Agreement found in Type 214 Submarine deal

10:57 GMT, May 29, 2009 One is for sure: The relations on defence procurement programmes between Athens and Berlin have seen better days. Just a few years ago the Greek and German defence authorities had a very fruitful and strong binding. The Hellenic Ministry of Defence, in its pursuit of the goal to renew and upgrade its military equipment, did on many occasions look towards Germany. In 2005, for instance, Athens signed a contract to purchase 333 second-hand Leopard 2A4s and 150 Leopard 1A5 main battle tanks from Bundeswehr (German Armed Forces) reserves in a deal worth some €270 million. On September 25, 2003 Greece became the ninth customer country of the European NH90 programme when it placed an order for 20 helicopters plus 14 options in a contract worth €657 million. Furthermore, on February 15, 2000 the Hellenic Navy signed a contract with the German Howaldtswerke-Deutsche Werft (HDW) shipyard for three Type 214 submarines which the Hellenic Navy called Papanikolis class. A fourth boat was then ordered in June 2004.

However, things have changed since. Facing a huge budget deficit Greece decided to give priority to long-term financial stabilisation, which amongst other measures involved putting a cap on defence expenditures. The orders placed in previous years resulted in huge payment obligations, it was clear that Athens could not meet all of these demands at the same time. Thus, sort of a complex “waiting game” came into being – winning extra time by the simple expedient of delaying acceptance of deliveries on ongoing programmes.

So, “several problems” were identified with the German tanks and payments were accordingly delayed, leaving Krauss-Maffei Wegmann (KMW) waiting for the money for nearly 100 tanks after 126 had been delivered. HDW found itself in an even more embroiled situation. The first submarine, ‘Papanikolis’, was laid down in Kiel in February 2001 and launched in April 2004. According to the agreement it was planned to build the remaining three boats at the Hellenic Shipyards, near Athens, which just as HDW is now part of the German ThyssenKrupp Marine Systems (TKMS) group. As soon as the ‘Papanikolis’ started her sea trials, however, the Hellenic Navy found a veritable host of major and minor problems with the vessel, which until today has resulted in a refusal to accept her.

The Hellenic Navy declared that the submarine suffered from insufficient stability while sailing in rough sea conditions, heeling by as much as 35-58°. Beyond that they found that the AIP system became inoperable after a few hours and noted problems with the ISUS battle system. The official report of the Navy also said that sea water was leaking into the hydraulic systems and that the submarine was not quiet as expected. Therefore, ‘Papanikolis’ has been docked in Kiel since 2006.

German industry accepted some of the shortcomings liabilities and maintains to have finally fixed the problems, however, they are still waiting payment. Some expert suggest that Greece is intentionally protracting the problem in order to delay payments and renegotiate the price.

Now it seems that at least the submarine programme could move forward. According to Hellenic news sources, the two sides have come to a tentative agreement that will see the Navy accept three of the four submarines that have been ordered, excluding the Papanikolis. Although the Navy confirms that the problems have been fixed, it is unwilling to accept the submarine which has been docked during the last years.

The Chief of the Hellenic Navy General Staff, Vice Admiral Giorgos Karamalikis was quoted as saying that the technical problems with the Type 214 submarine were being solved and Greece could soon be in a position to accept the three follow-on vessels. According to the news agency, HDW is willing to keep the Papanikolis and try to sell it to another interested buyer, which may be Poland.

Yesterday’s decision could represent a change back for better in the bilateral relationship and lead to the payment of many hundreds of millions Euros overdue with German companies. Other huge defence deals with German participations, such as the Eurofighter programme, could again become interesting.