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Larsen and Tourbo (L&amp;T) is going to export like never before as the engineering and manufacturing giant will be assisting South East Asian nations in enhancing anti-submarine warfare (ASW).
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	For the first time ever, L&amp;T is going to export ships to the South East Asian countries and with the new DPP Policy of the government, L&amp;T is expecting significant growth orders on the defence side.
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	L&amp;T’s plans also coincide with PM Narendra Modi’s "Act East" policy.
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	Steering this initiative along with company's domestic and international defence sector plans is L&amp;T’s Senior Vice President, Head of Defence &amp; Aerospace, Jayant D Patil. 
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	An alumnus of IIT-Bombay, Patil is responsible for the entire defence and aerospace strategic business sectors of L&amp;T. 
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	In an exclusive interview, Patil divulges details on L&amp;T’s export plans and the type of ships they will be exporting
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	<strong>Q: How has the journey been so far? Did you face any bottlenecks as far as DPP policy is concerned?</strong>
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	A: At L&amp;T, we have been building solutions in-house and have been looking at select export opportunities for some time. Wherever we looked at an export opportunity, one limitation we saw was that we needed complete end-to-end solution to create unique value-additions. That necessarily meant that if you look at any platform technology, we did not have 100% platform solutions in-house. For example, if we decided to offer somebody an anti-submarine warfare capability, we needed to import a weapon for want of indigenous products. Now how do I import weapons or sensors in this country and re-export and get export permissions?
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	Today with the change in policies leading to easing and expeditious clearances of the export applications, this has been made possible.
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	<strong>Q: What kind of solutions are you looking at?</strong>
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	A: So, one can look at something like a "Brahmos" subject to specific clearances. These are end-to-end integration solutions, which we have matured while working with our armed forces for 20 years in India. 
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	Today, we can architect such complete solutions and integrate them on ships backed by policies. We are actually working out with few countries, and in next six months, we expect to make an announcement that we have actually sold ships and modernisation solutions to at least one friendly nation. Today, we do just about 150 crore a year in export sales, even this is not small as most Indian companies don't do that much as annual sales in defence. 
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	<strong>Q: What about the exporting ships to Vietnam?</strong>
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	A: This ‎is one serious opportunity being pursued and is under discussions. While we look forward to expeditious conclusion, we will have to wait for formal announcements.
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	<strong>Q: How do you see your company’s overall exports growing on the defence side?</strong>
<br /><br /> A: I see it growing over years to come. We believe that this is aligned with the government's plans and agenda of <keyword id="6354869" type="UNKNOWN" weightage="100" keywordseo="make-in-India">Make in India</keyword> for export and expect the government’s support in growing exports in this sector. All defence exporting nations do this and India cannot be an exception. We have not put numbers to our export targets. Maybe in a couple of months, I should be able to share some numbers with you. <br /><br />

	<strong>Q: What kind of ships you will be exporting?</strong>
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	A: First that we built were small ships, which were essentially interceptor boats. The difference is that these are designed in-house at our ship design centre to compete in Buy Global RFP conceptualised post 26/11 Mumbai attacks to outrun and catch anyone in sea.
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	We have developed an amazing solution, we have a ship that can do 90-100 Kmph in water and nobody in India has ever done anything of this kind. We won the global RFP and are building 54 for Indian Coast Guard. These are built at our Hazira as well as Katupalli shipyards. We are currently building OPVs for Coast Guard and Floating Dock for Indian Navy, all designed in-house. 
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	<strong>Q: What are your expectations from the defence ministry?</strong>
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	A: Going forward, we expect the MoD to give larger warships to us and not only to the MoD shipyards, whom we work with as Tier1 to built and install weapon systems, platform specific engineering systems and logistics solutions. We believe that this will see us build requisite track record for exports across platforms as well as systems.
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	Today, submarines are there around the corner, you'll see the artillery guns getting concluded in the near future, we see that the communication suite will mature in the next 2 to 3 years and in the fourth year we will start having some revenues on that, FICV development about to begin. We have also developed a wall penetrating and ground penetrating radars that reveal what is going on across the wall and see mines buried underground.
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	So in about next few years, we would have moved ahead of others not only in India but also target exports. These capabilities and track record has been built leveraging L&amp;T’s own R&amp;D investments and using indigenous knowledge.
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	<em>(Anupama Airy is the Founder and Editor of EnergyInfraPost.com and DefenceAviationPost.com. She can be reached at <a href="mailto:anupama.airy@gmail.com" target="_blank">anupama.airy@gmail.com</a>​, Twitter handle: @anupamaairy)</em>
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	<em>(Image: Indiatimes)</em>
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L&T is going to export ships to South-East Asian nations for the first time ever. Here are the details

New Delhi, Feb 17 () Commerce and Industry Minister Piyush Goyal on Monday proposed to discontinue export incentives under a scheme to the services sector as it has not helped India "increase shipments positively".<p> The foreign trade policy provides tax incentives under the Service Exports from India Scheme (SEIS) to several services industries.</p><p> Depending on the nature of services, the government gives duty credit scrips or certificates. The scheme offers reward at 5 per cent or 7 per cent of net foreign exchange earned and covers service providers located in India.</p><p> "So, I am proposing that from the earliest opportunity, (we should) discontinue this SEIS in its current form. It has not helped us to increase our exports positively," he said here at a function.</p><p> He said that industry has to get out of the mind set of subsidies as they are detrimental to India's long-term interests.</p><p> "For example, we now give subsidies on services exports. I have gone through the list in great details, barely 2,200 companies take that subsidy. Some of them are such large names, making 1000s of crores of rupees of profit, that there is no business of giving them a subsidy," he said.</p><p> The minister wondered that if those big companies do not get this subsidy, will they stop providing those services.</p><p> He suggested that the subsidy can be used to promote sectors like tourism.</p><p> "...tourism...has huge untapped potential... which are the areas where we need targeted support for a defined time frame to get better value addition," he added.</p><p> Further, Goyal said countries that do not provide reciprocal opportunities to Indian companies in their procurement programme, India would also not allow them.</p><p> "I would urge all to use this reciprocity clause and if you do not use, you are actually hurting India's interest," he said.</p><p> On the liquidity issue, the minister said there is a little bit of liquidity crisis because banks have become discerning in giving loans nowadays.</p><p> "Borrowers have become conscious that they have to repay.... Now, big people have to repay their money. You may be anybody, you may have any surname in this country, everybody is required to repay his loans," he said.</p><p> He also appealed to all large companies such as L&amp;T and Maruti to start a programme to pay their suppliers in time.</p><p> "Can I appeal to all large companies to start paying your suppliers within a week or 10 days," he said.</p><p> He asked his ministry to identify 100 public sector undertakings and 250 top Indian companies to monitor how many companies are taking this appeal forward.</p><p> Goyal also pitched for expanding India's exports basket and ship value-added goods.</p> "Today, we are not world leader in anything... can we identify certain manufacturing and services sectors, where we can take leadership roles," he said.   RR HRS

