Two dozen new F-16's will be made available to Pakistanas a reward for that country's aid in the war on terror and will strengthen a fleet of about 40 F-16's acquired before Congress halted sales in 1990 to protest Pakistan's nuclear ambitions.
But the decision to open up the Indian market means that contractors now have the chance to sell up to 126 fighter jets - with price tags starting at $35 million each - to a country with an aging military fleet of 800 jets, none of them made in America.
[...]
Some critics denounced the Bush administration's move as contributing to a South Asian arms race. But from the government's perspective, weapons sales to Pakistan and India strengthen the American presence on the Chinese border and open new markets throughout Asia for military contractors, which are looking more to foreign buyers as the Pentagon budget comes under pressure.
On the face of it, Bush has finally done something I would tend to agree with. It looks like a win win on all sides with the exception of China. Short of India becoming the aggressor in a war against Pakistan, the US gains two well equipped allies on China's southern border. China's recent behavior tells me they have expansionary ambitions. They are already acting as if they are a superpower and are showing signs they are capable of even greater arrogance than the US. Hard to believe, I know.
Complete Article
The New York Times
April 16, 2005
A Deal for Jet Fighters Opens the Door to India
By LESLIE WAYNE
On the same day last month that the United States announced that it would sell F-16 fighter jets to Pakistan, President Bush personally called the prime minister of India, Pakistan's archrival, with advice intended to soften the blow. The United States, Mr. Bush confided, had decided to allow fighter jet sales to India as well.
Newspapers around the world put the Pakistani deal in headlines. But it was the 15-minute phone call that was heard loud and clear by American military contractors.
The jet sales to Pakistan have high symbolic value, but little in the way of business promise. Two dozen new F-16's will be made available to Pakistan as a reward for that country's aid in the war on terror and will strengthen a fleet of about 40 F-16's acquired before Congress halted sales in 1990 to protest Pakistan's nuclear ambitions.
But the decision to open up the Indian market means that contractors now have the chance to sell up to 126 fighter jets - with price tags starting at $35 million each - to a country with an aging military fleet of 800 jets, none of them made in America.
"The real prize is India," said Richard Aboulafia, a military analyst at the Teal Group, an aerospace consulting firm in Fairfax, Va.
"India would have gone on its merry way," Mr. Aboulafia added, "but the announcement of Pakistan getting the F-16's changes the game. For years, India has coasted on Russian and locally made fighter jets. Now, if its adversary gets real new American planes, it has to have them, too."
For Lockheed-Martin, the potential sales to India mean that it may be able to keep alive its aging F-16 production line and save jobs in Fort Worth, where nearly 5,000 people work on the plane.
Alternatively, Boeing could benefit if India pushes for something other than the F-16. That could mean new business for Boeing in St. Louis, where 5,000 people now build the F/A-18 Super Hornet and the F-15 Strike Eagle, high-performance jets now exclusively used by the American military.
Moreover, any initial deals could lead to more Indian arms sales of all types as New Delhi has announced a lavish spending plan to strengthen the country's military and upgrade its armaments. High on its list are early warning and missile defense systems, nuclear fuel and technologies and space-related technologies.
Some critics denounced the Bush administration's move as contributing to a South Asian arms race. But from the government's perspective, weapons sales to Pakistan and India strengthen the American presence on the Chinese border and open new markets throughout Asia for military contractors, which are looking more to foreign buyers as the Pentagon budget comes under pressure.
As for India, which already supplies software to Boeing and Lockheed, purchases of American arms would enable it to gain access to American military technology and participate in co-production agreements.
"The last few years since 9/11 have been a gold rush for U.S. contractors," said Jon Kutler, president of Quarterdeck Investment Partnership, a unit of the Jeffries Group. "But, in the next few years, we expect export sales will become extremely important again as U.S. spending on these major weapons platforms will start to go down."
India has a number of American fighter jets to choose from. But the heavy betting is on a fleet of F-16's, rather than large purchases of Boeing's F/A-18 and F-15 fighter jets, which are more specialized and more expensive.
The 20 or so F-16's to be purchased by Pakistan would add about a year's life to a Fort Worth production line that had been scheduled to shut in 2008 because of a paucity of orders from the Air Force. An even bigger Indian order would keep the F-16 line alive much longer.
"The potential for 126 jets is a significant program," said Tom Jurkowsky, a Lockheed spokesman. "If we don't get any more F-16 orders by 2005, we would have to take action to close the line. India is a market we want to pursue."
