(To view the graphic, click on https://www.reuters.com/graphics/USA-CHINA/GUAM/myvmbqngnpr/)

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US military conducts key test of missile defense system

under

development in Guam

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$10 billion project underscores Guam's strategic

importance for

US military operations in Asia

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System aims to complicate Chinese strike plans in

conflict, US

officials and experts say

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Concerns over Guam's housing, infrastructure amid defense

buildup

By Gerry Doyle, Vijdan Mohammad Kawoosa, Arathy J. Aluckal

Dec 11 (Reuters) - An SM-3 interceptor erupted into the

night sky over Guam late on Tuesday, its engine briefly

illuminating the northeast corner of the island as it

accelerated toward its target: a ballistic missile.

U.S. Missile Defense Agency and military personnel monitored the

radars and telescopic cameras tracking both projectiles; this

was not an attack, but a complex test.

Within minutes, the ballistic missile - air-launched from a

U.S. Air Force C-17 - was pulverized by the kinetic energy of

the SM-3.

(To view the graphic, click on )

The collision more than 600 kilometers (370 miles) up was a

violent milestone in the United States' multibillion-dollar plan

to turn its Western Pacific territory, closer to potential

adversary China than any U.S. state, into one of the most

heavily defended places on earth.

"We need the capability to deter the PRC from an attack on

sovereign U.S. territory," said a U.S. defense official,

referring to China by the initials of its formal name, the

People's Republic of China. "The goal of whatever capability we

put on Guam is defense of the homeland."

Over the next decade, the U.S. government plans to emplace

missile defenses at 16 sites around the island. They will use

the best hardware in the country's arsenal, including the SM-3

Block IIA and SM-6, Patriot PAC-3 MSE, and THAAD missile

systems, and a new, advanced radar, the AN/TPY-6, and

short-range air-defense system, the Indirect Fire Protection

Capability.

Linked to sensors on Guam and around the region, the

batteries are meant to engage whatever China might throw at the

island, home to crucial U.S. Air Force and Navy facilities,

which the Pentagon sees as vital to projecting power into East

Asia and the South China Sea.

That's the plan.

Reuters interviews with more than two dozen people,

including analysts, government officials, civic leaders, senior

U.S. military officers and technical experts, alongside planning

and budget documents, show the project's impact will balance on

a knife edge: complicating Chinese planning without simply

turning the island into a missile magnet.

The plan - a cornerstone of the U.S. Pacific Deterrence

Initiative, which seeks to counter China in the region - faces

headwinds as tensions tick upward. Building the island's missile

defenses as envisioned will cost about $10 billion over the next

decade. China will soon field the DF-27, which carries a

hypersonic glide vehicle to evade interception. On Guam,

residents worry that additional personnel will worsen a housing

shortage, and strain infrastructure and public services. And a

new administration in the White House may change the system's

requirements or architecture.

At stake in the Dec. 10 test was a simple question of

feasibility. A ballistic missile had never been shot down from

Guam. Could an interceptor designed for ships be fired from

land, guided for the first time by a new type of radar and hit a

fast-moving target?

Although that question was answered, a thornier one

remained: If China launched an all-out attack on Guam, home to

more than 170,000 people, would a missile-defense system matter?

"If the Chinese are serious about taking out Guam - and if

there's a war in Asia, I think they have to be - I don't see

what the value of an air and missile defense system would be,"

said Leland Bettis, director at the Pacific Center for Island

Security in Guam. "It is not a shield for Guam."

GUAM'S IMPORTANCE

Guam is home to Andersen Air Force Base, whose runways can

handle America's heaviest military aircraft, including

nuclear-capable B-52 and B-2 bombers.

The base also houses the largest U.S. munitions storage area

in the Air Force, according to the 36th Munitions Squadron,

amounting to nearly 20 million pounds (about 9 million kg) of

explosives.

Down the coast on the opposite side of the island from

Andersen is Naval Base Guam, which serves five Los Angeles-class

nuclear-powered attack submarines, and the U.S. Navy's only two

specialized ships for tending subs at sea.

Other military facilities include radar installations,

facilities for communications and maintenance, and housing.

All of that supports forces that can project power into the

South China Sea. Other U.S. military units are based closer to

China, such as in Japan and South Korea. But Guam is part of the

United States.

"Anything we are trying to get from the U.S. to INDOPACOM is

going to land in Guam," said a senior U.S. defense analyst, who

spoke on the condition of anonymity because of the sensitivity

of the matter, referring to Indo-Pacific Command, which controls

U.S. forces in the region. "It is the only reliable place that

we can operate out of in a Taiwan Strait scenario or a conflict

in the South China Sea."

The PLA could use a wider variety of weapons to hit American

bases in countries closer to China, and may see that as less

risky than striking U.S. territory on Day One of a conflict,

said Oriana Skylar Mastro of the Freeman Spogli Institute for

International Studies at Stanford University. She added that

Guam, being more-distant, would be ideal for staging operations

or regrouping for counterattacks.

THE THREAT

Chinese military planners are well aware of Guam's

significance, said Tong Zhao of the Carnegie Endowment for

International Peace, and the People's Liberation Army has an

enormous stockpile of weapons with which to attack it.

Many, however, require launch platforms: cruise missiles

such as the YJ-63 and CJ-20, with ranges that can exceed 1,000

km, must be carried by aircraft or ships that are vulnerable to

attack.

That leaves ballistic missiles as China's most likely option

to strike the island. It has two conventional types that can do

so: the DF-26 and DF-27.

