2007-2012) in order to keep the sea service on its replacement schedule. Current plans call for the acquisition of 30 major surface vessels and submarines over the next five to seven years in order to replace its aging fleet.

Assuming that the Ministry of Defense receives the entire budget of US$142B projected under the eleventh plan and the Indian Navy receives its traditional 16-17% of budget, the sea service will receive around US$24. IB over the five-year period. With procurement programs costing at least US 10.5B in the same period, it appears that more funding will have to be shifted to the general navy fund as procurement costs are projected at around 43.5% of total navy budget, quite high and not sustainable as operations and personnel costs generally utilize the majority of the budget.

From the November 2006 Issue
INDONESIA – Indonesia Selects Russian Submarine Designs

Following AMI’s 2005 and 2006 Indonesian Submarine Report projections, in early October 2006, AMI received information that the Indonesian Navy (IN) had made the decision to acquire Russian-built submarines in order to modernize its Submarine Force. The decision, announced by the Navy Chief of Staff, indicates that the sea service will acquire four Kilo class and two Amur class submarines in the near term and up to six additional units (Batch II) by 2024.

It appears that Indonesia made the decision to procure Russian submarines due to Russia’s offer to provide military equipment under an export credit offer. The Russian Government has reportedly offered up to US$ l B in credits for the purchase of the first two submarines as well as fighter aircraft for the Indonesian Air Force. Although Russia has offered to finance two of the initial six submarines, it is uncertain if the four follow-on units will be financed the same way.

Assuming a construction contract is in place for the first two units by 2007; both units could be delivered to Indonesia by 2010. Given no special financing on the four follow-on units, these may slip to the right until Indonesia can come up with financing. If the four follow on units are funded, AMI expects it would occur in 2009 or later with deliveries through 2014.

The six Batch II units will probably not be addressed again until after 2015. AMI would expect the IN to look into the possible construction of submarines in Indonesia when discussing the Batch II deal in 2015 or later.

The decision on the Russian solution follows Indonesia’s attempts over the past several years to supplement and then replace its two Cakra (Type 209/1300) class submarines that have been in commission since 1981. Sources indicate that South Korea, China and Germany had also made offers to Indonesia prior to the decision on the Russian solution. South Korea is currently overhauling the first Indonesian Cakra class submarine at Daewoo Shipbuilding and Marine Engineering (DSME) under a US$60M deal and offered to build the Type 209/1200 class submarines similar to the Republic of Korea Navy (ROKN) Chang Bogo class for the IN. German (probably Type 209/214) and Chinese (probably Song or Yuan class) offers were also rebuffed in favor of the Russian solution.

Circles within Indonesia have stated that the financing method offered by Russia (15 year loan at 5.6% interest) was the best available and helped lead to the decision. In addition, Indonesia has made it clear over the past several years that it intends on developing several supply chains in order to reduce any future risk due to military embargoes. Under this new policy, South Korea is providing the IN amphibious vessels, the Dutch are providing the IN amphibious vessels, the Dutch are providing new corvettes and now Russia with the future Submarine Force.

From the December 2006 Issue
UNITED KINGDOM-Future SSBN to Follow Vanguard Class
In early December 2006, the UK Ministry of Defense (MoD) published a new white paper entitled The Future of the United Kingdom’s Nuclear Deterrent. This white paper makes clear that the MoD intends to maintain Britain’s nuclear deterrent beyond 2020.

The nuclear deterrent capability equates to a new SSBN that replaces the Vanguard class ballistic missile submarines currently in service on a one-for-one basis. However, the white paper states that the MoD will investigate to see if the requirement can be satisfied with a fleet of only three total submarines, vice four. A decision on the final number of submarines to be procured will be made when more information is available on the detailed design.

Current estimates place the cost of the procurement of four new submarines, along with the associated equipment and infrastructure, at around US$29.48. The majority of the funding for the new submarines is expected to fall between 2012 through 2027. Of note, it is expected that in service support costs between 2020 and 2050 will remain relatively equal to those of the submarines currently in service today.

The first of the Vanguard submarines will begin decommissioning around 2022 followed by a second unit in 2024. It is estimated that it will take approximately 17 years from the initiation of detailed concept work until the first operational unit is in service. With those estimates in mind, the MoD will begin initiating detailed concept work on the replacement submarines beginning in 2007. The MoD will likely place a contract for detail design work between 2012 and 2014. The first unit to replace the Vanguard SSBNs should be in service by 2024.

As previously mentioned in the Defence Industrial Strategy (DIS), published in December 2005, the MoD has been urging industry within the UK to consolidate. Only through industrial consolidation does the MoD believe that a new replacement submarine can be delivered “on time and at an acceptable cost.” Also mentioned within the DIS was that the UK would begin searching overseas for suppliers of sub-systems for naval programs within the UK. Although hull construction and major systems will be maintained within the UK, the MoD will likely seek cost reductions by looking overseas for sub-systems for the SSBN replacement program.

