India wants fighter jets – but without American baggage (The Christian Science Monitor)

Bangalore, India – An Indian Air Force pilot dressed in a flight suit and sunglasses struts up to an F/A-18 flight simulator and a Boeing salesman engages.

“Your call sign must be Maverick,” says the Boeing agent, referencing "Top Gun," an ‘80s film probably older than this Indian jet jockey. “You look like Tom Cruise."

After a curt “no,” the Indian pilot asks to test out the machine. He lauds the F/A-18's maneuverability and touch-screen cockpit display. It's a far cry from what he currently flies: A Soviet MiG-21 that was outdated even in Maverick’s day. India is looking to buy 126 new fighter jets and Boeing is dogfighting against five international firms to land the deal this year.

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Despite some of the sales tactics on display at the recent Aero India 2011 show in Bangalore, there’s more to selling fighter jets than moving Chevys. Giving "test-drives" and offering value for money is important, but so are international politics. And on that score, US firms have hurdles that European competitors do not.

Much is at stake for the American economy, including a $10 billion-plus sale and an estimated 35,000 new US jobs. Trips by presidents Barack Obama and George W. Bush to India have increased US chances of bringing home that bacon. But America’s not-so-humble foreign policies over the years may prove costly in an era of strong European competition in the defense industry.

“The quality of European airplanes today – for that matter the Russians, too – has now reached a point where countries like India really do have choices,” says Ashley Tellis, author of a study on the jet fighter tender for the Carnegie Endowment for International Peace. “In that sense, [US] political choices are more constrained than they were before.”

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India's 'trust deficit' toward AmericaRetired Indian generals and industry analysts say Indian officials have two reservations about buying American.

First, New Delhi worries about relying on US parts given the sanctions Washington imposed in 1998 when India went nuclear. In case of a war with archrival Pakistan – a US strategic ally – would Washington curtail military trade again?

Second, US law requires defense agreements to be signed by any country purchasing certain high-tech military equipment. The US failed during Obama’s visit last year to get Indian sign-off on two such agreements: the Basic Exchange and Cooperation Agreement (BECA), and the Communication Interoperability and Security Memorandum of Agreement (CISMoA).

According to Mr. Tellis, the CISMoA would keep India from transferring sensitive US encryption technology to another country. The BECA, meanwhile, has been misunderstood as a deal that would plot Indian military units on a global grid visible to the US and its partners.

“The fact of the matter is that this is not true,â€

He and other analysts doubt the defense agreements will be central to Delhi’s decision on the fighters. But the suspicion about the agreements speaks to the lingering distrust of the US.

An Indian defense industry consultant who works with international firms and the Indian military says the Indians will only buy American for systems where there is no good competitor. The trust deficit, he says, comes not just from the 1998 sanctions, but US treatment of other friends.

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Do European firms have less baggage?It’s a point other nations bring up.

Ravit Rudoy, marketing communications manager for Israeli firm Rafael Advanced Defense Systems Ltd., argues the US will be careful to ensure a military balance between India and Pakistan, while that concern is not shared by the one Russian and three European firms also vying for the fighter jet deal.

Tellis sees Europeans as more willing to provide equipment with no questions asked because their firms need foreign sales more to stay afloat. “The European market is so small, so they cannot afford to make their commercial products playthings of geopolitics.”

Representatives of Boeing and Lockheed Martin say international politics are not a hurdle for US firms here. Rick McCrary, Boeing’s lead on the jet fighter bid, points to the “ongoing, improving relationship” between Washington and New Delhi that has now spanned three administrations, both Republican and Democratic.

Obama builds goodwill toward US firmsMuch has changed since 1998, including the signing of a nuclear deal under Mr. Bush and the lifting of export restrictions on Mr. Obama’s recent visit, he adds.

Ramesh Phadke, a retired Indian Air Force officer, agrees that Indian suspicions about the US have diminished in recent years, signaled by some purchases of equipment.

“America maintaining a special relationship with Pakistan has always been a major factor in all decisions India has made with Americans, but it’s also been accepted up to a point,” says Air Commodore Phadke. “That does not mean that India likes it.”

Privately, one US executive who is not authorized to speak argues the defense agreements are a “barrier” for the American bids.

“The playing field isn’t level” with the Europeans, says the executive. “We’re perceived by the Indians as being heavy handed. If you actually read the language of the agreements they are not as intrusive as the Indians are making them out to be…. [But] they want a relationship on an equal footing.”

Obama has played to that desire by endorsing India’s bid for a permanent UN Security Council seat. And Tellis says the administration will continue to be accommodating if a US firm is a chosen as a finalist.

