Finland has lost interest in buying Lockheed Martin's MGM-140 Army Tactical Missile System (ATACMS) and may opt instead for the more affordable, Russian-built Iskander-E. (US Army)

Apr. 3, 2014 - By GERARD O’DWYER – Defense News

HELSINKI — The likelihood of Finland acquiring a new surface-to-surface missile system from Russia has increased following a preliminary decision by the Finance Ministry here to opt for a more up-to-date and cost-efficient launcher-fired tactical missile.

The ministry’s decision happens against a backdrop where the government has announced more than $3 billion in public spending cuts across various departments as the government struggles to tame rising national debt.

The search for a “more cost-efficient” tactical missile means that Finland has effectively dropped its interest in Lockheed Martin’s surface-to-surface MGM-140 Army Tactical Missile System (ATACMS) for the Finnish Army.

Finland’s Ministry of Defense had signaled interest in acquiring the ATACMS as recently as January, setting aside a budget of about $140 million for the purpose. The ATACMS has a range of up to 188 miles (300 kilometers).

“The missile project has been put on hold due to budgetary reasons, and due to the high unit price,” said Arto Koski, a commercial adviser attached to the MoD’s Material and Projects Unit. “The ATACMS is a very expensive and relatively old system. We must now evaluate our entire material development.”

The focus has shifted, Koski said, to acquiring a surface-to-surface missile solution that is “more modern and affordable. We know of alternatives that would fulfill the same technological need.”

Finland’s interest in ATACMS peaked in mid-2012, when negotiations with the US culminated in a congressional permit to purchase up to 70 tactical missiles. Finland had earlier agreed to acquire US joint air-to-surface stand-off missiles for the Finnish Air Force’s upgraded F-18 Hornet fighter jets.

The prospect of an ATACMS deal heightened in 2006, when the Finnish Army acquired a second-hand M270 multiple launch rocket system (MLRS) from the Netherlands for $62 million. A further $50 million was spent to render the MLRS launchers compatible with ATACMS missiles. Because the M270 launchers contain US technology, Finland sought and received US congressional approval for the acquisition.

he possibility that Finland, a neutral country, may turn to Russia for a surface-to-surface missile has increased following an agreement between the two countries last June to look at practical ways to cooperate on weapon purchases, sales and, in the case of Finland, offering subcontracting capacity to Russia’s equipment modernization programs.

The agreement was reached following talks between Finland’s MoD and Russian Defense Minister Sergei Shoigu during a visit here last May. In the months that followed, separate working groups were established in each country to examine potential areas for commercial cooperation and to evaluate those areas offering the highest potential.

An updated export version of the Iskander-E surface-to-surface missile is among the list of weapon systems, which includes combat aircraft, that Russia wants to sell to Finland. The Iskander-E has a range comparable to ATACMS, but Finland could expect to acquire the Russian system at a lower cost.

Finland traditionally obtained most of its big-ticket defense systems from the Soviet Union under a bilateral trade agreement that lapsed following the collapse of the Soviet Union in 1991. Systems acquired under this arrangement included MiG-21 fighter jets, Mi-8 helicopters and the BUK air-to-air missile system.

The near-obsolete BUK system is to be replaced by four batteries of the Norwegian-developed NASAMS II missile system beginning in 2015

After 1991, Finland switched to Western suppliers for its big-ticket procurements, acquiring 64 McDonnell Douglas F/A-18C and D Hornet fighters in 1992