SEOUL – South Korean military leaders recommended purchasing 40 fighter jets with stealth capabilities and indicated Lockheed Martin Corp. (LMT)’s F-35 provided the best defense against North Korea’s growing nuclear threat.

The Joint Chiefs of Staff didn’t specifically name the Lockheed jet as the winner of the multi-billion dollar order in its statement, though the F-35 is the “only aircraft that fits requirements” set by the military, Defense Ministry spokesman Kim Min Seok told journalists in Seoul today.

The original tender process, which began almost two years ago, bogged down following the rejection of Boeing Co. (BA)’s F-15 Silent Eagle, as defense priorities shifted after the North launched long-range rockets and tested a third nuclear device. In recent months, South Korea has revised its security strategy to include the possibility of first strikes against the North, putting a premium on radar-evading technology.

“The stealthiness of the F-35 is a key consideration when you think about what kind of missions the Republic of Korea Air Force could be conducting — deep strike, for one,” said James Hardy, a London-based analyst at IHS Jane’s Defence Weekly.

The Joint Chiefs decision came hours after North Korea threatened to strike out at President Park Geun Hye and turn the presidential Blue House in Seoul into a “sea of fire” if South Korea makes any provocations, an unnamed North Korean military spokesman told the official Korean Central News Agency.

The fighter jet South Korea will buy “should be able to strike strategic targets after stealthily penetrating” into North Korea, the Joint Chiefs said in the statement.

More Planes

South Korea will sign the contract for the jets next year and take delivery starting in 2018, the Joint Chiefs said. The original tender was for 60 planes. Another 20 jets may be ordered depending on security needs, according to the statement.

The Lockheed F-35 was originally rejected as being too costly. By initially buying 40 jets the F-35 would now be within the original 8.3 trillion won ($7.8 billion) budget, easing final passage of the purchase by the Park government. Lockheed officials weren’t immediately available to comment.

The decision was also a setback for Boeing. In September, the ministry indicated it might consider buying a mix of planes, after refusing Boeing’s F-15 SE for the entire order because it lacked sufficient radar-evading capabilities.

Fighter Gap

“Once we are officially notified, we will closely review all new documentation before deciding how best to proceed forward,” Boeing said in an e-mailed statement. “We remain confident that the Advanced F-15, with its superior speed, range and payload, combined with cost and schedule certainty, is what Korea needs to meet its defense needs and address the growing fighter gap.”
Lockheed spokesman Philip Rood declined to comment on the fighter jet selection in South Korea.

South Korea faces North Korea over one of the world’s most heavily armed borders, a legacy of the 1950-53 Korean War that ended in a truce. In 2010, North Korea bombarded a South Korean island near the front line, killing four people. That incident has led South Korean military officials to vow air strikes should another frontline provocation take place.

U.S. Forces

President Park said Oct. 1 her government would hasten development of stepped-up surveillance and improved offensive weapons. The government has budgeted 1 trillion won next year for the plan. South Korea is also going to take over in the coming years war-time command of its forces from the U.S., which maintains about 28,500 troops in the country.

The U.S., Australia, Japan and Israel are among nations that have placed orders for the F-35, the Pentagon’s costliest weapon system.

The current price tag for 2,443 F-35s is $391.2 billion, a 68 percent increase from the projection in 2001, as measured in current dollars. This year, U.S. lawmakers, the Government Accountability Office and the Pentagon’s test office have said the aircraft is making progress in flight tests and in stabilizing production.

“Having more F-35s acquired by foreign allies and partners is helpful to us in keeping the costs lower for our own acquisition of the fighters that will eventually be the backbone of our fleet,” Bruce Lemkin, a former senior U.S. Air Force official who now heads Lemkin International LLC, a consulting firm, said by e-mail.

South Korea is expanding its air forces at time when the U.S. is trying to convince North Korea to abandon its nuclear program and return to the six-nation talks that offered the country aid in return for disarmament.

Signs that the North would consider de-nuclearization are “absent,” U.S. envoy for North Korea Glyn Davies said today on a visit to meet South Korean officials in Seoul.

– BLOOMBERG