Finmeccanica Eyes Sell-off of Some DRS Units

ROME - Three years after acquiring U.S. defense electronics firm DRS, Italy's Finmeccanica is planning to sell off some DRS units with total revenue of up to $800 million, managers said March 3.
The selloff at DRS, which saw $4 billion in revenue last year, is part of a move away from "non-core" activities. It will also help cut debt at parent Finmeccanica, CFO Alessandro Pansa told financial analysts in a meeting in London.

Some of the proceeds from the sales will also be plowed back into new acquisitions for DRS, which could be outside the U.S., said CEO Pierfrancesco Guarguaglini.
"If DRS can be more present outside the U.S., it will give the possibility to increase revenue," Guarguaglini said at the meeting.
Guarguaglini has previously said that DRS could benefit from expanding outside the U.S. market, guided by the global know-how of its parent company, Finmeccanica.
Without naming which units might be sold, Finmeccanica said it would seek to divest activities operating in "non-core segments for the group, markets with limited growth opportunities in the near future and markets where DRS lacks scale. …We are currently initiating the process to implement this portfolio optimization by 2011."
Proceeds from the sales would be partly used to help ease Finmeccanica's debt of 3.13 billion euros ($4.32 billion). Finmeccanica is also planning property sales and sale of a stake in energy unit Ansaldo Energia to reduce debt.
Targets for DRS acquisitions have already been identified by Finmeccanica, the company said, and were small to medium-sized. The company is interested in "control of enabling technologies, ease of integration within group products," and that possible acquisitions be in "key DoD programs of interest for the group that can be effectively integrated within DRS and foster growth in strategic areas."

North Korea threatens 'all-out war' over exercises

South Korean and US forces will start annual military exercises, which they say are purely defensive

North Korea has threatened "all-out war" in response to exercises by South Korean and US troops, starting Monday.

The South Korean capital Seoul would be turned into a "sea of flames", the Korean Central News Agency warned.
Pyongyang also said the South should stop sending propaganda leaflets and balloons over the border.
Inter-Korean relations have been extremely tense since 46 South Koreans died when their warship was sunk last March.
Seoul blamed the North for the incident, something Pyongyang denies.
But tensions rose even further after the North shelled a frontier island in November, killing four South Koreans.
Military talks aimed at defusing tensions and restarting dialogue broke down earlier this month.
Annual exercises About 12,800 US troops and some 200,000 South Korean soldiers and reservists will take part in the military exercises, which will last 11 days, according to US and South Korean forces.
Seoul insists the drill is purely defensive but North Korea says it is a pretext for an invasion from the South.
"The army and people of the DPRK [North Korea] will return bolstered nuclear deterrent of our own style for the continued nuclear threat... and our own missile striking action for their vicious attempt to eliminate our missiles," KCNA said.
The North routinely issues war rhetoric against South Korea and the US, but analysts say the risk of clashes is higher when the two sides are not talking to each other.
Earlier, Pyongyang said it would fire across the border if South Korean did not "immediately stop psychological warfare".
The South has been launching balloons, carrying leaflets critical of the Pyongyang regime and news about the recent democracy protests in the Arab world, over the heavily fortified border.
"South Korea is driving the Korean peninsula to overall confrontation, with beefing up anti-republic, psychological plots," the North Korean statement went on.
South Korea has also been attaching food, clothes and radios to the balloons it sends over towards the North.
Pyongyang tightly controls access to the Internet and attempts to block other sources of information about the outside world.

Iran nuclear plans: Bushehr fuel to be unloaded

The Bushehr nuclear plant has been hit by repeated delays

Iran has confirmed it is having to remove nuclear fuel from the reactor at the Bushehr power plant, the latest in a series of delays to hit the project.

On Friday, the International Atomic Energy Agency (IAEA) said it had new information on "possible military dimensions" to Iran's nuclear plans, which Iran says are purely peaceful.
The IAEA will supervise the unloading of fuel from Bushehr, Iran's nuclear envoy Ali Asghar Soltanieh said.
Iran began the Bushehr project in 1976.
Iran's Fars news agency says the fuel is being removed for "technical reasons".
The fuel at Bushehr is being provided by Russia, which built the plant and whose engineers will carry out the unloading, under the supervision of the IAEA.
"Upon a demand from Russia, which is responsible for completing the Bushehr nuclear power plant, fuel assemblies from the core of the reactor will be unloaded for a period of time to carry out tests and take technical measurements," Mr Soltanieh said, according to the semi-official Isna news agency.
Computer virus? The BBC's Tehran correspondent, James Reynolds, says diplomats suggest the entire core of the Bushehr plant is being replaced - potentially a serious problem.
There has been some speculation that the Stuxnet computer virus may be responsible, our correspondent says.
Analysts say Stuxnet - which caused problems at another Iranian enrichment facility last year - has been specially configured to damage motors commonly used in uranium-enrichment centrifuges by sending them spinning out of control.
Some experts believe that the problems at Bushehr call into question the safety and effectiveness of Iran's nuclear facilities as a whole, our correspondent says.
The IAEA report - obtained by the BBC and made available online by the Institute for Science and International Security (Isis) - says Iran is "not implementing a number of its obligations."
These include "clarification of the remaining outstanding issues which give rise to concerns about possible military dimensions to its nuclear programme".
Six world powers are negotiating with Iran over its nuclear programme, and the country is subject to United Nations Security Council sanctions over its refusal to halt uranium enrichment.
Enriched uranium can be used for civilian nuclear purposes, but also to build atomic bombs.

