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.

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.

Euro Hawk Arrives in Germany After Flight From U.S.

LONDON - The first Euro Hawk unmanned air system for the German armed forces has flown into the EADS air base at Manching after a 22-hour flight from California. The signals intelligence (SIGINT) platform should eventually replace a capability lost last year when the last of a fleet of Atlantic aircraft were retired.
Northrop Grumman's high-altitude, long-endurance platform will be fitted out with sigint sensors developed by EADS subsidiary Cassidian ahead of the Euro Hawk demonstrator being handed over to the Air Force for flight testing in mid-2012.

The Germans could order another four systems for delivery between 2015 and 2017. The U.S. contractor said July 21 the program and the timings are "tentative."
Nicolas Chamussy, the head of UAVs at Cassidian Air Systems, said the Euro Hawk work "reinforces Cassidian's role as a leader for complex UAS solutions in Europe."
Euro Hawk, a joint venture between Northrop Grumman and Cassidian, is a HALE system based on the RQ-4 Global Hawk. Additional Northrop Grumman machines are expected to be added to European capabilities in the next few years.
NATO is expected to contract for six Block 40 Global Hawks later this year to meet the Alliance Ground Surveillance requirement.

Merkel Defends Silence on Reported Saudi Tank Deal

BERLIN - German Chancellor Angela Merkel on July 8 defended her government's silence on a reported secret deal to sell hundreds of tanks to Saudi Arabia, and said she was committed to democracy in the region.
"Deliberation and decisions by the federal security council are secret for good reason," she told the daily Mittelbayerische Zeitung, referring to the panel including the chancellor and top ministers that rules on arms exports.

Saudi Arabia is reportedly about to buy 200 Leopard-2s, Germany's main battle tank, which is also produced under license in Spain, for a multi-billion-euro sum.
Germany, which for two decades has declined to sell such heavy weapons to Saudi Arabia because of concerns over human rights and fears for Israel's security, has refused to officially confirm the reports citing a secrecy policy on such deals.
Opposition politicians and even members of Merkel's ruling center-right coalition have slammed the reported tank sale, particularly in light of democratic uprisings throughout the Middle East.
Selling tanks to Saudi Arabia at a time when that country has sent armored vehicles to help put down a peaceful protest movement in neighboring Bahrain is "a slap in the face for freedom movements in the whole region," Social Democrat parliamentary deputy leader Gernot Erler said this week.
Merkel insisted in the interview that her administration was "of course doing its part to continue to support democratic development in North Africa and the Middle East together with our partners."
When asked about criticism of Berlin's secrecy on a delicate issue, she said her administration was following official guidelines.
"Transparency about exported weapons and other armaments is assured because every year a detailed arms export report is published which is also given to the Bundestag" lower house of parliament, she said.
However, a leading deputy from the Free Democrats (FDP), junior partners in Merkel's coalition, said the government should go on the offensive now that the country was openly debating the issue.
"It damages the government and it damages Germany too when only those who oppose (the sale) are heard," the foreign policy spokesman of the FDP's parliamentary group, Rainer Stinner, told the daily Rheinische Post.
"The chancellor and the affected ministers cannot keep hiding behind the sign reading 'secret'."
Opposition deputies were to present motions to the Bundestag on July 8 demanding Berlin call off the deal. The Green party said it would file a lawsuit against unnamed executives at the tank manufacturer Krauss-Maffei Wegmann in a move to force the German government to shed light on the matter.
A parliamentary whip, Volker Beck, told the daily Sueddeutsche Zeitung that the suit was based on suspicion that selling the tanks to Riyadh would violate arms export laws.

German Politicians Angered Over Saudi Tank Sale

BERLIN - German opposition parties and even some members of the ruling parties were up in arms Tuesday over reports that the government wants to overturn its export rules and sell hundreds of tanks to Saudi Arabia.
This followed press reports that Saudi Arabia is about to buy 200 Leopard-2s, Germany's main battle tank that is also produced under license in Spain.

