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AIRBUS AND BOEING – WHO WILL DOMINATE COMMERCIAL SKIES?

The battle between Airbus and Boeing to reign over the commercial aerospace market is far from over. As analysts predicted this past October, Boeing (the world’s largest aircraft manufacturer and an American company) is indeed pushing to strengthen its partnership with Brazilian aircraft manufacturer Embraer. In December 2017, the two companies discussed a potential combination and many are speculating as to what this combination shall entail.

However, the potential combination is not as simple as it seems. Any transaction of this nature has political implications and would be subject to approval firstly by the Brazilian government and regulators, the two companies’ boards, and Embraer’s shareholders. The Brazilian government’s golden share in Embraer means that it has veto powers over the creation of and/or changes in military programmes involving Brazil or otherwise and change in a controlling interest in the corporation, amongst others.

Boeing has a long-standing relationship with Brazil spanning 80 years beginning with the first delivery of F4B-4 fighters in 1932. Since the 60’s, Boeing has been selling commercial aircraft to Brazilian airlines and it was a natural progression for Boeing to establish an office in São Paulo in October 2011. Boeing and Embraer’s collaboration is nothing new and in June 2012 the companies signed an agreement to work on the KC-390 aircraft programme by sharing technical knowledge and evaluating markets for medium-lift military transport opportunities. More recently in 2016, the companies collaborated in the Boeing ecoDemonstrator programme by conducting tests on an Embraer E170 aircraft to reduce environmental impact and increase aircraft efficiency and performance.

Embraer is a proudly Brazilian company and an important player in Brazil’s defence industry therefore Brazil is treading cautiously as it would be ceding significant control to a foreign company. The partnership will focus on the commercial sector only as the Brazilian defence ministry wishes for its defence programme to remain independent. In January, Brazilian Minister of Defence, Raul Jungmann, held a meeting at his office in Brasília with representatives of Boeing to discuss the company’s partnership with Embraer. Jungmann was in favour of a partnership between Boeing and Embraer, but maintained that the Brazilian company’s shareholding control is a matter of national sovereignty and will not be transferred or negotiated.

A commercial aerospace partnership with Embraer would give Boeing a broader portfolio of aircraft and a leading share of the 70 to 130+ segment, creating stiff competition for Bombardier’s C Series programme, which since last October is now backed by Boeing’s European rival Airbus. Colin Bole, Senior Vice president for commercial aircraft at Bombardier, is of the opinion that talks between Boeing and Embraer on joining forces are an acknowledgement that Boeing does not have an answer to the C Series and that there is nothing in the 737 family that properly addresses the 100 to 150-seat category. It will be interesting to see how the competition plays out in the coming months.

 

 

Written by Sylvia Caravotas (Satovarac Consulting) for OIDA

SOUTH AFRICAN DEFENCE FOCUSES ON CYBER THREATS

As connectivity grows on the African continent, so will the threat of cyber-attacks. The South African Department of Defence in particular is planning through the defence intelligence programme (and with an allocation of R72 million over the medium term) to institutionalize a cyber security policy, implement its cyber warfare strategy, and establish a cyber command centre.

The Council for Scientific and Industrial Research (CSIR) has developed cyber security solutions to defend South Africa’s digital borders from cyber-attacks by promoting compliance with South Africa’s Protection of Personal Information Act (POPIA) and institutionalizing its cyber security policy. According to Johnny Botha, Cyber Warfare Project Manager at the CSIR and contributor to a study titled Pro-Active Data Breach Detection: Examining Accuracy and Applicability On Personal Information Detected, the amount of personal information being leaked online remains substantial. An additional paper to which Mr Botha has contributed – High-Level Comparison Between the South African Protection of Personal Information Act and International Data Protection Laws, highlights that POPIA is on par with international privacy legislation.

The CSIR’s Cyber Defence Research Group continues to support the DoD’s Directorate Information Warfare (DIW) with cyber-related research, development, and solutions. The DIW is mandated with securing South Africa’s military cyberspace. When it comes to defending a country’s cyber battlespace, it is important to identify cyber vulnerabilities, adversaries’ cyber weaknesses, and develop offensive and defensive strategies and capabilities as well as cyber security awareness initiatives, which must extend to industry, governmental departments, and security structures. South African defence entities are also focusing their attention on cyber defence. In September 2016, Denel announced the Denel Tactical Cyber Command Centre, which will work closely with local and international cyber domain players.

