Thailand’s government has reiterated its willingness to renege on a contentious
submarine contract with China if the requirements of the procurement cannot be
completed. Thailand agreed to pay the state-owned China Shipbuilding & Offshore
International Co (CSOC) 13.5 billion baht (now about $373.9 million) in 2017 to
purchase one S26T Yuan-class submarine, with delivery anticipated for 2023.
However, earlier this year, work on the submarine was put on hold when the German
company Motor and Turbine Union stated it would not give CSOC access to its state-
of-the-art MTU396 diesel engines for installation in the Thai submarine.
The German corporation claimed that a government restriction on the sale of military
equipment to China implemented in the wake of the 1989 Tiananmen Square murders
prevented it from making the deal.
In retaliation, CSOS has proposed either installing a Chinese-made engine in the
submarine or providing Thailand with two People’s Liberation Army Navy
decommissioned boats.
The Thai government first objected, requesting that the German engines be fitted in
accordance with the contract’s terms. Even the Prime Minister Prayut Chan-o-cha said
that the agreement might be scrapped. “What do we do with an engineless submarine?
Why should we buy it, he asked journalists in March.
The Thai government appears to have softened its demand, perhaps realising that it
must decide between cancelling the procurement and risking negative effects on its
wider relationship with China, or reaching a compromise. Adm Choengchai
Chomchoengpaet, the head of the Royal Thai Navy, reportedly told reporters that theThai navy now wants the Chinese navy to guarantee the Chinese-made CHD620
engine that CSOC has suggested using in place of the German propulsion system,
according to a report published yesterday in the Bangkok Post.
“There is a delay in the engine clarity,” he stated. “The engine’s initial stage of testing
was finished. The second step relates to replacement parts. He claimed that early next
month, when the navy and CSOC will debate the submarine acquisition project, Thai
officials will need a specific timeline for the boat’s development.
The Post stated that Choengchai responded, “Yes. The navy may stop the procurement
project if its conditions are not met. It may be cancelled at any time at this point.
Given that the EU embargo has been in place for more than three decades, it is
puzzling why neither side seemed to have anticipated the potential difficulties in
obtaining a German propulsion system, as I noted in March.
German defence attaché Philipp Doert claimed that the Chinese government “did not
ask/coordinate with Germany before signing the Thai-China contract, giving German
MTU engines as part of their product” in a letter to the Bangkok Post that was
published in February. Thailand’s navy said in February that it intended to resolve the
engine issue through discussions with the Chinese state-owned shipbuilder. No date
has been given for when those discussions will conclude, however.
Observers have suggested China could transfer second-hand submarines to Thailand
by way of compensation – a scenario that has been discussed in the local media
without any confirmation from the Thai navy.
The acquisition of submarines by Thailand, a goal of the RTN since the 1960s, has
long been questioned by observers. The specific Chinese deal was criticised as an