Goyal proposes to discontinue export incentives for services exports under SEIS

New Delhi, Reliance Electrolyser Manufacturing, Jindal India and <keyword id="20198636" type="General" weightage="20" keywordseo="john-cockerill" source="keywords">John Cockerill</keyword> Greenko Hydrogen Solutions are among the six firms who have emerged as successful bidders for getting incentives to set up facilities to manufacture electrolysers, a critical component required for green hydrogen production. The bids came in response to a tender by Solar Energy Corporation of India (<keyword id="19967266" type="General" weightage="20" keywordseo="seci" source="keywords">SECI</keyword>) inviting players for setting up 1.5GW manufacturing capacity for electrolysers, as per a SECI statement. <br /><br /> Bids for electrolysers manufacturing were invited on July 7 last year. <br /><br /> A SECI statement issued on January 12, 2024, showed that Reliance Electrolyser Manufacturing Ltd has bagged incentives of Rs 444 crore for setting up of 300MW of manufacturing capacities for electrolysers. <br /><br /> Similarly, John Cockerill Greenko Hydrogen Solutions Private Ltd and Jindal India Ltd have also bagged incentives of Rs 444 crore each for setting up 300 MW manufacturing capacity of electrolysers each. <br /><br /> Ohmium Operations Pvt Ltd has bagged Rs 202.76 crore incentives for 137 MW, while Advait Infratech Ltd (consortium with Rajesh Power Service Private Ltd) will get incentives of Rs 148 crore for 100 MW. <br /><br /> L&amp;T Electrolysers Ltd has bagged incentives of Rs 93.24 crore for 63MW. <br /><br /> The six firms have bagged total incentives of Rs 1,776 crore for 1200 MW under the 'Bucket-1: Electrolyser manufacturing capacity based on any stack technology'. <br /><br /> As many as 14 firms' bids were qualified for the incentives. <br /><br /> The eight firms which are not allocated any capacity under this scheme are Matrix Gas and Renewables in consortium with Gensol Engineering; HHP Seven; ACME Cleantech Solutions; Adani New Industries; Waaree Energies; Avaada Electrolyser; Green H2 Network India and Hild Electric. <br /><br /> Under the 'Bucket-2: Electrolyser manufacturing capacity based on indigenously developed stack technology', <keyword id="20198638" type="General" weightage="20" keywordseo="homihydrogen" source="keywords">Homihydrogen</keyword> and Adani New Industries have emerged as successful bidders. <br /><br /> Homihydrogen will get incentives of Rs 150.22 crore for setting up 101.5 MW of electrolysers manufacturing capacity, while Adani New Industries bagged Rs 293.78 crore for 198.5 MW. <br /><br /> Under the Bucket-2, seven firms were in the fray. As many as five were not allocated incentives under the scheme, which include Livehy Energy; C Doctor And Company, Pratishna Engineers, Bharat Heavy Electricals Ltd and Newtrace. <br /><br /> In January 2023, the Union Cabinet had approved the National Green Hydrogen Mission (NGHM) with an outlay of Rs 19,744 crore with an aim to make India a global hub for manufacturing this clean source of energy. <br /><br /> The mission is expected to lead to the development of 5 million metric tonnes per annum of green hydrogen production capacity by 2030. <br /><br /> The mission aims to develop India as a global hub for production, usage and exports of green hydrogen and its derivatives. It is expected to promote multilateral engagement and collaboration with various international efforts in hydrogen and fuel cells. <br /><br /> The mission provides for setting up of two green hydrogen hubs in the initial phase. <br /><br /> The ministry of ports, shipping and waterways has identified three major ports -- Deendayal, Paradip and V O Chidambaranar (Tuticorin) Ports -- to be developed as hydrogen hubs.

Reliance, Jindal among six firms to get incentives for electrolyser manufacturing

<ul class="summary-list"><li>The US military is increasingly concerned about China's presence near major maritime chokepoints.</li></ul><p>US military leaders are increasingly wary of Chinese activity near the maritime chokepoints through which much of the world's commercial and military traffic passes.</p><p>The latest warnings come from the general in charge of US Southern Command and the general nominated to lead US Africa Command and echo those of other US officials who worry that China's presence around those strategically important waterways could be used to gather information of economic and military value or to interfere with seaborne traffic.</p><p>"I was just in Panama about a month ago and flying along the Panama Canal and looking at all the state-owned enterprises from the PRC on each side," US Army Gen. Laura Richardson, head of US Southern Command, said at the Aspen Security Conference on July 20, referring to the People's Republic of China.</p><p>"They look like civilian companies or state-owned enterprises that could be used for dual use and could be quickly changed over to a military capability," Richardson added.</p><div type="image" title="Chinese President Xi Jinping at the Panama Canal" height="1513" width="2000" msid="93167949" hostid="261"></div><p>Richardson's predecessor often warned of China's <a href="https://www.businessinsider.com/southcom-4-ways-china-is-growing-influence-in-latin-america-2019-12" target="_blank" rel="noopener">involvement in the region's infrastructure</a>, particularly its ports. Richardson continues to sound that alarm, calling Chinese activity around the canal <a href="https://www.businessinsider.com/defense-officials-worried-about-chinese-military-presence-in-latin-america-2022-6" target="_blank" rel="noopener">one of her "greatest" strategic concerns</a>.