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Thai-Chinese Submarine Deal Faces Axe: PM Prayut

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Thai-Chinese Submarine Deal Faces Axe: PM Prayut

A German company has refused to supply the necessary diesel engines to the Chinese firm building the submarine.

Thai-Chinese Submarine Deal Faces Axe: PM Prayut

The keel laying ceremony for the Thailand’s S26T Yuan-class submarine at a shipyard in Wuhan, China, on September 5, 2019.

Credit: Twitter/龙龑之

Thailand’s procurement of a submarine from China could be canceled after a German company said it was unable to supply the needed propulsion system, the country’s Prime Minister Prayut Chan-o-cha said earlier this week.

In 2017, Thailand agreed to the purchase of the S26T submarine for 13.5 billion baht ($402.9 million), with payments to be made in installments over a seven-year period, with delivery expected next year.

But that deadline is unlikely to be met following the recent news that Germany’s Motor and Turbine Union company has refused to supply cutting-edge MTU396 diesel engines to the Chinese firm building the S26T Yuan-class submarine for the Royal Thai Navy (RTN). The German company is reportedly barred from making the sale due to a European Union government embargo on the sale of military items to China, imposed in the aftermath of the 1989 Tiananmen Square massacres.

“What do we do with a submarine with no engines? Why should we purchase it?” Prayut told reporters on Monday, according to the Bangkok Post. “If the agreement can’t be fulfilled, we have to figure out what to do. Isn’t that how we solve a problem?”

According to Thai PBS World, the two governments will hold talks later this month in a bid to settle the submarine engine issue, with Adm. Somprasong Nilsamai, the chief of the RTN, insisting that China Shipbuilding & Offshore International Co (CSOC) has to comply with the contract, which specifically makes mention of the German propulsion system.

CSOC has offered the RTN two alternatives: to use Chinese-made engines that it deems equivalent to the German ones, or to transfer two of China’s decommissioned submarines to Thailand. Thailand has refused both offers.

When asked if the Thai government has the ability to terminate the contract, Prayut said the matter will be considered by authorities concerned. But he insisted that any cancellation would not affect relations between Bangkok  and Beijing, which have warmed since Prayut’s seizure of power in a coup in 2014.

The most pressing question raised by the German engine affair is why neither side anticipated it, given the fact that the EU embargo has been in place for more than three decades. In any event, the engine troubles add a new twist to what has been since its inception a controversial procurement. Observers have long questioned the wisdom or necessity of Thailand acquiring submarines, a goal of the RTN since the 1960s, and the specific Chinese deal has been criticized as a costly extravagance amid the economic devastation of the COVID-19 pandemic.

Indeed, in September 2020, amid the economically ruinous lockdowns and facing a rising tide of public opposition, the Thai government officially postponed the purchase of two additional submarines from China, which were set to cost Bangkok 22.5 billion baht ($671 million). Last year, Prayut again ordered the RTN to delay the purchase of the two boats, which has been put on hold for four years. Given the current troubles, however, it seems like Thailand will be lucky if it ends up with one of its planned fleet of submarines.