Paul Lewis/BEIJING

GEC-Marconi's drawn-out contractual negotiations with the Chinese air force to supply the Argus 2000 airborne early warning (AEW) radar system are in danger of reaching an impasse over the issue of pricing.

The two sides have been engaged in negotiations since late last year on the cost of retrofitting four Ilyushin Il-76 transport aircraft with the AEW system, but are believed to far be from agreement. "There is a yawning gap between the asking price and what the air force claims it can afford," says an industry source.

China is believed to be seeking to negotiate with the UK supplier on the price of individual Argus 2000 systems, rather than an overall package price. It is further understood that the latest round of discussions held in recent weeks has made little progress. The team of GEC-Marconi negotiators has again been recalled to the UK.

Officials continue to warn that the longer it takes to finalise a deal, the less likely it is to happen. The mechanically steered Argus 2000 is based on the former RAF Nimrod AEW system and is regarded as only an interim solution for the air force, until a more sophisticated phased-array system can be fielded.

Israel Aircraft Industries (IAI) has already reached agreement with China to modify for trial purposes a single Il-76 transport with a dorsal-mounted, electronically steered Elta Phalcon system. The air force's Project 932 office, tasked with overseeing its AEW requirements, apparently believes that fitting the IAI system into the Russian aircraft is technically more risky than adding the bi-polar Argus.

A potential complication with the UK-supplied AEW radar is the question of export approval. GEC-Marconi had a mandate from the UK's former Conservative Government to supply the Argus 2000 to Beijing, but still has to obtain similar clearance from its Labour successor.

Racal's earlier sale of its Searchwater radar to the Chinese navy was controversial because of Europe's loosely defined arms embargo against China. Nevertheless, the 1996 deal has proceeded. The first modified Shaanxi Y-8 maritime patrol aircraft is expected to begin flight trials soon.

Source: Flight International