Dawn breaks. Out of the belly of an Airbus A400M "Eurolifter" military cargo transport whines a squat armoured vehicle. Powered by an innovative diesel-electric motor, this Swedish-built "SEP" vehicle is equipped with a high-power French built cannon and turret, and the magazine is stacked with French shells, manufactured to EU CEN standards. The vehicle bristles with high-tech sensors and threat detectors, also Swedish built, and is protected by a new generation of "electric armour", made by an European armament consortium.

The "Eurolifter" took off from Eindhoven, the headquarters of the European Air Transport Command, under commands issued through the EU military headquarters Command Information System (CIS), the Permanent Joint Headquarters for EU military operations, in Northwood, North London, and was guided en route by the EU's Galileo satellite global positioning system.

To reach its destination, it was refuelled from a European-built Airbus A330-200 and its passage was safeguarded by Eurofighter patrols, each aircraft armed with next-generation European medium-range air-to-air Meteor missiles. Tranche 2 Eurofighters now fly overhead, launching French-built Storm Shadow/SCALP-EG air-launched cruise missile at targets over the horizon.

Already, in the distance, Italian-built Panther reconnaissance vehicles are roaming the countryside, while French-built, high-endurance unmanned aerial vehicles (UAVs) scour the hinterland for potential threats. As more "Eurolifters" land, they disgorge from their holds the first of many German-built MAN tactical supply trucks, which immediately move to the designated positions shown on their in-cab, German-built logistics support system screens.

Meanwhile, officers, schooled in tactics and European doctrines at the EU Military college, gather in their hastily set-up command centre, consulting the latest intelligence from the GMES earth observation satellite, beamed via the European Union Satellite Centre in Torrejón de Ardoz, Spain, while awaiting final orders from Force Command in Brussels.

Above the command centre flutter two flags. One is blue with a ring of 12 yellow stars, symbolising the first full-scale deployment of the European Rapid Reaction Force. The other is a Union Jack. It is only this flag - which was made in China, as were the soldiers' uniforms – that identifies the British Army contingent, in action circa 2020 as an integral part of the ERRF, the New European Army.

That is the reality of what awaits us - not fiction, not a Eurosceptic fantasy but fact, based on my analysis of current MoD equipment procurement plans and co-operation agreements. The result will be that, as British armed forces undergo major re-equipment and transformation over the next decade, not one of the major systems will be of British design or manufacture.

In physical as well as organisational terms, the British Army will be wholly integrated into the European Rapid Reaction Force - the New European Army - no longer able to act independently without permission from Brussels.

It is perhaps a refection of my totally distorted news values that the most interesting article I found today in the press was the Sunday Telegraph piece reporting that: "Soldiers forced to shout 'bang' as the Army runs out of ammunition".

This contrasts rather neatly with some bizarre information unearthed by one of our readers (thank you) about the British Army's new Command and Liaison Vehicle, the Panther, subject of our previous posting.

It turns out that this grossly over-priced piece of Italian machinery, a cool £413,000 each – even before you add the "go-faster" accessories and the machine gun – is based on the Lamborghini LM002. This was a failed attempt by the parent company Fiat to capture the US military light utility vehicle market, that was eventually taken by the General Motors Humvee.

Having failed to interest the Yanks, the LM002 re-emerged as high-priced boy-racer "wheels", a version of which was marketed in Russia under the name of "Rambo", illustrating perhaps its intended market.

It then metamorphosed again to become an Italian Army runabout, complete with its three-litre engine, six-speed, automatic racing gearbox and all the trimmings, and thence to the FCLV contender. No wonder the boys in the MoD loved it. Now the brown jobs can go racing around the countryside in their glamorous new "wheels", at a cost to the taxpayer of half a million quid each – by the time the accessories have been added, and the tank has been filled.

And of course, adorning the rig is the latest "must have" fashion accessory, the "Enforcer", remote controlled weapon station, fitted with a 7.62mm or 12.7mm machine gun (Doncha just luv the macho name).

