ANDREW DOYLE / SINGAPORE
Seoul may not have funds for missile purchase unless Boeing cuts fighter price
South Korea may shelve plans to buy $1.5 billion worth of Patriot Advanced Capability-3 (PAC-3) surface-to-air missiles (SAM) from Raytheon unless Boeing cuts the $4.4 billion-plus price tag of the 40 F-15Ks it is acquiring.
The South Korean defence ministry says the two procurement programmes are not linked, but industry sources say Seoul is unofficially warning it does not have the budget for its SAM-X requirement unless Boeing drops the F-15 price.
The ministry admits there is a "real possibility that SAM-X will be pushed back or cancelled" because of budgetary constraints. It also says defence minister Kim Dong-shin has warned Boeing military aircraft and missile systems president and chief executive Jerry Daniels that the government could face a public backlash over the cost of the F-X deal if it is forced to go back to parliament for more funding before signing a final contract.
Boeing hiked the price of theF-15K during the F-X bidding process, which lasted more than two years. Seoul had earmarked $3.2 billion for the purchase in 1999. The defence ministry says it will not reduce aircraft numbers below 40.
The government aims to sign the contract by early June to enable deliveries to start in 2004, but this could be delayed if the pricing issue is not resolved quickly, say the sources. Dassault is also seeking to block the deal.
Meanwhile, Seoul is trying to defer the payment schedule for the PAC-3 by up to two years. E-X airborne early warning and control aircraft, and AH-X attack helicopter projects have already been postponed due to budget constraints.
Source: Flight International
