Secret missile offer

Press, 4 March 1982, Page 17

Secret missile offer

By

JON CONNELL,

of the

London “Sunday Times”

The Reagan administration has made a unique offer to the British Government as an inducement to buy the

Trident D 5 missile system. The plan, backed up with big savings on over-all costs, is for firms in Britain to be given the chance to build parts for the missiles — both for those that will come to Britain, and for the hundreds to be produced for the American navy as well. It could be presented by Mrs Thatcher as securing or even creating jobs in Britain. If the deal is .successfully completed, it will be put to the Thatcher Cabinet soon. It has been sought by the Defence Secretary, John Nott, and his officials in response to fears that the purchase of Trident as the replacement for Britain’s - independent nuclear deterrent could prove an unacceptably severe drain on Britain's resources.

By winning British companies a slice of the action, the Defence Ministry hopes both to offset part of the cost and, more- crucially, to defuse the political opposition to Trident. And the possibility of lucrative contracts and more jobs for the hard-pressed defence industry will make the purchase much harder for any future British Government to cancel.

The new agreement would replace the existing one — made between Mrs Thatcher and former President. Carter in June 1980 — for the purchase, of the original version of Trident, at an estimated cost of $11,700 million. If it gets through Cabinet and is subsequently ratified by Parliament in Britain and Congress in the United States, it will lead to Britain’s getting the new Trident 11, also know as'Ds, on terms more generous than in any previous Anglo-Ameri-can nuclear weapons deal. . The fact that the Reagan administration has agreed to it is evidence of the high price it is prepared to pay for Britain’s political support. There would be no direct strings attached but, as one of those privy to the deal explained: “The attitude .of the administration, and even more that of congress, is conditioned by the way the ’ United Kingdom acts ..in. the

wider defence interest of the alliance and the United States:” .. ■

Within this general political support, Britain would agree, for example, to continue the patrol it has maintained with frigates and maritime aircraft in the Gulf of Oman since the start of the Iran-Iraq war. It would also undoubtedly be persuaded to supply larger quantities of British-made plutonium for American nuclear warheads.

The British involvement in the Trident programme would be made possible under an arrangement called “second sourcing.” This means that while the Reagan administration is obliged by American policy to find a prime contractor for every component of the missiles within the U.S. it can farm out part of the production work to a “second source” overseas. : . The sheer scale of- the Trident programme means that these sub-contracts could add up to a lot of business. The Americans are building 20 submarines, each carrying. 24 missiles — which themselves may each carry up to 14 multiple independ-ently-targetable warheads. Britain would,...build' for submarines of its own, each equipped with 16 missile tubes. However, in the first instance — partly for arms control reasons — it is apparently not planning to take delivery of all the 64 missiles necessary, ,to fill all .the, tubes. . . ' , Apart from “second’sourcing,” the key elements in the deal are as follows: • Research and Develop- ■ ment cost. Instead of a percentage, Britain would pay a fixed research arid development charge, believed to have been set at less than 5 per cent of the presently estimated R. and D. cost. ...■ :.- ■■ -... ; : ..... . R. and D. costs invariably escalate.’ arid previous missile . deals have required

Britain to pay a percentage of the final cost. When bargaining began on C 4, the Americans proposed 10 per cent, which was subsequently reduced. For D 5 it has been reduced even further, although to “offset” this reduc- 1 tion the Ministry of Defence will agree to supply and man Rapier surface-to-air missiles in defence of United States air force bases in Britain. The unprecedented offer of a fixed R. and D. contribution would insulate Britain against the cost of any future problems in Ds’s development. Because of it, the R. and D. element of Ds’s cost is likely to be only some $4O million more than the $144 million negotiated for C 4. • Unit cost. Britain would pay the same for each missile as the United States navy. This is similar to the agreements reached on both Britain’s existing Polaris missiles (under the Polaris Sales Agreement of 1962) and on C 4 under the 1980 agreement. • ft Facilities cost. This is a perfectly standard charge, levied to cover the cost of American testing of different components of the missile. Under the proposed deal, however; it would be waived entirely, saving Britain almost $135 million. ft Overheads. ... Essentially, this is a handling charge levied by the United States Department of Defence. As with Polaris and C 4, it would amount to 1 or 2 per cent of the British purchase price. However, the Americans have agreed that part of the money thus raised should be used to set up a. “project liaison office”. in London, probably at the American embassy. This will be staffed by officials who will advise British companies how to tender for contracts. Given all this, ' the extra expense of buying D 5 instead of C 4 will come to about $1.17 mHlion for the missile system itself. However, the

total cost of Britain’s Trident, including submarines and warheads that are built here, 'is now likely to be between $16,000 million and $19,000 million at current prices.

The submarines are going to end up costing hundreds ol millions of dollars more than originally forecast, for a' variety of reasons. The most important of these is that they will need bigger midsections, to accommodate the larger D 5 missiles — Mr Nott has spoken of a submarine P/z times longer than St Paul’s Cathedral is high. That, in turn, means deepening Coulport harbour in Loch Long in Scotland, and blasting larger shelters out of the granite at the side of the loch.

Moreover, there have been improvements in submarine technology since June 198 C that will add to the cost:

® A new propulsion plant, the Pressure Water Reactor Mark 11, which gives greater endurance at sea.

® A new “sonar suit,” for detecting enemy submarines and surface ships.

© New tactical weapons - torpedoes — for self-defence.

The biggest, single factor in the cost increase, however, will be inflation and the weakening of the pound against the dollar since June, 1980. All told, the Ministry ol Defence estimates that this accounts for almost half the extra spending. Of course, the increase should be reduced through the involvement of British companies, since this will mean more money being spent in pounds as opposed to dollars.

The Treasury is likely to be convinced by the deal because of the more favourable time-scale. Buying C 4 would have entailed heavy expenditure over the next three years, since the imminent closure of the C 4 production line meant the missiles would have had to be bought quickly. The expenditure on D 5 will rise much more slowly, starting from some S47OM to s7ooMin 1983-84 and rising to a peak of $1640M to SIBBOM in 1987-88. The costs of.C4 would have been spread over 15 years; for D 5 it will be 20 or 21 .years.. ... *■*• .