Why did Aquino stop purchase of warships?


The Chinese are defiantly deploying armed vessels to escort their fishermen intruding into our territorial waters, according to Defense Secretary Voltaire Gazmin, who proclaimed that our military will defend our territory to the last soldier. The Taiwanese, on the other hand, have been taunting us by conducting war exercises just a few kilometers outside our territory.

It is staring us in the face. We need modern warships right now, not to really fight but to keep our pride, by convincing ourselves we do have some defense capability.

Then why did Gazmin, with the approval of Aquino, suddenly cancel the plan, in the pipeline for a year and a half now, to purchase two Italian frigates, or warships nearly as big as destroyers?

“We need these ships so that we will not be pushed around when it comes to defending our maritime territories,” so said Gazmin in June last year.

Because of their sudden volte-face, we would be getting new warships—if government doesn’t suddenly change its mind again—only after Aquino steps down in 2016.

In December 2011, the Italian government offered to sell us two Maestrale-class frigates, at a price of P12 billion. Although commissioned in 1982, the 3,200-ton frigates are considered among the best in Europe. While primarily designed for antisubmarine warfare, the ships have modern weapons systems—including missiles—for anti-air and anti-sea operations.

The opportunity for us to make the purchase had opened up after the Italian Navy decided to retire these frigates for newer ones this year.

In January 2012, Gazmin with a dozen of his officials traveled to Rome to inspect the Italian warships. He even had discussions with Italian Defense Minister Giampaolo Di Paola and the Italian military’s top brass for the ships’ acquisition. There was even a formal signing ceremony for a “five-year agreement” to expedite the purchase of the ships as well as other Italian-made weapons systems.

Gazmin meeting Italian counterpart
In May, 2012, Aquino himself bragged about the acquisition, saying that by the end of the year the Navy will have the two frigates and the BSP Alcaraz. “So that’s three warships, each one for Luzon, Visayas and Mindanao,” he said in jest. (His speech on this at www.youtube.com/watch?v=2WTQftOxQJM).

In August 2012, Gazmin was ecstatic, saying the Philippines would be getting real warships for the first time. “[The Italian frigates] have antisubmarine capabilities and surface-to-air missiles. These are ready for battle. We could get the frigates by November next year.” He also said the frigates would be “more lethal” than the Hamilton-class cutters the US Coast Guard was selling to the Philippines

In September 2012, Congress allocated P12 billion for the ships’ acquisition.

But then, quite suddenly, during the 2012 Christmas season, Aquino and his officials had a major change of mind. Strangely, the announcement of the volte-face was staggered and obviously calculated to be underplayed in the press, with Gazmin’s mouth practically zippered shut over the matter since then

On January 7, 2013, Fernando Manalo, Defense Undersecretary for Finance, told one print reporter and one broadcast journalist, “We are evaluating the Maestrale [frigates]and doing due diligence [to determine]whether it will really provide us the capability that we need, whether it is economical in the long term.” He said six other countries offered to supply the Navy’s needed warships.

That due-diligence was fast. On February 23, 2012, the government’s Philippine News Agency (PNA) quoted Manalo as saying that “acquiring second-hand ships will ultimately be costlier than buying new ships.” Therefore, he said, the Italian ships were no longer being considered for possible acquisition by the Philippines.

In March, the DND reported it was preparing the documents and procedures to bid out contracts for the purchase of new warships.

On April 30, Manalo disclosed that Defense was allocating P18 billion, not P12 billion, for the purchase of two warships, explaining the P6 billion increase was due to the fact that the ships were new, not refurbished ones. He said a number of countries, including South Korea, Spain and Singapore, would participate in the bidding.

The announcement of six countries offering to supply the ships was just a smokescreen, those familiar with the program claimed. They pointed out that Defense had already picked the supplier, as indicated by the state’s news agency report a month before:

A South Korean defense manufacturer is now talking with the Department of National Defense regarding its requirements for two brand-new frigates. A DND observer said that the company is offering the Philippines a choice of Incheon class frigates. He stressed initial talks are now being held and hopefully the company will get a chance to bid for our frigate requirements.

A posting at MaxDefense, a blog obviously well informed about Philippine defense matters, claimed: “MaxDefense sources said that South Korea’s Hyundai Heavy Industries made a very juicy offer when the Maestrale deal was still ongoing. HHI reportedly offered a derivative of the Incheon-class frigate at around P9 billion each … MaxDefense sources indicate that the additional P6 billion allocated for both ships will be taken from other naval projects as well as an additional budget coming from the Office of the President’s emergency— discretionary funds or Malampaya Special Account.” [Naughtily, and unfairly, the blog in that post had a photo of Aquino with half-Korean Grace Lee, whom it identified—wrongly?—as the President’s ”ex-girlfriend”.]

What could be worrying is the fact that while the South Korean government would likely be involved by offering concessional loans for the purchase, it would be a private company, Hyundai Heavy Industries, that would have huge stakes, and therefore would – theoretically—try to bag the deal by hook or by crook.

Corruption has seriously tainted the reputation of the Korean Hyundai group, with Hyundai Motor’s chairman, vice-chairman and two other executives jailed for several years in 2007 for embezzlement.

A defense-industry source quipped: “A small 5 percent commission” translates to nearly a billion pesos, with the price up from P12 to P18 billion, doesn’t it? In contrast, the aborted deal with the Italians would have been totally a government-to-government sale, in which commission from the transaction would have been well nigh impossible.

Why did it take the government a full year to decide that the Italian ships were not cost-effective for its Navy? Why didn’t it undertake a parallel bidding for new frigates last year so as not to delay the procurement of new warships, obviously a must with the country’s territorial disputes in the high seas?

It would take Hyundai Heavy Industries at least two years to construct and sea-test the frigates. Installation and testing of weapons systems would take another year. The Navy would have its new warships only after 2016. Gazmin would have an excuse. He can’t take his soldiers to defend our territory to the last man. No ships available.

E-mail: tiglao.manilatimes@gmail.com
Websites: www.rigobertotiglao.com and www.trigger.ph


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1 Comment

  1. I was excited when they posted the maestralle. Though the ship is built in the 80’s it is still comparable to any modern warship like the lafayette class. It is advantageous in our end since most of our neighbors have submarine capabilities it would somehow counter such threat. Im disgusted with the idea that the deal was off. If we are to acquire the incheon class why not plan it after 2016? It seems the government is not keen in building our navy by acquiring more credible ships, its now clear that we should acquire hardware to a minimum and rely more in our ww2 era ships which are way too obsolete. I just have to live up to the belief that there is no such thing as a philippine navy, with all due respect to our brave sailors the entire navy organization is a myth. I may sound unpatriotic but that’s reality, there is no way the govt can hide it