</p><p>While China doesn't have a military presence in Latin America, the comments by US military commanders reflect concerns that China's projects could be <a href="https://www.businessinsider.com/defense-officials-worried-about-chinese-military-presence-in-latin-america-2022-6" target="_blank" rel="noopener">used to monitor activity in the canal</a> and elsewhere around and <a href="https://www.businessinsider.com/r-chinas-military-run-space-station-in-argentina-is-a-black-box-2019-1" target="_blank" rel="noopener">above the region</a>, gathering information that could have security implications.</p><p>China is pursuing the "largest military buildup in history," Richardson said, "so one should ask themselves why, when they have this very capable military, are they putting [in] and trying to gain access to critical infrastructure in other countries across the planet?"</p><p>China's <a href="https://www.businessinsider.com/chinese-base-in-djibouti-near-camp-lemmonnier-africa-us-concern-2017-3" target="_blank" rel="noopener">first and so far only overseas military base</a> is near another important maritime chokepoint: the Bab al-Mandab Strait, which connects the Indian Ocean to the Red Sea and Suez Canal.</p><div type="image" title="China army military soldiers troops base Djibouti" height="2074" width="3351" msid="93167950" hostid="261"></div><p>China calls that base, which opened in 2017, a logistical support facility, and Chinese ships have conducted anti-piracy patrols nearby since the late 2000s.</p><p>US commanders have expressed concern about China's activity at that base, which is only a few miles from a major US military outpost, and <a href="https://www.businessinsider.com/chinese-navy-growth-and-search-for-overseas-bases-worries-us-2022-6" target="_blank" rel="noopener">about Beijing's future plans for the facility</a>.</p><p>"They have it there because probably in the future they want to have the ability to be able to affect the free flow of commerce that affects our global economy," US Marine Corps Lt. Gen. Michael Langley, who has been nominated to lead US Africa Command, said of the Djibouti base during his confirmation hearing on July 21.</p><p>The current head of Africa Command, Gen. Stephen Townsend, has warned that China is pursuing other bases in Africa and has upgraded its base in Djibouti, <a href="https://www.businessinsider.com/chinese-navy-growth-and-search-for-overseas-bases-worries-us-2022-6" target="_blank" rel="noopener">adding a pier large enough to accommodate an aircraft carrier</a>.</p><p>Langley looks set to maintain that focus. "That's a strategic chokepoint that needs to remain free for freedom of navigation of commerce," Langley told senators, calling it "a strategic point that we need to be really concerned about."</p><h2>'Under increased threat'</h2><div type="image" title="Ever Given, Suez Canal" height="2351" width="3135" msid="93167951" hostid="261"></div><p>As competition between the US and China intensifies, officials from both countries have expressed concern about maritime chokepoints, viewing their accessibility as a matter of commercial and strategic importance.</p><p>China has long been concerned with the so-called <a href="https://jamestown.org/program/chinas-malacca-dilemma/" target="_blank" rel="noopener">Malacca Dilemma</a> — its reliance on the flow of goods through the Malacca Strait between the Indian and Pacific oceans. Chinese experts often identify the Malacca and Bab al-Mandeb straits and the Suez and Panama canals, among others, as the world's main "<a href="https://direct.mit.edu/isec/article-abstract/46/4/9/111175/Pier-Competitor-China-s-Power-Position-in-Global" target="_blank" rel="noopener">strategic maritime corridors</a>."</p><p>Since the mid-2010s, some two-thirds of China's overseas port projects have been in the Indian Ocean region, reflecting its interest in those waters and the connections they provide to energy suppliers and export markets, according to an analyst of Chinese foreign policy.</p><p>That region has "the greatest concentration of Chinese commercial activity, and it's also their most significant logistical corridor for security and strategic reasons," the analyst told Insider this spring, speaking anonymously because of professional commitments.</p><p>The US Navy is also more attuned to developments around maritime chokepoints and to the emergence of new ones.</p><div type="image" title="US Navy map of maritime chokepoints" height="1100" width="1752" msid="93167953" hostid="261"></div><p>In early 2020, the Navy's top officer, Adm. Michael Gilday, said that <a href="https://www.businessinsider.com/bering-strait-importance-grows-amid-us-russia-tension-arctic-activity-2020-11" target="_blank" rel="noopener">the increasing accessibility of the Arctic meant the Bering Strait</a> could eventually be "strategically as important as the Strait of Malacca or the Strait of Hormuz."</p><p>More recently, Gilday included the Malacca and Bab al-Mandab straits on a map of chokepoints "under increased threat" in the Navy's latest navigation plan, which describes the service's strategic outlook.</p><p>The plan, <a href="https://www.navy.mil/Press-Office/Press-Releases/display-pressreleases/Article/3105576/cno-releases-navigation-plan-2022/" target="_blank" rel="noopener">published this week</a>, notes that US economic and national security "will continue to rely upon unrestricted seaborne trade, unimpeded access to markets, and a free and open rules-based order."</p><p>The days-long blockage of the Suez Canal by a container ship in March 2021 alerted many other US officials to the ease with which <a href="https://www.businessinsider.com/luria-ever-given-warning-risks-to-chokepoints-from-russia-china-2021-8" target="_blank" rel="noopener">those waterways could be disrupted</a>.</p><p>The 2022 National Defense Authorization Act, passed in December 2021, included an provision requiring the Defense Department to send Congress a report on "the threat of hostile kinetic attacks, cyber disruptions, and other form of sabotage" to the world's maritime chokepoints by mid-2022.</p>

