Facing the Guns versus Butter Dilemma: Kilo Class Submarines for the Philippine Navy?

Dr. Renato de Castro, Trustee and Convenor of National Security and East Asian Affairs Program of the Stratbase ADRi

The Philippine government, for the first time since 1946, released a national security strategy (NSS) doctrine in July 2018. Entitled “Security and Development for Transformational Change and Well-being for the Filipino People,” the 59-page NSS provides a realistic assessment of the Indo-Pacific region as marked by “increased uncertainty and unpredictability.” It identifies the rivalry of the major powers as the “most important (regional) strategic concern” and notes that the Philippines’ geography is both a source of strength and vulnerability as it provides a strong temptation to expansionist powers. Learning from the lesson of history, the NSS emphasizes the need to increase the size and capability of the Philippine Navy (PN) and the Philippine Air Force (PAF) as quickly as possible. This is to enable these two armed services to be country’s external deterrence in the face of an uncertain and potentially dangerous Indo-Pacific region.

In the same month, President Rodrigo Duterte agreed to finance the second phase or horizon two of the 15-year Armed Forces of the Philippines’ (AFP) modernization program. Horizon two (to be implemented from 2018 to 2022) provides for an ambitious and expensive period in which the Philippine military will begin acquiring weapon system for external defense, which includes two diesel-electric submarines for the PN.

The current PN Flag Officer, Vice-Admiral Robert Empedrad, had pushed for the immediate inclusion of the submarines in horizon two as undersea warfare, he argued, is the trend in naval warfare. The Department of National Defense (DND) supported his initiative, saying that the acquisition of the submarines will boost the morale of the AFP and improve the PN’s capability in defending the Philippine-occupied land features in the South China Sea.

Since 2015, the PN had already established a submarine program office that is in the process of reviewing contemporary submarine designs and drawing up concepts for the operational use of this naval asset. The PN is eyeing the purchase of two conventional diesel-electronic submarines possibly from France, South Korea, Germany or Russia. DND Secretary Delfin Lorenza, however, revealed that President Duterte wants the PN’s first submarine to be bought from Russia.

Aware that the Philippine government has a limited budget for its submarine acquisition program, Russia has offered soft loans for the PN to purchase two second-hand Kilo-class submarines which have displacement of 2,350 tons and maximum speed of 20 knots. In early August 2018, the PN and the Russian Navy started discussions on a draft Memorandum of Understanding that would require Russia to provide the PN with submarine training to support military operations, maintenance, and sustainable capability. The Philippines will decide whether or not to acquire its submarines and from whom within the next 12 months. The Philippines and Brunei Darussalam are the only two of seven littoral Southeast Asian countries that do not possess a submarine among its naval assets.

Since assuming the presidency in mid-2016, President Duterte has supported the AFP modernization program that began during President Benigno Aquino III’s term, as a challenge then to China’s maritime expansion in the South China Sea. He increased the 2017 defense budget by 15% and the supplemental allocation for the AFP modernization program from Php 20 billion to Php 25 billion, approved the acquisition of two guided missile frigates from South Korea, and received five former Japan Maritime Self-Defense Force TC-90 reconnaissance aircraft for the PN. Despite his substantial support for the PN, the submarine acquisition project faces the following obstacles:

  • The PN is in a very tight financial situation. It still needs to replace several of its World War II-era surface combatants and transport ships with modern naval assets, overhaul its overworked surface combatants, and more importantly, build bigger and proper naval bases that could house its newly acquired surface combatants like the three Del Pilar-class (former U.S. Coast Guard Hamilton Class cutters) frigates and two guided-missile frigates from South Korea that are expected to arrive in 2020. Currently, the PN’s newly acquired surface combatants are using civilian piers all over the country.
  • The PN will have to compete with other services, especially against the Philippine Army (PA), for its rightful share of the defense budget. The 2017 siege of Marawi City and the raging communist insurgency have enabled the PA to take the lion’s share of defense budget as it has been given the green light to recruit additional 20,000 soldiers for its counter-insurgency operations and to acquire towed and self-propelled howitzers, light tanks, and multiple launch rocket systems to develop its conventional capabilities.
  • The DND and the AFP will have to convince President Duterte and his economic officials to further increase the defense budget given the more pressing domestic priorities such as the ambitious and expensive infrastructure program and the president’s personal agenda of changing the Philippines’ system of government from a unitary to a federal system.

After his trip to Russia last month, Secretary Lorenzana admitted that the Philippines is still looking for other affordable options to the Kilo-class submarines because they are more expensive at the cost of Php 10.7 billion per unit. Another Php 10 billion will be spent for training of the officers and crew, maintenance, infrastructure, and spare-parts. The total cost of the program will be Php 30 billion or about 30% of the projected Php 300 billion for horizon two of the AFP modernization program. The PN’s submarine project shoves the Duterte administration to face squarely the guns versus butter dilemma.




Image Source: Armed Forces of the Philippines

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