Germany to Press Maritime Patrol Aircraft Pool

BRUSSELS - Germany is looking to make progress on a maritime patrol aircraft pool, a European Union multinational joint headquarters (JHQ) and other high-priority military ideas at a workshop it is hosting in September and October.

At first sight, the maritime patrol aircraft pool looks to have more potential, as the JHQ has been opposed by the U.K. and requires all 26 EU member states taking part in the EU's defense policy to agree for it to proceed.

"Using the European Air Transport Command as a template, a management structure for the coordination of maritime patrol resources and capabilities could be established, bringing together partial, fragmented national capabilities into a European pool," a German Ministry of Defence official said.

The aim of the workshop is to gain thorough information on member states' interest. "Nations who have declared their intention to participate in this initiative will also have to discuss the topic of sharing the use of maritime patrol aircraft in real-world operations," the official said.

The maritime patrol aircraft pool is one of some 300 proposals for pooling and sharing put together by the EU's military staff. Other high-priority project ideas, which have not yet been planned in detail and have also been forwarded to NATO, include:

■ A JHQ, which the U.K. opposes, would build on the existing German Response Forces Operations Command and be used at the operational level by both the EU and NATO.

■ A maritime auxiliary pool would create a European pool of auxiliary ships.

■ Biological detection and defense would be made up of eight subprojects, which comprehensively address capability shortfalls in biological-agent defense.

■ A multinational simulation network would further develop simulation network prototypes such as helicopters. Such networks would offer a broad scope ranging from basic training up to mission rehearsal in complex virtual environments.

■ Multinational academic education would design and implement a European network of military academic institutions with mutual acceptance and recognition of academic qualifications.

As for the JHQ, the German official said that "a detailed analysis of costs has not been conducted so far."

"Next to costs, operational issues are also to be considered. In general, a multinational JHQ could dispose of a 'lessons learnt' department. However, details concerning the possible structure of a multinational Joint HQ have not been worked out so far," he added.

EADS Perplexed by France's MALE UAV Pick

PARIS - The French government's decision to pick Dassault to supply an interim medium-altitude long-endurance (MALE) UAV has left EADS managers perplexed, as the European aerospace and defense group reported July 29 second-quarter operating profits which beat market expectations.

EADS chief executive Louis Gallois said he had difficulty understanding why EADS lost to Dassault in its bid to supply a MALE UAV for the French Armed Forces. Gallois was speaking on a conference call on financial results, which showed a 15 percent rise in underlying earnings to 371 million euros ($527 million) from a year ago.

The market had been looking for earnings before tax and interest of 317 million euros ($451 million) for the second quarter, down from 323 million euros a year earlier, a Reuters analyst poll showed.

EADS has asked for an explanation, as it was unclear whether its bid failed for reasons of operational capabilities, price, or timing, Gallois said. French Defense Minister Gérard Longuet said he would give an explanation, Gallois said.

The government's selection of Dassault maintains a national capability to design combat aircraft and reflects a political will to sustain a French design office rather than fund a German capacity based in EADS, Dassault executive chairman Charles Edelstenne said July 28 at the company's first-half results press conference.

EADS had proposed an upgraded version of the Harfang MALE UAV as an interim solution while lobbying for government-development contracts for the Talarion advanced UAV.

In the results for the first half of the year, sales at Airbus Military, the unit responsible for the A400M airlifter, showed an operating profit of 3 million euros ($4.27 million) after a loss of 161 million euros ($229 million) a year ago. The year-earlier loss reflected foreign exchange effects tied to revaluation of the loss-making contract and recovery of fixed costs on the A400M.

The A400M program booked sales of 412 million euros ($587 million) in the first half.

EADS' ability to execute the A400M program, along with the A380 superjumbo and A350 XWB airliners, will determine whether the company delivers the full-year operating earnings forecast at around 1.3 billion euros ($1.85 billion), roughly stable on a year ago, the company said.

EADS forecasts a significant improvement in earnings in 2012 based on higher volumes, better pricing and improvements in the A380 program.

First-half net profit fell 41 percent to 109 million euros ($155 million) on sales up 8 percent at 21.9 billion euros ($31.2 billion). Of total sales, defense revenues fell 4 percent to 4.9 billion euros ($6.9 billion).

New orders in the period rose 89 percent to 58.1 billion euros ($82.8 billion), with net cash of 11 billion euros ($15.6 billion), down 7 percent a year ago. The orders included a first order shared with Boeing from American Airlines.

"Our results for the first half of 2011 mirror the strong demand in the commercial aviation sector," EADS said in a statement.

"In terms of orders, Paris Air Show was record-breaking for us, particularly thanks to the A320neo (new engine version). The recent historic order by American Airlines adds to this remarkable success story as the strong commercial momentum continues beyond Le Bourget," the statement said.

Thales, Dassault Sign India Mirage Upgrade Deal

PARIS - Thales and Dassault signed July 29 a modernization contract for Indian Air Force's Mirage 2000 fighter jet fleet, the electronics company said in a statement.

