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With massive Polish arms deal S.Korea steps closer to Ukraine war

Stock Markets Jul 28, 2022 09:01PM ET
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© Reuters. FILE PHOTO: A K2 Black Panther tank manufactured by South Korea's Hyundai Rotem is displayed at the Seoul International Aerospace & Defense Exhibition, Seoul, South Korea, October 20, 2021. REUTERS/Josh Smith

By Josh Smith

SEOUL (Reuters) -South Korea's biggest ever arms deal will make it a major supplier of weapons flooding into Europe since the Ukraine war began, with sales to NATO-member Poland involving more than 1,600 tanks and howitzers, and nearly 50 fighter jets.

South Korean and Polish officials signed a framework agreement on Wednesday in Warsaw in a deal that Poland says is a key part of their efforts to rearm in the face of the war in Ukraine, where it has sent at least $1.7 billion in military aid.

The scale and speed of the multi-billion dollar deal caught some analysts off guard, as Poland has also been buying additional Abrams tanks from the United States and has been in a dispute with Germany over a request to obtain more Leopard tanks.

Polish Defence Minister Mariusz Blaszczak said that South Korea was the only player that could provide new weapons fast enough.

"It is extremely important that the first deliveries of howitzers and tanks will take place this year," he said at the signing ceremony.

For the countries of NATO’s eastern flank, the prospect of cooperation with South Korea is particularly interesting, said Oskar Pietrewicz, an analyst with the Polish Institute of International Affairs (PISM).

“The war in Ukraine is a stimulus for the South Korean arms industry,” Pietrewicz, said. “The interest in South Korea’s offer may be even greater if one takes into account the huge disappointment of NATO's Eastern Flank countries with the attitude of Germany.”

The reluctance of some other countries to act has opened this opportunity, said Ramon Pacheco Pardo, the Korea Chair at the Brussels School of Governance.

"Someone has to arm Ukraine, and South Korea is seizing this opportunity," he said.

NO LETHAL AID

Seoul, however, isn't ready to acknowledge the sale has anything to do with Ukraine.

A U.S. ally, South Korea's policy is that it will not provide Ukraine with lethal aid, and has sought to avoid antagonizing Russia - both for economic reasons and the influence that Moscow can exert with North Korea.

When asked if this deal signals greater involvement in the Ukraine conflict, South Korean Foreign Minister Park Jin stressed that it was only done bilaterally with Poland.

Poland has already given Ukraine some of its AHS Krab howitzers, which are made with components from South Korea. One security source said such transfers could require Seoul's approval.

A spokesman for South Korea's Defense Acquisition Program Administration said it does not confirm details on individual exports approvals, and said the latest deals with Warsaw are not related to helping Ukraine, but are aimed at boosting Poland's armed forces.

"I think that it's partly the business opportunity but also a political gesture," Pacheco Pardo said. "South Korea will get a hit from this in terms of its relations with Russia, so there is this political choice."

LONG-TERM PLANS

The Export-Import Bank of Korea said the nation's arms exports hit a record high of more than $7 billion last year, but this deal would potentially dwarf that.

Officials have not confirmed its value, but the fighter jets alone are worth around $3 billion, according to manufacturer Korea Aerospace Industries (KAI), and Poland said it is one of their most important and largest defence orders in recent years.

U.S.-based defence analyst firm Forecast International said the deal could be larger than Poland’s entire current-year defense allocation of $14.1 billion.

"It's like all of our companies, large and small, have come together to work on one project for the whole year, so it's massive," said Eom Hyo-sik, a former executive at Hanwha and a retired military officer.

Blaszczak said the deal goes beyond merely “filling the gaps we have in our armed forces,” and represents a “strategic approach” including technology transfers that will see Poland build many of the South Korean weapons and cooperate with Seoul long into the future.

Among the weapons involved in the deal are variants of the K2 Black Panther tank, which is manufactured by Hyundai Rotem, and the K9 Thunder, a self-propelled howitzer which is built by Hanwha Defense.

Hanwha Defense said it plans to establish a branch in Poland to use for the expansion of European defense exports, including the K9, Redback armoured vehicles, and guided missiles.

The first stage of the deal will involve 180 tanks and 48 howitzers, with the first deliveries this year. A second stage will include more than 800 tanks and 600 howitzers, and by 2026 both will be produced in Poland, Blaszczak said.

The first FA-50 jets, which can be used for training as well as combat, will arrive by the middle of next year, he added. KAI said it will help the Polish government and companies to establish maintenance, training, and production facilities which it hopes could eventually help it sell 1,000 FA-50s globally, as well as generate interest in its next-generation KF-21 jet.

With massive Polish arms deal S.Korea steps closer to Ukraine war
 

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