CORRECTED-Obama eyes arms sales to Taiwan, official says

(Corrects year Bush cleared sales to 2001 in paragraph 15)
* Black Hawk helicopters and diesel submarine design work
* Administration also weighing more PAC-3 missiles
* China opposes arms sales to Taiwan
By Jim Wolf
WASHINGTON, Dec 9 (Reuters) - The Obama administration is moving toward possible new arms sales to Taiwan, including design work on diesel-electric submarines, a U.S. State Department official told Reuters on Wednesday. China strongly opposes arms sales to Taiwan, which Beijing sees as a renegade province, as interference in its domestic affairs. New submarines could help challenge any Chinese seaborne assault on the self-governing island, which Beijing reserves the right to take by force.
Also progressing toward notification to the U.S. Congress is the sale to Taiwan of UH-60 Black Hawk helicopters, said Robert Kovac, acting deputy assistant secretary of state for defense trade.
In addition, the Obama administration is weighing more sales to Taiwan of Patriot "Advanced Capability" missiles known as PAC-3 as well as an operations deal for the "Po Sheng" (Broad Victory) command and control program, Kovac said.
"All of those things are going on," he said during a break in testimony to a House of Representatives Foreign Affairs subcommittee hearing on U.S. aerospace exports.
Asked whether "going on" meant advancing toward notification to Congress as a prelude to any sale, Kovac said: "In some cases, yes," including the Black Hawks and the submarines. On supplying more PAC-3 missiles, he said this was "in discussions."
China suspended military-to-military contacts with the United States after then President George W. Bush notified Congress in October 2008 of plans to sell Taiwan a long-delayed arms package valued at up to $6.4 billion.
'VERY SIGNIFICANT EVENT'
The United States does not build deisel-electric submarines.
The design work, estimated at $360 million, would require a U.S. company to show it had the ability to build them or had found a foreign partner that would do so, said Ed Ross, director of operations at the Pentagon's Defense Security Cooperation Agency from 1994 to 2007.
The cost of building eight diesel-electric submarines had been estimated at $10.2 billion and would take 10 to 15 years, he added in a telephone interview.
"It's a very significant event if they go forward with these sales," said Ross, now a defense consultant specializing in East Asia. "They are desperately needed for Taiwan's defense and deterrence to maintain the relative military balance in the Taiwan Strait."
The Black Hawk, a tactical transport helicopter, is built by Sikorsky Aircraft, a unit of United Technologies Corp (UTX.N).
The PAC-3 missile is built by Lockheed Martin Corp (LMT.N) and Raytheon Co (RTN.N) is the system integrator. Lockheed was the prime contractor for the original Po Sheng program, designed to integrate Taiwan's air, marine, ground and command and control assets in a single network.
Taiwan long has sought 60 Black Hawks and the submarines.
Bush had cleared both for sale in April 2001 but he omitted them when he finally sent Congress his 2008 arms package after much debate in Taiwan's legislative Yuan.
Included were up to 330 PAC-3 missiles and related gear valued at up to $3.1 billion, about half the amount Taiwan had sought for its defense against missiles and aircraft.
"We decided that trying to make up for the delays in the arms sale package in one fell swoop was potentially destabilizing to the improvements in cross-strait relations that occurred during the first year" of President Ma Ying-jeou's administration, Dennis Wilder, senior director for East Asian affairs on Bush's National Security Council staff, told Reuters in March.
"We also clearly told Taiwan that nothing had been taken off the table," Wilder said. "We wanted to leave the door open for the next U.S. administration to do its own review in consultation with Taiwan to decide on future arms sales."
U.S. Defense Secretary Robert Gates said in a Sept. 16 speech that China's investments in anti-ship weaponry "could threaten America's primary way to project power and help allies in the Pacific -- in particular our forward air bases and carrier strike groups." (Editing by John O'Callaghan)