Top US military commanders are worried about what China is up to around the world's most important waterways

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Kim Kyung-Hoon/Reuters</span></p><p class="caption">Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae-In at the G20 leaders summit in Osaka, Japan, on June 28, 2019.</p></div><p></p></div></div></p><ul class="summary-list"><li><strong>South Korea and Japan are in the midst of a trade war that appears to have no end in sight.</strong></li><li><strong>South Korea dramatically escalated tensions on Thursday by announcing that it will end its intelligence-sharing pact with Japan.</strong></li><li><strong>This means that Japan will be locked out of South Korean intelligence on pressing regional issues, like North Korea's missile and nuclear program.</strong></li><li><strong>The US, which has intelligence-sharing deals with both the South Korea and Japan, could also lose out.</strong></li><li><strong>"We're going to lose an important source of information-sharing between our two allies at a very dangerous time," security expert Ankit Panda told <a href="https://www.nytimes.com/2019/08/22/world/asia/south-korea-japan-intelligence.html">The New York Times</a>.</strong></li><li><strong><a href="https://www.businessinsider.com/">Visit Business Insider's homepage for more stories.</a></strong></li></ul><p>South Korea is ending its intelligence-sharing pact with Japan in a dramatic escalation of the two countries' trade war. It is a move that could strip Japan of vital information about North Korea's nuclear program.</p><p>South Korea's National Security Council decided to end the General Security of Military Information Agreement (GSOMIA) after an hour-long meeting on Thursday, <a href="https://www.reuters.com/article/us-southkorea-japan-labourers-idUSKCN1VC0WR">Reuters reported</a>, adding that President Moon Jae-in personally approved the plan.</p><p>The GSOMIA was due to be automatically renewed this Saturday unless one side canceled it, Reuters and South Korea's <a href="https://en.yna.co.kr/view/AEN20190822011753315?section=national/diplomacy">Yonhap news agency</a> reported.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Jae C. Hong/AP</span></p><p class="caption">Moon in Gangneung, South Korea, in February 2018.</p></div><p></p></div></div></p><p>The South Korean presidency blamed Japan for the termination of the deal, citing a "trust issue" it had created in the two countries' bilateral security relations, <a href="https://en.yna.co.kr/view/AEN20190822012500325?section=national/diplomacy">Yonhap reported</a>.</p><p>Kim You-geun, the deputy director South Korea's National Security Council, noted in a Thursday statement that Japan had on August 2 <a href="https://www.businessinsider.com/japan-south-korea-trade-war-whitelist-preferential-partners-wwii-tensions-2019-8">dropped South Korea from its list</a> of favored trading partners "without providing clear ground."</p><p>This, he said, led to a "grave change in security cooperation circumstances between the two nations," <a href="https://en.yna.co.kr/view/AEN20190822011753315?section=national/diplomacy">Yonhap reported</a>.</p><p>South Korea also dropped Japan from its export whitelist ten days after Tokyo's decision, and <a href="https://www.businessinsider.com/south-korea-japan-trade-war-new-trade-category-2019-8">created an entirely new country category</a> to punish Japan economically.</p><p>Those moves mean that Japanese and South Korean exporters of "strategic" goods will now have to go through additional screening to sell abroad.</p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/south-korea-japan-trade-war-new-trade-category-2019-8">South Korea created a new category of country specifically to punish Japan in their escalating trade war</a></em></p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Kim Hong-ji/Reuters</span></p><p class="caption">A truck drives between shipping containers at a container terminal at Incheon port, South Korea, in May 2016.</p></div><p></p></div></div></p><p>The decision to terminate the GSOMIA came shortly after Japan and South Korea's foreign ministers met in Beijing on Wednesday and Thursday, but failed to achieve a breakthrough, Yonhap and Reuters reported.</p><p>They have, however, promised to continue talking.</p><p>"Although ties between Japan and South Korea are in a very tough situation, we believe we should cooperate with South Korea where cooperation is necessary," Japanese Chief Cabinet Secretary Yoshihide Suga said Thursday, shortly before Seoul's announcement to end GSOMIA, Reuters reported.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>REUTERS/Toru Hanai</span></p><p class="caption">Abe in Fukushima, Japan, in October 2017.</p></div><p></p></div></div></p><p>Japan and South Korea have had tense relations since at least 1910, when Japan colonized South Korea and ruled it with an iron fist until 1945.</p><p>Tensions bubbled to the surface late last year when the South Korean <span>Supreme Court ordered Japanese companies to compensate Korean laborers who were forced to work for them during World War II. </span></p><p><span>The Japanese government maintains it settled all colonial-era debts in a 1965 pact, and many Japanese companies refused to comply with the court's order.</span></p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/south-korea-japan-trade-war-gas-stations-decades-long-tensions-2019-7">South Korea and Japan's trade war has gotten so bad that some South Korean gas stations are refusing to refuel Japanese-made cars</a></em></p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>How Hwee Young/Pool via Reuters</span></p><p class="caption">Chinese Premier Li Keqiang (center) at a meeting with Japanese Foreign Minister Taro Kono (left), South Korean Foreign Minister (second-left), and Chinese Foreign Minister Wang Yi (second-right) in Beijing, China, on Thursday. Japan and South Korea failed to make headway in this meeting.</p></div><p></p></div></div></p><h2>Why ending the intelligence pact is a big deal</h2><p>GSOMIA went into effect in November 2016, and was apparently created out of the US's strong encouragement, Yonhap and <a href="https://apnews.com/b6f4856f55294c68a4f8228a45ddf362">the Associated Press</a> (AP) reported. </p><p>The intelligence pact sped up information exchange between the two countries, which previously only exchanged information via the US, the AP reported. The US has separate security pacts with both Japan and South Korea, which officials say won't be affected, according to Yonhap.</p><p>All three countries have an interest in maintaining security cooperation as China continues to expand its military and naval power in the region, and North Korea's nuclear program continues to be a threat. </p><p>North Korea has long used missile tests to make threats against South Korea, with many of the projectiles landing in the Sea of Japan.</p><p>Kim Jong Un's regime completed <a href="https://news.sky.com/story/north-korea-kims-great-satisfaction-over-sixth-missile-test-in-three-weeks-11787225">six missile tests</a> within the space of a month this summer to protest against the US and South Korea's joint military drills.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Ahn Young-joon/AP</span></p><p class="caption">Images of North Korea's missile launch shown on TV at the Seoul Railway Station in South Korea on July 25, 2019.</p></div><p></p></div></div></p><p>The US has repeatedly urged its two Asian partners to resolve their differences.</p><p>Lt. Col. Dave Eastburn, a spokesman for the US Department of <keyword id="6354810" type="UNKNOWN" weightage="60" keywordseo="defense">Defense</keyword>, said <a href="https://en.yna.co.kr/view/AEN20190822012700325?section=national/diplomacy">according to Yonhap</a> and Reuters: "We encourage Japan and Korea to work together to resolve their differences. I hope they can do this quickly."</p><p>"We are all stronger - and Northeast Asia is safer - when the United States, Japan and Korea work together in solidarity and friendship," he added. "Intel-sharing is key to developing our common defense policy and strategy."</p><p>The US has a total of 80,000 troops in South Korea and Japan combined, according to the AP.</p><p>Ankit Panda, a security expert and adjunct senior fellow at the Federation of American Scientists, <a href="https://www.nytimes.com/2019/08/22/world/asia/south-korea-japan-intelligence.html">told The New York Times</a>: "We're going to lose an important source of information-sharing between our two allies at a very dangerous time."</p><p>"I think the two countries can be fairly described as adversaries now," he added. "In Seoul, the idea is if we can do something that will hurt Japan more than it will hurt us, then it's worth doing."</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/violent-video-games-ban-mass-shooting-shootings-2018-3">Violent video games are played all over the world, but mass shootings are a uniquely American problem</a></h3>        <div>                    </div>    </div>

South Korea ramps up trade war with Japan by ending intelligence-sharing pact, potentially stripping it of vital information about North Korea