Because of Pakistan's meager economy, $3 billion in American aid will be provided to buy the F-16's. India, by contrast, has enough money to pay for a large order of fighters itself.
First built in 1978, the F-16 has long been a powerful workhorse of the skies and has been one of the most successful and profitable American fighter jets ever made. More than 4,200 have been sold to 24 countries, but none to India, which has relied mainly on Russian-made MiG's.
The lack of American fighter jets in the Indian military fleet reflects decades of touchy relations between the two countries: the United States twice cut off arms sales to India during cold war disputes, prompting New Delhi to respond by displaying an even deeper distrust of doing business with a country it could not consider a reliable military supplier.
With the Pentagon having all the F-16's it needs, Lockheed has relied almost exclusively on foreign sales to keep the production line going. Recent sales of 48 new F-16's to Poland and an order for 60 to the United Arab Emirates were seen as the last planes to be rolling off the line.
At the moment, Lockheed is gearing up for production of a new generation of replacement fighter jets, mainly the supersonic F-35 Joint Strike Fighter. But that jet is still in development and will not enter American military service for a few years.
With its sales declining, Lockheed has been paring down F-16 employment. In January 2004, the F-16 line employed 5,800. That has since dropped to 5000. According to Mr. Jurkowsky, Lockheed anticipates a work force of 4,000 by next January if it gets no new orders.
"This is a new opportunity that was not there before," said Pierre Chao, a senior fellow at the Center for Strategic and International Studies, a nonpartisan group in Washington that closely follows international affairs and generally favors a strong stance abroad. "The reopening of sales to Pakistan and the opening of sales to India extends the life of the production line, the Fort Worth operation and the entire F-16 supply chain throughout the country. It also provides the Air Force with a warm production line should it want extra F-16's."
Lockheed, already in discussion with India about sales of its P-3 Orion patrol planes and the C-130J Hercules cargo plane, is rolling out the red carpet and has said it could build exclusive F-16's for India with special features for that country's needs. Last November, Lockheed anticipated these changes by getting State Department approval to give India information on the F-16.
Lockheed executives, along with officials from Boeing and other American military contractors, traveled to Bangalore in February for Aero India, a five-day air show; about 25 more non-Indian military contractors were at the show this time than at the previous show, two years earlier.
"If India's requirements are beyond any existing fighters, we are prepared to make upgraded F-16's to India's specifications with complete transfer of technology," Mike Kelly, a Lockheed senior executive said in an interview last month with the Press Trust of India, a New Delhi news agency. "We have, in the past, taken up building of such exclusive fighters for the U.A.E. and we are prepared to manufacture F-16's to India's special requirements." Lockheed would not make Mr. Kelly available for further comment.
One of India's big desires is to acquire military technologies from the United States that it could someday replicate. India, which will also look at possible fighter jet purchases from European nations, is proposing that it buy 18 F-16's outright and that the remaining 108 be built in India under a licensing agreement. This would be similar to arrangements Lockheed has made with Turkey, South Korea and a number of NATO countries.
Under these arrangements, the F-16 is mostly built in the United States, then broken down. The pieces are then shipped overseas and reassembled. This arrangement creates jobs in two countries.
"India wants to do what China has done," said Stephen P. Cohen, a senior fellow and South Asian specialist at the Brookings Institution, a liberal Washington research group. "They want to take a technology, improve it and then build it themselves. They've already done this with ships and now they want to do it with aircraft from the U.S."
As for Boeing, which is already relying on Indian companies to provide software for its new commercial jet, the 787 Dreamliner, the hope is to turn these business ties into military sales.
The Boeing F/A-18, which is used exclusively by the Navy and Marines, is capable of shipboard landings. India, which has just completed building its own carrier vessels, may find this feature attractive, but the price of $50 million for each plane could stand in the way. The top-of-the-line F-15, which costs around $65 million a plane, may also prove too costly to buy in large numbers.
About 4,500 people work in St. Louis on the F/A-18 production line, which has produced about 200 planes from a contract calling for around 200 more.
Boeing has applied for an export license with the United States government and is meeting with the Navy to determine what technologies it can provide to India.
"This could be significant for us," said Thomas Young, a spokesman for Boeing in St. Louis. "We are looking for new customers to increase the life of our product lines."
Copyright 2005 The New York Times Company
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