Germany has declined for more than 20 years to sell such heavy weapons to Saudi Arabia because of concerns over human rights and fear for Israel's security.
To date, the government has refused to confirm the reports and said such matters are discussed confidentially within the federal security council, which determines export guidelines.
"The federal security council meets secretly. Therefore we can comment neither about its deliberations, nor about its decisions," foreign ministry spokesman Andreas Peschke has told reporters.
But opposition leaders have demanded a parliamentary debate on the matter.
"The government must explain itself at some stage," Green parliamentary leader Juergen Trittin told ARD television on July 5.
"Such decisions cannot be taken at a time when people are fighting for democracy in the Arab world," he added.
"And now one's trying to say such heavy weapons can simply be sold to dictators - and that is the case in Saudi Arabia," he added.
"The government's readiness to sell 200 modern German tanks at a time of tension in the near East and the Arab peninsula denotes a frightening lack of judgment," the social-democrat parliamentary deputy leader Gernot Erler told the Welt newspaper's online service.
Such a policy demonstrates that Chancellor Angela Merkel and Foreign Minister Guido Westewelle "only pay lip service to supporting democratic movements in the Arab world," he added.
Selling tanks to Saudi Arabia at a time when that country has sent armored vehicles to help put down a peaceful protest movement in neighboring Bahrain is "a slap in the face for freedom movements in the whole region," Erler added.
The tiny but strategic Gulf archipelago, joined by a causeway to Saudi Arabia, has experienced repeated bouts of unrest between its Shiite majority population and its Saudi-backed Sunni ruling family.
Even in Merkel's government ranks, news of the possible deal has ruffled feathers.
Ruprecht Polenz, a Christian-Democrat who heads parliament's foreign affairs commission, suggested such a sale would go against all previous rules about exporting weapons to countries in turmoil, and even the parliament's Christian-Democrat president, Norbert Lammert, expressed concern about the timing of such a deal given the crackdown in Bahrain, newspapers reported.
The Saudi order for Leopard-2A7+ - a 55- to 62-ton tank equipped with a 120 mm gun - could be worth billions of euros to the companies Kraus-Maffei Wegmann and Rheinmetall, Der Spiegel magazine reported.
The Saudi kingdom has been in talks with the Spanish subsidiary of General Dynamics about buying their version of the Leopard tank, but the major portion of the order would land with the Germans, the magazine suggested.
The Saudis are also in talks with U.S. companies for $60 billion (41 billion euros) worth of defense equipment that would become the largest U.S. contract ever.
In an editorial, Die Welt newspaper defended the government's bid to sell the tanks and said Saudi Arabia needed to be able to defend itself against Iran.
With Iran threatening to acquire nuclear weapons "the only way to avoid a nuclear arms race (in the region) is to help the Saudis develop a strong conventional deterrence," it said.

$2.7B Turk Sub Deal With Germany Takes Effect

ANKARA - A 2 billion-euro ($2.7 billion) deal between Turkey's arms procurement agency and Germany's ThyssenKrupp Marine Systems for the joint manufacture of six submarines formally took effect July 1, the German group announced.
"The 2 billion-euro order for six U214 submarine material packages placed with ThyssenKrupp Marine Systems by the Republic of Turkey has entered into force with receipt of the advance payment," the group said in a statement July 1.

"As a longstanding partner and supplier to the Turkish Navy, ThyssenKrupp Marine Systems can now begin executing the order," the statement said. "The order will contribute to securing employment at [ThyssenKrupp's] HDW in Kiel, as well as at many subcontractors in Germany and Turkey, for the next 10 years."
A major loan deal on the last day of 2010 between German banks and the Turkish Treasury rescued the contract between the Undersecretariat for Defense Industries, the Turkish government's procurement agency, and German shipyard Howaldswerke Deutsche Werft (HDW), Turkish procurement officials said earlier. Since then, the two sides had discussed the loan's conditions, and that process ended successfully in late June.
Turkey and HDW, an affiliate of the ThyssenKrupp conglomerate, originally signed the submarine contract in July 2009, but no price was disclosed at the time. Turkey originally selected HDW over French and Spanish rivals in the summer of 2008, when officials said the German offer was worth 2.5 billion euros.
Renegotiations over price and a clear road map for Turkish local participation led to a final agreement on a price reduction of more than 500 million euros, bringing down the program's final cost to about 2 billion euros.
Under the Turkish modern submarine program, the non-nuclear vessels will be built at the Navy's Golcuk Shipyard on the Marmara Sea coast near Istanbul. The submarine program will become Turkey's largest defense modernization project after a planned $13 billion deal to buy 100 next-generation F-35 Joint Strike Fighters for the Air Force.
Ankara is hoping the U214 submarines will enter service shortly after 2015, two years later than the original schedule when the program was launched a few years ago.
With a decision to proceed, Turkey scrapped a modernization plan for its older Ay-class submarines, also built by HDW.
Turkey also is building its own corvette-type ships and hopes to produce its own frigates by the end of this decade. Several Turkish shipyards are producing patrol boats, coast guard boats and other amphibious platforms.

Industry Fronts Money for Typhoon Radar R&D

Industry is funding development of the Captor-E active electronically scanned array radar destined for the Eurofighter Typhoon because the four governments in the fighter program don't have the money available at this stage.
Selex Galileo chief executive Fabrizio Giuliani told reporters June 8 that members of the Euroradar consortium and Eurofighter would provide "pre-funding, not self-funding."

The Italian executive said that by the expected signing of a letter of intent backing the AESA program at the Paris Air Show later this month the governments of Britain, Germany, Italy and Spain are "committed to pay back Eurofighter and Euroradar what we anticipate [spending]."
Euroradar, which is led by Selex, also involves EADS and Indra. Eurofighter is the Typhoon management organization operated by BAE Systems, EADS and Finmeccanica.
Bob Mason, the executive vice president for sensors and airborne systems at Selex Galileo, said finance was not an issue. The important thing was to get the Eurofighter nations officially committed to the program through the letter of intent, Mason said.
"We understand the financial constraints. Finance is not the issue; that is being made available by Eurofighter and Euroradar for full-scale development. The issue is the backing of the governments and that's what the letter of intent will give us. Export customers like India and Japan will be more comfortable with the backing of the Eurofighter governments," he said.
The four nations "will join at the appropriate time when they have the budgets available," he said.
The availability of an AESA radar was a key requirement for the multi-billion dollar competition being run by the Indian government to equip the air force with a multi-role medium weight fighter. Typhoon was downselected recently alongside the Dassault Rafale for the final stages of the competition.
Talks over the releasability of the AESA technology to India is still under debate and depends on the final solution and final negotiations, Mason said.
"We are looking at the manufacturer of certain subsystems in India software transition in terms of modes and bringing new modes into the radar as well," he said.
Mason said they had agreed a "large amount of funding" from the Eurofighter governments through to the first production standard radars scheduled for completion in 2014 for aircraft production the following year.
The executive said Euroradar now had a huge team working on the development at Selex's main development plant in Edinburgh and elsewhere.
Aside from the Captor-E, Selex is also working in the combat aircraft field on a similar AESA radar for the Saab Gripen NG, and is involved in separate technology demonstrator programs funded by the British and Italian governments.

