An Airbus Update: First Half of 2019 Financial Results

08/01/2019

By Pierre Tran

Paris, France

Germany’s suspension of arms exports to Saudi Arabia led to a continued financial hit for Airbus, which reported July 31 a charge of €208 million ($232 million) in first-half results.

That charge comprised a charge of €18 million in the second quarter after a charge of €190 million in the first quarter, the European aircraft builder said in financial results.

Berlin earlier this year extended to September its six-month ban on weapons exports to Riyad, to protest against the slaying of Saudi journalist Jamal Khashoggi.

London and Paris have criticized that German sanction, as the Berlin ban has held up delivery of British and French weapons which rely on German parts.

Meanwhile, the Airbus Defence and Space (ADS) division said Julian Whitehead would take up the post of executive vice president for global business and strategic programs on Oct. 1. Whitehead is executive VP for finance and sits on the executive committee at the division.

That appointment was significant in view of the work on the Future Combat Air System and a European medium-altitude, long-endurance drone, Dirk Hoke, Airbus DS chief executive, said in a statement.

The first-half charge of €208 million on the German arms freeze was what Airbus dubbed an “adjustment” and led to an adjusted operating profit of €2.5 billion, up 118 percent from a year ago.

Other charges included €138 million for closing down production of the A380 super jumbo and €90 million of other costs, including compliance. The latter covers an internal inquiry into the use of middlemen for aircraft and other sales, Reuters reported.

Airbus Defence and Space reported a 25 percent fall in adjusted operating profit to €233 million from €309 million, reflecting investment in sales campaigns. Sales of the division rose eight percent to €5 billion, boosted by military aircraft.

That compares to total Airbus revenue of €30.9 billion, up 24 percent, helped by airliner sales.

ADS won a 33 percent rise in orders worth €4.2 billion compared to €3.2 billion, including a contract signed with the OCCAR procurement agency for service of the A400M airlifter in global support step 2, and a next-generation communications satellite on the Ka-band.

Orders for the helicopter division included Spanish procurement of 23 NH90 military transport helicopters. That deal led to net orders of 123 units, down from 143 a year ago.

The helicopter division reported adjusted operating profit of €125 million, down seven percent, on sales of €2.4 billion, down one percent.

On the A400M military airlifter, Airbus signed in the second quarter a contract amendment with OCCAR, a deal which took two years of negotiations. Airbus last year booked a further €436 million of charge, following a total of €7.2 billion of previous charges on the A400M.

The A400M contract agreement, dubbed global rebaselining, set new terms for a development plan for capabilities, new production delivery schedule, new timetable for retrofit and new financial terms.

In the financial terms, Airbus and OCCAR agreed “significant compensation in products and services” in exchange for dropping penalties for late delivery, the company said June 14.

In comparison, Boeing reported July 24 a loss of $2.9 billion in the second quarter, compared to profit of $2.2 billion a year ago. That loss was due to a grounding of the 737 Max airliner after two deadly crashes.

That quarterly loss followed a charge of $4.9 billion due to slower production of the troubled passenger jet, delayed delivery and related costs.

The featured photo shows an Airbus A400M during the Royal International Air Tattoo at RAF Fairford in 2016.

Credit: Australian Department of Defence

 

Poland and the F-35: First F-35s Land in Poland as Part of Rapid Forge Exercise

Four U.S. Air Force F-35A Lightning II aircraft, deployed from the 388th and 419th Fighter Wings, Hill Air Force Base, Utah, landed at Powidz Air Base, Poland, July, 16, 2019.

This is the first time that U.S. Air Force F-35A Lightning II aircraft have landed in Poland.

With the arrival in an exercise in Poland of F-35s, clearly the question is as well of not only the acquisition by Poland of F-35s, but building the infrastructure for operating F-35s and shaping an infrastructure to facilitate as well allied operations of the F-35 fleet operating by both the United States and allies in Europe and the Middle East.

The image of the plane operating from Poland is one thing, but the core capability of an integrated fleet would be its ability to shape an ISR, C2 and strike and defense belt over continental Europe.

This is an inherent potential of the F-35 fleet, a potential that will only be realized by the United States and its allies working through security and other challenges to unlock the inherent potential of the F-35 to operate as an integrated not interoperable fleet.

In a Mitchell Forum paper published in March 2019, Major Luke J. Harris and Col. Max M. Marosko III, USAF addressed the question of US and Allied F-35 interoperability.

We would go further that there is a unique historical chance facing the United States and its F-35 partners — namely to forge an integrated force.

This possibility is inherent in the technology, but will not happen without the political will, organizational reform and reworking of who the United States and its allies approach the broader security challenges.

As Harris and Marosko III concluded their paper:

There are few DOD programs better postured than the F-35 to improve allied warfighting capability and overall relationships. However, an F-35 pilot will only be an effective force multiplier if F-35 aircraft systems can communicate seamlessly with other F-35s, and other aircraft.

Future F-35-equipped coalition forces must operate with common TTPs and a shared mental model achieved through high-end training and tactics disclosure.

The United States has accepted a higher level of risk by selling advanced U.S. stealth and sensor technology to other nations, and trusting our allies not to disclose these capabilities. That trust is built on the mutual understanding that it is in our allies’ national interest to protect these capabilities.

The United States, likewise, needs to trust our allies with the intelligence, information, and proven best tactics and practices that were previously not releasable, so they can optimally employ the F-35 and provide value-added combat capability.

With American F-35s dispersed worldwide, the U.S. is absolutely dependent on regional allied capacity and capability to succeed in future combat operations.

