South Korea has signed its biggest ever military deal with Iraq, worth $2BN.
South Korean aircraft maker Korea Aerospace Industries (KAI) signed a US$1.1 billion deal Thursday to export 24 FA-50 light attackers to Iraq, paving the way for tapping into the Middle East's arms market.
The FA-50 is a light attack variant of the T-50 Golden Eagle supersonic trainer that was co-developed by KAI and U.S. defense firm Lockheed Martin, which was designed to replace F-5 class aircraft operated by the South Korean Air Force.
The Iraqi version of the FA-50, named the T-50 IQ, is armed with air-to-air, air-to-surface missiles and machine guns, as well as precision-guided bombs, such as joint direct-attack munitions and censure-fused weapons.
In addition, Iraqi Prime Minister Nouri al-Maliki and KAI Chairman Ha Sung-yong agreed to sign a $1 billion contract later for support equipment and training over the next 20 years, a deal whose combined value would mark the largest ever arms export for South Korea.
"South Korea's aerospace industry has shown its competitiveness in the world market and its export potential," Ha told reporters after his meeting with the Iraqi premier at his office. "We will make utmost efforts to support Iraq to help it operate the aircraft without difficulties."
The FA-50 beat the Hawk-128 by British defense contractor BAE Systems, the Yak-130 by Yakovlev of Russia, and the L-159 by Aero Vodochody of the Czech Republic.
The deal comes after Iraq last year signed a new contract to buy its second set of 18 F-16 fighters from Lockeed Martin, part of a deal to purchase 36 of the jets to rebuild its air force.
With the delivery scheduled between 2015 and 2016, the Iraqi air force aims to use the Korean-made aircraft to train its pilots and conduct light attack missions, KAI said.
While KAI has sold T-50 variants to Indonesia, Turkey and Peru, the sales of the FA-50 marks the first time for South Korea to export the light attack fighter overseas.
In October, the Philippine government signed a memorandum of understanding for 12 FA-50 fighters worth $450 million. While a final contract was expected within this year, it has been delayed, as the Southeast Asian nation is grappling with the aftermath of Typhoon Haiyan.
The deal in the Middle East is expected to pave the way for KAI tap into the in the lower-end fighter market, company officials said, as they seek to expand the global outreach beyond Southeast Asia, Europe and South America.
The South Korean aircraft maker is seeking to export T-50 family jets to the Philippines, Peru and Botswana, while eyeing on U.S. Air Force's T-38 replacement program next year.