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>JASDF's 3rd Air Wing, 302nd Tactical Fighter Squadron, Misawa Air Base, Japan.</span></p><p class="caption">The aircraft, designated AX-6, is the second F-35A assembled at Mitsubishi Heavy Industries' F-35 Final Assembly &amp; Check-Out (FACO) facility in Nagoya, Japan and is the first to be assigned to the JASDF's 3rd Air Wing, 302nd Tactical Fighter Squadron, Misawa Air Base, Japan.</p></div><p></p></div></div></p><ul class="summary-list"><li><strong>Japan's military reported on Tuesday that it lost an F-35 stealth jet some 84 miles off the east coast of Aomori prefecture in the Pacific.</strong></li><li><strong>Experts say Russia and China will do anything to get a look at the crashed jet, and if they do find it or can salvage it, they could seriously undermine the next several decades of US airpower. </strong></li><li><strong>Russia and China probably couldn't perfectly reconstruct the F-35, but any of its technology that ends up in their hands would be a blow to the heart of the US military.</strong></li><li><strong><span><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit BusinessInsider.com for more stories</a>.</span></strong></li></ul><p>Japan's military reported on Tuesday that it lost contact with an F-35 stealth jet some 84 miles off the east coast of Aomori prefecture in the Pacific, and that the hunt was on for the pilot and the downed plane.</p><p>But if Russia or China, who both maintain a heavy naval presence in the region, find the plane first, the future of US airpower could be over before it started.</p><p><span>"Bottom line is that it would not be good," for the future of US airpower if Japan or the US don't quickly recover the jet, retired US Air Force Lt. Gen. David Deptula told Business Insider. </span></p><p><span>"There is no price too high in this world for China and Russia to pay to get Japan's missing F-35, if they can. Big deal," Tom Moore, an expert on Russia and weapons proliferation, <a href="https://twitter.com/PaperMissiles/status/1115650865560465410" target="_blank" rel="noopener">tweeted</a>. </span></p><h2><span>The hunt for F-35 tech is on</span></h2><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="http://www.lockheedmartin.com/">Lockheed Martin</a></span></p></div><p></p></div></div></span></p><p><span>Basically, if Russia or China, perhaps using their advanced and stealthy submarines to probe the ocean floor, first found the jet, they would gain a treasure trove of secrets about the most expensive weapons system in the history of the world. </span></p><p><span>The F-35 crash in the Pacific represents the first ever such opportunity for Russia and China to hunt for one of these planes in the wild, as the jet has only crashed once before, and that time was on US soil.</span></p><p><span>Potentially, reverse-engineering the technology could allow Russia and China to build their own versions of the jet, up to a point. </span></p><p><span><em><strong>Read more: <a href="https://www.businessinsider.com/f-35-wont-save-natos-air-forces-from-putins-formidable-beasts-2019-3" data-analytics-position="1">NATO will lose its next air war to Putin's 'formidable beasts' if it waits for the F-35 to save it</a></strong></em></span></p><p><span>"The usefulness for Russia or China of recovering some or all of the wreckage would depend on how much damage the aircraft sustained upon hitting the water," Justin Bronk, an combat aviation expert at the Royal United Services Institute, told Business Insider.</span></p><p><span>"The general shape of the jet is well known, as are its performance characteristics so not much to gain there but parts of radar and other sensors would be prime targets for recover and testing/even attempts at reverse engineering," he continued. </span></p><p><span>Russia specifically <a href="https://www.businessinsider.com/russia-to-arm-a-secretive-submarine-with-6-nuclear-doomsday-devices-2019-3" target="_blank" rel="noopener">operates a fleet of shadowy submarines</a> meant for very deep dives and research. The US and Japan have advanced maritime capabilities to search for the fallen jet, but mostly rely on two of the US' aging rescue and salvage ships and on large nuclear submarines, which may not be ideal for the rescue mission. </span></p><p><em><strong>Read more: <a href="https://www.businessinsider.com/russia-to-arm-a-secretive-submarine-with-6-nuclear-doomsday-devices-2019-3" data-analytics-position="3">Russia says it's going to arm a submarine with 6 nuclear 'doomsday' devices</a></strong></em></p><p>As of now, all anyone knows is where the F-35 was last seen flying. It could have continued on for miles, and had currents drag it miles further. In short, the entire region has a chance at brushing up against some piece of it.</p><h2><span>What Russia and China stand to gain</span></h2><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Associated Press</span></p></div><p></p></div></div></span></p><p><span>Russia and China know what an F-35 looks like. There's even some evidence China stole plans for the F-35. But even with an F-35 in its hands, the two countries still lack the advanced manufacturing know-how held in the US.</span></p><p><span>Just having some composite material used in the F-35s jet engines wouldn't necessarily allow China to create the materials at will. Just measuring the characteristics of the fuselage wouldn't necessarily allow Russia to reliably manufacture airframes like the F-35 on its own.</span></p><p><em><strong>Read more: <a href="https://www.businessinsider.com/us-f-35s-combat-ready-if-tensions-with-russia-syria-iran-boil-over-2018-9" data-analytics-position="9">The US is ready to send in F-35s into combat if tensions with Russia and Syria boil over</a></strong></em></p><p><span>The F-35's stealth and performance represent a tiny portion of its worth to the US military. The <a href="https://www.businessinsider.com/us-aircraft-carrier-f-35cs-training-f-18s-deadlier-uss-abraham-lincoln-2018-8" target="_blank" rel="noopener">rest lies in the networking, sensor fusion, and secure communications.</a></span></p><p><span>There, according to Bronk, the jet stands a chance against prying eyes. </span></p><p><span>"Samples or the 'fibre mat' stealth coating would be sought after," said Bronk, "but the jet's all important software and programming would likely be hard to reconstruct given not only the likely damage from the crash and salt water in Pacific, but also the way that the jet's sensitive systems are designed to be very hard to decipher and reverse engineer to make it more suitable for export."</span></p><p><span>Despite the US's best efforts, Russia or China salvaging any part of the F-35 represents a US security nightmare.</span></p><p><span>"Both China and Russia have excellent reconstruction/reverse engineering/copying skills, particularly the Chinese as they are masters at it," said Deptula. </span></p><p><span>Bronk and Deptula both agreed that in Moscow, Washington, Beijing, and Tokyo, the race is now on to find the fallen F-35 and either protect, or undermine its future as the lynchpin of US and allied airpower. </span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/coast-guard-us-patrol-port-miami-drug-smuggling-illegal-immigration-2019-3">I spent a day with the US Coast Guard in the Port of Miami, where units search for drug smugglers and unauthorized migrants</a></h3>        <div>                    </div>    </div>

Japan lost an F-35 in the Pacific, and the US is in trouble if Russia or China find it first