To optimize allied F-35 interoperability, the U.S. must remove the security and policy barriers that inhibit this objective and smartly share intelligence, technical information, tactics, techniques, and operating procedures with our allies.

Only by doing this will America see the true potential of the F-35 as a revolutionary combat capability.

Clearly, the addition of Poland to the F-35 global enterprise would expand the fleets operational reach in a way that would make it central to deterrence in the neighborhood.

In an article we published last month on June 22, 2019, we discussed the potential acquisition of the F-35 by Poland.

During the recent visit of the Polish President and a high-ranking Polish delegation, many key defense issues were discussed with President Trump and his Administration.

Among those issues was the potential purchase of the F-35 by Poland.

According to an article published on the Polish Ministry of Defence website, this prospect was discussed.

“Soon Poland will join the elite group of states whose air forces have the most modern F-35 aircraft. I want this process to proceed quickly and effectively,” said Mariusz Błaszczak, the Minister of National Defence after meeting the command of the Eglin Air Force base in Florida and the F-35 pilots.

On June 10, the head of the Ministry of National Defence began his visit to the USA and visited the Eglin Air Force Base, where, among others he became acquainted with the F-35 development program – the latest – 5th generation aircraft.

“We are advanced when it comes to the process of acquiring this state-of-the-art equipment – F-35 fighters. This is a big breakthrough in the combat capabilities of Polish Air Force.

“This is a challenge, but it is such an element that will certainly deter the potential aggressor,” the head of the National Defence Ministry said.

The minister reminded that at the end of May this year Poland has sent letter of request regarding the purchase of 32 F-35A aircraft.

“We are already in the process, we as MoND have placed the letter and there have been several meetings between experts from the Polish and United States Air Force. So, we are talking, I am happy that we will finish this process quickly,” added the head of the National Defence Ministry.

As the minister pointed out, the era of post-Soviet equipment used by the Polish Air Force ends, and era of the fifth generation equipment and therefore the most modern one, begins.

The minister added that he wanted the Polish pilots, who belong to the world’s leaders, to have effective and safe equipment.

“The planned purchase of F-35 fighters fits into the creation of the entire system that deters a potential enemy. Earlier, I signed contracts for the purchase of Patriot and HIMARS systems,” said the head of the National Defence Ministry.

Note: Rapid Forge is a U.S. Air Forces in Europe-led mission to enhance readiness and test the ability to function at locations other than the main air bases.

POLAND

07.16.2019

Video by Senior Airman Sara Voigt

86th Airlift Wing/Public Affairs

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The US Army at Sea

On July 3, 2019, the crew of the U.S. Army Vessel Molino Del Rey (LCU 2029) performs maintenance and readiness battle drills in the Northern Arabian Gulf.

Army watercraft are a crucial part of sustainment operations for the Army and the 77th Sustainment Brigade.

KUWAIT NAVAL BASE, KUWAIT

07.03.2019

Video by Staff Sgt. David Clemenko

77th Sustainment Brigade

An article published by Stars and Stripes in 2013 highlights the role of ships in the US Army:

HENDRICK SIMOES | STARS AND STRIPES Published: March 31, 2013

PORT OF SHUAYBAH, Kuwait — There’s a little known fact about the U.S. Army — it has boats. And that’s even surprised those assigned to serve on them.

Soldiers, not sailors, they prefer to be called Army mariners.

The vessels assigned to the Army in the Persian Gulf, such as Landing Craft Utility and Logistical Support Vessels, are designed to move military equipment and personnel within the region.

It is cheaper to move large quantities of equipment and materiel via Army watercraft than via air or ground transportation, according to Sgt. 1st Class Joshua Smith, the watercraft operations noncommissioned officer in charge for the 316th Sustainment Command (Expeditionary).

While the U.S. Navy has a dominant presence in the Persian Gulf, Smith maintains the existence of Army watercraft is an instrumental logistics asset in the theater: “The two services have two different roles on the sea, ‘we bring the goods, they bring the guns,’” is the motto, Smith said.

Aboard the USAV Churubusco — a Landing Craft Utility vessel — is a crew of Army reservists.

Their career paths may have been vastly different but they do have something in common: the surprise of family, friends and fellow soldiers — even themselves when they learned the Army has boats.

When Chief Warrant Officer 2 Vernon Slaughter retired from the U.S. Navy Reserves after 27 years because of high year tenure, he learned about Army vessels, and was able to continue his military career through the Blue to Green program, which allows sailors to transfer to the Army. Now Slaughter is the vessel master of the USAV Churubusco.

Growing up in Florida, Pvt. Damian Adams enjoyed being around boats. After joining the U.S. Army, he was surprised to find himself back on the water.

Pvt. Stephen Danek always wanted to be a cook and join the military. Now he’s accomplished both as a U.S. Army reservist. But his recent assignment stunned him – it was on board a boat. He said he had no idea the Army had boats.

And in this article by Tyler Rogoway in The War Zone on November 23, 2016, the role of ships in the US Army sustainment ops was highlighted as well.

When you think of the US Army, large seagoing vessels don’t come to mind.

Maybe they should; the service has its own expansive fleet of boats and ships, and the USAV SSGT Robert T. Kuroda and its sister ship the USAV Major General Robert Smalls are the biggest of them all.

While the Marines have their own specialized high-end armada of Navy ships, sometimes referred to as the “Gator Navy,” to support their amphibious operations, the Army has no such luxury.

But what the Army does have is a far more understated beach landing and logistics naval force that relies on a simpler sea-bound logistics concept. 