A Flash of Opportunity

ROME - The Via Tiburtina, the old Roman road that heads east out of the Italian capital, is home today to various Finmeccanica outposts. But amid the units of the state-controlled giant stands Elettronica, the small family-run firm that has become a leading light on Europe's electronic warfare scene.
Sixty years after its founding, Elettronica is pushing into a new market it believes will help secure its future: infrared (IR) countermeasures for aircraft that do a better job than flares at playing havoc with the IR guidance systems of shoulder-fired missiles.
"With directional infrared countermeasures [DIRCM], we will be covering transport aircraft, helicopters and VIP platforms ... so we are moving into the world of homeland security," CEO Enzo Benigni said. "We see the market value for DIRCM rising above the 1 billion euro [$1.44 billion] mark."
Elettronica's supply of electronic warfare (EW) systems to large European programs like FREMM frigates, the NH90 helicopter and the Eurofighter Typhoon has allowed it to build revenue from 165 million euros in 2006 to 195 million in 2010. But Benigni knows the likes of the Typhoon program are due to wind down, and has been seeking new opportunities.
The firm's new DIRCM product, the ELT/572, is based on technology initially developed by Elbit Systems. Elettronica jointly funded the program and is now co-owner, divvying up potential markets with the Israeli company.
"Elbit proved to have the most advanced know-how to develop and industrialize the DIRCM, based on fiber laser, dual-color principles," Benigni said.
South America, India and the Middle East are key markets, he said. But the launch customer is the Italian Air Force, which has signed a 25 million euro contract to install five ELT/572 systems, each based on two turrets, on C-27J and C-130J transport planes and AW101 utility helicopters.
The ELT/572 also may be flown on the Air Force's new 767 tankers, P180 VIP/light transport and ATR maritime patrol aircraft and the Army's new Chinook helicopters.
Gen. Giuseppe Bernardis, chief of the Air Force, has said that Northrop Grumman DIRCM was unavailable in time for military export.
With its own product, Elettronica can exploit the demand for systems that lack U.S.-made components subject to Washington's International Traffic in Arms Regulations. The company also may stress the technical advantages the ELT/572 offers, with officials citing a potentially faster reaction time between the missile warning alert and the laser flash.
The new countermeasures work follows a series of joint initiatives planned with Israeli industry, a useful partnership for Italian industry after it was excluded from EW workshare on the international F-35 Joint Strike Fighter.
"Our work on Eurofighter helped us evolve to a level that gives us an undisputed technological advantage," Benigni said.
If Italy decides to acquire a new signals intelligence aircraft and opts for Israeli systems, he said, Elettronica would be a partner.
"And if Italy sells an armed version of the M346 jet trainer to Israel, we would be exploiting that opportunity, too," the CEO said.
The firm already has a strong presence in the United Arab Emirates, with business worth 1 billion euros contracted since the 1980s and a local joint venture. Electronic warfare, electronic support measures and electronic intelligence systems have been supplied for Dash-8 maritime patrol aircraft, new ships, including Baynunah corvettes, ground systems and Mirage 2000-9 fighter jets.
Orders from outside Europe now account for 9 percent of the firm's revenue, a figure Benigni said he would like to see rise to 40 percent within 10 years, alongside an overall revenue increase of 5 percent per year.
Benigni said he is encouraged by the Italian government's newfound desire to back defense exports.
"The [Ministry of Defense] is really assisting us, which is a huge change from the past," Benigni said. "Marketing in India requires a good deal of political support, particularly in the fighter contest, where I would not exclude the U.S. fighters re-entering the competition."
Founded by Benigni's uncle, Elettronica employs the CEO's son and daughter, suggesting the family tradition will continue. Stakes held by Finmeccanica (33 percent) and French company Thales (32 percent) are stable, he said. That leaves Benigni the majority shareholder.
DIRCM apart, Benigni said a second trend to watch is the combining of different emitters in one turret, which is attached to an aircraft's exterior.
Elettronica signed up in 2005 to an Italo-Swedish program to combine radar, EW and communications into one system with no interference. Though limited funding for research into the Multifunctional Active Electronically Scanned antennas was in the Italian defense budget last year, Benigni said funding is stalled.
"This was a missed opportunity," he said. "We know it's the future, and the first country to do it will have big advantages."
In the meantime, Elettronica will continue to benefit from ongoing work on the defensive aids systems it supplies for the Typhoon. Last September, a 400 million pound ($656 million) deal was handed to a European consortium, including Elettronica, to supply the Praetorian self-protection system for 112 Tranche 3A Typhoons.
But with no more Typhoon buys in the cards from Britain, Germany, Italy and Spain, what has been a solid revenue stream looks set to wind down. Benigni said a large part of the 80 percent of Elettronica revenue that comes from European programs came from Eurofighter.
"Elettronica is ... dependent on Eurofighter but has developed other technologies which are bearing fruit and can therefore maintain a good position in the market," said Michele Nones, head of the security and defense department at Rome think tank Istituto Affari Internazionali.
"Having Thales and Finmeccanica as shareholders could present problems since they are competitors, but they tend to balance each other out," Nones said. "And the firm has the attention of the Italian government since it is considered strategic. Italy believes it needs EW capability."
With a focus on engineering, Benigni said Elettronica's small size and niche status is an advantage.
"A big company does not have the same mentality. The Israelis have shown that," he said.
Elettronica recently fought off tough Israeli competition to win a contract for a naval electronic support measures system from an East Asia customer, the CEO said.
Benigni said the victory came thanks in part to Elettronica's focus on what he called "the science of architecture" - the arrangement of components in an electronic system that leaves room for growth.