Of course, given the parlous state of defence spending, the MoD won't be able to afford any ammunition for it, so the brown jobs will have to tear around in their shiny new Lamborghinis shouting "bang! bang!" at the nasties. But then, if you are shelling out near-on half a million quid for your "wheels", you can't have everything.

At the risk of offending some of our readers, who might prefer shorter, snappier posts and a diet of trivia, we return once again to the saga of the MoD procurement of the British Army "Panther" vehicles, featured in yesterday's post - with some truly mind-blowing additional revelations.

As we left the story, the MoD had pushed a British manufacturer, in preference to its own product, to enter the Italian Iveco Panther into an MoD trial aimed at selecting the best Future Command and Liaison Vehicle (FCLV), after the short-list had been closed and the competitors had already been chosen.

Then, against world class competition, this untried, untested design was selected – by the same MoD which had insisted on its inclusion. It then went on to order 401 vehicles at a cost of £166 million - working out at £413,000 each – with an option for another 400 vehicles. Afterwards, it pretended that they were British-built, until forced to admit that the vehicles were wholly Italian-built, with the exception of minor roof modifications (necessary to fit a machine gun).

In our previous post, we also observed that, at the time, the clear favourite – which was expected to win the order - was the South African built RG32M, produced by a company which now calls itself Land Systems OMC, previously owned by Vickers Defence Systems and now a subsidiary of BAE Systems – the premier British aerospace and defence manufacturer.

What we lacked, when this post was written, was any idea of cost comparison which, in the defence equipment sector, is notoriously hard to obtain. However, with further research, the Swedes have come to our rescue as it now transpires that in May of this year, the Swedish Defence Force placed an order for 102 RG32s.

Interestingly, the version supplied - the RG32M, the same model as intended for the British Army - had been extensively customised to meet customer and regulatory quality standards, including "homologation" for Sweden and Europe. Modifications included changes to axles, wheels and tyres, bonnet and louvres, steering wheel and instrument panel. The vehicle was also given "winterisation" for Sweden's –35°C temperature extremes.

But what is absolutely devastating is the cost, the total contract coming to "almost" 180 million Rand. At current conversion rates, this equates to a contract value of £15.49 million, working out at £152,000 per vehicle as opposed to £413,000 for the Panther. On a directly equivalent basis – without any discount for quantity – buying 401 RG32Ms would have cost the MoD £60.78 million, as against the £166 million it is paying for the Italian vehicles.

Now – as we all know - cost, especially in terms of military equipment, where performance is crucial, is not everything. If there were significant performance benefits to the Panther, then there could be a case for buying the more expensive vehicles.

Here, however, it must be recalled that, at the time of the selection, the Panther was a new, untried vehicle, with no combat record. That is not the case with the RG32 and its similar but larger cousin the RG31. With the latter vehicle, for instance, its capability is endorsed by none other than the US armed forces. Despite their notorious reluctance to "buy foreign", in February last they bought 148 vehicles (at £289,000 each, i.e., £124,000 less than the Panther).

The order came after an incident in 2004 in which a RG31 in Afghanistan was destroyed by a mine. Five US soldiers in the vehicle were able to exit with only light injuries. The soldiers wrote a letter of thanks to Land Systems OMC, saying the vehicle had saved their lives. "If it was not for its superior design and manufacturing we would not be able to write this letter today," the soldiers wrote.

Land Systems MD Johan Steyn responded by saying that, "This order simply confirms what we have always known - that in its class the RG-31 is the best mine-protected vehicle in the world." That is what you would expect from the MD of the company that makes the vehicle, but no military expert would disagree. It simply is the best in its class.

As for the RG32, 75 were recently purchased for United Nations use in Kosovo, with a further 20 for service elsewhere, and the vehicle has seen service in Malawi, Mozambique, Georgia, Israel, the Lebanon, Tajikistan and Burundi, attracting the same high reputation and glowing testimonies.

All that affirms that Land Systems has a strong track record, and is an acknowledged leader in mine protection and light armoured vehicles. Furthermore, the company itself has a good record for the "Africanisation" of its workforce. It has an 25 percent local equity partner in South Africa, DGD Technologies (Pty) Ltd, a local "Black Economic Empowerment company". Furthermore, its component purchases support a considerable number of local South African firms, making it a key industry in an under-developed country, and just the sort of enterprise that Tony Blair should be supporting.