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="https://en.wikipedia.org/wiki/Israeli_Air_Force#/media/File:IAF-F-35I-and-F-16I--Sufa--cropped-nf.jpg">Major Ofer, Israeli Air Force</a></span></p><p class="caption">An Israeli F-16I.</p></div><p></p></div></div></p><ul class="summary-list"><li><strong>Russia has some of its best air defenses in Syria, and has boasted they can shoot down US stealth fighters, but Israel routinely defeats these systems with non-stealthy F-16s.</strong></li><li><strong>Syria managed to shoot down one Israeli F-16, but also shot down a surveillance plane that belonged to its ally, Russia, on accident.</strong></li><li><strong>There's good evidence to suggest that Israel's air force is really good at defeating Syria's air defenses and that Syria hasn't figured out how to defend itself yet.</strong></li><li><strong>Russia has taken to making excuses for their Syrian allies as their systems, which they hope to export, are routinely defeated by Israeli jets. </strong></li></ul><p><span>Russia deployed some of its best air defenses to Syria to keep US missiles and jets at bay as the US military's immense air and naval power fought ISIS in close proximity - but the supposedly airtight defenses are routinely defeated by Israel.</span></p><p><span>In February 2017, a Syrian-manned Russian-made S-200 missile <keyword id="6354810" type="UNKNOWN" weightage="100" keywordseo="defense">defense</keyword> system <a href="https://www.businessinsider.com/israel-launches-massive-attack-on-syria-after-f-16s-downed-2018-2" target="_blank" rel="noopener">shot down an Israel F-16</a> returning from a massive raid targeting Iranian forces in Syria. </span></p><p><span>In response, Israel <a href="https://www.businessinsider.com/israel-launches-massive-attack-on-syria-after-f-16s-downed-2018-2" target="_blank" rel="noopener">launched another raid</a> that it claimed took out half of Syria's air defenses, of which older Russian systems comprised the majority. </span></p><p><strong>Read more:</strong> <em><a href="https://www.businessinsider.com/israels-f-35s-saw-combat-in-syrian-air-war-that-hit-russian-defenses-2018-5" target="_blank" rel="noopener">Israel's F-35s reportedly saw combat in a raging Syrian air war that smashed Russian defenses</a></em></p><p><span>In April, Syria got <a href="http://www.businessinsider.com/israel-iran-payback-syria-strikes-2018-4">rocked by a missile attack</a> that appeared to ignite a munitions depot hard enough to register as a 2.6 magnitude earthquake and is believed to have killed dozens of Iranians. </span></p><p><span>In May, Israel released video of one of its bombs destroying a Russian air defense system, <a href="http://uk.businessinsider.com/russia-explains-why-its-air-defenses-were-beaten-by-israel-in-syria-2018-5" target="_blank" rel="noopener">Russian media offered excuses as to why it failed to stop the incoming missile.</a></span></p><p><span>Israel rarely confirms individual airstrikes, and either confirmed or didn't deny these attacks. </span></p><p><span>In September, another Israeli raid on Iranian weapons stockpiles in Syria saw a <a href="https://www.businessinsider.com/russia-blames-israel-after-syria-killed-15-downing-an-il-20-in-air-battle-2018-9" target="_blank" rel="noopener">Russian Il-20 surveillance and control plane downed by Russian-made air defenses</a> fired off in error by Syrian air defense units, killing 15. </span></p><p><strong>Read more:</strong> <em><a href="https://www.businessinsider.com/russian-missile-defenses-in-syria-could-set-off-war-with-israel-2018-9?r=UK&amp;IR=T" target="_blank" rel="noopener">Russia's new missile defenses in Syria look likely to set off a shooting war against Israel</a></em></p><p><span>Russia accused Israel of purposefully flying under the Il-20 to confuse the Syrian air defenses into shooting down a friendly plane and quickly shipped the more advanced S-300 missile defenses to Syrian hands.</span></p><p><span>Russia thinks highly of its S-300 and other missile defenses, and has <a href="https://www.businessinsider.com/what-would-happen-us-strike-russia-targets-syria-2016-10" target="_blank" rel="noopener">publicly mocked the US over its stealth jets</a>, implying it could shoot them down. At the time, Russia said it would shut down satellite navigation in the region and that it <a href="https://www.businessinsider.com/syria-to-get-russian-s-300-weapons-after-accidental-shoot-down-2018-9" target="_blank" rel="noopener">expected its new defenses would preclude further Israeli attacks.</a> So far, they were wrong. </span></p><p><span>Somehow Israel has continued to hit targets in Syria at will with F-16s, non-stealthy fourth-generation fighter-bombers.</span></p><p><span><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Google Maps</span></p></div><p></p></div></div></span></p><p><span>On Monday, Israeli Prime Minister Benjamin Netanyahu acknowledged that his country's air force had carried out hundreds of raids in Syria, with a recent one hitting Iranian weapons near Damascus <keyword id="6356001" type="UNKNOWN" weightage="60" keywordseo="international">International</keyword> Airport.</span></p><p><span>Russia initially deployed air defenses to Syria to keep powerful countries like the US from attacking Syrian President Bashar Assad, and later to protect its own air force fighters stationed there. </span></p><p><span>The US has long opposed Assad, as he violently shut down peaceful protesters in 2011 and has stood accused of torture, war crimes, and <a href="http://www.businessinsider.com/assad-might-have-hidden-some-of-syrias-deadliest-chemical-weapons-2016-9" target="_blank" rel="noopener">using chemical weapons against civilians</a> during the country's maddening 7-year-long civil war.</span></p><p><span>But the US has <a href="https://www.businessinsider.com/category/syria-strike" target="_blank" rel="noopener">attacked Syria twice with cruise missiles</a>, and Syria has never proven a single missile intercept. </span></p><p><span>According to experts, there's two likely reasons why Syria's Russian-made air defenses can't get the job done: 1. Israel is good at beating Syrian air defenses. 2. Syria is bad at beating Israeli jets. </span></p><h2><span>Israel is good at this</span></h2><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="http://theaviationist.com/2015/10/30/blue-flag-2015-exercise-photos/">The Aviationist</a></span></p><p class="caption">Israel's air force.</p></div><p></p></div></div></span></p><p><span>"One of the Israeli hallmarks when they do these sort of fairly bold strikes within the coverage of the Syrian air defenses is heavy electronic warfare and jamming," Justin Bronk, an aerial combat expert at the Royal United Services Institute <a href="https://www.businessinsider.com/israel-f-35-air-combat-syria-war-2018-2" target="_blank" rel="noopener">told Business Insider</a>.</span></p><p><span>Bronk said that Israel, a close US ally that takes part in major training events in the US, has become adept at knocking over Syrian air defenses.</span></p><p><span>Israel sees Iranian arms shipments through Syria as an existential threat. Although Israel has relationships to maintain with the US and Russia - both key players in the Syrian quagmire - Netanyahu has said resolutely that Israel will stop at nothing to beat back Iran. </span></p><p><span>In more than 100 raids admitted by Netanyahu, Israel has only lost a single aircraft. Bronk attributes this to </span><span> "many, many tricks developed over decades" for the suppression of enemy air defenses developed by Israel.</span></p><p><span>Retired US Marine Corps Lt. Col. <a href="https://www.businessinsider.com/israel-f-35-air-combat-syria-war-2018-2" target="_blank" rel="noopener">David Berke, a former F-35, F-22, and F-18 pilot, told Business Insider</a> that Israel finds "innovative, creative, and aggressive ways to maximize the capability of every weapons systems they've ever used."</span></p><h2><span>Syria is bad at this</span></h2><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>AP Photo/Hassan Ammar</span></p><p class="caption">The Damascus sky lights up missile fire as the U.S. launches an attack on Syria targeting different parts of the capital early Saturday, April 14, 2018.</p></div><p></p></div></div></span></p><p><span>Syria has demonstrably failed on many occasions to stop air attacks on its territory. While Russia's air defenses do give US military planners serious pause, Syria's have yet to prove themselves.</span></p><p><span>With US Tomahawk cruise missile strikes in consecutive Aprils in 2017 and 2018, Syria claimed both times to have blocked a significant portion of the attack, but <a href="https://www.businessinsider.com/russia-says-us-syria-strike-failed-us-missiles-captured-2018-4" target="_blank" rel="noopener">never provided any evidence of an intercept</a>. </span></p><p><span>Additionally, photos from the second US Tomahawk strike on Syria show Syrian air defenses firing interceptor missiles on ballistic trajectories.</span></p><p><span>This <a href="https://www.businessinsider.com/syria-missile-interceptors-miss-photos-blind-fires-2018-4" target="_blank" rel="noopener">strongly indicates that the Syrians simply fired blindly into the night sky</a>, unable to detect a thing as US missiles rocked targets across the countryside. <div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Reuters Graphics</span></p></div><p></p></div></div></span></p><p><strong>Read more:</strong><em> <a href="https://www.businessinsider.com/syria-missile-interceptors-miss-photos-blind-fires-2018-4">Photos of the Syria strike appear to show missile interceptors firing blindly, failing to stop missile attack</a></em></p><p><span>Finally, Syria shooting down a friendly Russian plane evidences a lack of coordination or situational awareness, whether due to old hardware, Israeli electronic warfare, or simply poor execution. </span></p><p><span>Israel's most recent attacks in Syria took place smack in the middle of Damascus, Russian and Syrian air defenses make for some of the world's most challenging airspace. </span></p><p><span>That Israel can still fight in Syria among top Russian air defenses shows either that their force has its tactics down pat, that Syria can't field decent air defense regimes, or that Russia has turned a blind eye to Israel pounding on Iranian advances in the region. </span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/north-korea-kim-jong-un-scariest-dictators-2016-1">North Korea's leader Kim Jong Un is 35 - here's how he became one of the world's scariest dictators</a></h3>        <div>                    </div>    </div>

Russia's air defenses can't stop Israel from stomping on Iran in Syria with airstrikes