The DF-26, nicknamed the "Guam Express," can carry both nuclear

and conventional warheads. The PLA Rocket Force has more than

250 launchers and 500 missiles, according to the most recent

Pentagon estimates. It is accurate enough to hit a medium-sized

building at a maximum range of 4,000 kilometers with more than a

ton of high explosives.

The DF-27 is not yet in service, according to the Pentagon.

It is designed with a hypersonic glide vehicle warhead that can

maneuver to the target, complicating matters for missile

defenses.

The worst-case scenario, according to a missile defense

program director granted anonymity to discuss a sensitive

matter, is a simultaneous attack involving all of the Chinese

weapons that can strike Guam.

Many experts think that is unlikely. Besides the risk to Chinese

ships and aircraft, the United States is working to ensure that

its forces can be distributed around the region - investing

in upgrades to Australian bases, for instance - so strikes

cannot focus on a single location.

China's defense ministry did not respond to a request for

comment about how the Guam project might affect Beijing's

military planning, whether it would make the island more of a

target or under what circumstances U.S. territory might be

attacked. Last year, a ministry spokesperson said, "If Guam were

to be an outpost to wage wars, it would not be secure even if it

were armed to the teeth."

MISSILE DEFENSE

Swatting down ballistic missiles is difficult. The targets and

interceptors are moving at many times the speed of sound at

altitudes ranging from a few thousand meters to above the

International Space Station.

But missile defense technology has matured in recent years, some

analysts say, pointing to successes in Ukraine and the Middle

East. The Guam Defense System project will link the most modern

U.S. equipment, creating a "layered" network.

"This is the hardest thing Missile Defense Agency has ever

done in terms of complexity," said a U.S. official with direct

knowledge of the program.

At the heart of the system will be a ground-based version of

the Aegis fire control used on U.S. Navy ships. Linked to

Lockheed Martin AN/TPY-6 radars - as well as other

radars and sensors around the region and in space - it can spot

inbound missiles early in flight and, working with the Northrop

Grumman Integrated Battle Command System, determine the

optimal way of defeating them.

Challenges include limited ammunition, and modern ballistic

missiles carry decoys and other countermeasures, which mean they

may take several shots to destroy.

Stopping every missile in a massive attack is not realistic.

But increasing the number China must fire to do meaningful

damage - limiting what is available elsewhere and increasing the

risk of unwanted escalation - complicates Chinese planning, said

Sidharth Kaushal, a senior researcher at the Royal United

Services Institute in Britain.

"A credible missile defense system would not be one that

intercepted every missile... but stopped enough of the salvo to

prevent the destruction the planner was hoping for," he said.

U.S. Rear Admiral Gregory Huffman, commander of Joint Task

Force Micronesia, said that would "enhance the deterrent effect"

and give pause to adversary strike planners.

ON THE GROUND

The 550-square-kilometre island is going to be a target no

matter what, said Guam Governor Lou Leon Guerrero. Adding

missile defenses only makes it safer, she said.

"We realize the importance of a military presence here in

the defense of the nation and the defense of our civilian

population," Leon Guerrero said. "We are a peaceful island ...

But deterrence is also very important in defense."

Others worry that fortifying Guam will make it more of a

target. More than half of the 136 public comments on the plan

submitted to the MDA last year involved concerns the defenses

would invite a strike or be ineffective.

Guam's relationship with the U.S. military stretches back to

the late 19th century. Since World War II, it has seen repeated

military buildups; in 2012, before the missile defense project

was proposed, the United States and Japan agreed to transfer

5,000 U.S. Marines to Guam from Okinawa, the first of whom were

due to arrive in December.

Construction means more work for the island's companies, and

a larger population means more spending. But Guam's construction

workers are already fully occupied, said Catherine Castro,

president of the Guam Chamber of Commerce, estimating that the

number of foreign workers would double to about 10,000 in coming

years.

That's in addition to the estimated 1,000 U.S. personnel and

1,300 dependents associated with the missile defense program who

would need housing, according to MDA estimates.

Such an influx would pile strain on an already severe

housing shortage. The mean income on Guam is about $42,000,

according to government data. The median home price is over

$400,000, said Robert Underwood, Guam's congressman from

1993-2003 and former president of the University of Guam.

Because of Guam's status as a territory, its residents and

government cannot reject any federal government plans for the

island. So the question becomes what the island may get out of a

military project, including investment in hospitals, education,

emergency services or infrastructure, Underwood said.

"Inevitably there is sort of logic here: we are going to

leverage the government interest and get something else,"

Underwood said. But, he added, that would not change "the

overall direction of the plan."

Although all of the proposed sites for the system are on

military property, explosions or debris could affect nearby

civilian areas, Bettis said.

The MDA's draft environmental impact statement classifies

ordnance risks as "long term, moderate and less than

significant."

THE FUTURE

A key aim of the Guam Defense System project, planners say,

is to prevent a conflict: if it is never used, it will be a

success.

"This is trying to enhance deterrence by communicating to

potential adversaries... that we would consider an attack (on

Guam) an attack on the U.S. homeland," Skylar Mastro said.

The only way to know for sure whether the system works

against a major missile attack is a scenario everyone on Guam

hopes will never unfold. For now, a regime of regular flight

tests will benchmark how well the missiles, radars and control

systems work.

The project calls for up to two tests a year.

(Reporting by Gerry Doyle, Vijdan Mohammad Kawoosa and Arathy J.

Aluckal; additional reporting by Adolfo Arranz and Sudev Kiyada;

editing by David Crawshaw, Rebecca Pazos and Simon Scarr.)