The strange story goes back to Argentine economic woes of the last decade, and the use of military vessels as collateral for loans. When Argentina stopped paying up, and defaulted on its debts, the suddenly a whole raft of Argentine assets, including naval vessels, have become legitimate targets in the eyes of NML Capital to try and recover their debt (estimated at some £230m).
In recent years the Argentinean government has been struggling to try and prevent loss of assets in this manner. Reportedly President Kirchner does not fly abroad in Argentine Air Force jets for fear that they may be confiscated on landing by authorities. Most recently the Argentine sail training vessel ‘Libertad’ (classed as a Frigate) pulled into Ghana on a routine training cruise. Whilst alongside the vessel was impounded, as NML tried to take possession of it, agreeing to return the vessel for a payment of some £12.5m.
Such a payment was not forthcoming, and the Argentine Govt evacuated the vessel, chartering a jet to bring them home for fear that any Argentine Air Force jets would also be impounded. The result is that the vessel remains in the hands of the company, and is now likely to be put up for sale on the commercial market.
More seriously, reports now indicate that an Argentine frigate docked for emergency repairs in Simonstown (the Espora) is also likely to be subject of an attempt to be impounded by the company. In reality it is unlikely that such efforts would succeed, as South African courts are reportedly no friends of vulture companies, but it does mark a significant precedent.
|ARA Libertad in Ghana - Elena Craescu/European Pressphoto Agency|
What does this mean?
There has been some discussion that the seizure of Libertad and possible seizure of Espora somehow mark an act of war against Argentina. This is errant nonsense – no matter how you look at it, there does not seem to be any way that a US company can engage in a form of conflict with a country. If followed to its logical conclusion, one would have to argue that Argentina is duty bound to declare war on the USA, as this is the home of the company. It is highly unlikely that this situation would occur, and in reality the key lesson that can surely be drawn from this is not to include military assets as collateral for a loan!
More seriously though, the case does highlight the many challenges facing the Argentine Navy at present. On a practical level, it is now becoming ever harder for Argentine forces to deploy overseas, and the list of countries where they can put into port is reducing. In effect this reduces the ability of Argentina to work with allied nations, or to conduct coalition exercises or operations beyond their own immediate neighbourhood. The Espora incident shows that even fairly ‘safe’ countries like South Africa will still see embarrassing court cases. As such, Argentinas’ navy now faces a slow decline into operational irrelevance.
International exercises are a key part of operating a modern navy. There are constant lessons to be learned from operations, basic issues to be ironed out and understanding built. One of the reasons why the UK is a relatively significant maritime power is due to the wide programme of international exercises it conducts each year. By working with different nations, capability is improved, understanding on interoperability increases and bugs can be ironed out. The result is that UK vessels can easily slip into multi-national groups, and the UK is often sought after as a contributing power – just look at how often the UK plays a key part in leading the multi-national coalition forces in both the Middle East and Horn of Africa. By contrast, when the French began to reintegrate into NATO following thirty years of Gallic temper tantrums, they were reportedly very rusty and unable to keep up to date with modern operational practise.
The ability to exercise, cross fertilise ideas and ensure that your own procedures work, or could be improved is a key part of being a credible maritime power. The problem Argentina now faces is that it will be increasingly difficult to do this. The lack of fleet replenishment capability, coupled with the inability to run forward logistics sites without them being subject to court action means it will be almost impossible to deploy warships outside their immediate neighbourhood.
More broadly, participation in wider international affairs, such as back in the 1990s when Argentine vessels served off Haiti, or the participation in the first Gulf War, are likely to be curtailed. While the current Argentine political leadership may not wish to take part in such activities anyway, the fact remains that Argentina is now unable to generate maritime capability to enhance its national standing with other powers. It would be a reasonable judgement to suggest the Argentine Navy will, in the medium term, greatly suffer from this reduced ability to operate with partner nations.
The next major challenge will be the long term future of the Argentine Navy itself. At present, the fleet comprises four destroyers and nine corvettes, plus a further three conventional submarines. All of these vessels are now approaching, or significantly over, thirty years of age. They are elderly ships, and haven’t been significantly updated for many years.
