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A400M PROGRAMME REMAINS SHAKY

By Karl Schwarz

"A parliamentary decision will be taken later this month, it's as simple as that," said defence minister Rudolf Scharping on 17 January on the occasion of a ceremony involving the responsible OCCAR armaments agency at the Petersberg Guesthouse near Bonn. Brushing aside critics of the A400M programme, he said it would be "pure provincialism" to allow a European project that was so important politically, militarily and technologically to be put at risk because of budgetary issues.

The notion that he himself might be responsible for the persistent problems besetting the new military transport naturally did not enter into Scharping's mind. "The defence minister must ask himself why, despite full knowledge of the situation, he has not taken prompt action," said Oswald Metzger, Green party spokesman on budgetary issues. After all, was it not common knowledge that the previous commitment appropriation of Euro 5.11 billion would not cover all 73 aircraft ordered?

That the Budget Committee had not yet been able to examine either the question of numbers or the choice of aircraft, the equipment configuration and linking in with other military projects was a cause of concern to Dietrich Austerman, CDU/CSU party spokesman on budgetary matters. The Opposition, which believes that the transporter is needed urgently, requested a supplementary budget to clarify the financing situation, seeing this as the only way to ensure the contractual certainty called for by Germany's European partners.

But in an election year, this is not a route that the German Government wishes to pursue. It was therefore planning to introduce a motion in plenary session on 24 January (after FLUG REVUE had gone to press). "The Bundestag supports the decision of the Federal Government to permanently strengthen Europe's security and defence identity through the procurement of 73 A400M transport aircraft... The resolutions that are required for this will be included in the legislative programme relating to the 2003 budget," so it goes.

But such a motion does not alter the fact that the A400M is not at present properly included in the budget. "This means that the contract still does not have the full force of the law", said Oswald Metzger for the Greens. Nevertheless the Federal Government was apparently hoping that this would satisfy its partners. If no objections were raised after the European armaments agency OCCAR (Organisme Conjointe de Coopération en Matière d'Armement) was informed of the consent of the Bundestag, then, so the argument went, the intergovernmental agreement and contract with industry would enter into force.

But it is by no means clear that it will be as simple as this. What exactly is contained in the small print no one was prepared to say. The French defence minister, Alain Richard, at any rate was taking comfort at the Petersburg in the words, "A German commitment is a commitment. It is not for us to dispute the form that this takes, as every country has its own (budgetary) procedure."

At the time of going to press it thus seemed that a way would be found once again of keeping the A400M programme alive, using tricks which were legally somewhat dubious. But the latest episode is only too consistent with the unmitigated series of disasters that have plagued the transporter project for years.

Germany is in fact not the only country to have wreaked havoc on the project. Other partners too have often pursued their own interests and, for example, reduced the unit numbers they planned to purchase at will. Italy has even withdrawn from the club. The A400M is a "splendid project", said Italian defence minister Antonio Martino, but "We need our resources for other purposes." The previous government in Rome had gone ahead with a C-130J purchase and was also planning a C-27J buy, so that another transporter was no longer a priority.

"The whole thing is not a political or ideological question," said Martino in Bonn. Naturally he deliberately refrained from mentioning the violent disagreements in the Italian government last autumn, which had ended in defeat for the pro-European foreign minister Ruggiero.

This left eight nations to sign the intergovernmental agreement for the development and procurement of the Airbus A400M in the evening of 18 December, in the Royal Military Academy in Brussels. At the same time, management of the programme was transferred to OCCAR. On this basis, OCCAR Director Dr. Klaus von Sperber and Alberto Fernandez, Chief Executive of Airbus Military, then signed the industry agreement. This provides for the following unit numbers:

• Belgium: 7, with deliveries to commence in 2018
• Germany: 73, commencing 2009
• France: 50, commencing 2008
• United Kingdom: 25, commencing 2008
• Luxembourg: 1, to be delivered in 2013
• Portugal: 3, commencing 2016
• Spain: 27, commencing 2010
• Turkey: 10, commencing 2008

The cost of the 196 aircraft, including development and initial operational support, is Euro 18 billion. This works out at a unit cost of around Euro 92 million per aircraft, which is not enormously different from the flyaway price of Euro 80 million named by Airbus last year.

According to defence minister Scharping, the German calculations look somewhat different. At December 2000 prices, the programme will cost Euro 8.517 billion, including VAT. The basic price of the aircraft is to be Euro 95 million, on top of which then come special equipment for low-level flight, spare parts, training and OCCAR management costs, giving a system price of Euro 116.67 million.

The Defence Ministry will not pay anything until deliveries commence, so that pre-financing will entail arrangements with industry that are as yet unspecified. The interest rates would be "lower than for normal borrowings", Scharping promised. However, CDU/CSU budget expert Austermann believed that the arrangements would raise costs by an extra Euro 840 million compared with conventional procurement procedures.

Discussion of the programme will thus continue even if the contract does enter into force after the German Bundestag has withdrawn its reservations. Nor will things be easy for industry. When Italy withdrew from the programme the financial holdings in Airbus Military had to be adjusted (Airbus 64%, EADS 25.5%, TAI 5%, Flabel 4% and Ogma 1.5%). And of course, despite the supposed "commercial approach", there will be the usual haggling over workshare.

To be on the safe side, the time allowed for development through to delivery has been lengthened by six months to 77 months. "Because of the delay in signing the contract, we have redeployed our staff and we now need to rebuild the teams again," said a spokesman at Airbus Military in Toulouse. Selection of important equipment items (propeller, cockpit etc.) has not yet been finalised either. On top of this it will be necessary to fine tune the design, so as to accommodate, amongst other things, modifications to the wings and engine nacelles.

From page 50 of FLUG REVUE 3/2002