BAe Systems/SAAB in fresh rumours over fighter tender

Published: 3/16/2000

Much has been made of the memorandum of understanding expected to be signed between the Czech Republic and BAe Systems/SAAB, on the grounds that it could signal a preference by the Czech government for the UK company's proposal in the ongoing fighter tender for the Czech Air Force. Prime Minister Zeman has insisted that such an agreement could equally be signed with any of the other participants. These comprise Boeing, DASA, Dassault and Lockheed Martin. Lockheed Martin has downplayed the significance of the memorandum, commenting that such understandings, in which a supplier pledges to fulfil certain conditions, were not unusual in the arms industry. The US company expressed its confidence in its F-16 fighters as being one of the best options for the Czech Air Force. Zeman, who did not rule out the relationship of the agreement to the fighter contract, also observed that a final decision would be made on 14th March as to whether the purchase would be made at all. He made it clear that, if so, a minimum requirement would be creation of 100% offset programmes. Zeman added that participation in the Czech Republic's privatisation programme would also be required, particularly for those firms in need of substantial injections of foreign capital. Vladimir Vetchy, Defence Minister, denied any relationship between the memorandum and the fighter tender. A spokesman for the Ministry of Defence (MoD) further denied any knowledge of the agreement. The Ministry of Finance was equally circumspect. A number of reports have, however, suggested that the memorandum will be signed in the presence of the Prime Minister, Helen Liddell, UK Minister for Trade, Lars Rekke, Swedish Secretary of State for Trade and Industry, John Weston, Executive Director of BAe Systems and Bengt Halse, President of SAAB. The reports claim that the memorandum forms part of the Opportunity Czech Republic campaign, supported by British Trade International. John Neilson, Central European spokesman for BAe Systems stated that the memorandum of understanding would be non-exclusive and that it would set the conditions for "offsetting investment opportunities" between the two parties, in case any contract is ever signed. More details are expected to be revealed following the signing. Given the size of the potential order, estimated to be worth at least Kc 50billion ($1.36 billion), competition is tough and rumours are quick in the making. While the memorandum may be no guarantee of an order for the Gripen fighter aircraft, the claim that there is no connection between the agreement and the tender is a little hard to swallow.

Article ID: 1693