HAL’s Argentina deal for its LCA Tejas on hold | The Financial Express

HAL’s Argentina deal for its LCA Tejas on hold

Argentine Air Force commission is carrying out the onsite inspection of F-16 A/B MLU fighter bombers.

HAL’s Argentina deal for its LCA Tejas on hold

Top Argentine officials are in Denmark to evaluate the US aerospace company Lockheed Martin’s F-16s that it plans to acquire second hand.

Argentine Air Force commission is carrying out the onsite inspection of F-16 A/B MLU fighter bombers. According to reports in a local news outlet Zona Militar, this could be the culmination of the technical evaluations in the selection process. After China’s JF-17 Thunder and India’s Hindustan Aeronautics Limited (HAL) Light Combat Aircraft (LCA) Tejas, this is the third offering to undergo technical evaluations.

However, in a general consensus, the community is skeptical of any Argentine deal to go through.

The Great Argentine Hunt

Argentina has been looking for a fighter jet for their Air Force for a while. Historically, given their arduous relations with the United Kingdom, the South American nation has been unable to build credible defences.

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During the pandemic, there were reports that the South American nation Argentina had finalized the Chinese JF-17. In fact, sources in the know let on that China had apparently flown a few JF-17 fighters to Argentina where their Air Force evaluated them for about a month. In the wake of preemptive news, rumour mill has it that the United States pressured Argentina into letting go of the deal. If the deal went through, China would have had a foothold in America’s backyard. Thereafter, India proactively pitched the HAL LCA Tejas and the Argentine was receptive. In multiple rounds, the bond and the probability of the deal both increased.

Sources close to the deal shared that various visits by the top defence officials from Argentina often included their top pilots in the entourage to evaluate the LCA Tejas at HAL facilities in India. Rumour has it that Argentina requested another such opportunity to evaluate the indigenous fighter jet but HAL has deferred it to sometime in 2023 for unknown reasons.

India’s proactiveness and Argentine keenness has been on the display with a high level delegation from HAL also reaching Argentina earlier this year. It came close on the heels of external affairs minister Dr S Jaishankar’s visit to the South American nation in August. Just last week, Zona Militar reported that Argentine Chief of the Joint Chiefs of Staff, General Juan Martin Paleo met with the Indian Ambassador to Argentina, Dinesh Bhatia, in the follow up to his recent visit to India where he also stopped at HAL facilities.

In wake of such bilateral engagement, domestic conditions might deter Argentina from finalising any fighter.

Domestic Deterrence

In the global recessionary trend, things look excessively bleak for the South American nation. The Argentine economy is under great stress due to inflation. Peso, their currency, has been volatile and interest as high as 52 per cent, investors are dumping peso assets.

As recent as 2020, Argentina restructured its sovereign bonds in a massive US$ 110 billion deal. This has proven to be ineffective as the bonds are in distressed territory with just 20-30 cents worth on the dollar. Investors are in flight, not fight. Although Argentina tightly controls the official rate against the dollar, the unofficial rate for dollars is much higher and the gap between the two rates is fast widening. This hints at an increasingly unstable economy.

In September, the Argentine government allocated around US$ 700 million for their fighter jet acquisition. While it hints at better furthering of the deal, with the present economic conditions, it alone cannot alleviate fears of defaults.

In 2023, Argentina is scheduled to undergo national general elections. For the politics of Argentina, the 20th century period of turmoil and democratic reversals remains relevant even today. The armed forces of the country reigned supreme, stifling the voice of the people. In fact, it was Jorge Rafael Videla’s dictatorship during which the daring Falklands War took place. This war is the very contentious issue with the UK that has left the nation void of modern defence equipment.

This complex history of a nation with its armed forces, along with the UK’s pressure internationally, has led to a nation reluctant to invest in defence. It is likely that in lieu of the upcoming elections, the deal for the fighter jets will be embroiled in political controversy and further jeopardise it.

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First published on: 25-11-2022 at 16:35 IST