hankyoreh

Park Hyun

At first glance, Canada’s Oct. 19 federal election may not have appeared to have much to do with South Korea. But the Liberal Party, which swept to victory in the voting, had previously pledged to cancel the Conservative government’s plans to purchase F-35 stealth fighter aircraft. The cancellation would have international repercussions, since it would be the first by one of the nine countries involved in jointly developing the F-35 and could cause the sale price to increase. Meanwhile, it was reported that countries like Norway were also reexamining the costs and development process for the aircraft.

The fate of the F-35 after its selection as Canada‘s next-generation fighter holds a number of implications for South Korea. Thirty-three Canadian companies currently supply parts after the country joined the development project by the US company Lockheed Martin in 1997. In 2010, the Canadian Ministry of National Defence announced that it planned to purchase 65 of the fighters. The total cost would be $16 billion, including the $9 billion purchase price and twenty years of maintenance.

But dogged efforts by the opposition eventually revealed that the price tag was bogus. The Parliamentary Budget Officer announced that the actual total costs for 30 years of operation would be $29.3 billion. The Office of the Auditor General revealed a total cost of $25 billion even for 20 years of operation -- $9 billion more than what the defence ministry had announced. It also recommended a longer time frame for operation in order to calculate costs more accurately. The Office of the Auditor General of Canada is a body independent from the administration that reports its findings to Parliament.

In 2012, Ottawa was finally led to set up an organization separate from the defence ministry to oversee the F-35 purchase. It also commissioned the global accounting firm KMPG to produce a cost estimate. The KMPG findings were shocking: a total cost of $45.8 billion, or around 51 trillion won, for 42 years of operation. The number included the $9 billion purchase price, $20 billion in operation costs, and $13.3 billion for maintenance and repairs. The tail now looked to be wagging the dog, and the Canadian government finally announced late that year that it was putting the purchase plan on hold. The then-ruling Conservative Party did plan to revisit the purchase plan at a later date, given the potential blow to Canadian parts suppliers. Its rout in last month’s election suggests that its hopes were in vain.

The most notable aspect in the Canadian F-35 saga is the role played by the opposition, which doggedly went after the administration in its attempts to hide the actual total price tag. A report by the national broadcaster CBC noted that the opposition had submitted over twenty demands for written responses in addition to its verbal questioning. In 2011, a new election had to be held after the House of Commons passed a motion of non-confidence, with the government’s refusal to submit data ruled to be in contempt of parliament. Many began arguing that the total F-35 costs should not only include the purchase price, but also associated expenses over the period of the fighter’s use. That seemed legitimate in light of the nature of the F-35‘s costs, with far more expensive maintenance and operation expenses than previous fighters.

When the Park Geun-hye administration signed a contract last year to purchase 40 F-35s, it only shared the purchase price of around 7.3 trillion won (US$6.4 billion). Even that was only an anticipated number, thanks to the foreign military sales (FMS) format in which the US Defense Department would be purchasing the aircraft on Seoul’s behalf. The method allows South Korea to purchase fighters for the same price that the US Defense Department would be able to acquire them, but it also leaves it holding the bag for any increase in production costs from development delays or production cutbacks, which is unfair. If the price were calculated to cover 42 years of use as Canada did, the F-35‘s total cost to South Korea would soar to an estimated 31.8 trillion won (US$28 billion).

It is unclear whether this country even needs to buy the F-35 at such an astronomical rate after the refusal to transfer key technology for the Korean fighter (KF-X) project. We should reconsider it starting now.

By Park Hyun, staff reporter

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