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Sweden May Fund Gripen-E Even Without International Partner

May. 22, 2014 - 06:46PM   |  
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Sweden may remove the requirement that an international partner be found before it would continue funding for the Gripen E.
Sweden may remove the requirement that an international partner be found before it would continue funding for the Gripen E. (Saab)
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HELSINKI — The Swedish government has signaled it is ready to roll back a stipulation in its 2012 agreement with Saab that required an international partner to be in place before funding could continue for the Gripen-E project.

The government’s new, softer line, reinforced by the Ministry of Defense, puts the Gripen-E project into the category of “too big to fail.”

In the 2012 Gripen-E project agreement with Saab, the MoD stipulated that it held the right to rescind funding if an international partner could not be found to share costs and develop export markets for the aircraft. The Swedish state has already invested more than $300 million in the Gripen-E development program.

Sweden had long pinned its Gripen-E international partner hopes on Switzerland, but this avenue of cooperation was closed on May 18 when the Swiss, by a 53.4 percent referendum vote, rejected a government plan to spend $3.5 billion on acquiring 22 aircraft from Saab.

Saab has now turned its attention to Brazil. Sweden continues to negotiate a broad industry partnership to produce an initial 36 Gripen-Es for the Brazilian Air Force in cooperation with the country’s aerospace sector. Under this industrial program, Saab is building an aircraft production facility outside Sao Paulo.

“With Switzerland gone, the focus has naturally shifted to Brazil. The government has until the end of 2014 to demonstrate that the Gripen-E can find an export partner, otherwise the issue will revert to parliament for debate and possibly a vote on the Gripen-E’s future,” said Peter Hultqvist, chairman of the Parliamentary Committee On Defense.

The international partnership agreement offered by Sweden to Brazil is designed to provide strong economic benefits for all parties covering design, production, operation and lifecycle maintenance, said Karin Enström, Sweden’s defense minister.

“As I see it, the Gripen-E project’s future will require the parliament to give the government freedom of action. We need to increase our defense capability and the new Gripen is the most cost-effective way to do it. Global developments in recent months have shown that we really need Gripen E, and there is broad political support for the aircraft. Our air-defense capability, and the needs of our Air Force, must be prioritized,” said Enström.

Negotiations on an industrial agreement tied to a Gripen-E contract with Brazil are expected to be completed in December, said Hultqvist.

“This gives the government some time, but not a lot, to turn matters around and lift confidence in the Gripen-E project. Such negotiations are always uncertain. It should be remembered that Saab invested 10 years negotiating a Gripen sale to Switzerland, and as it turns out, it has no sales to show for it,” Hultqvist said

The Swedish government clearly wants to proceed with the Gripen-E project regardless of finding production and export partners, said Åsa Romson, the Green Party’s spokesperson on industry and defense.

“It would appear that the stipulation in the 2012 agreement means less and less, and was added to give the government an exit plan of last resort. The Gripen-E has taken on the stature of a project that is now too big to fail, and it seems it will continue with or without an international partner behind it. Given that Switzerland is no longer an option our party would rather see the project end here,” said Romson.

Saab believes in the long-term potential of the Gripen-E project, and its “development will continue,” said group Chairman Marcus Wallenberg.

Under a framework agreement signed in February 2013, Saab is contracted to deliver 60 Gripen-E aircraft to the Swedish Air Force. This could rise to 80 when the defense allocation is increased significantly after 2015 to accommodate an expanded 40-year Gripen-E program. ■

Email: godwyer@defensenews.com.

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