Fate of two subs in balance
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Fate of two subs in balance

Payment put off after PM comes under fire for Covid response

A graphic showing the specifications and pictures of the Chinese submarines. (Photo: Apichit Jinakul)
A graphic showing the specifications and pictures of the Chinese submarines. (Photo: Apichit Jinakul)

The fate of two of three submarines hangs in the balance now that next year's instalment payment for them has been shelved.

Dubbed by the navy as "vaccine of the sea", the planned procurement of the second and third submarines ran into their biggest financial hurdle yet when the first instalment worth 3.37 billion baht was put on hold despite it having been bargained down to 900 million baht in the early stages of budget scrutiny.

Payments for the two Yuan-class S26T submarines, worth a combined 22.5 billion baht, was to be spread over six years starting this year.

It is one of the most contentious expenses in the defence budget slated for the next fiscal year which officially kicks off in October.

Prime Minister Prayut Chan-o-cha, who is concurrently defence minister, has reportedly ordered next fiscal year's instalment for the submarines to be suspended amid demands from the opposition that the money be diverted to help ease the Covid-19 crisis.

A source in the Defence Ministry said the ministry made it known to navy chief Adm Chartchai Sriworakhan that next year's instalment would be put off.

The "signal" from the premier came only two days before the budget scrutiny meeting took place.

"A thought had crossed Adm Chatchai's mind that he should withdraw the instalment request at the onset of the third outbreak.

"But there was no 'signal' from the prime minister at the time," the source said.

After Gen Prayut indicated he wanted the instalment halted, Deputy Prime Minister Prawit Wongsuwon, who also leads the ruling Palang Pracharath Party (PPRP), instructed party secretary-general Thamanat Prompow to inform the budget scrutiny committee that the PPRP objected to the instalment proposal, according to the source.

The move came after Yutthapong Charasathien, an MP of the main opposition Pheu Thai Party MP and member of the House committee vetting the budget bill, attacked the proposed submarine purchase funding.

The Maha Sarakham MP also threatened to expose an alleged broker in the sub procurement deal, who he claimed retained ties with Gen Prawit.

However, the allegation was strongly denied by Adm Chartchai and Defence Ministry spokesman Lt Gen Kongcheep Tantrawanich.

They insisted no broker was necessary since the Thai and Chinese governments had sealed the deal through direct contact.

A source in the navy said that in the beginning, Gen Prayut had hoped a reduction rather than an outright suspension of the initial instalment payments would at least keep the deal alive.

At the same time, the navy managed to convince Beijing not to raise the price tag of the submarines despite the smaller instalments.

China offered special prices for the submarines because the government agreed to buy three of them.

Even as the third outbreak of Covid-19 was detected in early April, the instalment plan appeared intact with no indication of it being halted.

But when infections soared past the 10,000 daily mark with fatalities exceeding 100 a day, calls for Gen Prayut to step down as prime minister grew louder and a crisis of faith in him set in.

The political pressure piled on Gen Prayut may have in large part driven him to retreat on the instalment.

The opposition, meanwhile, vowed not to stop at the suspended instalment. It declared the submarine procurement project must be scrapped altogether.

"There's nothing wrong with getting one submarine. We'll have to make do for now. Wouldn't we be better off doing that?" Mr Yutthapong said.

The first submarine, being built in the Chinese city of Wuhan, is due for completion in 2023.

The navy drew up a strategy to have three submarines in commission for the defence of territorial waters in both the Andaman Sea and the Gulf of Thailand.

A third was to be kept for rotation during maintenance.

The navy source said it feared the submarine deals would suffer further delays even when the pandemic crisis subsides as the national budget would focus on rebuilding the economy.

For that reason, the submarine purchase, viewed by critics as symbolic of Gen Prayut's power, would continue to draw resistance.

Despite opposition from some quarters, navy spokesman Chettha Jaipiam said the navy was duty-bound to submit a budget request for the subs every year. "We'll do the same next year," he added.

The navy source predicted that after the Covid-19 crisis was over, international conflicts might escalate, which would compel Thailand to raise its defence capability.

The delay in procurement would erode the government's reputation in the eyes of the Chinese.

The second and third submarines will take six years to build and any lengthy procurement delay could see Thailand end up paying more with inflation factored in, according to the source.

The navy has also invested in auxiliary and telecommunication systems and built a dockyard to accommodate three submarines.

"Like the Covid-19 vaccine, having submarines can repel threats," the source said, noting that in peacetime, the submarines' value may be overlooked.

The submarines are well-worth the investment for safeguarding the country's 24-billion-baht maritime assets and resources in the lucrative commercial shipping, fishery and related industries, according to the source.

The navy forms the frontline marine defence force. "And we need to be armed for deterrent purposes," the source said.

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