Furthermore, when in June 2001, Vickers Defence Systems announced it had won the contract for the MoD assessment phase of the FCLV, being one of three companies paid £500,000 for entering the trials, it offered a choice of the RG31M and the RG32M, stating that the RG31M exceeded the load carrying and mine protection requirements whilst the RG32M offered "the stealth attributes associated with a compact design combined with anti-tank mine protection."

As yet unexplained is, at the time, the MoD's total requirement was for "more than 500 vehicles", and it was offering not a direct purchase contract but a PFI deal – which would have included in-service maintenance, at a total programme value of £370 million. Somehow, in between nominating the shortlist and selecting the Panther, the contract turned into a direct purchase arrangement, with £166 million being allocated to buying outright the 401 Iveco vehicles.

However, had the proven RG32M design been bought, the MoD would have saved the taxpayer over £100 million and if it takes up the additional 400 Panthers on option, the taxpayer will be over £200 million out of pocket.

Looking at the images of the three vehicle (from the top), the RG32M, the RG31M and the Panther, with what we know so far, it is very hard to see an adequate reason why the MoD is, to all intents and purposes, throwing £200 million down the drain on Italian vehicles, manufactured by a firm whose parent FIAT is, incidentally, on the brink of financial collapse.

In a posting at the end of June we drew attention to an extraordinary deception perpetrated by the Ministry of Defence, in relation to the procurement of a new type of armoured vehicle for the British Army, then known as the Multirole Light Vehicle (MLV).

With its announcement in July 2003 of the "preferred bidder" – and subsequently – the MoD sought to give the impression that the vehicle was British-made. It was only through persistent questioning from Conservative back-bench MP Anne Winterton that it emerged that the vehicle was not only entirely Italian-designed but was also to be manufactured (all bar the roof) by the Italian firm Iveco in Italy.

Not least of our concerns was the extraordinary price of each vehicle, at £413,000 – twice the price of a Rolls Royce limousine – but what particularly aroused our suspicions were the lengths to which the MoD had gone to conceal the European origin of the vehicle. After the award of the contract to supply trucks for the British Army to the German firm MAN-Nutzfahrzeuge, this we felt might be more evidence of what appears to be a covert quest by the MoD (at the behest of the Blair government) to achieve European defence integration.

What has since emerged is the depth of the deception, evidenced by the press release issued by the MoD at the time of the final contract award on 6 November 2003. It states, "The Ministry of Defence today signed the contract for the manufacture of the new Future Command and Liaison Vehicle (FCLV)…", then continuing: "The contract, worth £166 million, will see Alvis Vickers Ltd manufacture an initial order of 401 vehicles, with an option for up to 400 more."

Lord Bach, then defence procurement minister, was cited as saying that: "The award of this contract to Alvis Vickers Ltd (wich had been formed when Alvis acquired Vickers Defence) is excellent news both for our Armed forces and the defence industry. It will sustain approximately 35 highly skilled jobs at the Alvis Vickers Ltd factory at Telford, and a further 25 within other UK companies."

But an even more deceptive press release was issued by Alvis Vickers Ltd, (link above) which announced that it had been awarded "a prime contract" for the project, then stating that the company had signed a sub-contract with Iveco SpA "to supply major vehicle sub-assemblies" - er... like the whole damn vehicle.

A year later, Alvis Vickers was acquired by BAE Systems, to form a new armoured vehicle manufacturing company called BAE Land Systems, and this company has taken over the contract.

From here, the plot thickens. When we explored the British Army truck contract awarded to the German firm, we found that it had been awarded in preference to two other bids from two American-led consortia, both of which had a much higher British manufacturing component, and both of which appeared to be technically superior.

Curious as to whether something similar was at play here, Ann Winterton put down another parliamentary question (12 Jul 2005: Column 861W), asking what other designs were considered in the assessment phase of the contract.

According to defence minister, Adam Ingrams, three designs were considered, from three companies: Alvis Vehicles Ltd proposed the Iveco vehicle; Vickers Defence Systems proposed a vehicle called the RG32M, and United Defence Limited Partnership proposed the ACMAT "Ranger", otherwise known as the VLRB – a French armoured vehicle.