About Elettronica

2010 revenue: 195 million euros.
Employees: 754.
Sectors (percentage of total revenue):
■ Fighter aircraft (44).
■ Product support (35).
■ Naval vessels (8).
■ Helicopters/maritime patrol aircraft/transport aircraft (12).
■ Land (1).

Chinese Military Build-Up No Threat: Official

LONDON - China's military build-up poses no threat to the world, even as the army modernizes to meet the challenges of an "informationalized age", a top Chinese army official said June 1.
The comments by Gen. Zhang Qinsheng, deputy chief of the general staff of the People's Liberation Army, come amid longstanding Western claims that hackers inside China are behind a range of cyberattacks.

"China has always been embarking on peaceful development and the development of China is by no means a threat," Zhang told a conference on land warfare at the Royal United Services Institute, a defense think-tank in London.
"China does not pursue hegemony. We will not do it even when we grow stronger. This is not only the basic state policy, but also a solemn commitment to the people of the world."
In March, China announced that its defense budget would rise 12.7 percent in 2011 to 601.1 billion yuan ($91.7 billion), fuelling regional concerns about Beijing's military build-up in addition to its economic clout.
Addressing an audience of senior military officers from countries including the United States, Britain and Brazil, Zhang said China's armed forces needed "reform" to win increasingly high-tech conflicts.
"The (Chinese) army has to be modernized to fight modern wars in an informationalized age. This is a major challenge facing us," said Zhang, speaking through an interpreter.
He said China's aims had always been defensive, but added: "The goal of modernization of our army is to transform it from a regional defense force to an all-theatre maneuvering force."
Zhang's words come just days after Chinese state media reported that the military had set up an elite Internet security task force tasked with fending off cyber-attacks.
But the Global Times newspaper denied that the initiative, in which the military has reportedly invested millions of dollars, is intended to create a "hacker army", saying that China was relatively weak in cyber-security.
The United States, Australia, Germany and other Western nations have long alleged that hackers inside China are carrying out a wide-range of cyber-attacks on government and corporate computer systems worldwide.

China's PLA Bans Soldiers From Social Media

BEIJING - Making online friends could play into the hands of the "enemy", according to China's People's Liberation Army, which has said its roughly 2.3 million soldiers will be banned from using social media.
The world's largest military force has notified service men and women that it will strictly enforce the ban to "safeguard military secrets and the purity and solidarity" of the PLA, state media said this week.

The People's Liberation Daily, the armed forces' official newspaper, said passing on personal details such as a soldier's address, duties or contact details could risk revealing the location of military bases.
It added that particular risks exist in users posting photos of themselves, such as during training, which could divulge military capabilities and equipment.
The ban was included in regulations announced last year that proscribed soldiers from launching websites or writing blogs, the paper added.
But in a sign that the ban was apparently being ignored in a country where social media are wildly popular, the military brass has taken the step of re-emphasizing the restriction, warning of a "grim struggle" on the Internet.
Officers and soldiers must be made to understand the "real dangers" of making friends online and to "strengthen their knowledge of the enemy situation," it said, without elaborating.
China has nearly half a billion online users, according to official figures, and Chinese-language social media sites similar to Facebook and Twitter - which are blocked by the country's censors - count hundreds of millions of users.
The newspaper last week said China's military has set up an elite Internet security task force tasked with fending off cyberattacks, while denying that the initiative is intended to create a "hacker army."
The United States, Australia, Germany and other Western nations have long alleged that hackers inside China are carrying out a wide range of cyberattacks on government and corporate computer systems worldwide.

China Sets Up Military Cyber-Warfare Team: Report

BEIJING- China's military has set up an elite Internet security task force tasked with fending off cyberattacks, state media reported May 27, denying that the initiative is intended to create a "hacker army."
The People's Liberation Army has reportedly invested tens of millions of dollars in the project, which is sure to ring alarm bells around the world among governments and businesses wary of Beijing's intentions.

