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U.S. Aerial Tanker Contract Decried As Symptom of Protectionism     Print Email

Transatlantic Press Review: Pentagon Slammed for Poor Management

The collapse of the joint tanker bid by Northrop Grumman and EADS triggered extensive and strongly worded media criticism on both sides of the Atlantic of the Obama administration’s handling of the bidding process by the Pentagon. These commentaries are echoed in private by many U.S. and European officials, who say that it further dims hopes for reversing a declining trend in transatlantic defense relations, starting with defense-industrial cooperation.

According to Germany’s Der Spiegel, four European leaders recently wrote a joint letter to President Barack Obama reminding him of his commitments to fair competition in the context of the tanker bid. Obama reportedly did not bother to reply, apparently feeling it was unnecessary -- a dangerous precedent for U.S.-EU cooperation in defense cooperation, the magazine said.

France’s Le Monde editorialized that the Pentagon’s changes in specifications for the new aerial tanker confirm a trend of decreasing U.S. interest in promoting open competition in its markets. It cited European leaders’ growing concern about a “Buy American” trend in the U.S.

In Spain, El Pais reports that Brussels may try to find evidence to take the case to the World Trade Organization’s tribunal on the grounds of favoritism to Boeing. El Mundo quotes Thomas Enders, CEO of Airbus, an EADS subsidiary, as saying that [Defense Secretary] “Robert Gates had already let it be known in 2009 that he favored Boeing’s offer” and that “the biggest loser is the [U.S.] Air Force, who are now left with their second-best option”.

Jorn Madslien, from the BBC adds details about EADS’s larger troubles due to the slow sales of its new Airbus passenger planes. Quoting disappointment among high-ranking European officials, he suggests that this outcome may “poison cross-Atlantic relations for years to come” because of perceptions of U.S. protectionist measures.

Christopher Drew of the New York Times remarks that this issue “raises questions about President Obama’s plan to foster more competition and shift more of the responsibility for covering cost increases to military contractors.” He quotes an analyst of Lexington Institute, a policy group working with military contractors, as complaining about the irony that this huge weapons program faces no real competition although Obama has been strongly advocating reforms of the Pentagon’s (and other government agencies’) acquisition practices.

The Washington Post quotes French Prime Minister François Fillon as declaring that the U.S. government’s attitude was “a serious breach of the rules, which are those of fair competition between our economies.” Following the European Commission’s warning that the U.S. is becoming increasingly protectionist, President Nicolas Sarkozy stated that he intends to raise the issue when he visits Obama at the end of March.

An insightful insider account of the Washington politics involved in the final outcome deal appeared in Politico. It highlighted Boeing’s domestic-political advantage in a situation where a jobs-conscious Democratic administration is in power in the midst of an economic crisis. Politico reports: “A crippling error for Northrop may well have been its decision [in the first five years of the bidding war] to bank too long and too heavily on Republicans maintaining control” of key decision-making positions in the military-affairs committees of Congress. By last September, when the bidding was reopened, Politico reports, “Northrop’s position was eroding as the economy went from a nose dive to a slow and jagged recovery, elevating the issue of protecting U.S. jobs. In addition, Obama, who’d already criticized the Pentagon procurement process, was forced to hunt for savings in the budget to offset the ballooning deficits caused by the financial bailouts and economic stimulus efforts.

“The now budget-conscious Pentagon bid writers began to scale down the tanker design and size — a move that benefited Boeing. During the past months, Northrop-EADS appealed to the Pentagon to adjust bid specifications and/or to give them credit for their plane’s additional features."

“But when the Pentagon issued its final bid requirements two weeks ago, it was apparent Northrop hadn’t won the argument. As late as last week, Northrop was still weighing its decision. Executives gathered during the weekend — the day after Dicks’s elevation to replace the late Rep. John Murtha (D-Pa.) as chairman of the House subcommittee that controls the Pentagon’s purse strings — and decided to pull out."

In many ways, the flap over the tanker is only the latest reminder of long-standing quarrels about “fairness” in the transatlantic defense market. As Germany’s conservative Die Welt said: “It would be desirable if competition could, at the very least, be opened up between NATO members. But that would also mean that Europe would have to stop its common practice of senselessly developing some of its own weapons-products when it could just buy them from America."

By Basil Maudave