TKMS Commits to $181M Offsets in 4-Ship Deal

TEL AVIV, Israel — After more than five years of negotiations, Israel's Ministry of Defense hailed "maximum achievements" in a€430 million corvette package signed Monday with the German government and its strategic shipyard in Kiel.

Signed just hours before Israeli Defense Minister Moshe Ya'alon was set to host his German counterpart Ursula von der Leyen in Tel Aviv, the deal includes four Israeli-tailored surface ships based on ThyssenKrupp Marine Systems (TKMS) BBlohm+Voss-class 130 corvette.

According to a May 11 announcement by Israel's MoD, Berlin has agreed to fund €115 million of the €430 million package, with combat weapons suite, armament and subsystems to come from Israeli industry.

"MoD insisted that all the weapons systems for these ships will be Israeli-made, in a manner which will guarantee the flow of new orders in significant quantities for the Israeli defense industry," according to the MoD announcement.

Moreover, MoD said TKMS committed to Israel's Industrial Cooperation Authority an offset package totaling 700 million shekels (US $181 million), half of which will be paid to Israel's MoD.

It said the four ships would be delivered within five years in support of the Israel Navy's new mission of defending offshore energy assets in its exclusive economic zone (EEZ).

Further, it noted that according to a government decision, the so-called economic waters package will be funded from a special US Treasury account, and will not come out of Israel's constrained defense budget.

Israel's Bank Discount won an MoD competitive bid for financing of the economic waters package, which will ultimately include surface ships, patrol boats, unmanned aerial vehicles and a variety of sensor systems.

Ships on order for the Israeli Navy are expected to be smaller than the 1840-ton displacement featured in standard Blohm+Voss-class 130 Corvettes. However, they will be large enough to accommodate a utility helicopter and two medium-altitude, long-endurance UAVs.

"This deal that was signed today is a very significant event that represents a dramatic leap forward in our Navy's ability to defend the government of Israel's strategic sites in the field of natural gas at ranges of tens and hundreds of kilometers out at sea," said retired Maj. Gen. Dan Harel, director –general of Israel's MoD.

"Additionally, it serves as a significant economic springboard to the Israeli economy as nearly 1 billion shekels will be returned to Israeli industry as a result of associated procurement orders.

"We are happy and proud at the results of the negotiations, which guarantee maximum achievements from an operational as well as economic perspective," Harel said.

Email: bopallrome@defensenews.com

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