"Cyber attacks have become an international problem affecting both civilian and military areas," the Global Times quoted China's defense ministry spokesman Geng Yansheng as telling a rare briefing this week. "China is relatively weak in cyber-security and has often been targeted. This temporary program is aimed at improving our defenses against such attacks."
The 30-member "Cyber Blue Team" - the core of the PLA's cyber force - has been organized under the Guangdong military command in the country's south and will carry out "cyber-warfare drills", the newspaper said.
The United States, Australia, Germany and other Western nations have long alleged that hackers inside China are carrying out a wide-range of cyberattacks on government and corporate computer systems worldwide.
But in a commentary, the Global Times hit out at "some foreign media" for interpreting the program as a breeding ground for a "hacker army".
"China's capability is often exaggerated. Without substantiated evidence, it is often depicted by overseas media as the culprit for cyberattacks on the US and Europe," the paper said. "China needs to develop its strong cyber defense strength. Otherwise, it would remain at the mercy of others."
China's military has received annual double-digit increases in its budget over much of the last two decades as it tries to develop a more modern force capable of winning increasingly high-tech wars.
In 2007, the Pentagon raised concerns about a successful Chinese ballistic missile test strike on a satellite. That weapon could be used to knock out the high-tech communications of its enemies.
U.S. computer firm McAfee said in February that hackers from China have also infiltrated the computer networks of global oil companies and stole financial documents on bidding plans and other confidential information.
According to US diplomatic cables obtained and published by WikiLeaks, the United States believes that China's leadership has directed hacking campaigns against U.S. Internet giant Google and Western governments.
In one cable, the U.S. Embassy in Beijing said it learned from "a Chinese contact" that the Politburo had led years of hacking into computers of the United States, its allies and Tibet's exiled spiritual leader, the Dalai Lama.

Pentagon Agency Halts Kill Vehicle Production

The U.S. Missile Defense Agency has suspended production of the latest version of the Exoatmospheric Kill Vehicle (EKV), part of the Ground Based Midcourse Defense (GMD) anti-ballistic-missile system, while it looks into a 2010 flight test failure, said the agency's director, Army Lt. Gen. Patrick O'Reilly.
In May 25 testimony before the Senate Appropriations Committee's defense panel, O'Reilly also said a plan to shift program oversight of the Army's Patriot air and missile defense system to MDA could be in place as soon as 2013.

The GMD interceptor missile, which failed during the final moments of a December test, was an upgraded version of the currently deployed GMD system. This upgraded version includes a new EKV, the Raytheon-built component that intercepts an incoming missile in space.
The suspension will last until required design modifications are completed and verified, and the agency has diverted 2011 GMD funding to expedite the modifications.
The GMD program had two test failures in 2010. The first involved EKV quality control.
"We have identified and confirmed that we had an error in the assembly process of the new EKV," O'Reilly said during the May 25 hearing.
He said the problem was fixed by revising the factory's inspection processes.
O'Reilly said the agency has seen no problems in older-model EKVs currently deployed on older GMD systems, nor are there problems with the GMD booster.
As for the December test, O'Reilly did not say what the problem was.
"We have completed almost all of the ground testing to confirm what the problem was and have identified that problem," he said. "We're now in the process of correcting the problem, confirming it on the ground, but the nature of these type of problems make it very difficult to confirm in ground testing."
Investigators have found "one flaw, which … we are aggressively working to resolve it and prove it," O'Reilly said.
MDA will conduct "extensive ground testing" this summer and a non-intercept test with an upgraded EKV, and it will repeat the failed intercept test in 2012.
A Raytheon spokesman deferred comments to Boeing, the GMD program's prime contractor. A Boeing spokeswoman was not immediately available for comment.
In March, Boeing's top program official said he believes the problem was solely with the EKV.
Norm Tew, a Boeing vice president and the company's GMD program director, said during a March briefing that the December test was "the cleanest, most picture-perfect flight" conducted "up until the last few seconds."
GMD is designed to protect the United States from long-range ballistic missiles, particularly from North Korea and Iran.

Patriot Transfer

The plan to transfer the Patriot program, first discussed in April 2010, would relieve the Army of certain budgetary responsibilities while providing more stable funding to the program, service officials said at the time.
"The particular proposal we have made for the Army's case is literally to take their leadership that does currently oversee Patriot," O'Reilly said. "They would become part of the Missile Defense Agency, but still … have rating responsibilities to the Army."
The transfer is still being deliberated, and a final decision has not been made, he said.
The Army and MDA also had considered transferring the Medium Extended Air Defense System (MEADS) during the last year. But since then, the Defense Department has announced that the MEADS program would come to an end in 2013 because the United States will not move forward with production.
MEADS also involves Germany and Italy. The program's prime contractor is MEADS International, a consortium of Lockheed Martin and MBDA, the European missile company.
MEADS was planned to replace the Patriot system. Pentagon officials have said that due to MEADS delays, the Patriot system needed upgrades. But the Pentagon could not afford to upgrade Patriot and buy MEADS at the same time.

Russia Softens Stance on U.S. Missile Shield

MOSCOW - Russia on May 21 said it may be ready to drop its objections to the U.S.-backed missile defense shield for Europe if it receives a formal security pledge from the United States.
The comments by Foreign Minister Sergei Lavrov suggest an easing of Moscow's position and precede a meeting between U.S. President Barack Obama and his Russian counterpart on the sidelines of G8 summit in France next week.