At the heart of this concept are the Army’s largest class of ships, the Logistic Support Vessels (LSVs) of the General Frank S. Besson class. Eight of these ships are in service with Army, six of which were built between 1987 and 1994. Following the retirement of the Newport class Landing Ship Tank (LST), they are now the largest of their kind within the Pentagon’s inventory and are reminiscent of Russia’s massive amphibious landing ships.

These first six ships are 273 feet long, 60 feet wide, and displace 4,200 tons.

They were designed to convey cargo and vehicles, and can be loaded and unloaded by crane right onto their decks, or by ramps on the stern and on the bow of each vessel.

The bow ramp in particular is designed for direct beach/shoreline access, with ships pulling right into the surf for loading and offloading. 

 

The UK Launches its Loyal Wingman Program

07/31/2019

In our recent report on Australian and UK defence transformation, we highlighted the opportunity for the two nations to collaborate on a number of efforts, one of which is a remote platform or family of platforms to worked with manned platforms, notably in the Australian case with its loyal wingman flying with the F-35.

We noted in that report, that the loyal wingman program was part of the Australian effort as well to ramp up their indigenous development and manufacturing capabailities.

Part of the defense rethinking going on in Australia involves finding ways to enhance a sustainable fifth generation force. Building out a lethal and effective offensive-defensive force, which can expand the perimeter for the defense of Australia and provide for allied extended deterrence, is a core focus of ADF modernization.

To do so in a crisis management situation needs a serious look at how long Australian operations could be sustained if a determined adversary sought to disrupt imports into Australia to support a modern society and a modern combat force.

The sustainment issue could be solved in part by enhanced domestic manufacturing capabilities and sustainment approaches, such as the projected shipbuilding effort or the F-35 regional support hub.

But clearly, there is an opportunity as well to build out manufacturing in Australia and with the ranges and potential workforce augmentations, missiles and unmanned air vehicles would be a clear area of interest, not just for Australia but for its partners as well.

As a member of the F-35 global enterprise, there is a clear global partnering opportunity whereby the Australians could do “a Konigsberg” and build missiles or related capabilities for themselves but in a way that makes them a natural partner with other key F-35 partners.

The recently announced “loyal wingman” program could be a case in point.  

To be clear, the amount of money being discussed at the program launch at Avalon makes it, in the words, of a senior Australian strategist “a PR stunt.”

What he was focusing on was a key reality – the money being proposed could hardly achieve a program of record.

But one way to look at it might be to see an Australian effort to leverage their position geographically and in terms of training ranges to provide a foundation for several partners to come and to build out an Australian-based test, development and manufacturing capability.

It is clear that already fifth generation led training in the United States is extending the range of training – quite literally – and it will be virtually impossible for European and Asian F-35 partners to do such training without the geographical scope that Australia provides.

If we take a look at the proposed loyal wingman program, a key element is affordability and the expectation that these are assets which can be consumed in a combat scenario, more like weapons than airplanes.

And to get a low cost, it is clear that the wingman will not be an organic festival of advanced sensors, C2 or other features.

It will be a plus up in mass for what Secretary Wynne has called for in terms of ‘the wolfpack.”

But some of the analyses surrounding the proposed program suggests that this will be an asset which can provide the tip of the spear into contested airspace or fly with legacy aircraft in a way whereby the legacy combat asset somehow has thinking capabilities which they simply do not have.

Clearly, as a low-cost wingman is developed modifications to systems like Wedgetail or to tanker could occur to make them adjuncts to an operation, and as one considers the range of combat scenarios they could complement.

But the management capability onboard the mother ship so to speak is a key consideration of what will fly with it to make for an effective combat team.

One Australian enthusiast for the program highlighted what he sees as the contribution of this program to Australian sovereignty.

“We should now concentrate our efforts on breaking down barriers between further technological and industrial co-operation so we can build a sustainable sovereign defense industrial capability.”

Makes sense, if you are willing to invest significantly greater money in the program; but if it is a leveraging effort, then it is certainly conceivable that American, Japanese, and European F-35 partners would invest.

But it is also crucial to keep in mind the program’s limitations if it is to be a disposable lower cost asset.

The Australian analyst made a core point which he then seems to forget later in his analysis.

“The idea is that F-35s will be tasked with entering dangerous environments, relying on stealth and electronic warfare capabilities to survive, while spotting targets for lower-tech unmanned systems, like the new RAAF-Boeing drone, and non-stealthy fighters that remain outside the range of adversary defences.”

This statement is good up to a point; but the F-35 is a multi-domain air combat system with a brain big enough to work combat teaming with “slaves” in the wolfpack.

This is not true of 4thgeneration aircraft.

“This “loyal wingman” will be paired with fourth-generation manned aircraft such as F-18s and will likely act as decoys, scouts and communication relays. Eventually they may play a “bomb truck” role, carrying additional missiles and ordnance for both air-to-air combat and other strike missions.

“The largest benefit of these systems will be to beef-up its mass, or the amount of presence and firepower it will be able to project across the region against large numbers of adversary aircraft.

“A single F-18 with four to six autonomous wingmen in tow would be better able to survive, while being more lethal and numerous, multiplying its impact.”

 The problem with this is that a legacy aircraft like the F-18 will have a difficult enough time to survive without trying to manage “slaves” in tow.

If we return to the sovereignty bit, it is clear that if the loyal wingman program is a trigger to investment and engagement by the USAF and the RAF and others in leveraging the test ranges and future training facilities in Australia, this could well be a viable program.

But certainly not one for the amount of money being put on the table currently.

