Thai Prime Minister warns of cancelling submarine deal with China

Prime Minister of Thailand Prayut Chan-o-cha has warned the Chinese government that a planned acquisition of newly built submarines will be discontinued if the diesel engines indicated in the purchase agreement will not be fitted.

Speaking during a recent press conference, Mr Prayut said the warning to Beijing comes following the refusal of German manufacturer MTU to supply the engines that will power the first of a planned three Type 039A or Yuan-class diesel-electric submarines slated for the Royal Thai Navy.

MTU is reportedly being prevented from supplying the engines due to an EU government embargo that prohibits the sale of military equipment and related items to China.

Philipp Doert, Germany’s defence attache to Thailand, told local media that China offered the MTU engines as part of the submarine contract without first informing the German government about the engines’ inclusion in the purchase agreement.

Mr Prayut said that the contract termination will be discussed by relevant authorities and will be carried out in accordance with the procurement process.

The prime minister then added that the parties involved are working towards resolving the issue and that contract termination, should it become necessary, will not affect relations between the two countries.

Representatives of the Thai and Chinese governments are set to hold talks later this month with the aim of settling the engine issue.

China Shipbuilding and Offshore International Company (CSOC), the builder of the submarines, has proposed alternatives in the form of Chinese-made engines reportedly similar to the MTU diesels and the transfer of two ex-People’s Liberation Army Navy submarines in place of the Yuan-class boats covered in the purchase agreement. Thailand has reportedly rejected both offers.