Lavrov said during talks with the German and Polish foreign ministers that missile defense negotiations with the United States and NATO were "progressing but slowly."
"We are proposing, and asking for it to be put in writing, that the missile defense system for Europe is not directed against any of the participating states - not NATO, Russia or other European states," Lavrov said.
"We are told there is no need to get this down in writing because this is inherently the case," he told a televised news conference.
"But if it is inherently not aimed against Russia, why not write [that] down?" he asked.
Lavrov's nuanced language appears aimed at easing tensions between Washington and Moscow on the eve of the Group of Eight summit talks May 26 and 27.
Russia previously sought veto power in the system's operation - a subject not broached by Lavrov.
Russian President Dmitry Medvedev used a closely watch pre-election television appearance this week to warn the United States of a return to the Cold War should the shield be constructed despite Russia's objections.
And the chief of the military's general staff warned May 20 that the shield's deployment could lead to a "mad arms race."
Russia's tough talk and decision to test two heavy nuclear missiles in the past month underscore a fear in Moscow that the Obama administration is paying lip service to the "reset" in relations announced by Washington in 2009.
The United States argues that the shield is meant only to protect Europe from nations such as Iran but has said nothing about Russian security safeguards.
Analysts note that Moscow is primarily worried the system will leave a permanent stamp on the security map of Europe and formalize the reduced role Russia plays in the post-Cold War world.
The shield could theoretically be expanded to sizes that one day neutralize Russia's shrinking nuclear arsenal, or transformed into an offensive weapon that target its soil.
"This issue is so serious that we cannot ignore a single detail," Lavrov said.
But he stressed that Moscow saw itself joining the systems under the right conditions.
Russia envisioned "a joint concept and architecture of a future European missile defense system," Lavrov said.
"We hope that we will be able to resolve these issues - at least at the expert level."

Libyan Rebels Say Italy Will Provide Weapons

BENGHAZI, Libya - Libya's rebel government said May 7 that Italy has agreed to supply it with weapons to fight against Moammar Gadhafi, but government sources in Rome said only "self-defense material" would be sent.
"They will supply us with arms and we will receive them very soon," Abdul Hafiz Ghoga, the vice chairman of the National Transitional Council, told reporters in the rebel capital Benghazi.

Ghoga said military officers from the rebel council had travelled to Italy, Libya's former colonial ruler, and reached an agreement with officials there for the supply of arms.
He gave no details on what weapons would be supplied.
If the arms supply goes ahead, that would make Italy the first European nation to provide weapons to the badly-armed and poorly-trained rebel force that has led the fight against Gadhafi since the uprising began in mid-February.
Foreign ministry sources in Rome said that Italy has agreed to send "self-defense material" to the rebels following agreements last month within the framework of UN Security Council resolution 1973.
They said these would not be assault weapons but gave no further details.
Italian Foreign Minister Franco Frattini said last month during a visit to Rome by NTC chairman Mahmud Jibril that Italy was thinking of sending "night-vision equipment, radars and technology to block communications."
Italy, France and Britain have each sent a small number of military advisors to Benghazi to help organize the ragtag rebel force.
Rome last month said it wanted the international community to consider arming the rebels under UN Resolution 1973, which authorized the use of all means to defend civilians.
U.S. Secretary of State Hillary Clinton and British Prime Minister David Cameron have both said they believe U.N. resolutions on Libya allow arming the rebels.
But other nations in the NATO alliance that is enforcing a no-fly zone over Libya and bombing Gadhafi's military have opposed arming the rebels.
Belgium came out against the idea and Germany has insisted there could be "no military solution" in Libya.
China and Russia, which hold permanent seats on the United Nations Security Council, have argued that NATO's bombing campaign may already be stretching the U.N. mandate.
The head of the rebel council said last month that "friends" had already supplied the insurgents with arms, without saying which countries had done so or what weapons they had provided.
Russia had been a traditional supplier for Libya since Soviet times but the lifting of a previous European Union arms embargo in 2004 opened up a new market to European contractors, who rushed into the oil-rich North African state.
The most vocal backer of lifting the embargo was Italy, which quickly became one of the top European arms suppliers to the Gadhafi regime before the uprising began in February.
France, Malta, Germany, Britain and Portugal also secured lucrative arms contracts with Tripoli.

A400M Engine Wins Safety Certification

LONDON - The turboprop engine powering the Airbus A400M airlifter has been certified by the European Aviation Safety Agency (EASA).
Europrop International (EPI), the four-company consortium responsible for developing and building the TP400-D6 engine, said the milestone came after a test campaign that included more than 8,000 flight hours and more than 4,000 hours of ground testing.

The May 6 announcement came just days after EPI said it had signed an amended contract with Airbus Military settling outstanding issues related to the much-delayed and over-budget transport plane.
EPI involves partner companies Rolls-Royce, Snecma, MTU Aero Engines and Industria de Turbo Propulsores.
In a statement, EPI said the TP400 is the first large turboprop certified by EASA and the first military engine to be cleared by the agency to civil standards from the outset. At 11,000 shaft horsepower in a three-shaft configuration, the TP400 will be the most powerful turboshaft engine to enter service in the West.
Military certification is expected next year ahead of A400M deliveries getting underway to lead customer France around the turn of the year.
Airbus Military has orders from seven European countries for 170 aircraft, with an additional four being destined for export customer Malaysia.
The seven partner nations in the program are Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.

