Bank One Buys Control of Submarine Manufacturer HDW (June 2002)

(c) K.B. Sherman, 2002

According to the Taipei Times, the American acquisition of the German shipyard Howaldswerke-Deutsche Werft (HDW) may help remove the barriers to Washington's sale to Taiwan of eight diesel-electric submarines. One Equity Partners, the private equity arm of Bank One Corporation (Columbus, OH) has acquired a 75-percent stake of HDW -- the builder of the German 209/212-class submarine. This move could strengthen US efforts to honor its commitment to help Taiwan maintain a modern navy.

The US has not built conventional submarines for more than 40 years and designing an entirely new one would be prohibitively expensive. To help the clarify the situation, the US Navy set up a Team Diesel Submarine group last September, according to Jane's Defence Weekly. The German government had said it would not get involved in arms sales to Taiwan because Beijing wets its pants whenever such a possible sale is even mentioned. Even with the US purchase of HDW, German export licenses remain an issue, though a less daunting one.

Several submarine builders, including HDW, Northrop Grumman, and General Dynamics, had submitted concept papers to the US Navy's International Programs Office, which supervises Taiwan's submarine deal. The Taipei Central News Agency had previously reported Northrop Grumman would offer Taiwan the same Dutch-designed Moray class submarine it plans to build for Egypt's navy. The timeframe for delivery of these new Egyptian subs is presently estimated for 2010 - 2012, according to the News Agency. As has also been reported, General Dynamics Electric Boat was believed likely to obtain a 40% share in the Australian Submarine Corp. (ASC) (Adelaide, Australia) in preparation for such a bid. ASC is the builder of Australia's Collins-class submarines. Taiwan currently has two 2,650-ton, 1970s vintage Zwaardvis-class Dutch submarines, plus two decrepit ex-US Guppy class subs. European shipyards have already noisily assured Beijing that they would not provide any new submarines to Taiwan. According to earlier reports in the Far Eastern Economic Review, officials in Taipei suggest that Taiwan would want at least half the submarines built in a local shipyard.

Two dozen countries have purchased Type 209/212 subs, making it one of the world’s most successful export warships. The 212 class features an air-independent propulsion system using a silent hydrogen/oxygen fuel cell system. DaimlerChrysler Aerospace (now merged with Aeropsatiale-Matra of France and CASA of Spain to form the EADS company) and Thales Defence Ltd have been awarded a contract to develop the FL1800U electronic warfare system for the German and Italian navies' U212 submarines. The 1800U is a submarine version of the FL1800 S-II, which is in service on the Brandenburg and Bremen class frigates. A consortium led by STN ATLAS Elektronik and Allied Signal ELAC is responsible for the development of the TAU 2000 torpedo countermeasures system. TAU 2000 has four launch containers, each with up to ten discharge tubes equipped with effectors/jammers. The submarine is also equipped with an integrated DBQS sonar system which has: cylindrical array for passive medium-frequency detection; a TAS-3 low-frequency towed array sonar; FAS-3 flank array sonar for low/medium-frequency detection; passive ranging sonar; and hostile sonar intercept system. The active high-frequency mine detection sonar is the STN Atlas Elektronik MOA 3070. The search periscope is the Zeiss-Eltro Optronic (ZEO) SERO 14 with optical rangefinder, thermal imager and global positioning system. The ZEO SERO 15 attack periscope is equipped with laser rangefinder. Beijing's 70+ submarine fleet is a mixed bag, ranging from leaky old ex-Soviet Foxtrot and Romeo subs to world-class Han nuclear attack and Xia ballistic missile boats. Ever paranoid about "foreign devils," Beijing continues to express extreme displeasure with any plan to improve Taiwan's armed forces. However, the combination of the Bush administration's inflexibility on the issue of protecting Taiwan, an ever-growing pool of workers hungry for work during a global shipbuilding recession, the realization since September 11 that only strength deters attack, and the flexibility of Western-style capitalism, may tip the balance of this issue in favor of Taipei.