Asia Defense | Security | South East Asia
Disagreement over propulsion system choice continues to haunt the controversial and costly deal.
The Thai government has again said it is ready to pull out of a controversial submarine deal with China if procurement terms cannot be met. In 2017, Thailand agreed to pledge 13.5 billion baht (about US$373.9 million currently) to purchase an S26T Yuan-class submarine from state-owned China Shipbuilding & Offshore International Co (CSOC). pay, with delivery expected in 2023.
But earlier this year, construction of the submarine ground to a halt when German company Motor and Turbine Union said it would not supply its state-of-the-art MTU396 diesel engines to CSOC for installation on the Thai submarine. The German company said it was barred from selling due to a European Union government embargo on sales of military equipment to China imposed after the 1989 Tiananmen Square massacres.
In response, CSOS has offered to fit a Chinese-made engine in the submarine or to offer Thailand two decommissioned People’s Liberation Army Navy boats.
The Thai government initially refused, insisting that the German engines would be installed under contract. Prime Minister Prayut Chan-o-cha even raised the possibility that the deal could be called into question. “What do we do with a submarine without engines? Why should we buy it?” he told reporters in March.
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But perhaps the Thai government, recognizing that it faces a choice of canceling the procurement, potentially affecting its broader relationship with China, and reaching some sort of compromise, seems to have softened its call. According to a report in the Bangkok Post yesterday, Adm Choengchai Chomchoengpaet, the commander-in-chief of the Royal Thai Navy, told reporters that the Thai Navy now wants the Chinese Navy to guarantee the Chinese-made CHD620 engine, which CSOC has proposed to use instead of the German propulsion system.
“There is a delay in clearing the engine,” he said. “Testing of the first stage of the engine has been completed. The second stage concerns spare parts. He said the Navy will discuss the submarine procurement project with CSOC early next month, during which Thai officials will ask for a clear timeline for the boat to be built.
Asked whether the Navy could end the procurement project if its terms were rejected, the Post reported Choengchai said, “Yes. At this stage it can be terminated at any time.”
As I noted in March, it’s hard to understand why neither side anticipated the potential complications of sourcing a German propulsion system, considering the EU embargo has been in place for more than three decades. In a letter to the Bangkok Post published in February, German Defense Attaché in Thailand Philipp Doert wrote that the Chinese government “did not ask/vote Germany to offer German MTU engines as part of their product prior to the signing of the Thai-Chinese treaty. “
Observers have long questioned the wisdom or necessity of Thailand acquiring submarines, a goal of the RTN since the 1960s, and the special Chinese deal has been criticized as a costly extravagance during the COVID-19 pandemic, when many Thais are struggling had to get through. In fact, the pandemic forced the government to delay a planned purchase of two more Yuan-class submarines at a cost of 22.5 billion baht ($621 million).
Whether growing frustration on the Thai side will lead to the termination of the submarine contract remains to be seen. Any decision to drop out of the project would have to be weighed against the potential impact on relations with China and the additional cost of sourcing equivalent submarines from elsewhere. As such, the two sides are likely to reach a face-saving compromise that will allow the RTN to finally achieve its dream of a submarine fleet – albeit a fleet of just one boat.