Thailand and China to continue submarine purchase negotiations

Negotiations are set to resume next Wednesday between Thailand and China, as they seek to resolve the protracted issue surrounding a submarine purchase agreement. A 13-person delegation from China, encompassing military officials and representatives of the S26T Yuan-class submarine manufacturers, is due to meet their Thai counterparts. The submarine was part of a procurement deal agreed upon by the Royal Thai Navy (RTN) and China in 2017, according to a navy insider.

Defence Minister, Sutin Klungsang, outlined that the forthcoming talks would revolve around two remaining options. The first possibility is that Thailand cancels the submarine agreement, opting instead for a frigate and a compensation agreement. Alternatively, China’s proposal to replace the initially agreed German-made submarine engine with a Chinese alternative could be accepted, alongside a more favourable compensation deal, said Sutin.

“The final choice will be in Thailand’s best interests.”

Sutin though, remained uncertain whether a conclusive decision would be reached during next week’s meeting. The necessity of preserving positive Thai-Chinese relations will also influence the outcome of the negotiations.

The original submarine agreement was complicated by Germany’s refusal to sell the designated engine to China, citing its military and defence status. In response, China Shipbuilding & Offshore International Co (CSOC), the contracted submarine manufacturer, suggested installing Chinese engines in the submarines. Although initially rejected by the RTN, the proposal was later accepted, indicating a desire to advance the submarine procurement process.

To represent him at the meeting with the Chinese delegates, Sutin has appointed his adviser and chair of the RTN’s submarine procurement review committee, General Somsak Roongsita. Representatives from the Ministry of Commerce will also participate in discussions, exploring the potential to incorporate the Thai government’s offset policy into the submarine deal.

This policy mandates reciprocal trade benefits as part of any new military hardware procurement agreements. The source suggested that approval of the Chinese-made engine for the first submarine might pave the way for the RTN’s plan to purchase two additional new submarines from China, reported Bangkok Post.

In 2017, the RTN secured the first deal for one submarine, worth 36 billion baht (US$973.5 million), as part of a broader plan to purchase three new submarines from China, which was supposed to be delivered last year. However, they have struggled to obtain funding for the remaining two submarines.