The demonstrator is being developed under the Loyal Wingman Advanced Development Program, which is being supported by A$40 million ($28.5 million) over four years in Australian government funding and by Boeing as part of its A$62 million investment in research and development in Australia in 2018.

The other limitation is clearly the current industrial capacity in Australia.

Boeing Australia has a modest industrial footprint in Australia, which might be considered seed corn but clearly not the kind of workforce and industrial facilities which will require a significant investment and build out.

Put in blunt terms: the loyal wingman could be part of enhanced Australian sovereignty and a trigger for global industrial partnering with Australia as a launch point rather than an importer.

As one senior Australian analyst highlighted:

“The price quoted is only for the development of the first three prototypes.

“Boeing has what was left of the Commonwealth Aircraft Corporation (CAC) and the Government Aircraft Factories (GAF) which produced their own designs in the 80s and early 90s. 

“It’s now Boeing Aerostructures.  

“BAE have the autonomous brains to the system, which they produced for Tarinis, and there are no hydraulics in the system only electrics. 

“And they are designing it to a price point.”

Dr. Alan Stephens, the noted Australian military historian and a research Fellow at the Williams Foundation, in his discussion of a Plan B approach to Australian defense policy going forward, underscored the importance of the Australian loyal wingman program for shaping a way ahead for the next round of airpower modernization, leveraging the foundation which is being currently put in place.

“Channeling their inner Sir Richard Williams, the Air Force’s senior leadership appears to have redefined Australian air power through the agency of Project Jericho. Described as a “marriage of minds and machines”, Jericho implies a transformed organization based on artificial intelligence, robotics, machine learning, manned-unmanned teaming, networks, and innate intellectual flexibility. 

“Concurrently, and channeling their inner L.J. Wackett, the Air Force, the Defence Science and Technology Group and the Boeing Company have announced the cooperative development of a stealthy unmanned combat air vehicle under the rubric of “Loyal Wingman”. This is the most exciting initiative undertaken by the Australian aerospace community since World War II. If the project succeeds, the implications are profound.”

And with regard to the UK we drew upon interviews during a May 2019 visit to highlight thinking about the way ahead with a remote-manned aircraft pairing:

As MoD focuses on future airpower developments, a key opportunity rests with regard to how the carrier could work with their version of loyal wingman. With the capabilities built in to the F-35 to manage the battlespace, a loyal wingman with significant range could add the strategic bomber function to the fifth generation enabled carrier.  The reach of the carrier is significantly enhanced as data flows into the carrier-based F-35s to provide targeting solutions at longer range which can then be passed onto a loyal wingman as a targeting solution…..

Recently, we discussed with a well-placed UK defense analyst, the potential UK approach with regard to remotes going forward.

In this discussion, he argued that at the heart of an effective remote development and deployment strategy was leveraging the F-35. The F-35s fusion engine and ability to do C2 at the tactical edge provided significant opportunities to expand the effectors.

And with a loyal wingman approach one could build a relatively simple and relatively cheap wingman for the F-35 led force.

But the concept of a wingman was greatly expanded and different with a fifth-generation fighter.

One saw this as the F-22s started to sort out the distances and which they flew to support one another and with the F-35 and its fusion engine and low observable data transfer system, the notion of the wingman is migrating to other platforms, other assets and a much broader diversity of ways to provide a targeting solution.

With a longer-range loyal wingman – a modular remote with a data link and an ability to be directed by the F-35 and its interactive networks – can operate from a variety of air launch points which provides for the kind of airbase mobility and flexibility necessary to deal with an adversary which is prioritizing strike on fixed bases and targets.

The UK analyst argued this was a way to give the RAF back a capability for de facto strategic bombing as well as providing for much more flexible employment of the existing force. And with modularity, one could envisage a wide range of potential payloads, which could evolve with technology and with the evolving weapons mix required for diverse missions in a crisis environment.

Such an approach could open the window significantly for partnering for the UK forces and industry, which this analyst felt was crucial to a post-Brexit environment.  This could tap into a much broader F-35 enabled market place, much like the weapons manufacturers are doing as well as provide entry points as well into working with initiatives like FCAS. And obviously, there is a natural point here for collaboration with the Australians.

And we concluded with regard to UK and Australian collaboration on the capability the following:

a clear focus of common interest would be variants of the loyal wingman.

The British can bring relevant industrial capacity to the challenge along with Boeing Australia capabilities which can then leverage Australian test and development areas to shape a range of loyal wingman, some designed to fly with the F-35 and its fusion sensor enabled C2 capability and some designed to work with differently configured manned systems.

Now the British have officially launched their loyal wingman effort.

In an article by Andrew McLaughlin published by ADBR on July 23, 2019, the launch was highlighted.

The UK’s RAF Rapid Capabilities Office (RCO) and Defence Science and Technology Laboratory (Dstl) have announced the awarding of preliminary design contracts for the RAF’s Lightweight Affordable Novel Combat Aircraft (LANCA) concept.

Under a technology demonstrator project known as Mosquito, the Phase 1 contracts were awarded to Blue Bear Systems Research, Boeing Defence UK, and Callen-Lenz (a partnership of Team BLACKDAWN, Bombardier Belfast and Northrop Grumman UK).

The Phase 1 contracts will produce preliminary system designs for unmanned air vehicle, and will assess the key risks and cost-capability trade-offs for an operational Loyal Wingman concept. It is hoped these studies could lead to initial flight trials of demonstrator air vehicles as early as 2022.

The LANCA program was initiated by the Dstl in 2015 to develop and better understand innovative future fast-jet air combat technologies and concepts, and was subsequently brought under the RAF RCO as part of the Future Combat Air System Technology Initiative (FCAS TI). 

