Procurement: Accidentally On Purpose


February 20, 2022: German engine manufacturer MTU builds diesel engines for ships and is now in trouble because some of their engines have been used in Chinese Type 53D destroyers and Type 39 diesel-electric submarines. This became an issue recently when Thailand revealed that its new Chinese S26T submarines, an export version of the Type 39 being built in China, was going to use MTU engines. This became an issue for MTU because use of their engines in warships was forbidden by sanctions and Thailand was reporting that China was violating those sanctions. China responded by contacting MTU to see if an agreement could be reached to deal with this problem. Legally, there isn’t and for now the Thai S26Ts are on hold. This is not a new issue because German media have been reporting this issue since mid-2021 and MTU denied the allegations, insisting that it only supplied diesels for Chinese commercial ships.

MTU explained that they do not supply engines for Chinese warships but that some of their maritime diesels are also used for commercial ships and are thus dual-use technology. While technically true, the engines used in warships are distinct variants of the engines used in commercial ships and as early as 2002 another German engine builder posted on its web page site that MTU supplied the Chinese navy with military-grade diesel engines. After MTU established a joint-venture in 2010 with a Chinese engine manufacturer to build MTU maritime diesels in China, the head of the Chinese firm acknowledged that it supplied military versions of the MTU engines for the Chinese navy and coast guard.

In an effort to placate Thailand China offered to donate two older Type 35 submarines that are Chinese copies of the Russian Romeo-class subs which were built in China from 1962 to 1984. The Type 35 was an upgrade of the Romeo built from 1974 into the 1990s. These older subs used Russian diesels or Chinese copies. These older subs are less capable than the S26T and more expensive to operate and maintain. Thailand did not feel placated.

Russia cut economic and military cooperation with China in 1969 over a border dispute, and those links have never been fully restored because of continued Chinese theft of Russian military technology. Until 1991 Russia was the Soviet Union, a communist state that did not pay much attention to patents and intellectual property rights. After 1991, with the communist state gone, Russia agreed to play by the rules and was able to obtain worldwide patents for some of its best tech. Eventually China did as well, but has become known as a chronic cheat when it comes to other nation’s patents. Some Western firms go along with this, unofficially, by using the dual-use defense. When you get down to details, that excuse does not work and it is difficult to get around this when a Chinese sub with an MTU engine is being exported to another country. China still does not export military equipment containing too much Russian technology that Russia refused to give China permission to use.

Dual-use technology exports to nations sanctioned from receiving military versions has always been a problem. In the 1980s a German firm sold Iran technology to build an insecticide plant, which the Iranians promptly modified to manufacture nerve gas. That was simple to do because many insecticides are nerve gas optimized to kill insects. It is not difficult to modify that to produce a similar “insecticide” that kills mammals.




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