However, that was at a very late stage of the process. In the initial phases of the selection, six companies were invited to tender by the MoD. Alvis Vehicles was one, but not with the Iveco vehicle with which it was to win the contract. Initially, it submitted its own private venture design called the Scarab (and here). First launched in September 1999, the Scarab had its origins in a collaborative development with Mechem from South Africa; a company respected for its expertise in mine protection technology. A British manufactured vehicle, it was later to win a Belgian Army contract.

Vickers Defence Systems submitted the RG32M, Hunting Engineering (later to be re-named Insys) fronted the ACMAT "Ranger" and Iveco was in the bidding on its own account, with a completely different vehicle called the Puma. The final contender was NP Aerospace, a Coventry firm which is believed to have been offering an armoured Land Rover.

Also considered at an early stage seems to have been the Turkish-built Cobra, manufacturered by Otokar, with the significant advantage of incorporate the mechanical components of the US HMMWV vehicle.

On 15 June 2001, though, the MoD announced that the competition had been whittled down to three. According to its own news release in June 2001, it placed contracts with Hunting Engineering, Alvis Vehicles, and Vickers Defence, worth about £500,000 each, for a year-long Risk Reduction and Trials programme, from which the winner would eventually be selected.

The clear favourite at the time was the RG32M, and rightly so. Actually designed and manufactured by BAE Systems SA – the South African subsidiary of BAE Systems – over 1,000 had been produced and were in service, a testament to a firm which is the world leader in the production of mine hardened vehicles. In a website dedicated to the British Army, it was obvious that this vehicle was expected to get the contract.

However, as early as 14 May 2001, Janes Defence Weekly intimated that there might be another contender, reporting that the MoD Defence Procurement Agency were pushing Alvis Vehicles or Vickers Defence Systems to take on the Iveco MLV "Panther" which at the time was undergoing trials in Italy. In the event, Alvis did the deal and by September had signed an agreement with Iveco Defence Vehicles to offer the Panther (together with the Scarab) as an FCLV contender.

With that in place, on 31 January 2002, the MoD was able to announce the unveiling of the contenders for its "new fleet of armoured cars". The three original firms are named, but the picture in its press release shows not three but five armoured vehicles. Although the picture is poor definition, one is clearly the Iveco Panther. In the text of its release, the MoD states: "The prime contractor will be expected to have a UK base and, although place of manufacture is yet to be decided, it is expected that the programme will have significant British content." It also stated: "The FCLV will play a leading role in the Joint (i.e., EU) Rapid Reaction Force."

Back in June 2001, therefore, we had a situation where the MoD had limited its choice to three vehicles from three companies. One was wholly British designed and built, based on South African experience, one a world-leading South African design from a British-owned company, and another a French design, to be built by a British company.

Less than three years later, the contract goes to an untried Italian design, a vehicle that was not even in the original selection - entered at the specific behest of the MoD. And instead of being entered by its Italian manufacturer, it was fronted by a British firm - again at the behest of the MoD - that had its own vehicle rejected, and had since been acquired by another firm which had also submitted a world leading design that had also lost out.

Somebody please try and convince me that everything was above board and the best vehicle was chosen. Otherwise, it looks suspiciously like a covert "work sharing" arrangement, whereby contracts are being shared between members of what is intended to be a European Army using common equipment.

And, as a coda, when Ann Winterton asked the defence minister how much BAE Land Systems are paying for the Panther vehicles they buy from Iveco (at the instigation of the MoD) and sell on to the British Army, she was told that "the information requested cannot be provided given the confidential nature of the contract…".

Following the loss of the column last week, displaced by a "souvenir edition" on the Live8 concert, Booker is back with a vengeance, this week leading with a story on European defence integration.

The issues raised, however, will be entirely familiar to Blog readers, having been rehearsed last week in this blog. However, given that the MSM seems to have almost given up reporting on defence issues, Booker's coverage – which focuses on the hike in the costs of FRES, from £6 to £14 billion - is both timely and necessary.

