International Defense Industry Cooperation Where Success and Failure Coexist

[Kim Ho-sung, Professor of Business Administration, Korea Army Academy at Yeongcheon] South Korea's next-generation fighter jet (KF-X) development project is aimed at replacing the Air Force's outdated fighter jets, which are over 40 years old, with the latest domestically produced fighter jets. The total project cost is 8.8304 trillion KRW, making the KF-X development project one of the largest weapons development projects since the founding of Korea. Due to the enormous development costs involved, the Korean government previously chose an international cooperative development approach with Indonesia to distribute the expenses. At that time, Indonesia also had a need to replace its outdated fighter jets, aligning interests well with the Korean government, and agreed to cover 20% of the total project cost, amounting to 1.7338 trillion KRW. The remaining 80% was to be borne by our government and Korea Aerospace Industries (KAI). As the project progressed, Indonesia began to delay payments of its share. Currently, only 227.2 billion KRW, which corresponds to 13% of the total burden, has been paid. Some express concerns about whether the KF-X development project can proceed smoothly due to Indonesia's passive attitude. Was international defense cooperation always this difficult? Let's consider this by looking at European aircraft development cases, which have more experience than us.

The first international cooperation in the European aerospace sector dates back to the 1950s with the development of the French Breguet 1150 Atlantic maritime patrol aircraft. The full-fledged international cooperation in Europe was the Concorde supersonic passenger aircraft project jointly developed by the UK and France. Although this was a civilian aircraft development project, the 1962 agreement between France's Sud Aviation and the UK's British Aircraft Corporation (BAC) was not a commercial contract but an intergovernmental treaty, making it very similar to defense cooperation. The Concorde's design was divided between Sud Aviation and BAC, development and production were assigned to France's Snecma, and the engines were produced by the UK's Bristol Siddeley. The project seemed to proceed smoothly, but after the treaty between the UK and France in November 1962, the UK attempted to withdraw from the project in 1964 due to rising costs and delays. The first flight was in March 1969, commercial service began in January 1976, and service ended in October 2003, with continuous issues throughout. Ultimately, the project was completed successfully, but it was a major international project that made the UK and France realize how difficult it is to cooperate with countries having different languages and cultures.

The Eurofighter Typhoon development project, a representative European fighter jet, involved Italy's Alenia, the UK's BAe, Spain's CASA, and Germany's DASA. This project also faced many difficulties in international cooperation. Although not initially intended, it became a very long-term project, taking about 17 years from the establishment of the Eurofighter company in 1986 to the first operational deployment in 2003. As the project progressed, the end of the Cold War brought a new strategic environment, and budget issues and technical limitations among participating countries also posed problems. However, the core reason for the delay was communication issues among the four participating countries. The key lesson this case offers for global defense cooperation is that transaction costs increase as the number of participating countries grows. The initial demand from participating countries was 765 units, later reduced to 620, and then further cut to 472. By 2018, a total of 623 aircraft were produced, including 472 ordered by participating countries and 151 exported. This result fell short of the initially planned production volume, indicating that the project did not achieve sufficient economies of scale.

The project that caused even more complex problems due to the number of participating countries was not only the Eurofighter Typhoon. The Airbus A400M Atlas development project involved even more countries, and the problems increased exponentially beyond imagination. Initially, the project was led by the European Future Large Aircraft (EFLA) group, established in 1991, consisting of France's Aerospatiale, Italy's Alenia, the UK's BAe, Spain's CASA, and Germany's DASA. As the project progressed, Belgium and Turkey also joined. Italy withdrew midway, and order reductions from Germany and the UK, cost overruns compared to plans, major technical issues, Airbus's internal restructuring, and project delays were continuous problems. The first flight, scheduled for 2008, was delayed to December 2009, and the planned first delivery was postponed from 2009 to 2013. In 2009, a crisis arose when an aircraft was lost during test flights, leading to considerations of project cancellation.

Conversely, there are cases where international cooperation succeeded. Representative examples are the Jaguar and Panavia Tornado fighter jet development projects. The Jaguar project began in 1965 between the UK and France to develop two types of aircraft: supersonic fighters and trainers. The UK's BAC and France's Breguet participated in airframe development and production. For engine development, a separate industrial partnership existed between the UK's Rolls-Royce and France's Turbomeca. Fortunately, no serious problems occurred during the project, and the attack aircraft was successfully developed rather than the initially emphasized trainer. It achieved significant export success and is a good example of economies of scale. The Panavia Tornado project also benefited from economies of scale. Started in March 1969 by Germany, Italy, and the UK to design, develop, and produce an all-weather multirole fighter, it was first deployed in July 1980. Approximately 1,000 aircraft were produced, including 120 exported to Saudi Arabia, and it remains popular and in operation today.

Large-scale defense cooperation throughout history has left many precedents. Looking at past European cases, such cooperation appeared more frequently in aerospace than in maritime or land weapon systems. The reasons likely include risk distribution and realization of economies of scale due to domestic technological levels, project complexity, and the burden of large-scale investment. From the international defense cooperation cases examined so far, it is clear that both failures and successes coexist. The issues arising in the KF-X development project with Indonesia may be inevitable in large-scale international cooperative projects between countries. From a long-term perspective, this will also be a valuable accumulation of experience for Korea's defense industry, which lacks international cooperative experience.

This content was produced with the assistance of AI translation services.