In the world of defense spending, and defense investing, everything old is becoming new again — aircraft carriers especially.

Over the past several months, defense news headlines have been dominated by reports that everyone from India to Singapore to Japan seems to be busily building aircraft carriers. China, in particular, is said to be in the process of building multiple carriers simultaneously. Now, could the Islamic Republic of Iran be next in line to join the aircraft carrier-owning club?

According to multiple sources, Iran recently completed work on a two-thirds scale model boat resembling the American Nimitz-class nuclear-powered aircraft carrier. Curiously, the new vessel appears to come complete with airplanes on deck, and even has the “68” navy designation for the USS Nimitz (CVN-68) painted on its deck. Why?

 

 

 

 

 

 

 

 

 

 

 

 
The real USS Nimitz — bigger than a breadbox, bigger than its Iranian doppelganger, and more heavily armed. Photo: Wikimedia Commons

Roll film
Asked to comment on Iran’s new boat in March, when it was still under construction in the Gachin shipyard near Bandar Abbas seaport in the Persian Gulf, U.S. Navy Cmdr. Jason Salata dismissed the vessel as “a large barge built to look like an aircraft carrier” — nothing more.

Iranian media appear to agree, with local newspapers still characterizing the vessel as a movie set-piece for a propaganda film telling the tale of Iran Air Flight 655, which was shot down by the U.S. during the Iran-Iraq War in 1988. But this seems unlikely. After all, IAF 655 was shot down by the U.S. guided missile cruiser USS Vincennes — not by the Nimitz. In fact, at the time IAF 655 was shot down, the Nimitz wasn’t even in the Gulf — it was back in its home port in Washington state.

So taking Iran’s explanation about the purpose of its new carrier at face value, experts who’ve viewed satellite photos of the craft and considered Iran’s explanation for building it call the project “stupid” and “an utterly ridiculous waste of money.”

But that doesn’t necessarily mean the U.S. should rest easy.

Target practice?
Commenting on the project, former Deputy Director of Future Operations at the U.S. Navy Fifth Fleet, and now Senior Naval Analyst at the Institute for the Study of War, Christopher Harmer suggests that the Iranian vessel might have been built for use as a target to be shot at in military war games. Quoted on DefenseNews.com recently, Harmer noted that the Iranian navy has recently “adopted Kamikaze tactics in which hundreds or thousands of small boats armed with rocket launchers or machine guns would launch suicide attacks against US warships.”

Having a target vessel to practice against, and one of roughly the same size and shape as America’s most numerous model of aircraft carrier, could be useful for trying out naval tactics. Running with theory, many defense analysts have taken to calling Iran’s new “carrier” by a different name — “the Target Barge.”

Events appear to support the Target Barge theory. Quoted on Iran’s Fars news agency, Iranian Rear Adm. Ali Fadavi said it was only “natural that we want to sink the carriers. … If war with the United States breaks out, the Iranians will attack American aircraft carriers in the Persian Gulf, their size making them easy to target.” To this end, says the admiral, Iran has “been making and sinking replicas of US … warships for long years.”

But as it turns out, they could still use some practice.

Earlier this month, intelligence and security news website DEBKAfile reported that a nearly brand new Iranian “Ghadir-class stealth mini-submarine” has just gone missing, sinking somewhere near the Strait of Hormuz while in the process of preparing to practice “sinking or disabling a mock-up US aircraft carrier.”

Three guesses which “mock-up” that might be.

What it all means to investors
So, mystery solved? All signs point to the conclusion that Iran built its new “aircraft carrier” to serve as a target to practice on during wargames — practice that the Iranians evidently need pretty badly. But what does all this imply for investors in defense contracting companies?

Simply this: At the same time that countries like India, Singapore, Japan, and China are intent on investing billions of dollars in building aircraft carriers, other countries such as Iran are just as eager to spend “utterly ridiculous” amounts of money on finding ways to sink aircraft carriers. So long as the U.S. Navy’s blue-water fleet hews to a policy centered on aircraft carriers, you can expect the Pentagon to spend a fair amount of its own money on finding ways to protect its flat-tops.

After all, the reported cost of the new USS Gerald R. Ford supercarrier is pushing past $13 billion per unit. With that much money tied up in a single ship, it only makes sense that the Pentagon would happily spend millions of dollars on new weapons systems to defend the craft. Iran’s threats could, conceivably, breathe new life into General Dynamics‘ (NYSE: GD) and Lockheed Martin‘s (NYSE: LMT) Littoral Combat Ships program — the LCS having been designed in part with an eye toward countering threats from Iran’s small, fast-attack boats.

 

 

 

 

 

 

 

 

 

 

 
America’s first Littoral Combat Ship, the USS Independence (LCS-1). Photo: Wikimedia Commons

An increased threat from small boats might also argue in favor of accelerating deployment of Raytheon‘s (NYSE: RTN) new Griffin surface-to-surface “mini-missile”, which recently achieved “initial operational capability”. Designed specifically to improve naval warships’ defenses against threats from small, fast attack boats (which Iran might use to “swarm” U.S. carriers), the Griffin boasts a 33-pound warhead capable of disabling such small boats, combined with a three-mile range that’s roughly twice as far as standard-issue shipborne MK 38 “chain guns” can shoot.

Long story short, even if Iran’s new “aircraft carrier” is probably a fake, the threat it represents is real.

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