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>AP/Paul Szoldra/Business Insider</span></p></div><p></p></div></div></p><p>In the summer of 2007, a US Navy carrier strike group of approximately 20 ships was decimated while on patrol in the Middle East. Some 20,000 sailors were killed.</p><p>The group, comprised of an aircraft carrier, five amphibious ships, and several cruisers, was overwhelmed by a swarm of fast attack boats laden with explosives, missiles launched from ground sites, and low-flying aircraft. The assault was "over in five, maybe ten minutes," Lt. Gen. Paul Van Riper <a href="http://warontherocks.com/2015/11/millennium-challenge-the-real-story-of-a-corrupted-military-exercise-and-its-legacy/" target="_blank">said at the time</a>.</p><p>Fortunately, it was only a training exercise. </p><p>No ships were actually sunk. No sailors lost their lives.</p><p>But the <a href="http://warontherocks.com/2015/11/millennium-challenge-the-real-story-of-a-corrupted-military-exercise-and-its-legacy/" target="_blank">Millennium Challenge Exercise</a> of 2002 - which tested US military capabilities five years into the future - exposed a critical gap in the Navy's defenses: No matter how much firepower or armor a ship might have, it's entirely possible that at least some among a large swarm of small boats could penetrate those defenses and <a href="http://www.cnn.com/2013/09/18/world/meast/uss-cole-bombing-fast-facts/" target="_blank">inflict major damage</a>. And countries like Iran <a href="http://www.telegraph.co.uk/news/worldnews/middleeast/iran/9486815/Little-boat-big-danger-how-a-British-made-speedboat-has-become-a-weapon-in-Irans-standoff-with-the-US.html" target="_blank">have taken notice.</a></p><p>"The US military has never found a way to stop that type of swarm attack against the US fleet," Gregory Sancoff, the CEO of Juliet Marine Systems, told Business Insider. "They're incredibly difficult targets."</p><p>While the military hasn't yet perfected a solution, Sancoff believes he has it.</p><p>It's called Ghost, and it's a stealthy, small boat that can be outfitted with a variety of weapons to fight back in danger areas such as the Strait of Hormuz. But the US Navy doesn't want it, and the government of the United States seems to be doing everything it can to stop anyone else from having it as well.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Juliet Marine Systems</span></p></div><p></p></div></div></p><h2>When a serial entrepreneur decides to build a stealth boat</h2><p>Sancoff did things differently than most in the <keyword id="6354810" type="ORGANIZATION" weightage="100" keywordseo="Defense">defense</keyword> contracting world. Instead of waiting around for the Pentagon to put out requirements or solicit contract proposals, he saw the <a href="http://www.cnn.com/2013/09/18/world/meast/uss-cole-bombing-fast-facts/">2000 attack on the USS Cole</a> in Yemen, and the revelations from Millennium Challenge, as the catalyst for building his next company.</p><p>Like most entrepreneurs, he saw a problem that needed a solution. So he just decided to build it.</p><p>"We are the model the Secretary of Defense is looking for," he said, of Defense Secretary Ash Carter's push for <a href="http://www.businessinsider.com/pentagon-diux-silicon-valley-2016-6">companies outside the defense</a> establishment to start building things for the Pentagon.</p><p>Sancoff had built successful companies outside of the defense industry plenty of times. He built low-cost portable IV pumps for hospitals with his first company, Block Medical, which he later sold for $80 million. Then he started a different company, <a href="http://www.hampton.lib.nh.us/hampton/history/business/2000s/onux2000.htm">and sold that</a> for $400 million. And then he sold yet <a href="http://www.upi.com/Bard-buys-Onux-Medical/12191088707717/">another</a> in 2004.</p><p>After that, Sancoff wanted to start something that would be helpful for his country. He named the company Juliet Marine Systems, and its flagship project was called Ghost.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Juliet Marine Systems</span></p></div><p></p></div></div></p><p>Sancoff, along with some outside investors, put down roughly $20 million to make it happen. He hired engineers and naval experts, and <a href="http://www.julietmarine.com/AboutUs.htm">assembled a board</a> with an impressive array of former Navy admirals to help advise him.</p><p>Then he got to work, building a prototype of the design he came up with. That was in 2007. It took him about four years, and $5 million of his own money, but eventually his full-scale Ghost prototype was ready to hit the water outside Portsmouth Naval Shipyard, New Hampshire, where it was built.</p><p>There are a few things the Ghost does very well: Its clever design makes its radar signature minimal, so most larger ships won't even pick it up on their radar displays. And since its cockpit sits far above the water, it can literally cut through waves for a smooth ride, reducing the slamming effect that rough water would have on a crew.</p><p>"You can sit there and drink your coffee going through six-foot swells," Sancoff <a href="http://www.bloomberg.com/news/articles/2016-10-19/the-feds-won-t-buy-this-19-million-stealth-boat-or-let-it-be-sold-abroad">told</a> Bloomberg. But Ghost's most cutting-edge feature is its propulsion technology, which has far-reaching implications for navies with access to it.</p><p>"He put the propellers at the forward end of these two hull forms," Rear Adm. Jay Cohen (Ret.), the former head of the Office of Naval Research, and now a board member for Juliet, told Business Insider. "It's like riding on two fins attached to two submarines. But instead of pushing, they are pulling."</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Juliet Marine Systems</span></p></div><p></p></div></div></p><p>Sancoff's design was a super cavitating propulsion system - the propellers create a gas bubble through which the fins then move - which is a more efficient and faster way to move a boat through water with far less drag.</p><p>"The beauty of that is they are very stable," Cohen said. "It's like front wheel drive versus rear wheel drive."</p><p>Sancoff said that he made plenty of overtures to the Navy and the Pentagon about what he was working on. The Office of Naval Research initially balked at his idea prior to the completion of a prototype, <a href="http://www.bloomberg.com/news/articles/2014-08-21/juliet-marines-ghost-boat-will-be-hard-sell-to-u-dot-s-dot-navy">according</a> to Bloomberg. Then, he claims, a call came from DARPA, which eventually led to contract negotiations for the Ghost.</p><p>"To me, this was a no brainer," Cohen, the ONR Chief from 2000 to 2006, said. "Had I been chief of naval research [at that time], I absolutely would have invested in a cooperative agreement for a couple of million dollars." As Cohen explained, the ONR's budget is mostly dedicated to investments that will probably turn into viable projects down the road, but about 10% of that budget is set aside for "high risk, high gain" projects like Sancoff's - systems that can be bought and fielded much quicker than going through the slower defense acquisition funnel.</p><p>"The Congress and the Navy are very supportive of this because basically, if it's successful, you can introduce it immediately as a solution," Cohen said. "And if its not, you're not wasting your money on an acquisition program."</p><p>But that didn't happen.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Jeff T. Green/Getty Images</span></p><p class="caption">Rear Adm. Jay Cohen showing off a Navy research vessel in 2005 as head of the Office of Naval Research.</p></div><p></p></div></div></p><p>"The next thing you know I get a contract from them and I look at it and they want all the patent rights," he said. Sancoff, believing the Ghost could have many more uses outside the military market, scoffed at the idea of losing his intellectual property. He turned down the contract, thinking eventually the US Navy would go for it, and if not, he could sell to a friendly nation such as South Korea, Japan, or the UK.