S. Korea Develops Vertical Launch Tubes for Subs

SEOUL - A top shipbuilder in South Korea has developed a vertical launching system (VLS) to be installed on heavy attack submarines that will be deployed after 2018, according to procurement and industry officials here.
Daewoo Shipbuilding & Marine Engineering, the world's second-largest shipbuilder, developed the VLS in cooperation with the state-run Agency for Defense Development (ADD), officials from Daewoo and ADD said.

Daewoo, which built the 1,300-ton, Type-209 submarine with technical cooperation from HDW of Germany, is a subcontractor for the 3,000-ton KSS-III submarine to be jointly designed and built with its rival Hyundai Heavy Industries, the world's biggest shipyard.
The submarine VLS comes on the heels of the development of the ship-launched Cheonryong missile, which has a range of 500 kilometers. Cheonryong is a modified variant of the surface-to-surface Hyunmoo III-A ballistic missile co-developed by the ADD and LIG Nex1, a precision electronic weapon maker.
The Cheonryong is said to have also been modified to be installed on the 1,800-ton Type-214 submarine built by Hyundai with technical assistance from HDW.
Currently, South Korea's Navy operates nine Type-209s and three Type-214 subs, all of which are diesel- and electric-powered.
Beginning in 2018, Seoul plans to build 3,000-ton KSS-III subs fitted with domestically built submarine combat systems jointly developed by the ADD and Samsung Thales.

NATO Vows To Stay In Afghanistan

BRUSSELS, Belgium - NATO warned Monday that its mission in Afghanistan was far from over despite the death of Osama bin Laden as war-weary Europeans pile pressure on governments to bring troops home quickly.
World leaders hailed bin Laden's killing Sunday by U.S. commandos inside Pakistan as a victory against al-Qaida, but they also warned that the battle against terrorism was far from over.

"As terrorism continues to pose a direct threat to our security and international stability, international cooperation remains key and NATO is at the heart of that cooperation," said NATO chief Anders Fogh Rasmussen.
"NATO allies and partners will continue their mission to ensure that Afghanistan never again becomes a safe haven for extremism, but develops in peace and security," he said.
Some 140,000 NATO-led troops are in Afghanistan amid growing fatigue in Europe over the war, launched by the United States to hunt down al-Qaida and its Taliban hosts in the wake of the Sept. 11 attacks.
NATO has decided to begin handing over security responsibility to Afghan forces this year, with the aim of ending the combat mission by 2014, although the alliance insists that it will stand by Kabul's side for the long haul.
Francois Heisbourg, special adviser at the Foundation for Strategic Research in Paris, said calls in Europe for troop withdrawals will only grow after bin Laden's death.
"If we are looking for an exit door, it is now or never," Heisbourg said. "Politically and strategically, the intervention in Afghanistan was at the start about bin Laden. With him gone, it becomes harder to justify this military presence, regardless of the situation on the ground," he said.
NATO officials insisted that the war is about bringing stability to Afghanistan, not just about al-Qaida.
"NATO's mission in Afghanistan is not linked to one enemy. It is linked to stability and bin Laden was not the only obstacle," said an alliance official. "His death will not suddenly resolve everything."
A NATO military official acknowledged that there could be some "temptations" to pull troops out, but that European nations still face the threat of extremists entering their countries.
Britain, the second-largest contributor to the mission after the United States with 9,500 troops, warned that al-Qaida was still "in business" and that its chief's death would not mean an end to the campaign.
"The work in Afghanistan will continue to be phenomenally difficult and must go on. So it would be wrong to draw the conclusion that suddenly we have solved a mass of the world's problems," said Foreign Secretary William Hague.
NATO allies, however, are keeping an eye on the exit sign in Afghanistan.
The Netherlands withdrew its combat troops last year and decided to send police trainers this year. Canada plans to switch to a training mission this year while Poland has said it wants to do the same in 2012.
Lawmakers in Germany, the third-largest contingent with 5,000 troops, agreed in January to extend the mission by 12 months but with a clause calling for them to begin coming home at the end of the year, if conditions permit.
With 100,000 American troops in Afghanistan, U.S. President Obama hopes conditions allow him to begin drawing down troops in July, while British Prime Minister David Cameron says London may also begin a withdrawal this year.
Constanze Stelzenmueller, an expert at the German Marshall Fund of the United States, said bin Laden's death will not have an impact on the debate over troop withdrawals since al-Qaida was no longer a central player there.
"Afghanistan is now about stabilizing the country so that it doesn't become another failed state," she said. "There is by now a pretty general interest in Afghanistan not imploding and I think that's the case that ought to be made to the larger public."

India Shortlists Rafale, Eurofighter for Jet Deal

NEW DELHI - India has shortlisted Dassault's Rafale and the Eurofighter Typhoon for a $12 billion dollar fighter jet deal, cutting out U.S. bidders from one of the largest military contracts of recent years.