“I think the Obama administration will really do its utmost to make sure that whatever concerns India has both on a political and technical level are assuaged, because the US at this point for economic reasons really wants to see this deal.”

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(Editor's note: The original article misidentified the nationality of firm Rafael Advanced Defense Systems Ltd., as well as the type of Boeing fighter jet at the Aero India 2011 show.)

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Pirates grab four American sailors off Oman (Reuters)

MOGADISHU (Reuters) – A yacht with four Americans on board is believed to have been hijacked in the Arabian Sea, the U.S. embassy in Nairobi said on Saturday.

Pirate gangs plaguing the shipping lanes through the Gulf of Aden and Indian Ocean typically target large merchant ships, with oil tankers the prize catch, but the snatching of foreigners can also yield high ransoms.

"Preliminary reports indicate that a U.S.-flagged vessel tentatively named as the Quest has been hijacked in the Arabian Sea. There were four U.S. citizens on board," an embassy spokesman said.

All relevant U.S. government agencies were monitoring the situation, he added.

Earlier, a regional maritime expert said the 58-foot S/V Quest had been hijacked 240 miles off Oman on Friday afternoon as it sailed from India to Salalah in Oman.

Ecoterra, an advocacy group monitoring piracy in the Indian Ocean, said the 58-foot yacht was owned by Jean and Scott Adam. It was not immediately clear if the couple were on the yacht at the time of the attack.

The couple began a round-the-world trip in 2004, according to their website.

East Africa maritime expert Andrew Mwangura said the ship was now heading toward Somalia, on the Horn of Africa.

Somalia has been mired in violence and awash with weapons since the overthrow of a dictator in 1991, and the lack of effective government has allowed piracy to flourish.

Pirate gangs in the Indian Ocean are making tens of millions of dollars in ransoms, and international navies have struggled to contain the problem owing to the vast distances involved.

Pirates in southern Somalia are still holding two South Africans seized from their yacht late last year. In November, another gang released the British couple Paul and Rachel Chandler after holding them captive for more than 14 months.

One French hostage was killed and four were freed in April 2009 when French forces attacked a yacht that had been seized by Somali pirates.

(Reporting by Richard Lough; Editing by Kevin Liffey)

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Anglo American net profit nearly triples (AFP)

LONDON (AFP) – Global miner Anglo American said Friday that net profits almost tripled to $6.54 billion (4.82 billion euros) last year, boosted by soaring commodity prices and booming demand from emerging markets.

Earnings after tax rocketed 170 percent in 2010 from $2.43 billion in 2009, London-based Anglo American said in a results statement.

The firm, which has key mining operations in South Africa, said operating profit almost doubled to $9.8 billion in 2010 while revenues jumped 34 percent to $32.93 billion.

"Anglo American performed strongly in 2010, both operationally and financially, and we have continued to deliver on our clear strategic objectives," chief executive Cynthia Carroll in the earnings release.

"In addition to benefiting from higher commodity prices, our focused commodity businesses are driving superior operating performances, through major productivity improvements, disciplined cost management and the benefits of our asset optimisation and global supply chain programmes."

Anglo added that demand growth would be driven by the rapid economic expansion of emerging markets -- particularly China and India.

"The outlook for demand growth for Anglo American's commodities remains extremely positive. Such demand will be driven by the resource intensive nature of robust economic growth in the emerging markets, led by China and India and many countries across Asia, Latin America and Africa.

"While there remain a number of uncertainties in the immediate term, not least in the developed economies, our medium- to long-term view of demand growth for our commodities remains positive, driven by the resource intensive nature of economic growth in emerging markets."

The resources sector enjoyed a vintage year in 2010 owing to sky-rocketing prices for vital raw materials and booming emerging-markets demand.

Earlier this week, the world's top miner BHP Billiton said its half-year net profits soared 72 percent to $10.52 billion while global giant Rio Tinto said its annual net profits almost tripled to $14.32 billion.

Copper, iron ore, tin and gold remain near all-time record peaks, while silver and palladium are at multi-decade highs and aluminum, nickel, platinum and coal have risen to their highest levels since the global financial crisis.

Separately, Anglo also unveiled a joint-venture with French building material giant Lafarge to create a leading UK construction materials company with annual sales of about £1.8 billion.

"Anglo American Plc and Lafarge SA announce their agreement to combine their cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the United Kingdom, comprising Tarmac Limited and Lafarge Cement UK, Lafarge Aggregates and Concrete UK," they said in a statement.

"The transaction will form a 50:50 joint venture and will create a leading UK construction materials company, with a portfolio of high quality assets drawing on the complementary geographical distribution of operations and assets, the skills of two experienced management teams and a portfolio of well-known and innovative brands."

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