Bulgarian Navy Finally Gets 1st Panther Helicopter in Troubled Eurocopter Deal

Defense | October 9, 2011, Sunday // 17:09|  views

(Left) Bulgaria's PM Borisov, Defense Minister Angelov, Read Admiral Manushev are among the guests at the ceremony for receiving the first Eurocopter 'Panther' helicopter (right) by the Bulgarian Navy. Photo by Defense Ministry

The Bulgarian Navy has formally received the first out of a total of three Panther helicopters in a highly troubled supply deal that Bulgarian Defense Ministry made with Eurocopter.

The first "Panther" was welcomed at a ceremony at the naval helicopter base "Chayka" near the Black Sea city of Varna by Prime Minister Boyko Borisov, Defense Minister Anyu Angelov, the commander-in-chief of the Bulgarian Navy Rear Admiral Plamen Manushev, Varna and Great Preslav's Bishop Kiril, as well as representatives of the French Embassy and the supplier, Eurocopter.

"For the first time since I have been serving, the Bulgarian Navy is getting the best possible equipment in the world," Read Admiral Manushev declared, thanking the PM and the Defense Minister for the funding they have allocated for the naval forces.

Borisov said the helicopter is an "important acquisition for the security of the Bulgarian external Schengen Area border" (even though it remains unclear when Bulgaria will technically be admitted to the Schengen Agreement).

Defense Minister Angelov stressed the multifunctional features of the Panther helicopters, and the fact that they can be used by various institutions and for various tasks such as seeking and rescue missions, sea border monitoring, humanitarian and anti-piracy operations, anti-terrorist actions, among others.

The Bulgarian Navy was originally supposed to get 6 Panther helicopters but money issues and controversial supply contract provisions forced the Bulgarian government to renegotiate the pricy deal with Eurocopter, under which the Bulgarian Air Force already got 12 Cougar helicopters.

The Defense Ministry has clarified that in August and September 6 Bulgarian Navy pilots and 9 technicians completed training at the Eurocopter training center in France. The Bulgarian Navy is expected to receive two more Panthers by the end of 2011.

In June 2011, Bulgaria's government and Eurocopter finally reached an agreement on the troubled deal for the purchase of 6 Panther helicopters for the Bulgarian Navy, with Eurocopter agreeing to cut the deal in half.

The breakthrough came after Bulgaria's Defense Minister Anyu Angelov got his French counterpart Gerard Longuet to agree to releasing Bulgaria of half of the Panthers, and later the same day Angelov and Olivier Michalon, Eurocopter's Vice President of Sales for Europe and Central Asia, signed an agreement which meets the Bulgarian demands.

Thus, instead of 6 Panther helicopters, Bulgaria is to get 3 by the end of 2011. What is more, the advance funds already transferred by the Bulgarian government to Societe Generale, the intermediary bank, for all six originally negotiated helicopters will be used to cover the cost of the three Panthers that Bulgaria will receive. The price will also cover maintenance costs and spare parts as well penalties.

Back in June 2011, the Bulgarian Defense Ministry said there were remaining issues of dispute between Eurocopter and the Bulgarian government but "these will be settled with continuing talks in a spirit of understanding."

The Panther helicopters will be unique for the Bulgarian Navy, which currently has no similar aircraft. They can be used for reconaissance and control of aquatory, rescues, evacuation, fighting piracy, illegal trafficiking, humanitarian operations.

According to Defense Minister Angelov, his team managed to defend Bulgaria's interests – i.e. to negotiate a downsizing of the arms deal – in hard talks that took seven months.

Earlier in June 2011, Bulgaria's Cabinet authorized Defense Minister Anyu Angelov to conduct talks with helicopter manufacturer Eurocopter in order to shake off the purchase of 3 out of 6 "Panther" helicopters for the Bulgarian Navy.

The decision was the latest in a series of attempts on part of Bulgaria's center-right Borisov Cabinet to renegotiate a number of major arms purchase deals made by previous governments under loose contracts and in a time when the Bulgarian budget enjoyed a big surplus. In this line of action, Bulgaria's Defense Ministry managed to renegotiate, i.e. cancel or downsize arms deals with Daimler-Chrysler and Alenia Aeronautica.

According to the decision of the Bulgarian government, the rationale for asking Eurocopter to cut in half the helicopter order is "the lack of money" of the Bulgarian Defense Ministry.

Minister Angelov has previously described the talks with Eurocopter as "extremely difficult" because they have to be conducted not directly with the supplier but through a bank, which is an intermediary.

The contract with Eurocopter was singed by former Defense Minister Nikolay Svinarov in January 2005. Under it, Bulgaria was supposed to receive 12 Cougar helicopters for the Bulgarian Air Force, and 6 Panther helicopters for the Bulgarian Navy at the price of EUR 358 M.

By August 2010, Bulgaria had received 11 Cougar, and had paid 60% of the entire deal – about EUR 240 M – which is the guarantee deposit.

Under the contract, if the Bulgarian state failed to pay the entire due sum, the bank servicing the deal could withdraw 60% of the value of each of the helicopters whose delivery had not been paid for from the EUR 240 M deposit made by the Bulgarian government.

Subsequently, the Bulgarian government decided to pay all the money for the Cougars and to ask Eurocopter to renegotiate the deal in order to give up buying the three Panthers but this decision was not formalized until Wednesday, June 15, 2011.

In December 2010, the 12th Cougar helicopter arrived from France, and was received at the Krumovo base of the Bulgarian Air Force. According to a statement of the Bulgarian Defense Ministry, the 12 Cougars for the Air Force are to be used for "combat searches and rescue operations."

In August 2010, Bulgaria's government allocated BGN 256 M from the country's fiscal reserve in order to complete several arms deals with foreign companies widely seen as problematic, including the deal with Eurocopter.

At present, the Bulgarian Air Force cannot even use the helicopters already delivered to them because under the terms of the deal they are not entitled to do that until the accounts have been fully settled.

Back in December 2010, Angelov indicated that Eurocopter had very little desire to renounce the penalties worth EUR 12 M that Bulgaria had to pay for delaying its scheduled payments.

The Bulgarian government has been holding meetings with the European Aeronautic Defence and Space Company N.V. (EADS), which is Eurocopter's parent company, in an attempt to reach a settlement sooner.

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Tags: fiscal reserve, Bulgarian Army, Defense Minister, Defense Ministry, Eurocopter, helicopter, Cougar, Panther, Anyu Angelov, default, Boyko Borisov, Prime Minister, Belgium, frigate, helicopter, Alenia Aeronautica, Spartan, Daimler-Chrysler, Daimler, arms deals, EADS, Bulgarian Navy, Bulgarian Air Force, Gerard Longuet, Chaika air base, Varna, Plamen Manushev


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