South Africa’s offensive cyber warfare strategy began during FY 2016/17, when the DoD developed a cyber warfare strategy aligned with the country’s stance and capabilities. The cyber warfare strategy will be submitted for consideration to the Justice, Crime Prevention and Security (JCPS) cluster ministers during FY 2017/18. Cyber security measures must also have a defensive approach to protect and shield sensitive and classified information from unauthorized access, modification, destruction, or disclosure. The DOD’s Cyber Security Incident Response Team (CSIRT) will be established to prevent or recover from a cyber warfare incident through the establishment of the cyber command centre.

Bridging the digital divide is a double-edged sword as connectivity is a conduit for cyber adversaries to access any system. A sound cyber security policy and cyber warfare strategy counteract these threats, which can severely affect and wreak havoc on a country’s security and economy by penetrating infrastructure, financial, and other key institutions essential to a country’s function. Information-based processes and systems as well as communication networks must be protected with capabilities that have the potential to neutralize, destroy, or exploit cyber-attacks.

 

Written by Sylvia Caravotas (Satovarac Consulting) for OIDA

 

CROATIA AND SERBIA FOCUS ON AIR DEFENCE

Croatia and Serbia are two Balkan states that will see increased defence budgets in 2018 with a focus on air defence. Croatia, unlike Serbia, is a member of the European Union (EU) and the North Atlantic Treaty Organization (NATO). Serbia is taking steps to join the EU, but has no desire at present to join NATO and wishes to remain militarily neutral. It is however a member of NATO’s Partnership for Peace programme and continues to have political dialogue and cooperation with NATO on democratic, institutional, and defence reforms. Serbia’s opposition of Kosovo’s declaration as a sovereign and independent state will continue to influence any alliances and membership.

 

Multi-role combat aircraft have been on Croatia’s procurement agenda for some time and although delayed for 15 years, eventually moved forward in October with proposals from Greece, Israel, Sweden, and the U.S. The winning bid will bolster technological and industrial development, employment growth, and investment. On 7 September, Croatia approved the purchase of AGM-114 Hellfire missiles to arm 16 of its Bell OH-58D Kiowa Warrior helicopters donated by the U.S, a deal worth around $3 million. In 2018, the ministry of defence is set to receive around $67 million more, of which $54 million is earmarked for fighter jets.

 

Whilst Serbia partakes in EU accession negotiations it is also strengthening military ties with Russia, however former Serbian President, Tomislav Nikolić, previously stated that Serbia’s alliance with Russia would not compromise its EU membership aspirations regardless of tensions over Kosovo’s status. Serbia’s relationship with Russia allows for increased military and economic development without the conditions usually imposed by Western economic institutions. These ties were evident when Serbian President Aleksandar Vučić met with Russian President Vladimir Putin in December to discuss military cooperation. Possible arms purchases from Russia are six MI-17 helicopters, supplies of Buk-M1 and Buk-M2 missile systems, the delivery of six additional MiG-29 fighter jets, and S-300 air-defence systems (either from Russia directly or Belarus). In October, the Serbian Air Force received six older model MiG-29 fighter jets with Russia indicating the further donation of 30 used battle tanks and 30 armoured vehicles.

 

In 2018, Serbia’s defence budget is to increase by RSD11.6 billion (around $114 million) or 19.7% to RSD70.5 billion (around $700 million). The increased defence budget will allow for the procurement of the versatile H145M helicopter and the upgrading of ten MiG-29 fighter jets. Further, the ministry of defence is looking to acquire locally produced Lazar 3 eight-wheel drive armoured vehicles and Milos unmanned ground vehicles. The Serbian Army is soon to be equipped with 9mm Glock 17 handguns and 5.56mm FN Minimi light machine guns.

 

 

 

Written by Sylvia Caravotas (Satovarac Consulting) for OIDA

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