Booker also manages to raise the issue of the Panther and also the purchase of German trucks for the British Army.

Frankly, I find it worrying how little attention is given to these defence issues for, even if there is no interest in the hardware and the broader political implications, the government is commiting to enormous expenditure. As Booker points out, the procurement cost for FRES now equates to £600 for every taxpayer in the country.

Furthermore, as we pointed out, the system originally involved 900 vehicles with a total "lifetime cost" over 30 years of £49 billion. Booker last week asked the MoD for the "lifetime cost" of the 3,500 vehicles now proposed (which pro rata should be over £100 billion), but they failed to reply.

In what must rank as one of the most bizarre events in the history of British defence policy, therefore, Booker observes that what makes it even more startling are the lengths to which our Government seems to be going to hide all this from view. Mind you, the way the media is behaving, they need not have bothered.

If the media had managed to tear itself away from the Live8 crap for even a second this week, they might have noticed that a junior minister in parliament coolly revealed that, in less than a year, the cost of a key government project had increased from an horrendous £6 billion to an absolutely staggering £14 billion.

This was in a debate in Westminster hall last Tuesday – a place where journalists rarely venture and thus means by which the government can claim to have addressed an issue while ensuring that no one takes the blindest bit of notice. And, of course, our lamentable, trivial media duly obliged, by ignoring it completely.

The debate in question was on the new Army equipment that goes under the name of Future Rapid Effects System (FRES), and was brought by Ann Winterton, Conservative MP for Congelton – a back-bencher who is proving to be more effective than the entire Tory front-bench on defence questions.

It was in fact, nearly a year ago (28 July to be precise) that I first wrote on this Blog about FRES which, according to Geoff Hoon in his strategic defence review, was a new generation of medium-weight armoured vehicles for the British Army that was going to equip it for the 21st Century.

In a second piece, the following day, I explored the political implications of the decision to procure this equipment and ventured the opinion that we have a debate about it.

So it has come to pass that, 11 months later, we have had a debate, triggered by a back-bench MP in a side hall to the Parliament, on a day when all the defence team, bar the unfortunate who had to answer Ann Winterton, was at the Naval Review in Portsmouth.

In the meantime, with the exception of Booker and a few mentions in The Business, the project has been virtually ignored by parliamentarians and the media alike, as indeed they have all ignored last week’s debate.

Yet, it was in that debate that the Parliamentary Under-Secretary of State for Defence, Mr Don Touhig, revealed that the FRES system would involve the acquisition of 3,500 vehicles rather than the 900 originally planned, at a cost of £14 billion rather than £6 billion. Yet, until we heard this from the mouth of a junior defence minister, nothing of this had been revealed to the public.

That, incidentally, still makes for an average unit price for each vehicle at something like £4 million and, while Touhig did not specify the total costs of ownership, for a mere 900 vehicles it was about £50 billion. We must expect a proportional increase for the increased number of vehicles.

Anne Winterton, however, did not call the debate to complain about the increased costs – about which she had no information until the minister responded to her – but to air the concerns about the implications of the system with regard to European defence integration, and to question the military validity of the system.

Her speech, therefore, which admirably sums up the issues, can be read from this link (Col. 390WH et seq).

Needless to say, Touhig ignored most of the points raised but, on the possibility that the system would be built in co-operation with other nations' armoured vehicle programmes was not denied. But the minister did deny that FRES would be dependent on the European satellite navigation system, Galileo, repeating that stale old lie that it is "a civil programme under civil control".

Still, a minister lying these days is nothing new – hardly worth bothering about when the media cannot even get off its backside to report a little matter like a £8 billion hike in costs for yet another defence project.

But, with the man lying about the nature of Galileo, there can be no confidence that he is not lying about further European involvement especially when the last two Army procurement contracts, the supply trucks and the Panther command and liaison vehicle, went to European manufacturers.

Incidentally, the Panther story was one Booker would have run this weekend had not the new Sunday Telegraph editor, Sarah Sands, lost her marbles and junked the column in favour of the Live8 crap, but then who gives a rat's bottom about real news these days when there's a whole continent to save?

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