Iran nuclear plans: UN concern over 'military angle'

Iran has always denied its nuclear programme is aiming to develop weapons

The UN's nuclear watchdog says it has received new information on "possible military dimensions" to Iran's nuclear development programme.

The International Atomic Energy Agency (IAEA) said the report raised "further concerns" about Iran's activities.
It urged Tehran to co-operate fully with its investigations in alleged weapons experiments, saying it had not done since 2008.
Iran insists its nuclear programme is entirely peaceful.
The IAEA report was obtained by the BBC and made available online by the Institute for Science and International Security (Isis).
It says Iran is "not implementing a number of its obligations including clarification of the remaining outstanding issues which give rise to concerns about possible military dimensions to its nuclear programme".
The country was also "not providing the necessary co-operation to enable the Agency to provide credible assurance about the absence of undeclared nuclear material and activities in Iran, and therefore to conclude that all nuclear material in Iran is in peaceful activities".
"Based on the agency's analysis of additional information since August 2008, including new information recently received, there are further concerns which the agency also needs to clarify with Iran," says the report.
Among those concerns were that Iran was not engaging with the IAEA on allegations that it was developing a nuclear payload for its missiles.
Six world powers are negotiating with Iran over its nuclear programme, and the country is subject to United Nations Security Council sanctions over its refusal to halt uranium enrichment.
Enriched uranium can be used for civilian nuclear purposes, but also to build atomic bombs.
The UN has imposed four sets of sanctions on Iran over the years.
While these have made it more difficult for Iran to acquire equipment, technology and finance to support its nuclear activities, they have not stopped trading in oil and gas - the major sources of Iran's income.

Italian Report Details Arms Sales to Libya

ROME - Italy has sold Libya explosives, gun targeting equipment and other military hardware worth tens of millions of euros (dollars) in the past two years, Italian daily Corriere della Sera reported on Feb. 26.
The newspaper quoted an official report from the Italian interior ministry that listed signed contracts as well as ongoing negotiations between Libya and several major Italian defense companies including industry giant Finmeccanica.

Missile systems maker Mbda Italia signed a deal worth 2.5 million euros in May 2009 to supply Libya with "material for bombs, torpedoes, rockets and missiles," the interior ministry report was quoted as saying.
Helicopter maker Augusta Westland signed two contracts with Libya in October 2010 worth 70 million euros. Also last year, Selex Sistemi Integrati signed a 13-million-euro deal to provide Libya with gun targeting equipment.
Italy and its former colony Libya signed a friendship treaty in 2008 that opened the way for major business deals. Italy is now Libya's top trade partner and Italian energy major ENI is the biggest foreign energy producer in Libya.
Saturday's report said artillery company Oto Melara had also begun talks with Libya in November 2010 for "weapons or weapons systems with a caliber of more than 12.7 mm, as well as material, spare parts, know how and equipment."
This year, military shipmaker Intermarine Spa started negotiations with Libya for contracts worth a total of 600 million euros.
Selex Sistemi Integrati, Augusta-Westland and Oto Melara are also in talks with Libya for contracts totaling 150 million euros.

Russia Vows to Sell Missiles to Syria

MOSCOW - Russia announced Feb. 26 that it intended to fulfill its contract to supply Syria with cruise missiles despite the turmoil shaking the Arab world and Israel's furious condemnation of the deal.
"The contract is in the implementation stage," news agencies quoted Defence Minister Anatoly Serdyukov as saying.

