Unexpected Challenges Arise in South Korea-Iraq Defense Pact Negotiations

– It has been revealed that LIG Nex1, the key contractor of the M-SAM initiative, concluded the $2.6 billion contract without agreements with local partners such as Hanwha.

– LIG Nex1 cannot promptly deliver the surface-to-air interceptor to Iraq without the provision of vertical launch systems, vehicles, and radar units produced by Hanwha.

The recent defense pact between South Korea and Iraq regarding the supply of surface-to-air interceptors has hit a snag following the announcement by LIG Nex1 of the $2.6 billion agreement on September 20.

According to reports from Korean media and industry specialists, LIG Nex1 executed the agreement on the M-SAM II (Cheongung-II), a medium-range surface-to-air missile interceptor, without finalizing contracts with its local partners, including Hanwha Aerospace and Hanwha Systems.

Often dubbed the Korean counterpart to the U.S. Patriot missile system, the M-SAM is designed to counter both ballistic missiles and aerial threats. As the main contractor, LIG Nex1 is responsible for system integration, which includes the vertical launch system, launcher vehicles developed by Hanwha Aerospace, and the multifunction radar developed by Hanwha Systems.

Iraq becomes the third country to procure the M-SAM missile interceptor, following the United Arab Emirates and Saudi Arabia in previous years; however, implementing this latest agreement may present challenges due to procedural hurdles.

“Without the key components like launchers and radars, the operation and delivery of the M-SAM is impractical,” remarked a Korean industry expert. “This is an exceptional case where a primary contractor concluded a deal lacking supply agreements, which could result in complications with the customer nation.”

The Defense Acquisition Program Administration, South Korea’s arms procurement agency, held an emergency meeting on September 24 to tackle the issue but did not reach a resolution, according to sources.

“In July, we responded to LIG Nex1’s request for a quote but did not receive any confirmation regarding its acceptance,” a Hanwha spokesperson shared with Yonhap News Agency. “Later, LIG Nex1 advanced to sign the contract without notifying us.”

The spokesperson stressed that their company needed to evaluate the changing security environment in Iraq and the nation’s economic capabilities prior to establishing the export price, which is standard protocol before finalizing a contract.

During a press briefing on September 23, Lee Hyun-soo, an executive at LIG Nex1, indicated that his company had discussed the status of negotiations with Iraq but did not confirm whether an agreement with Hanwha was secured prior to signing.