* Taiwan sought jets to counter China's strength
* China had warned US that deal could inflame tensions
* Upgrades to existing fighters still possible
(Recasts throughout with comments, Lockheed statement)
By Phil Stewart
WASHINGTON, Aug 15 A U.S. sale of 66 new
Lockheed Martin (LMT.N) F-16 C/D fighter jets to Taiwan appears
unlikely to go through, people familiar with the matter said on
Monday, although they cautioned that no final decision has been
Taiwan has repeatedly asked Washington to agree to sell it
the advanced F-16 fighter jets, citing the need to counter the
growing military strength of China, which views the island as a
China cut off ties with the U.S. military for most of last
year to protest an American arms package for Taiwan. While
other deals were possible, sources following the issue said
they believed Washington would probably opt against the sale of
"If the Obama administration goes this way, as expected,
then it's a political decision," said Rupert Hammond-Chambers,
president of the U.S.-Taiwan Business Council, which supports
the sale of new fighter jets to Taiwan.
A source familiar with the matter, who declined to be
named, also said the deal appeared unlikely but said no
decision had been made.
Defense News, citing an unnamed Taiwan defense official,
reported on Sunday that the United States had formally refused
Taiwan's request for the Lockheed Martin jets, claims that were
not confirmed in the United States.
A State Department official said no decisions have been
made on potential arms sales to Taiwan.
A spokeswoman at Lockheed Martin said the company had not
been informed by the U.S. government of a final decision
regarding the sale of new F-16s to Taiwan or of upgrades to its
Hammond-Chambers said he believed the Obama administration
was expected instead to offer Taiwan a package for upgrading
existing F-16A/B jets worth up to $4.2 billion.
Taiwan's Defense Ministry said it could not comment on the
Defense News report, as it had not heard from the United
"However, we want to point out that the Republic of China
(Taiwan) does hope the sale of new F-16C/D fighter aircraft
will go through. We are in urgent need of the aircraft,"
spokesman Luo shou-he told Reuters.
BIDEN TO VISIT CHINA
The House Foreign Affairs Committee last month urged Obama
to sell Taiwan "all the F-16 fighter jets that are needed by
Taiwan." A Republican aide to the committee said it had not
been notified of any decision on the matter.
Any fresh U.S. arms support to Taiwan is likely to raise
hackles in Beijing, but the advanced fighter jets have been an
especially touchy point for China, which this week will host
U.S. Vice President Joe Biden. [ID:nN1E77E11A]
The United States switched diplomatic recognition from
Taiwan to China in 1979 and recognizes Beijing's "one China"
policy. But it is also Taiwan's biggest ally and arms supplier
and is duty-bound by legislation to help the island in the
event of attack.
Washington had been set to make a decision by October on
Taiwan's request for the fighter jets, balancing its legal
obligations to Taiwan under the Taiwan Relations Act against
the need to avoid upsets with a major creditor and trading
"Frankly, it is not a real surprise. The real surprise is
that they sold them the F-16s in the first place," said Richard
Bitzinger, a senior fellow and regional defense expert at
Singapore's S. Rajaratnam School of International Studies.
But Bitzinger said it was not a total victory for Beijing
because a potential upgrade to existing fighters would go a
long way in covering Taiwan's loss of a new batch of F-16s.
"The types of upgrades they are talking about would make
them the most advanced F-16s in the world. This is a
significant upgrade, and I am sure a lot of that work will go
to Taiwanese companies. In that regard, it may be a better
deal," he said.
In May, a visiting Chinese military commander warned
against any future U.S. arms sales to Taiwan. And recently, a
popular tabloid linked to China's Communist Party's mouthpiece
argued that China should use its "financial weapon to slap
Washington" over any arms sales to Taiwan.
(Additional reporting by Faith Hung in Taipei; Chris Buckley
and Michael Martina in Beijing and Andrew Quinn, Jim Wolf and
Susan Cornwell in Washington, and Karen Jacobs in Atlanta;
Editing by Nick Macfie, Dave Zimmerman and Christopher Wilson)