The deal was worth about 1 billion euros ($1.42 billion) for Thales, a company spokeswoman said.

Thales will supply the RDY-3 radar, navigation and attack equipment, and electronic countermeasures for India's 51 Mirage 2000 fighter aircraft. Dassault will supply a new onboard computer.

"The extensive involvement of Indian industry within the program will consolidate existing ties with the French aerospace industry and will reinforce long-term cooperation based on cutting edge technologies and the sharing of technical know-how and expertise," Thales said.

Separately, Dassault's Rafale has been shortlisted with the Eurofighter Typhoon for India's contract for 126 medium-range combat aircraft in a deal estimated to be worth $10 billion.

USMC to Test Communications-jamming Device

A U.S. Marine Corps AV-8B Harrier jump jet squadron is set to conduct trials on the services' new Intrepid Tiger II communications intelligence and jamming pod next month.

The device is an open-architecture, commercially derived unit built by the service to quickly and effectively field state-of-the-art electronic attack capabilities on a limited budget. This will be the second iteration of the pod.

Each pod - which is integrated by the service itself, not a contractor - costs less than $600,000 and can be upgraded by simply replacing off-the-shelf internal components without exhaustive integration work or testing, said U.S. Marine Lt. Col. Jason Schuette, who serves in the U.S. Navy's N88 office as the EA-6B and Marine Air Ground Taskforce (MAGTF) electronic warfare requirements officer. Schuette was speaking at the Lexington Institute's Electronic Attack Capitol Hill Conference on July 28.

"In fact, in two years, when I get ready to upgrade whatever is inside this pod, I will just pullout the part and put in the new one," Schuette said of upgrading the device to it's future Intrepid Tiger II configuration. "I will [not] rely on industry to continue to make a part that is old and obsolete; I'll put in the new one."

Eventually the pod will not only collect communications intelligence and jam those transmissions, but also it will be upgraded to provide electronic support.

Schuette said the service was able to build the cheap and flexible pod by leveraging commercial development of the electronic hardware. New civilian hardware can produce very clean signals, he said.

The challenge, said Schuette, is the bureaucracy - the Marines have to convince the test community that the new part will not have to undergo an exhaustive test process from scratch.

"The challenge will be convincing the testing powers-that-be that we shouldn't have to go back and do all sorts integration testing to field this pod that we continue upgrade," Schuette said.

Timely fielding of new technology is critical in the fast moving electronic attack field because technology and threats change rapidly, he said. Fielding upgrades quickly is vital.

The pod will be tested next month with a Harrier squadron and will deploy in the fall if everything goes according to plan, Schuette said. But eventually the pod will also be carried on the F/A-18 Hornet fighter and AH-1 attack helicopters.

In keeping with Marine doctrine, the pod will be used to support Marine ground forces, whose radio battalions will control the pod from the surface. The pilot will be able to control the pod, but the idea is that Marines on the ground control the pod, eventually with a handheld device.

U.S., North Korea Hold Nuclear Talks

UNITED NATIONS - The United States opened discussions July 28 with North Korea, in a move testing Pyongyang's willingness to negotiate giving up its nuclear arsenal.

The U.S. special envoy on North Korea, Stephen Bosworth, greeted North Korea's first vice foreign minister Kim Kye Gwan at the entrance to the U.S. mission to the United Nations in New York before they set the talks underway.

Neither side many any comment before the meetings, which were expected to go on into July 29. The United States has stressed however that these are "exploratory talks" to see if the Pyongyang regime is serious about living up to past commitments on its nuclear program.

The United States considers progress on disarmament to be key to any hopes of improving six decades of hostile U.S.-North Korea ties.

It is the first talks since Bosworth visited Pyongyang in December 2009.

The invitation to New York was made after a meeting between nuclear envoys from North and South Korea at an Asian security forum in Indonesia last week.

The international community is anxious to see North Korea return to six-nation talks on its nuclear weapons, which broke down in late 2008.

North Korea agreed in principle at the six-nation talks in 2005 to scrap its weapons program, but staged nuclear tests in 2006 and 2009.

The North's disclosure in November that it had a uranium enrichment plant, adding a new means to produce atomic weapons, has become a new complicating factor in the talks the North has held with the United States, China, South Korea, Japan and Russia.

U.S. Secretary of State Hillary Clinton invited the North Korea minister for what she called "exploratory talks."

State Department spokesman Mark Toner said July 27 that the Indonesia meeting had been "constructive" but that the communist state needs to do more.

"What we're looking for is in our mind a clear indication that North Korea is serious about moving forward," Toner told reporters.

The United States will be watching to see if the North will recommit to the 2005 agreement "as well as take concrete and irreversible steps towards denuclearization," Toner said.

The North highlighted its mistrust of U.S. motives ahead of the talks.

At a U.N. debate on disarmament on Wednesday, the North's U.N. ambassador said a proposed U.S. missile defense shield in Europe would spark a "new nuclear arms race."

