January 29, 2010 / 10:02 PM / 8 years ago

UPDATE 4-Obama proposes his first arms sales to Taiwan

* Sales to Taiwan could add to U.S.-Chinese strains

* Package includes Black Hawk helicopters, PAC-3 missiles

* Total value could be $6.4 billion

* U.S. officials hope to keep China ties stable (Adds U.S. official’s comments, paragraph 13)

By Jim Wolf and Paul Eckert

WASHINGTON, Jan 29 (Reuters) - The Obama administration notified the U.S. Congress on Friday of its first proposed arms sales to Taiwan, a potential $6.4 billion package bound to add to rising U.S.-China strains over trade and cyber security.

The Pentagon’s Defense Security Cooperation Agency proposed five separate sales, including 60 UH-60M Black Hawk helicopters, 114 Patriot “Advanced Capability-3” anti-missile missiles, and a command-and-control enhancement known as Multifunctional Information Distribution Systems.

The United States also would supply 12 advanced Harpoon missiles capable of both land-strike and anti-ship missions, plus two refurbished Osprey-class mine-hunting ships, the security agency said in notices to Congress.

The announcement on Friday follows sparring over cyber attacks and censorship that prompted the U.S. search engine Google Inc (GOOG.O) to threaten to quit the China market, as well as broader trade disputes and friction over President Barack Obama’s expected meeting with Tibet’s exiled leader, the Dalai Lama.

China since 1949 has regarded the self-ruled island as a wayward province subject to unification with the communist-run mainland, by force if necessary.

The United States, Taiwan’s main arms supplier, is mandated under the 1979 Taiwan Relations Act to aid Taiwan’s self-defense. The law was enacted when Washington switched diplomatic recognition to Beijing from Taipei.

A U.S. State Department official played down the chances of the sale disrupting U.S.-Chinese relations.

“We have worked through these issues before. We will work through them again,” said the official, who spoke to reporters on condition that he not be identified by name.

A senior U.S. official, also speaking on condition of anonymity, told reporters in a teleconference that a Chinese embassy official had been called in on Friday morning to be told of the proposed sales before they were announced but there was no earlier notice given to Beijing.

‘TAIWAN’S NEEDS’

Taiwan also has sought to buy 66 U.S. Lockheed Martin F-16C/D fighter jets to upgrade its F-16 fleet. Such a sale could seriously roil U.S.-China ties.

“We have discussed that with them on a variety of occasions and we’re in the process of assessing Taiwan’s needs and requirements for that capability,” the senior U.S. official said. He declined to say when a decision on this would come.

U.S. arms sales are designed to reassure Taipei and maintain a balance across the Taiwan Strait, where China has deployed more than 1,000 missiles to back up its territorial claim. China’s posture has not eased despite the election of China-friendly Taiwanese President Ma Ying-jeou in 2008.

“There’s a connection between what Beijing does in its military modernization and the threat they pose to the island and the types of sales that we authorize,” said another senior U.S. official who also briefed reporters.

China usually responds to U.S. weapons sales to Taiwan with stern diplomatic protests. Beijing underscores its anger by freezing military-to-military relations — contacts sought by Washington to build confidence and avoid accidental clashes.

China suspended military-to-military contacts with the United States after then-President George W. Bush notified Congress in October 2008 of plans to sell Taiwan a long-delayed arms package also valued at about $6.4 billion.

U.S. INTERESTS

The notice of a potential sale is required by law and does not mean a deal has been concluded. The Pentagon said the proposed new sales would serve U.S. national, economic and security interests by backing Taiwan’s defense capabilities.

The Black Hawk, a tactical transport helicopter, is built by Sikorsky Aircraft, a unit of United Technologies Corp (UTX.N). The sale of 60 of them would be worth $3.1 billion, the notification said.

The PAC-3 missile is built by Lockheed Martin Corp (LMT.N), and Raytheon Co (RTN.N) is the system integrator. The value of 114 of them along with radar sets and related gear was estimated by the Pentagon at $2.8 billion.

Lockheed was the prime contractor for the original “Po Sheng” (Broad Victory) program, designed to integrate Taiwan’s air, marine, ground and command-and-control assets in a single network. The new command-and-control technology would be worth about $340 million, the Pentagon said.

Omitted from the new package was design work on diesel-electric submarines, something Bush had offered Taiwan as early as 2001. The submarine work was dropped because of a lack of consensus among Taiwanese leaders on whether to go ahead with the project, said Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council.

Bush had cleared both the submarines and the Black Hawks for sale in April 2001 but skipped including them when he finally sent Congress his 2008 arms package after much debate in Taiwan’s legislative Yuan.

U.S. Defense Secretary Robert Gates said in a Sept. 16 speech that investments by countries like China in anti-ship weaponry “could threaten America’s primary way to project power and help allies in the Pacific — in particular our forward air bases and carrier strike groups.” (Editing by Mohammad Zargham and Will Dunham)

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