South Korea has signed a $1.1 billion contract to build three German-designed Type-214 submarines with air-independent propulsion in a Korean shipyard. The German HDW yard won the deal over a rival bid from the French DCN shipyard. The three boats will enter service in 2007, 2008, and 2009. South Korea has terminated negotiations to acquire three Russian Kilo-class submarines as part payment for Russia's debt to South Korea, noting that the subs had inadequate batteries, navigation systems, and communications, and that logistical support would be expensive and tedious.--Stephen V Cole