</p><p>Instead, about a month later, Sancoff said, "I had secrecy orders slapped on my company. They took it anyway. They went and they grabbed my four patents, put secrecy orders on them, and they didn't call me."</p><p>Sancoff and Cohen believe that DARPA may have contacted ONR to shut him out of any further opportunities to do business with the Pentagon. Then the Navy issued secrecy orders over Juliet's four patents, which meant the company couldn't sell the boat, or even show it to anyone.</p><p>"This thing reeks of conspiracy," Cohen said.</p><p>Almost as soon as he had built the cutting-edge boat, Sancoff's dream of turning it into a business was fading away.</p><p>Both DARPA and The Office of Naval Research declined to comment, citing ongoing litigation. The Department of Justice also declined to comment.</p><h2>'This is like a bad soap opera'</h2><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="https://www.flickr.com/photos/usnavy/8683136925/in/photolist-eeim6k-aPf75e-da7mdh-99DmWn-efFTkN-acneeD-cqeyWm-bWc5uu-pW73uv-tQGpBd-mWKtQ3-aZiiNF-9vS9Yn-wKVoEK-eeim4e-9MvS8m-bmtbou-fzaUfj-cNwT33-jrRkjA-dPwRwq-spEp8M-i2GYNU-cLDaE1-dWSwyP-q8YXzS-pzirnU-f6VShv-fonHZg-pXvwW8-gitv39-mhBR1y-dPwRzS-np6uSx-i5HaKn-oSUTyK-dPwRAG-bWc4xG-9p4utz-nMSznp-egi95N-nEHnGs-9krwka-pL644L-bccfKR-bep7hH-f23pdX-p6jnz2-rNfyiY-e8YS2U">US Navy photo by Mass Communication Specialist Seaman Apprentice Ignacio D. Perez/Released</a></span></p></div><p></p></div></div>"If you're wondering why innovators like Greg Sancoff and others don't come to the US government to do business anymore," Cohen told Business Insider. "This is the kind of hubris by government service people of 'not invented here' that could significantly degrade our national security if its not nipped in the bud."</p><p>According to Cohen, it's likely that the Navy saw potential in Ghost's technology but its culture of investing mostly in internal projects tainted any hope of adoption. At one point in 2014, Adm. Michelle Howard - then serving as Chief of Naval Operations - even <a href="http://www.seacoastonline.com/article/20140411/NEWS/140419929">toured the boat</a> and, according to Cohen, later asked ONR about it. They said the design was "dangerous," Cohen claimed, of rumors he heard afterward.</p><p>Howard did not respond to a request for comment.</p><p>"Meanwhile, they're <a href="https://books.google.com/books?id=Xw0NnCoL3dQC&amp;pg=PA1&amp;lpg=PA1&amp;dq=navy+funding+supercaviation&amp;source=bl&amp;ots=ML46QOZtVW&amp;sig=p5AyYLCUohuohn0sdzzw5e4q-DE&amp;hl=en&amp;sa=X&amp;ved=0ahUKEwjS_Y6NoYvQAhUmqFQKHTIYBZsQ6AEIQDAF#v=onepage&amp;q=navy%20funding%20supercaviation&amp;f=false">funding other</a> supercavitation initiatives," Cohen said.</p><p>Juliet Marine Systems was slapped with a secrecy order in October 2009. Then in March 2010, it was lifted without explanation. The orders were reinstated in August, and then lifted again in June 2011.</p><p>"It just completely stifled the innovation," Sancoff said. "It stifled our schedule and our financial plans, and we basically sat around for long periods of time with little money."</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Juliet Marine Systems</span></p></div><p></p></div></div></p><p>So Sancoff decided that if the US government didn't want Ghost, perhaps some US allies would. In the times he wasn't under secrecy order, he was hearing positive feedback from outside the United States. But his outreach to friendly nations was stifled by the State Department, <a href="https://www.bis.doc.gov/index.php/forms-documents/doc_view/781-export-licensing">using export regulations</a> on defense-related systems.</p><p>If Juliet wants to take a meeting with South Korea, for example, it has to file paperwork with the State Department. And since it's naval technology, State then goes back to the Navy to ask for their opinion before issuing a decision. And pretty much every time, Sancoff said, those decisions come along with plenty of caveats.</p><p>"They tell us basically you cannot discuss anything with any foreign country unless we see it first," Sancoff said. "We absolutely believe they'd like us to go out of business. They don't want to see this technology used by other countries."</p><p>First and foremost among things Juliet cannot discuss, according to one export license the company shared with Business Insider, is the Ghost boat, and its supercavitating hull. It also said it couldn't talk about its stealth capabilities, or Ghost's ability to employ various US weapons systems.</p><p>Essentially, Juliet is hindered by a Catch-22 that says, sure you can do business outside the United States, as long it's not your main line of business.</p><p>"This is like a bad soap opera. You can't write this," Cohen said. "This is either incompetence at its height or it's a Machiavellian plot and you know what, its somewhere in between the two."</p><h2>What happens next?</h2><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Juliet Marine Systems</span></p></div><p></p></div></div></p><p>Juliet's bureaucratic nightmare continues to this day.</p><p>Because the company can't do business with anyone, Sancoff has had to lay off most of his employees. He has been in contact with Sen. Kelly Ayotte (R-N.H), a member of the Senate Armed Services Committee, and she has set up meetings with Navy officials and written letters on the company's behalf, but those efforts have only gone so far.</p><p>"It doesn't seem right for the US government to tell a company like Juliet Marine that the Department of Defense is not interested in the cutting-edge vessel and propulsion technology the company has developed at its own expense, while also telling the company that the technology is too advanced to permit them to share it with our nation's closest allies and partners," Ayotte told Business Insider in a written statement.</p><p>"DoD will increasingly need innovative American defense suppliers in the future, and the Pentagon would be wise to not adopt policies that will drive those companies out of business or out of the defense sector."</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Juliet Marine Systems</span></p></div><p></p></div></div></p><p>In July 2015, Sancoff decided to take the government to court over the secrecy orders, alleging that they resulted in a loss of business opportunities and revenue. Juliet's complaint says the orders delayed critical sea trials, discussions with potential partners, the marketing of its product, and stifled its ability to hire employees and raise additional investment.</p><p>Government lawyers have denied any damage has been caused by those orders, court filings show.</p><p>Now more than a year on, the case has moved slowly in the US Court of Federal Claims. Discovery has produced more than 37,000 documents from Juliet, while the government has only produced about 5,000. And for almost all of Juliet's filings, the government does not respond without first asking for an extension, adding weeks and months of delay.</p><p>"They are doing everything they can to stonewall us, redact everything they can redact, and fight us until the very end," Sancoff said. </p><p>But Sancoff is confident that he will emerge victorious. And though he's had to lay off most of his employees as he fights the government, he told Business Insider they would all be re-hired once the case is settled.</p><p>"Greg Sancoff and the backers of Juliet Marine will be damned if they will allow the federal government to run out the clock," Cohen said. "They are not inclined to do that."</p><p>"We will never give up this company," Sancoff said.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/how-mexicos-drug-cartels-make-billions-2016-9">These are the kind of profits Mexican drug cartels are making </a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="54a3VsMDE60amvVfiJDydwA4G9SZvyIJ" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

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