Sunday, April 20, 2014

Saudi Leopard 2 deal might be dead

No Leopard 2A7+ to Saudi?

Krauss-Maffei Wegman introduced the Leopard 2A7 at Eurosatory 2010, as an evolution of the Leopard 2A6 PSO (Peace Support Operations) main battle tank. 

Like the American M1 TUSK, the Leopard 2A7 is optimized for urban operations, with 

  • Optional explosive reactive armor, 
  • KMW FLW-200 Remote Controlled Weapon Station and sensor array
  • Improved mine protection
  • Upgraded suspension, drive system, brakes and tracks
  • Improved power generation system to handle its Advanced electronics
  • 3rd generation thermal imagers.


Those changes are normal for current generation tank upgrades, but the Leopard 2A7 also has a couple of innovations that set it apart. 

Its longer 55-caliber Rheinmetall L55 120mm smoothbore tank gun produces greater velocity than the L44 gun found on American M1s and earlier-model Leopard 2s, and can be combined with programmable fuze shells to kill infantry behind and within buildings.

Its most significant additions, however, may be its combat engineering attachments. In Israel, large armored bulldozers have been the IDF’s most valuable weapons in major urban fights. American operations in Iraq’s urban centers have featured heavy use of combat engineering prior to major city battles, and Canadian Leopard 1A5 and Leopard 2A6M tanks in Afghanistan have benefited greatly from attachments like dozer blades and mine ploughs. The Leopard 2A7 has learned from all of these experiences, and comes to the urban fight with new levels of flexibility for a tank.

An initial upgrade of 50 German Leopard-2 tanks to the 2A7+ standard is set to begin production of the type. If the reported Saudi sale goes through, Saudi Arabia would become the type’s first export customer.

That sale would represent both a market breakthrough, and a significant financial opportunity for German firms.

The Saudi Opportunity

It would be a market breakthrough, because until now, the Saudis have equipped some divisions with American equipment (M1 and M60 tanks, Bradley and M113 APCs etc.), and other land divisions with French equipment (AMX-30 tanks, AMX-10P tracked APCs, etc.). The comparably modern replacement for its older French equipment would be about 300 Leclerc tanks and 500 or so Nexter VBCI or local Al-Fahd wheeled APCs. On the other hand, rumors of deals with countries like Russia have suggested that this opportunity may be open to new entrants, and the Saudis have been lukewarm at best toward the recent French-led war in Libya.

The military and export opportunity question is which Saudi tanks the Leopards would replace. They could be used to replace older American M60s, in which case the opportunity to modernize the kingdom’s “French” divisions still exists in full. Or, they could replace the AMX-30s, leading to questions about next steps in replacing those divisions’ accompanying AMX-10P infantry carriers.

The industrial question, in contrast, largely answers itself. Germany has a history of selling surplus German tanks at fire-sale prices, in order to broaden its firms’ customer base and reap upgrade & maintenance contracts. Chile, for instance, bought its Leopard 2A4s at just EUR 250,000 per tank external link base price. A Saudi contract doesn’t help Germany position its firms as Europe’s heavy armor designers, but it would involve new-build tanks at EUR 4-7 million each, and the associated after-sale maintenance contracts would be even larger and more lucrative. The Saudis traditionally devolve most equipment maintenance duties to foreign contractors, and pay accordingly. A combination of manufacturing and maintenance work for the Saudis could go a long way toward keeping Germany’s key armored vehicle producers busy, while solidifying their financial position.



Controversies and Politics

If the Saudis have been shopping the globe for a non-French supplier, Germany is a surprising alternative. To this point, the Saudis have pointedly chosen second suppliers with a reputation for non-interference after arms are sold, and a record of independence from their primary supplier. Germany’s strict export conditions, and traditionally closer relations with the USA, make them an odd choice in this regard. Germany is quick to attach conditions to its sales, and is seen as likely to withdraw sales or support from areas deemed to be conflict zones.

Some of those tensions have already been on display in the German Parliament. The opposition Left Party is pushing its opposition to the deal by citing the use of Saudi tanks and troops to quell recent uprisings in Bahrain, at the invitation of Bahrain’s government.



On the other hand, German financing for Europe’s debt crisis bailouts has been taking a political toll on Merkel’s government, and economic wins have local political value. Germany already provides defense equipment to the Saudis, and is a major contributor to construction of the RSAF’s new Eurofighter multi-role jets.

There are also regional balance issues at work in the Middle East, which the German government is citing as justification for the sale.

Iraq will not be prepared to defend its borders when the US military removes its heavy ground forces, which means that its safety is likely to be guaranteed by some combination of perceived American resolve, and the willingness of the Gulf Cooperation Council to come to its aid. With the former in question, the latter becomes more important. Persistent reports have even said that Israel has supported the German sale, just as it quietly indicated its lack of opposition to the multi-billion dollar array of American military offerings announced in October 2010. In all of these cases, the Iranian regime across the Gulf is the real focus of local and Western concerns.

The long term issue for Saudi Arabia has to be support for its German weapons, if local conflicts escalate to domestic or international battles. The current CDU/CSU/FDP government has voted down opposition party attempts to block the Saudi sale, but its continuation in power beyond 2013 is uncertain, and the major opposition parties appear consistently hostile to the sale.

If German politics creates future problems, the Saudis could face real difficulties with a key segment of their tank fleet. Turkey’s sizable fleet of Leopard 2 tanks could offer an opportunity to have Turkish firms handle maintenance, but if Germany was opposed, the result from the Turks’ point of view would be a crisis in bilateral relations with one of Turkey’s biggest military suppliers. That would not be undertaken lightly.

The Saudis’ best approach would be to keep substantial spares inventories on hand, and insist on a larger share of local maintenance and assembly work using Saudi citizens. There is some indication that this kind of “localization” is becoming a concerted focus in Saudi Arabia. It remains to be seen whether similar arrangements might be true for any buy of Leopard 2 tanks. If, indeed, that buy materializes.



Latest news from April 13th, in the aftermath of an election that narrowly forced Merkel into a “grand coalition” with the left-wing Social Democrats, the Saudi tank deal is reportedly dead. SPD Economy Minister and Vice-Chancellor Sigmar Gabriel has reportedly refused to agree, effectively blocking any sale by Spain’s licensed producer GD Santa Barbara Sistemas.

That will probably make several other countries happy: France, Turkey, the USA, and possibly even South Korea. CDU/CSU Party members have taken that point a step further, arguing in public that the Economy Minister is burying German jobs, and saying that if Germany cannot export outside of NATO, there will soon be no German arms industry. It’s certainly true that external sales make it easier to build an industrial base that can equip German forces.

This is a deep and ongoing disagreement between the parties. The relevant question is whether this issue is seen as being worth the damage to the coalition that would be involved, in order to sideline Gabriel’s objections.


Defense Industry Daily, "http://www.defenseindustrydaily.com/desert-leopards-germany-selling-heavy-armor-to-the-saudis-06993/"