LANCA aims to explore the utility and feasibility of unmanned capability adjuncts to existing and future Fast Jet aircraft, specifically those that offer substantial reductions in traditional cost and development timelines. Project Mosquito has two planned phases. After Phase 1 which is scheduled to run for a year, Phase 2 will select up to two solutions to further mature the designs, complete manufacturing of the technology demonstrator and conclude with a limited flight-test program.

With Boeing Defence UK involved, it is possible that company will offer a variant of its Airpower Teaming System  (ATS) concept currently under development by Boeing’s Phantom Works for the RAAF’s Air Force Minor Program DEF 6014 Phase 1 requirement for a Loyal Wingman demonstration.

Fifth-Generation Enabled Military Transformation: Australia, the UK and Shaping a Way Ahead

 

 

Alliances and Self-Reliance: The Challenge for Defense Industry

With the strategic shift, the importance of regional conflict, and of regional allies is enhanced within the overall context of full spectrum crisis management.

And with it, the need for enhanced self-reliance of allies as well.

But enhanced self-reliance in the context of dealing with global authoritarian challenges for the liberal democracies, their partners and allies requires a balancing act.

On the one hand, the regional partner or ally requires access to the force capabilities and the industrial underpinnings of those capabilities evident in a relatively small number of defense industrial powers. And this entails the capability to plug and play between the larger power and the regional partner or ally.

On the other hand, there is a growing need for indigenous industrial support for sustainment and the development and production of selected national or regional defense capabilities by regional partners or allies.

It is not a zero sum game, but does challenge the dichotomy of exporting and importing nations for more advanced equipment.

It is about how the regional partner or ally can shape enough sustainability and defense capability within the boundaries of its nation or regional setting to be able to work with a larger ally who needs to plug and play with the capabilities of that nation.

In our work with the Williams Foundation, the Australians are clearly working to enhance their sustainability and industrial infrastructure to support the evolution of their integrated force.

But clearly they are not alone.

In a recent piece published by our partner Front Line Defence,Brett Boudreau, a retired CAF Colonel, a Fellow with the Canadian Global Affairs Institute, and former Director of Marketing and Communications at CADSI (2013-14), assessed the presence of Canadian firms at the International Defence Exhibition and Conference (IDEX) at the National Exhibition Centre in Abu Dhabi, United Arab Emirates.

In so doing, he underscored the evolving trend and the challenges which this trend posed to Canadian industry:

One important take-away from IDEX with strategic consequences for Canada is how aggressively Saudi Arabia and the UAE alone and in partnership, have pursued strategies to substantially expand their respective homegrown defence industries.

Vision 2030 sets out Riyadh’s ambition for at least half of the national security and military equipment it needs to be produced locally by 2030, from about 2 per cent now.

To help achieve that, the state-owned Saudi Arabian Military Industries (or SAMI) was stood up in May 2017, and was already a major exhibitor at IDEX 2019. Chief Executive Andreas Schwer, in an interview with Reuters at a conference on the margins of IDEX, said SAMI “will generate 30 per cent of its revenues from export markets by 2030” and generate $10B in revenue over the next five years, aiming to create more than 40,000 jobs locally by 2030.

Schwer also said since 2018, SAMI had signed 19 joint venture deals with companies [none Canadian] and planned to sign 25 to 30 more in the next five years.

Emirati national leadership is also not shy to dream boldly, to set out long-term development visions, and to aggressively pursue ideas that seem fantastical at the time, be it in fields of tourism, transport or even space.

For instance, in 2014 the Dubai International Airport overtook London’s Heathrow to become the world’s busiest for international travellers, with more than 88 million passengers in 2017, up from 16 million in 2002, according to the airport authority. Dubai’s Expo 2020 expects to welcome at least 25 million visitors.

The five-decade-long national development vision – Centennial 2071 – has as its ambition nothing less than to make the UAE “the best country in the world”, with a focus on education, economy, government development and community cohesion. The emphasis on higher education and the application of advanced technology is at the heart of many national priorities and projects. The world’s first commercial hyperloop transport system – using electro-magnetic levitation to propel the capsule to speeds in excess of 1,100 km/h, is in production and will eventually link Abu Dhabi, Al Ain and Dubai in a 150-km network at a cost to build of $20-40M US per km, with the first 10 kms expected to be ready this year.

Last October, the UAE’s first locally-made satellite was launched into orbit from Japan, just one offshoot of the National Space Strategy 2030 to turn the country into a major global hub for space-related science and technology. The UAE will send its first astronaut to the International Space Station in 2019 (two are in training now), as well as a probe to Mars in 2020. In 2017, the UAE unveiled a 100-year plan to establish a colony on Mars by 2117 (!) – and are building a simulated prototype Mars colony in the desert: according to the Emirati project manager, the prototype 1.9 million square feet Mars Science City  near the Mohammad Bin Rashid Space Centre, will be 3-D-printed and operational in four years.

So, when leadership including Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, says the country wants to transform its defence industry to realize multiple strategic objectives in short order, we can expect that a national defence industrial strategy currently being developed will have big ambitions and heft behind it.

This muscular approach to a made-in-UAE defence industrial strategy is visible also by the upcoming exhibition schedule in the country.

Later this year is the Dubai airshow, and in early 2020, the Unmanned System Exhibition (UMEX) for drones, robotics and unmanned systems – the only one in the Middle East – and the Simulation and Training Exhibition (SimTEX) for defence, civil aviation and healthcare in Abu Dhabi,  expected to draw 12,000 visitors and 120 international exhibitors.

