The Slovak airforce's ageing MiG 29s (pictured above) may be replaced by new subsonic fighters.
"The first question is, do we need an airforce? And if that answer is yes, then 'offset' is definitely the best way to go about it."
MESA 10 research analyst Marek Jakoby
Following a top-level Defence Ministry meeting on February 9, newly-appointed Defence Minister Jozef Stank put his weight behind proposals for the Concept for Airforce Development which would see the Slovak airforce equipped with up to 40 subsonic fighters and training craft to replace its ageing Russian MiGs.
Experts estimate the cost of the force's upgrade at around 45 billion crowns (just under $1 billion).
In supporting the new purchases, Stank signalled his commitment to his predecessor Pavol Kanis' views on NATO accession, and, analysts have said, opened the path for a series of possibly influential 'offset' investments - offers of investment into industry sectors as part of a deal to supply military equipment - that would accompany a tender for the aircraft.
"Slovakia is a very strong NATO candidate, and this is a really good decision from the Slovak government. It shows to NATO that it is spending its defence budget properly and wisely," said Paul Beaver of the international defence journal Jane's Defence Weekly.
He added: "This is a wise decision and a good deal all round. The offsets are tremendously important to any transition country, because they go into not only the defence industry but others, and Slovakia doesn't need the supersonic fighters [MiGs] anyway."
While the ministry's recommendation that the subsonic and training aircraft be bought has still to be discussed by the State Defence Council (a meeting of top government ministers) at the end of this month, the plans are expected to gain approval.
Defence Minister Jozef Stank has put his weight behind proposals to buy subsonic aircraft for the Slovak military.
Stank had told journalists just a few days before the February 9 decision that buying the planes would be a way "to keep the Slovak airforce alive".
Dealing with past problems
Bringing the Slovak airforce out of its worrying technical decline, in which the number of planes in service dropped to 94 in 1999 from 146 in 1993, and that of pilots fell 50% to 195 over the same period, is a pre-condition for NATO accession. However, last year's Garrett Report, sponsored by the US government, advised Slovakia to invest money into other military equipment, such as radar, rather than new jets.
Experts believe that while the decision may not be the cheapest option, it is unlikely to harm Slovakia's NATO integration, despite the report last year.
"I don't really know if Slovakia needs these planes, but the MiGs are very old, and obtaining new fighters will definitely not damage [Slovakia's] NATO plans," said Pavol Lukáč of the Slovak Foreign Policy Association.
"The government is basically saying 'we can't do everything ourselves, but we can get our skill levels up by taking these planes," added Jane's Defence Weekly's Paul Beaver.
Czech firm Aero Vodochody's L-159 (pictured above) is likely to be in the running in an expected tender.
photo: Courtesy Aero Vodochody
Just before Stank's decision was taken, Deputy Prime Minister for Economy Ivan Mikloš had hinted at the fiscal pressures a purchase of fighters would bring. Speaking in parliament on February 7, he said that an investment of several tens of billions of crowns into new fighter aircraft would be difficult, but also acknowledged the importance of Slovak NATO integration. The deputy prime minister and Finance Minister Brigita Schmögnerová will, analysts say, likely have to agree to the outlay before the next election
The Defence Ministry, while pressing for the fighters, has been keen to show it is aware of the delicate financial situation surrounding the bid. "This proposal best combines the need for the protection of air space with the realities of the Slovak economy," the ministry said in a statement after the February 9 decision.
But although the deputy prime minister has expressed a degree of concern over the cost of the jet purchases, he is likely to console himself with the potential economic benefits of the deal. The eventual bidders to supply the craft will, if deals follow the same path as similar tenders in other countries, be expected to offer the government the 'offset' investments as part of their bids.
Tenders in countries across the world, and expected ones in Slovakia's central European neighbours (the Czech Republic, Hungary and Poland) have seen the world's top air manufacturers enter bidding with a series of offers of investment into defence and other industry sectors as part of the deal to supply the military craft to a country's airforce - the so-called 'offset' package.
"The first question is, do we need an airforce? And if that answer is yes, then 'offset' is definitely the best way to go about it. Offset is a very, very important thing in situations like this because it is a good way to guarantee foreign investment and attract further FDI," said Marek Jakoby, research analyst at the economic think-tank MESA 10.
"For NATO accession the important thing is that the planes come from a NATO member, but economically the important thing is offset deals," he added.
Top bidders expected
If the Defence Council does, as expected, approve the plan, the government will begin ruminating on a tender for supply of the jets. Some of the world's top firms, and especially those already involved in the central European region, are likely to be at the top of the government's list.
The British firm BAE Systems, which is hoping to supply the Czech Republic with a package of its Hawk subsonic and trainer fighters, is expected to be a top runner in any Slovak tender, as is the Czech manufacturer of light-fighter aircraft Aero Vodochody, part-owned by the US giant Boeing.
John Neilson, spokesman for BAE Systems in central Europe, reacted to the news of the defence minister's approval, saying: "If there is a tender we would be interested, and would expect a lot of hard work, as is the case anywhere, to win that tender."
The British firm has been praised in many countries for its offset packages in bidding for such contracts as the one likely to be offered for the Slovak airforce.
BAE's Neilson said that if involved in a tender, his firm would more than likely be attaching an offset deal in its offer.
"Offset deals are an important part of any package we put together, and in this case, the Slovak government could expect from us an offset that would see at least 100% of the cost of the [planes'] purchase returned to it in offset investments," he said.
19. Feb 2001 at 0:00 | Ed Holt