The ambassador, Sin Son Ho, said the United States was seeking "absolute nuclear superiority" and had no "moral justifications" to lecture other countries about proliferation.

North Korea's official news agency said in a commentary July 27, however, that an agreement with the United States formally ending the 1950-53 Korean War could become a "first step" to peace on the Korean peninsula and "denuclearization."

Diplomats have warned that the North is unlikely to make concessions in the talks.

"North Korea is in trouble again. It needs food supplies and its economy is falling deeper and deeper into crisis," an Asian diplomat said on condition of anonymity.

"But it cannot afford to give up the nuclear weapons, which are its main bargaining point."

In a sign of the diplomatic minefield that the United States has been going through in its dealings with North Korea in the past six decades, an aide accompanying Bosworth was seen carrying a copy of "How Enemies Become Friends," a recent book by Charles Kupchan, a former adviser to President Bill Clinton, into the meeting.

Kupchan champions the cause of U.S. engagement with its enemies in the book.

Exchange Rate Behind UAE Rafale Balk: Dassault

PARIS - The price resistance from the United Arab Emirates on the Rafale fighter jet stems from an unfavorable euro-dollar exchange rate, but talks on the French aircraft continue, Dassault Aviation executive chairman Charles Edelstenne said July 28.

The UAE's discussion with Lockheed Martin about a potential purchase of additional F-16 fighters was "not a negative sign," Edelstenne told a press conference on the company's results for the first half of the year.

"Talks are going on," he said.

But with the euro at $1.40, the Rafale's sale price was boosted by the currency exchange rate, Edelstenne said. Dassault could not cut prices by 40 percent to offset the weaker dollar.

"I make Mirages, not miracles," he said.

The euro was trading at $1.43 in early afternoon, with the dollar under severe pressure from the U.S. government impasse on raising the debt-ceiling limit ahead of the Aug. 2 deadline.

Edelstenne refused to disclose the unit price of a Rafale, but he said an export purchase generally involves a political decision to pay a "price premium" that granted "independence of action." As the Rafale is built in France, reflecting a strategic decision on sovereignty, its costs are in euros, making it more expensive than an American fighter aircraft sold in dollars.

On the French government's July 20 decision to start negotiations with Dassault on a supply of the Heron TP medium-altitude long-endurance (MALE) UAV, Edelstenne said this meant sustaining a French design capability in military aircraft instead of paying for the "Messerschmitt design office" in EADS.

Edelstenne said in picking OHB over EADS, Germany made similar national selections in its space procurement.

Asked what the significance was in selecting Dassault as supplier of an interim MALE UAV, Edelstenne said the choice showed a determination to maintain a French national capability in building combat aircraft, as the next manned fighter jet would not enter service for another 30 to 40 years.

The negotiations would determine what sensors and communications payloads would go on the Israeli Aerospace Industries' UAV air vehicle, which is intended to provide an interim solution until the planned Anglo-French new generation MALE UAV enters service, expected in 2020.

IAI has agreed to disclose technical information on the Heron TP, which will be adapted to French requirements, including the ability to carry weapons, Edelstenne said.

The interim MALE UAV could have a service life of around 10 years and could overlap with the new Anglo-French air system, a company executive said.

On an asset swap under negotiation between Safran and Thales, Edelstenne said the airplane engine and equipment maker was holding up a deal by saying "no" to each new proposal from the electronics company. That forced Thales into a corner, he said.

"The valuation levels are a bit extraordinary," Edelstenne said.

Dassault signed an agreement with the government on an asset swap when it took its 26 percent stake in Thales, covering inertial navigation, onboard electricity generation and optronics, Edelstenne said.

Safran's sales in optronics are worth around 600 million euros, and if the business were put into Thales, that would make the electronics company second or third in the world market for electro-optics.

At the Paris Air Show in June, French President Nicolas Sarkozy said the government would impose a settlement if industry failed to reach a voluntary agreement.

Edelstenne said he was "very satisfied" with the Thales first-half results, which were released on July 27. The results displayed early effects of the Probasis restructuring plan and improved management of large programs and contract negotiations, he said.

Dassault reported a 35 percent fall in net profit to 129 million euros from 197 million euros a year ago, as sales dropped 34 percent to 1.32 billion euros from 1.99 billion euros.

The sales and profit slide came from lower deliveries of the Falcon business jet, with a delay in shipment of the Falcon 7X into the second half.

Orders declined to 95 million euros from 99 million euros.

On a production rate of one unit per month, Dassault has delivered six Rafale jets so far this year out of 180 total orders to date.

Privately, company executives expect the French government to stretch out future Rafale orders because of expected defense budget cuts, especially if export contracts are won.

Besides the UAE, Dassault hopes to sell the Rafale to India, Brazil and Switzerland. India is holding to its timetable to buy 126 medium-range combat aircraft, and the Swiss government has shown renewed interest in replacing its F-5 fighters.