Comparing national efforts at a premium show like IDEX provides a stark visible contrast of different national strategies and approaches to indigenous defence and security industries.

“You can see it here at the exhibition and conference,” said one Canadian business representative.

“Some nations don’t look to be trying very hard at all, some look to be trying, some are serious, and some are really serious. At the very least, Canada should wish to move from the ‘look to be trying’ to the ‘we are serious’ category.”

“What we’ve seen in other nations is the nut we have to crack,” says Cianfarani. “We can keep talking about icing all these little cakes that we have now in Canada, but I do not believe they will make the tremendous impact in little bits and pieces that you get with a $15B [General Dynamics Land Systems] sale.

“The fact is 80% of the revenues driven by the industry are from less than 10% of the companies.”

To make a substantive difference in the industry, she says, “you’d have to pick five to ten major domains or procurements and go after them hard as a nation. You’d have to go after them like the French do, like the Germans do, like the UK does.

You’d have to mobilize the politicians, you have to mobilize the military to some extent [attaches] as sales people.”

That is particularly the case in Defence, she explains, since that is a marketplace that by definition is considerably more managed compared to other sectors such as IT.

“What we would love to see,” says Cianfarani, “is a contract that gets awarded under the IDEaS program or any other innovation program that’s happening, that actually gets purchased on an active procurement for Canada under the investment plan and then gets supported and promoted by the Trade Commissioners, Canadian Commercial Corporation and Global Affairs as a viable export from our country.”

Walking amongst so much military hardware of every sort imaginable at IDEX, one wonders about Canadian defence industry prospects in the face of focused competition from other countries and strained relations (including the spill-over effect of the Saudi Arabia boycott to its neighbours including the UAE, plus the uncertainties for exports stemming from the Liberal Government’s self-declared “values-based foreign policy”).

The latter doesn’t faze Cianfarani, however.

She says that so long as national leaders are clear about countries they have decided they no longer want to do business with, and why, being in the business of defence exports and having a values-based national foreign policy can co-exist. 

The featured photo highlights one country clearly interested in leveraging the regionalization trend line, the PRC.

The strategic challenge for the United States is clear:

How best to deal with the cross-cutting of two trend lines?

The first trend is the rise of global authoritarianism, something which was not anticipated with the optimistic end of history dominance by liberal democracies.

The second is how best to work the challenge of  reworking the industrial base in order to deal with the aspirational dynamics of regional partners and allies for the liberal democracies while maintaining cutting edge capabilities?

How to deal with both trends effectivley?

 

Working Coalition Force Air Refueling

By Captain AnnMarie Annicelli (United States Air Force) and Flying Officer Clarice Hurren

In the fight for air superiority during Exercise Talisman Sabre 2019, the United States Air Force (USAF) and Royal Australian Air Force (RAAF) met a major milestone in the airspace off the Queensland coast.

For the first time in the Indo-Pacific region and during a combined exercise, a RAAF KC-30A Multi-Role Tanker Transport aircraft, from No. 33 Squadron, successfully conducted an air-to-air refuelling mission with a USAF F-22 Raptor.

Colonel Barley Baldwin, USAF 13 Air Expeditionary Group Commander, said it was a momentous achievement as both forces collectively further capability and assist in the security of the region.

“This successful mission enhances Air Force agility to employ air power in the interest of regional stability and security.”

“Now that we have passed this initial test and first training hurdle, Australia’s KC-30A aircraft is another viable option for extending the power projection capabilities of the F-22 Raptor in the Indo-Pacific region,” Colonel Baldwin said.

Group Captain Stephen Chappell, Talisman Sabre 2019 Amberley Task Unit Commander, agreed with Colonel Baldwin, noting that this was a major achievement for the Australian Defence Force.

“This successful mission enhances Air Force agility to employ air power in the interest of regional stability and security,” Group Captain Chappell said.

“It has been an invaluable opportunity for No. 33 Squadron to train alongside the USAF and the F-22 Raptor, and to access US fighter aircraft fuel receiver expertise.

“Australia looks forward to continued interoperability with the US Air Force and the 90th Fighter Squadron in the future.”

Published by the Australian Department of Defence

July 18, 2019

INS Tarkash in Russia

07/30/2019

After a stop in Sweden, the INS Turkish went to Russia to celebrate Russia’s Navy Day parade.

In an article by our partner, India Strategic, the arrival of the ship and its involvement in celebrating the relationship between the two countries was highlighted.

New Delhi. Towards bolstering the robust ties between Russia and India and in recognition of the ‘Special and Privileged Strategic Partnership’ between the two countries, Indian Naval Ship Tarkash arrived at St. Petersburg, Russia today, on 25 July 2019 to participate in The Russian Navy Day Parade. The ship was welcomed into harbour by officials from the Russian Navy with a live performance by the Russian Naval Band as a part of the Welcome Ceremony.

The Indian Navy is being represented at the Russian Navy Day Parade 2019, by a delegation led by Vice Admiral Ajit Kumar P, Flag Officer Commanding-in-Chief, Western Naval Command and INS Tarkash. In addition to attending the Navy Day Parade, the Flag Officer would also call on the Commander-in-Chief of the Russian Navy to review Navy to Navy cooperation and explore new avenues for collaboration.

NS Tarkash will form part of the mobile column for the review by the President of the Russian Federation. During its stay in harbour, the ship will be berthed at Lt Schmidt Embankment and remain open for visitors on 26 and 27 July 2019. The ships crew would also have professional interactions with the Russian Navy towards enhancing co-operation between the two forces. 