SOUTH KOREA-Naval Update
3000-Ton Submarines (KSS-111) Delayed:

In mid-December 2006, AMI received information that the Republic of Korea Navy (ROKN) was delaying its 3000-ton submarine program (KSS III). Press reporting from South Korea in late December confirms that the Joint Chiefs of Staff announced the deferment of the KSS III program in lieu of additional Type 214 submarines.

AMI received information in October that the ROKN had decided to move forward with the acquisition of six additional Type 214 submarines under the KSS-II submarine program bringing that class total to nine units. These additional Type 214s undoubtedly pushed the KSS III program to the right until around 2020 when the final 214 will enter service.

Assuming that the nine Type 214s will be constructed on schedule and commissioned by 2020, it can be anticipated that the ROKN will resurrect its 3000-ton program in 2018 in order to have a continuous flow of submarines under construction at Daewoo Shipbuilding & Marine Engineering (DSME) and Hyundai Heavy Industries (HHI). Of note, the first three Types 2 l 4s were built at Daewoo but the six remaining units will be split between DSME and HHI.

CHINA-New Building Programs Continuing
The People’s Liberation Army- Navy (PLAN) continues its course of building up its fleet at an accelerated rate. Sources indicate that the following programs are continuing to progress much more rapidly than originally anticipated:

Yuan Class Diesel-Electric Submarines (SS):
Information received by AMI in early December 2006 indicates that the PLAN has begun construction of the second unit of the Yuan class SS. This is nearly a year behind the original estimated schedule for hull two.

The Yuan class was first seen in mid 2004 and came as a complete surprise to western intelligence agencies. With China’s naval build-up, the PLAN has added more than 14 new submarines since 2002 with many more under construction or in the planning stage.

The Yuan is very similar in looks to the Russian Amur and is approximately 75 meters (250ft) in length displacing around 2,300 tons. It is equipped with six 533mm (21 inch) torpedo tubes for YU4 anti-ship or YU-1 acoustic homing torpedoes, mines or YJ-8 submarine launched anti-ship missiles.

Anticipated to be a class of up to twenty units, the class should be completed, barring any additional delays, by 2020. With the construction of the Yuan as well as the purchase of the Kilo class submarines from Russia, the PLAN will be in a position to decommission its aging Romeo class SS that are well beyond their effective service ages, being commissioned in the 1970s.

Type 095 Class Nuclear Powered Attack Submarine (SSN):
AMI has received information that the PLAN is actively in the process of developing its next class of SSN as follow-on to the Type 093 (Shang class) currently under construction.

The new Type 095 is said to be of a more Western design hull with improved noise reduction and weapon systems. Current plans indicate that five units of the class will be built and will incorporate a newly designed 195mw reactor unit. It will be armed with six torpedo tubes for anti-ship and anti-submarine torpedoes as well as anti-ship missiles and possibly the new HY-4 cruise missile.

If sources are correct that the initial planning stages are completed and long-lead equipment is being procured (listed in the llth Five Year Plan), the first unit of the class could commission as early as 2015 with all units commissioning by 2020.

RUSSIA/SOUTH AFRICA – Satellite Launched from SSBN
In mid-December 2006, AMI received information that the Russian Navy (Rosiyskiy Voennomorsky Flot – RVF) is in the process of working with South Africa (SA) to launch the 81kg (178.2 pounds) SumbandilSat, low-earth-orbiting micro-satellite from one of their ballistic missile submarines in 2007.

The satellite left for Russia on 07 December 2006 where it will be taken to the Russian naval base at Murmansk and integrated into the launch rocket. From there the assembly will be shipped to the submarine base at Severemorsk where it will be loaded into a Russian ballistic missile submarine (SSBN) and subsequently launched just off the Russian coast sometime between April and May 2007, weather dependent. The rocket will likely be launched from one of the RVFs six Delta IV class SSBNs.

This is the first time a satellite will be launched from an SSBN and could herald in a new enterprise for the RVF to increase revenues and subsequently their budget.


On 10 November 2006, the third Lada class submarine (Project 677), RFN SEVASTOPOL, began construction at Admiralty Shipyard in St. Petersburg, Russia.

In late December, the first Indian-built SCORPENE (unit three) class submarine began construction at Mazagon Dock Ltd (MDL) shipyard in India. Construction of parts for the first two units began at DCN on 28 April 2006.

On 13 December 2006, the second SCORPENE submarine (Carrera) built by DCN and Navantia for the Chilean Navy arrived in Talcahuano Chile.

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