A Eurofighter Typhoon aircraft (top) and a Dassault military jet Rafale are seen. India shortlisted the Rafale and the Typhoon for a $12 billion fighter jet deal on April 28, cutting out U.S. giants Boeing and Lockheed, sources said. (AFP FILE PHOTOS / PIERRE VERDY / PAUL ELLIS)

The U.S. embassy in New Delhi confirmed April 28 that Lockheed Martin's F-16 and Boeing's F/A-18 Super Hornet had both been ruled out of the running for India's planned purchase of 126 multirole combat aircraft.

Ambassador Timothy Roemer, who announced separately April 28 that he was resigning his post for personal reasons, said the U.S. government was "deeply disappointed" by the decision.
The long-delayed fighter jet deal has seen fierce competition between Boeing and Lockheed Martin, Sweden's Saab AB, France's Dassault Aviation, a European consortium with its Eurofighter Typhoon and the Russian makers of the MiG 35.
It was also the object of intense lobbying during visits to India last year by U.S. President Barack Obama, French President Nicholas Sarkozy and Russian President Dmitry Medvedev.
"It is confirmed Eurofighter and Rafale have been selected and the remaining four are off," a senior Indian defence ministry official told AFP.
"The grounds for their rejection have been individually conveyed,: said the official, who declined to be identified.
He added that the government hoped to sign the final fighter deal by March 2012.
Saab AB confirmed April 27 that it had been notified its JAS-39 Gripen fighter was no longer in contention.
The Eurofighter is made by the four-nation EADS, representing Germany and Spain, Britain's BAE Systems and Italy's Finmeccanica.
The contract includes the outright purchase of 18 combat aircraft by 2012 with another 108 to be built in India.
India, the biggest importer of military hardware among emerging nations, issued the request for proposals to the six firms in 2007 and trials of the aircraft competing for the deal began a year later.
In his statement, Roemer said he had been "personally assured" at the highest levels of the Indian government that the procurement process for the multirole fighter "has been and will be transparent and fair."
The procurement of the fighter jets is a key part of India's military modernization program, aimed at securing its borders against its traditional and emerging rivals Pakistan and China.
International consultancy firm KPMG estimates New Delhi will hand out military contracts worth $112 billion by 2016.

India Eyes German Help on Sub Upgrade

NEW DELHI - Construction delays to four French-designed submarines have led India to reverse an 11-year-old decision and seek German help to upgrade four older subs.
Estimated to cost about $500 million, the upgrade of the four HDW T-1500-class subs will replace their weapon control systems, data links, torpedoes and missiles. The Indian defense ministry wants the German submarines to be upgraded at Indian facilities with technical assistance from HDW Germany.

The Indian Navy has seen its fleet of usable submarines shrink from 21 in the 1980s to 14 today, while the Chinese sub fleet, including nuclear boats, grows, said a Navy official.
In 2000, when the Navy decided to buy the new Scorpene submarines, it shelved plans to upgrade the T-1500s, which have now been in disrepair for several years.
The French-designed boats, now planned or under licensed production by Mumbai-based Mazagon Docks Limited (MDL), are more than three years behind schedule, a senior defense ministry official said.
Under the $3.9 billion contract signed in 2005 with France, construction of the first three Scorpenes began in December 2006, December 2007 and August 2008. The MDL contract said the six subs were to be delivered annually beginning in December 2012. Instead, the first one is now scheduled for delivery in 2015.
Besides the Scorpene troubles, the Navy is also seeing delays in its $10 billion purchase of air-independent-propulsion submarines, the official said. The world's sub builders are expected to be invited to bid on the job, called Project 75I, in the next three months, the Navy official said.
The T-1500s were built under an $89 million deal signed in 1983. HDW's shipyard in Germany built two of the T-1500s in 56 months apiece; the other two were built under license by MDL, taking 98 months and 116 months respectively.
Later in the decade, New Delhi blacklisted HDW because of alleged bribery in the sub deal. The ban was lifted after an inquest by India's Central Bureau of Investigation ended without resolution.

Germany Shifts AWACS Troops From Libya Ops

BONN - The German parliament voted March 25 to approve the deployment of up to 300 soldiers to support NATO's AWACS (Airborne Warning and Control System) planes over Afghanistan.
The Bundestag vote, by a tally of 407-113, followed Germany's abstention from the U.N. Security Council's vote on March 17 to establish a no-fly zone over Libya. Germany will not take part in military missions in Libya.

"Because we have decided this, we have therefore [decided] to withdraw our mission as part of AWACS" aircraft that are operating in the Mediterranean, said Secretary of State Guido Westerwelle.
This move is a sign that Germany will not be neutral and does not want to endanger its allies in Libya, he said. Without the German presence in Afghanistan, NATO would not have been able to operate its AWACS planes in the Mediterranean, he said.
Germany withdrew its naval vessels from alliance operations in the Mediterranean a couple of days ago, after NATO decided to enforce a weapons embargo against Libya. A frigate, a minehunter and a reconnaissance vessel with about 300 sailors are still in the Mediterranean, but now under national command.
The AWACS mandate is scheduled to run until Jan. 31, 2012, and as long as there is a mandate of the U.N. Security Council.