INS Tarkash commanded by Captain Sathish Vasudev, is the second ship of the state-of-the-art Teg Class Stealth Frigates (P1135.6), built by Yantar Shipyard at Kaliningrad, Russia. It is equipped with a versatile range of weapons and sensors and manned by a highly motivated crew of over 250 personnel including 30 Officers. It incorporates the latest stealth features such as reduced radar, infra-red, acoustic and magnetic signatures, thus making it difficult to detect at sea. The ship is part of the Indian Navy’s Western Fleet based at Mumbai under the operational Command of Flag Officer Commanding-in-Chief, Western Naval Command.

The China Challenge: An Australian Perspective

By Brendan Sargeant

China has always loomed large in Australia’s strategic imagination.

It is a major Asian power with vast economic and strategic potential. It has a long history of cultural and political engagement across the Indo Pacific and it borders the Eurasian landmass as well as the Pacific Ocean. It has a large and diverse diaspora. There has been a Chinese presence in Australia since the earliest days of settlement. China has shaped Australian social policy and challenged our national identity through its large presence in the world and the energy of its diaspora communities.

China has had a profound influence on Australia’s strategic policy over decades.

Its influence will continue to be enormous in every dimension of our national life.

In the Australian strategic policy assessments, from the 1940s to the 1970s, China was seen as a threat.

How this threat was framed was very much a reflection of the moment when assessments were written and the shifting dynamics of the Cold War.

In the 1970s, Australian strategic thinking began to move away from the idea of China as a direct threat to Australia, but it continued to recognise that it would remain a country of substantial political and strategic consequence.

In the 1980s and 90s, defence policy shifted to a focus on the direct defence of Australia and a priority for the capacity to undertake military operations in our near region. China was not part of the thinking behind this shift.

Since the 2000 Defence White Paper, strategic policy has recognised that the strategic relationship between China and the United States is the single most important element of the regional security architecture.

This understanding laid the foundations for the recognition that Australia had to develop a strategic relationship with China that included a defence relationship.

Economic security drives rising military power

Recent decades saw a broad consensus emerge in the defence policy community that China’s military development was commensurate with its emerging economic power. China’s developing military power was described as a natural outgrowth of its economic development and a reflection of its need to secure its broader strategic interests, particularly as it is a country that is dependent on trade and external resources for its development.

China’s economic and military growth has now changed the Indo-Pacific strategic environment irreversibly. It is the major trading partner for most countries in the Indo-Pacific. It has begun to challenge the strategic primacy of the US. It is more assertive militarily, most notably in the South China Sea with its island building to secure its disputed territorial claims.

Defence White Papers from 2009 have responded to this change, but the response has varied, reflecting uncertainty in Australian thinking about the strategic and security consequences of China’s growing power. In sequence, the White Papers embody three subtly different strategies to what they considered to be the primary strategic challenge for Australia – the rise of China.

The 2009 White Paper argues for a much stronger ADF and reasserts the alliance with the US as a core element of Australia’s defence and security. It also identified the possibility of a direct military threat to Australia from a major Asian power, which some interpreted as China, though the document was not explicit on this.

The 2013 White Paper introduced the idea of the Indo-Pacific as an enabling policy framework that sought to position China as part of a larger security community. The central strategic challenge was to develop a regional architecture capable of managing the interests of that community as a whole without necessarily being dominated by any single power. That White Paper also recognised the centrality of the US alliance for Australian security.

The 2016 White Paper suggested that Australia’s security interests were not necessarily tied to our geographic position but resided more broadly in how the global system functioned. It emphasised the importance of support for a rules-based global system. Australia’s strategic interest was in a China that continued to accommodate to the existing rules-based order.

The 2017 Foreign Policy White Paper introduced a more sombre tone in its assessment of the strategic implications of the rise of China.

What these policy documents do, when read in succession, is chart the increasing complexity of the strategic challenge that China now represents.

Countries develop defence relationships for many reasons. The future might hold a crisis that requires that the countries work together. This is easier if they know each other.

Defence links are built on mutual strategic understanding

A defence relationship can be an important part of the broader pattern of relations between countries, as well as a sign of the maturing of the broader bilateral relationship. What countries will do together in the area of defence can indicate the level of trust they have in each other’s strategic intentions. Defence relationships can enable influence and understanding in both directions. They can be important for confidence building because they enable and strengthen capacity to understand the difference between what a country says it is doing and what it actually does.

Perhaps most importantly, a defence relationship increases understanding on both sides as to how either country might use its military forces in a crisis. It can provide insight into how defence culture is shaped by how a country thinks about its strategic environment, its geography and its history. Most importantly, it can help understand how these influences translate into operational capability and decision making. This knowledge is as important for allies as it is for potential adversaries. To understand a country’s strengths and weaknesses and how it might use its military force in a crisis enables more effective response and management of escalation or de-escalation.

No country’s interests are completely congruent with the interests of other countries. Countries will therefore always reserve some capacity to act independently. This necessarily establishes the limits of trust and the limits of any defence relationship. The central question governing the future development of the defence relationship between Australia and China is: what are the limits?

Australia and China have developed defence engagement and defence cooperation steadily since the late 1970s. There was a visit in 1978 to China by the senior Defence official Paul Dibb, which led to the exchange defence attaches a couple of years later. There was a goodwill visit by HMAS Swan in 1981. The Joint Services Staff College visited China for the first time in 1982. In 1998, General Chi Haotian, was the first Chinese Defence Minister to visit Australia. This visit saw the establishment of an annual strategic dialogue at senior officials level, which has continued.

