"Defense News" reports that Israel and the US may export the Arrow 2 anti-ballistic missile system to South Korea in a $1 billion deal - the first potential exports of the system made by Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) and Boeing Company (NYSE: BA). The US and Israeli government have given the go-ahead for marketing of the system. India is another potential customer.
The Israeli Defense Ministry categorically denies the story.
Executives from Boeing and IAI say that Boeing would lead marketing and negotiations in South Korea. "Defense News" quotes industry sources as saying that a potential deal would be concluded between the US and South Korean governments and managed as a Pentagon foreign military sale.
"Defense News" quotes Boeing Network & Space Systems president Roger Krone as saying during a visit to South Korea, “There’s still a long way to go, but we and our Israeli partners are working very persistently to be able to provide this phenomenal capability to South Korea, an important US ally."
IAI and Boeing jointly manufacture the Arrow 2 and are developing the longer range Arrow 3, which can intercept incoming missiles outside the earth's atmosphere.
Last week IAI and Boeing announced the expansion of their 10-year partnership beyond joint development and production of Arrow-2 and Arrow-3 interceptors for Israel’s defense needs. The companies did not disclose countries to be targeted by the new strategic agreement, saying only that the agreement “aims to explore and develop new opportunities in the missile defense arena."
IAI CEO Itzhak Nissan said that the agreement was "the next logical step in our relationship with Boeing, and a strong opportunity for both companies to play a bigger role in the missile defense market agreement." Krone added, "The Arrow program demonstrates Boeing’s commitment to develop international missile defense partnerships around the globe."
"Defense News" says that, during the visit to South Korea, Krone declined to speculate when the South Korean Defense Ministry would request proposals or which competitors might respond. He also declined to say whether Boeing and IAI would bid the operational Arrow-2 or the smaller, less expensive, exo-atmospheric Arrow-3, now in development and scheduled for its first fly-out test later this year.
The magazine adds that defense and industry sources say that South Korean military planners late last year launched a so-called assessment of alternatives that included Arrow-2, the Terminal High Altitude Area Defense system, the Patriot PAC-3 and the Russian S-300 and S-400 systems. South Korea bought 48 used PAC-3 launch modules, radars and missiles, including the Patriot Anti-Tactical Missile and Guidance Enhanced Missile Plus (GEM+) from Germany. In 2009, South Korea decided to buy two EL/M-2080 Green Pine radars, which support the Arrow system, from IAI subsidiary Elta System, with deployment scheduled for this year as part of South Korea’s Air and Missile Defense-Cell, a key component of the nation’s low-tier air and missile defense system to counter the threat posed by North Korea’s low-flying, short and intermediate-range missiles.
"Defense News" added, "While Israel is pushing ahead with the sale of the Arrow, the South Korean government has made no effort to introduce a high-altitude interceptor because of fears over potential backlash from neighboring countries, including China. South Korea is also preparing to build its own low-tier and medium-range missile defense systems.
"Defense News" also quotes defense and industry sources as saying India is a potential export market for the Arrow, given the Pentagon’s willingness to restart missile defense cooperation talks with India. A potential sale or joint production of missile defense systems was an agenda item for the US-Indian strategic dialogue that began in 2003, but was suspended in 2008. Press Trust of India quotes US Deputy Assistant Secretary of Defense for South and Southeast Asia Robert Scher as saying, “We are really open to it. This is something we ask them if they are interested in."
US and Israeli sources said that neither government had approved any marketing efforts or technical discussions on potential Arrow exports to India, but noted that India has the need, potential funding and the favorable political standing with Washington and Tel Aviv to support such a deal.
India has also bought Green Pine radars to support its own anti-ballistic missile system based on the Prithvi missile. “If the U.S. government allows ballistic-missile defense exports to India, it will represent a very inviting prospect for the IAI-Boeing team,” former Israeli Missile Defense Organization director Uzi Rubin told "Defense News. “I don’t see the US refusing us the opportunity to export Arrow if the other US systems are allowed to compete."
Published by Globes [online], Israel business news - www.globes-online.com - on January 31, 2012
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