UPDATE 3-Japan picks Lockheed F-35 fighter as allies stress tight ties

Tue Dec 20, 2011 12:53am EST

* Japan, U.S. stress tight ties after death of North Korean leader

* Decision a shot in the arm for F-35 programme

* Choice a major setback for Boeing

By Kiyoshi Takenaka

TOKYO, Dec 20 (Reuters) - Japan picked Lockheed Martin's F-35 jet as its next mainstay fighter on Tuesday, choosing the aircraft over combat-proven but less stealthy rivals, as concern simmers over North Korea and as China introduces its own stealth fighters.

The decision came as Japan and the United States stressed that their security alliance was tight in the face of worry about an unstable North Korea after the death of its leader, Kim Jong-il.

Defence Minister Yasuo Ichikawa said the decision to buy 42 of the stealth aircraft, valued by analysts at more than $7 billion, would help Japan adjust to a changing security environment after Monday's announcement of the death of the 69-year-old North Korean leader.

"The security environment surrounding future fighter jets is transforming. The F-35 has capabilities that can firmly respond to the changes," Ichikawa told reporters.

Lockheed Martin and the Pentagon hailed Japan's selection of the F-35, saying it would help establish a strategic, conventional deterrent in the Asia-Pacific region, where concern simmers about instability under Kim's successor, his untested youngest son, Kim Jong-un.

"The F-35 Program Office looks forward to strengthening partnerships with Japan, and contributing to enhanced security throughout the Asia Pacific region," the Pentagon said in a statement after Japan announced its decision.

The F-35, which is in an early production stage, competed against Boeing's F/A-18 and the Eurofighter Typhoon, made by a consortium of European companies including BAE Systems .

Experts said the decision to opt for the U.S. plane, made informally well before news of Kim's death, reflected Japan's desire to tighten U.S. ties in the face of concern over China's rising military might and other regional uncertainties.

"It reflects Japan's recognition on a variety of levels that at a time of greater insecurity, it needs to be more deeply engaged with the United States on security issues," said Brad Glosserman, executive director at Honolulu's Pacific Forum CSIS.

In a sign the allies meant to stand together, U.S. President Barack Obama spoke by telephone to Japanese Prime Minister Yoshihiko Noda and underscored the U.S. commitment to its allies, the White House said.

Japanese Chief Cabinet Secretary Osamu Fujimura told a news conference that Washington and its two close Asia allies, Japan and South Korea, were likely to hold high-level talks on North Korea soon. "The date has not been decided but it will be at the soonest possible opportunity," he said.

U.S.-Japan relations had frayed after the novice Democratic Party of Japan took power in 2009 for the first time, vowing to recalibrate the alliance on a more equal basis and attempting, unsuccessfully, to keep a pledge to move a U.S. military base off Japan's Okinawa island.

Noda, who took office last September, has firmly shifted gears back to a more traditional security stance.

"Once again, Japan's security policy is right back to the post-war Japanese mainstream -- the decision that the U.S. is Japan's best security partner," Glosserman said.

Japan had been widely expected to choose the F-35 due to its advanced stealth capability and U.S. origin. Stealth technology has drawn much attention in Japan since China, which has a long-running territorial dispute with Japan, in January confirmed it had held its first test flight of the J-20 stealth fighter jet.

Despite Sino-Japanese tension over territorial feuds, maritime resources and a bitter wartime past, Noda will nonetheless be seeking China's cooperation in coping with North Korea when he visits Beijing on Dec. 25-26.

"Instructions from the prime minister were that we need to establish close cooperation and exchange of information with the United States, South Korea and China, so we will seek to work with China on this understanding," Fujimura said.

BOOST FOR LOCKHEED MARTIN

Japan's choice of the F-35 comes as a shot in the arm for Lockheed Martin's F-35 programme, which has been restructured twice in the past two years and is expected to boost the odds that South Korea will follow suit with its own order for 60 fighters. Japan will pay 9.9 billion yen per fighter including backup parts in the initial stage of procurement.

"This programme badly needed an endorsement like this, particularly one from a technically respected customer. But there are still many complications, especially price tag and work share demands," said Richard Aboulafia, an analyst with the U.S.-based Teal Group.

He said the F-35 programme was facing scrutiny from U.S. lawmakers and officials who need to trim hundreds of billions of dollars from the defense budget over the next decade.

Boeing's loss of the order would be a real setback for the company's prospects in the fighter business, especially since there were few other large competitions open anymore, said Loren Thompson of Lexington Institute.

"The market place is signaling to Boeing that its days in the fighter business may be numbered," Thompson said.

Japanese firms Mitsubishi Heavy Industries Ltd , IHI Corp and Mitsubishi Electric Corp will participate in the production and maintenance of the F-35, the Defense Ministry said.

A Lockheed Martin official said Japanese defence contractors could become global suppliers to the F-35 stealth fighter programme if Japan's government decided to ease a decades-old ban on exports of military equipment.

"The Japanese aerospace industry is world class, so if there was a relaxation (of the export ban) it would be very logical for them to have the opportunity and indeed it would be a very good opportunity to participate in the F35 global supply chain," Dave Scott, director of international business development for the stealth fighter, told Reuters.

Japan is considering easing the export ban, a step that might allow its contractors to bid for contracts in the United States, which spends 10 times as much on its military.

Ending the ban would also allow Japan to buy aircraft, ships, missiles and other equipment more cheaply by allowing domestic manufacturers to tap overseas markets and lower production costs through economies of scale.

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