ARA Espora (from Wikipedia)
By now, most navies would have active replacement programmes underway for all these vessels. The debt crisis means it is almost impossible to see a situation where the Argentine Navy receives new first rate warships within the next 10-15 years. The problem of financing such an acquisition on the international markets is a major bar to proceeding. It is highly unlikely that any reputable shipbuilder would offer meaningful credit to the Argentine Government at present, and even if it did, there is no guarantee that any foreign built new hulls wouldn’t be seized in the yards by the Vulture Funds. That is even without considering the parlous state of the Argentine acquisition budget, which has been starved of funds for years, while a long list of items requiring replacement stack up. The only recent order for the Navy has been four patrol ships back in 2010, which will be indigenously built, although news on their status remains scarce.
From a prestige perspective, the recent confiscations have cost the head of the Argentine Navy his job, and the standing of the military, always low with Kirchner, is likely to be reduced further. It is hard to see the Navy having sufficient clout at present to justify funding for a large shipbuilding programme, when all it seems to do is get its existing ships confiscated!
So, at present the Argentines cannot afford new ships, cannot get credit to build them overseas and even if they could, they’d be likely to face confiscation in the yards. It is hard to imagine many foreign governments willingly entering into sales agreements with the Argentine Govt right now. This also more broadly highlights the problems facing all three armed services which have huge amounts of obsolete equipment needing replacement; for instance this article has not even begun to consider the cost of replacing the Argentine Navy etendards, nor updating the Skyhawk fleet.
This places the current Argentine Navy on a very steep path to decline. It normally takes 15-20 years to take a new major warship class from concept phase to being fully operational. Even if work started today, the earliest that we’d start to see new vessels entering service would be in the late 2020s – early 2030s. Even if they bought an existing design, it would still take 5-10 years to get everything sorted. In this timeframe the existing vessels will only get older and in an ever more fragile state.
It is important to remember that the financial challenges facing Argentina means that funding of upgrades, maintaining munitions stocks and ensuring that current warships remain credible is also likely to suffer. Missiles, munitions and radars need spare parts, need updating and need maintenance. Most Argentine escorts use foreign sourced munitions, and it’s likely that hard currency would be needed to pay for their updating. Therefore, the Argentine Navy is stuck with the vessels it has, and is unlikely to be able to pay to update or upgrade them in the near future.
It is reasonable to assume that by the 2020s, the Argentine Navy is going to be reduced to a rump of escorts made operational by cannibalising others, and all of which are roughly 40 years old. While in the post war era, many navies could get away with running 30-40 year old warships, particularly the workhorses of the Fletcher and Gearing class, as their capability was similar to other vessels, todays navies do not have the same luxury. By the 2020s the Argentine Navy faces block obsolescence as it fields vessels which have not had an update to their weapon systems for years, and which are likely no longer supported by manufacturers. More worryingly, it is hard to see any credible replacement work going ahead for some time, so the Admirals will need to try to shepherd their resources as best they can.
Of particular concern will be the submarine fleet, which is getting ever older, and where replacement costs will be extremely expensive. Submarines have a limited life, and their performance will be ever more diminished over time – just look at the clusters of old Soviet era Whiskey and Romeo boats around the world. The Argentine Navy will face a real challenge to maintain its submarine capability in the medium term, and if not careful, could easily lose this capability forever.
One option for replacement could be to turn to the second hand market, although this would require hard cash. Argentina may be able to source some assorted hulls from Italy or other European nations as they downsize their fleets, or potentially look to acquiring cast offs from other navies in South America. Whatever solution is chosen though will require hard cash, and further increase dependence on a diverse source of spare parts, making it harder to sustain the vessels. Training overseas would be difficult, as vulture funds may try to seize assets, and many governments may be wary of doing business with a nation with such poor international standing.
So, the outlook for the Argentine Navy is increasingly grim. Isolated from traditional partners, unable to steam to locations that previously welcomed Argentine vessels, and working with an ever more unreliable fleet of elderly vessels, while funding for replacements is unlikely to be found. Currently it is hard to see the future of the Argentine Navy as being anything other than a sad decline into strategic irrelevance, particularly when one looks at the reinvigoration of the Chilean, Brazilian and Peruvian fleets. The early 20th Century saw huge competition between the major powers of South America in order to be the leading naval power. For many years Argentina presented probably the second most potent navy on the continent, but now it is hard to see it as being anything other than an also ran.