In 1999, Defence Minister John Moore visited China and since then every Australian Defence Minister has visited, and there have been regular visits to Australia by Chinese counterparts. Ship visits both ways are now a regular occurrence. China participated in the combined Naval Exercise Kakadu in 2017 for the first time. There has also been limited training between the Australian and Chinese armies in Australia. In addition, Australian staff colleges have had Chinese students attend and there have been regular study visits to Australia by Chinese military personnel. China is now a regular destination for senior Australian military personnel. One of the more significant engagements in recent years was Australian support for the Chinese deployment into the Indian Ocean to search for the wreckage of Malaysian flight MH370.

Even as engagement has increased, we have seen China expand its presence and capacity for the exercise of coercion, particularly through island building and militarisation in the South China Sea. Australia has also been concerned at China’s expansion of  activities in the Pacific, particularly with the possibility that China may seek to establish some form of permanent military presence through access to basing rights in one or more of the Pacific island countries.

The strategic relationship is therefore one of engagement and increasing competition. Capability building by Australia and the further development of other strategic relationships across the Indo-Pacific, such as with Japan and India, represent, in part, a strategic response to China’s increasing military presence. Another important element of Australia’s response is the continuing affirmation of the centrality of the alliance with the US to Australian security and the development of capabilities that not only provide for the defence of Australia, but also strengthen Australia’s capacity to operate with the US.

The defence relationship with China has seen steady but slow growth with the central element of it still being personal contact and dialogue at the senior levels reinforced by reciprocal visits. The relationship is contextualised by competing and fundamentally incompatible strategic objectives. For China, a strategic goal is to weaken Australia’s commitment to the US alliance and for Australia to more visibly accommodate Chinese economic, political, and strategic interests. This would include recognition of China’s primacy as the pre-eminent power in the Indo-Pacific.

Australia’s strategic goals include retaining the alliance with the US as the central pillar of our security. This means supporting continued US presence and strategic primacy in the Indo-Pacific and supporting China’s participation in the global rules-based order in ways that support our interests.

These strategic goals are not compatible and they are not likely to shift for the foreseeable future. The strategic relationship is therefore likely to be characterised by continuing engagement and limited defence cooperation, but increased competition as China seeks to expand its strategic space and its conception of its legitimate interests. This competition will continue for as long as the Indo-Pacific strategic order remains contested.

How the defence relationship evolves will be a very important indicator of the state of the broader strategic relationship. It is in Australia’s national interests that we continue to develop the defence relationship with China, but the reality of that relationship is the inherent asymmetry as a result of size difference and the very different strategic challenges each military has to respond to. China does not have much experience as a modern major power. It is developing strategic capability but has limited experience in using it as an instrument of national power. Few of its military personnel know much of the world beyond China. Just as it is important for us to understand the Chinese military, it is important that they understand the world. How we build the defence relationship in the future must recognise this broad context.

Defining the limits of cooperation

Both Australia and China should understand and be explicit as to where the limits of cooperation lie. This enables cooperation in areas where interests converge, and the effective management of challenges where they do not. For Australia, observance of international conventions such as the United Nations Convention on the Law of the Sea are non-negotiable. Our participation in the alliance relationship with US and in other regional security forums is similarly non-negotiable. China has its own set of non-negotiable interests. These will not change. The challenge will be managing them effectively without destabilising the relationship as a whole and putting at risk areas of cooperation where our interests are mutual.

We should increase the level and frequency of visits and dialogue, personnel exchanges and shared training activities. The value of strategic dialogue, study visits, and other defence activities is the awareness that it brings of the perspectives and culture of participants. It is important that Australia and China understand each other, their perspectives on the world and how this translates into strategy and operational practice.

The focus of strategic dialogue should be directed at increasing a mutual understanding of differing perspectives on the regional strategic environment, but also on how and where crises might occur. This has the benefit of strengthening the capacity to manage a crisis between our countries, should one occur, or to be able to work together in response to regional problems when they occur.

Not all crises involve potential military conflict. There are many where military capabilities provide the only capacity to respond. Natural disasters are one such example, but there are also regional security challenges that engage the interests of all countries – such as terrorism or piracy, or the need for search and rescue. The search for the missing Malaysian airline is a recent example of very substantial cooperation between Chinese and Australian military forces.

Australia and China should increase military exercises, particularly in the maritime domain. This recognises that the Indo-Pacific strategic environment is primarily a maritime environment and both countries have an over-riding strategic interest in the security of that environment and its sea-lanes. Exercises and the development of protocols for managing potential incidents while building the capacity to work together would strengthen engagement and build capacity.

There will be crises in the bilateral relationship, and these will put cooperation at risk. Australia has often used the defence relationship to send signals to other countries when they do something that displeases us. We should resist the temptation with China. We need to understand China, which does not mean condoning its behaviour. We particularly need to understand it’s evolving thinking on strategy and the use of military force. The best way of maintaining that understanding is to continue to engage in an active defence relationship.

Brendan Sargeant is honorary professor at the Strategic and Defence Studies Centre at the Australian National University. From 2013 to 2017 he was associate secretary in the Department of Defence.

This is (an edited version of) the essay first published by Asia Society Australia under its Disruptive Asia series: China Special Edition.

Disruptive Asia is a thought-leadership project by Asia Society Australia launched in 2017.

It presents – through long-form essays – new perspectives and policy recommendations on how Asia’s rise is impacting Australia’s foreign policy, economy and society and how Australia should respond. 

Disruptive Asia deliberately looks at both external aspects of Australia’s relationship with Asia (foreign policy, business connectivity, international education) and their domestic implications and manifestations (community relations, leadership diversity, education settings and capabilities).