Russia initially agreed to send a large shipment of anti-ship Yakhont cruise missiles to Syria in 2007 under the terms of a controversial deal that was only disclosed by Serdyukov in September 2010.
The revelation infuriated Israel and the United States and there had been speculation that Russia would decide to tear up the contract amid the current turmoil plaguing North Africa and the Middle East.
Israel - which is still technically in a state of war with Syria and fears its close ties with Iran - suspects that the shipment is ultimately aimed at supplying Hezbollah militants in neighboring Lebanon.
The disputed sale is believed to be worth at least $300 million and is meant to see Syria receive 72 cruise missiles in all.
Russia has not officially confirmed making any Yakhont deliveries to date.
But Interfax cited one unnamed military source as saying that Russia had already sent Syria two Bastion coastal defense systems that can include up to 36 Yakhont missiles each.
The feared systems can only operate when equipped with radar and target detection helicopters and it was not clear from Serdyukov's comments which supplies - if any - had already been received by Syria.
Serdyukov's comments come amid Russian efforts to keep its military supply lines open to the Middle East despite the wave of revolutions and social unrest currently sweeping the region.
A source in the Russian arms exports industry said this week that the fall of the region's regimes may see the country lose about $10 billion dollars in contracts.
Serdyukov himself confirmed that the unrest may force Russia to give up some of its Soviet-era clients in the Arab world.
"There is a chance we might lose something," the defense minister said on a visit on visit to Russia's Pacific port city of Vladivostok.
"But I hope that the main weapons and military equipment agreements will be fulfilled," Serdyukov said.
Russia's sales to Syria have come under particularly close scrutiny because of fears that Moscow may be also covertly assisting Damascus' nascent nuclear program.
The head of the country's arms export corporation in October denied that Russia had also signed an agreement to supply Syria with its latest range of MiG-31 fighter jets.
But the same agency confirmed in May that Russia was in the process of supplying Syria with a less advanced fighter jet version - the Mig-29 - along with short-range air defense systems and various armored vehicles.
Russia is the world's second-largest arms exporter behind the United States and its sales are crucial to the country's efforts to keep alive a creaking defense industry whose reforms have dragged on for years.
The military this week announced with some fanfare the start of a $650 billion rearmament drive that will add eight nuclear submarines and hundreds of warplanes to the under-equipped force by 2020.
Serdyukov said Feb. 26 that Russia intended to arm its nuclear submarines with the high-tech Bulava long-range missiles whose deployment is being delayed by a series of embarrassing test failures.
But Russia's last two Bulava launches were successful and Serdyukov said Feb. 26 that the first new missiles would be dispatched to the country's Pacific Fleet.

Gates Warns Against Iraq, Afghanistan-Style Wars

WEST POINT MILITARY ACADEMY, New York - U.S. Defense Secretary Robert Gates warned Feb. 25 against committing the military to big land wars in Asia or the Middle East, saying anyone proposing otherwise "should have his head examined."
Gates offered the blunt advice - hard won after a decade of bitter conflicts in Afghanistan and Iraq - in what he said would be his last speech to cadets at the U.S. Army's premier school for training future officers.

"The odds of repeating another Afghanistan or Iraq - invading, pacifying, and administering a large third world country - may be low," Gates said.
"In my opinion, any future defense secretary who advises the president to again send a big American land army into Asia or into the Middle East or Africa should 'have his head examined,' as General MacArthur so delicately put it," Gates said.
Douglas MacArthur, the World War II hero of the Pacific campaign, made the comment at a meeting with then-president John F. Kennedy in 1961 regarding U.S. military intervention in mainland Asia.
Gates, a former CIA director, replaced Donald Rumsfeld in the defense job in 2006 as Iraq was spiraling into civil war and the U.S. military appeared to be facing a historic failure.
The change in leadership and a new strategy executed by Gen. David Petraeus helped salvage the situation, and U.S. forces now appear on schedule to leave the country at the end of this year.
But nearly 100,000 U.S. troops are still deeply engaged in another difficult conflict in Afghanistan, once again under Petraeus' command, with no exit seen before 2014.
Gates said he was not suggesting that the U.S. Army "will - or should - turn into a Victorian nation-building constabulary designed to chase guerrillas, build schools or sip tea.
"But as the prospects for another head-on clash of large mechanized land armies seem less likely, the Army will be increasingly challenged to justify the number, size, and cost of its heavy formations," he said.
Future U.S. military interventions abroad will likely take the form of "swift-moving expeditionary forces, be they Army or Marines, airborne infantry or special operations," which Gates said "is self-evident given the likelihood of counterterrorism, rapid reaction, disaster response, or stability or security force assistance missions."
Gates is set to leave his job this year, and his presentation was a farewell speech to the West Point students.
"We can't know with absolute certainty what the future of warfare will hold," Gates said, "but we do know it will be exceedingly complex, unpredictable, and - as they say in the staff colleges - unstructured."
The United States also has a poor track record at predicting the next conflict, Gates said.
"We have never once gotten it right, from the Mayaguez to Grenada, Panama, Somalia, the Balkans, Haiti, Kuwait, Iraq, and more - we had no idea a year before any of these missions that we would be so engaged," he said.
Gates praised the Army's "ability to learn and adapt," which in recent years "allowed us to pull Iraq back from the brink of chaos in 2007 and, over the past year, to roll back the Taliban from their strongholds in Afghanistan."