Transatlantic Muscle Flexing

PR-"War"

This US $35 billion deal to supply refueling aircraft to the US Air Force has provoked a bitter struggle among lobbyists in the United States. Arms experts refer to the "equivalence of total war" between the US Boeing Company, which initially had been defeated, and the consortium of Northrop Grumman (likewise USA) and the Aeronautic Defence and Space Company EADS (German-French), to which the Pentagon had awarded the contract, last February.[1] Boeing objected to this deal. Just a few days ago, EADS had to accept a major setback: the "contract of the century" won in alliance with Northrop Grumman could be rescinded. The US Government Accountability Office (GAO) sustained Boeing's objection and recommended a new round of bidding because of irregularities in procedure.

New Round

The US Air Force has 60 days to react. According to analysts, the military will not ignore the GAO's findings, because its deal with the European competitor had already provoked public outrage in the US. The German-French company has already announced that it will not passively accept the loss of the $35 billion deal and plans to again participate in the possible new bidding.[2] The struggle for this arms contract, which always has a political dimension, will probably enter a new round and is becoming a topic of debate in the US presidential elections. The Republican candidate John McCain is already calling on the Pentagon to repeat the bidding and is being seconded by the Democratic candidate Barack Obama. Observers are predicting more "transatlantic muscle flexing".[3]

Obama

Most EU member states, including Germany, would prefer Obama as the next US president. Independent of the outcome of the presidential elections, most government advisors expect transatlantic tension will persist.[4] But some, like Alexander Skiba of the German Council on Foreign Relations (DGAP), hope that there would be a "noticeable change" in US foreign policy should Obama win the elections. A democratic president could eventually "also allow Germany to have more influence on the US American position on international policy issues," hopes Skiba.[5] But Obama's victory would be a clear disadvantage for EADS. As the German press notes, particularly democratic senators and congressmen had opposed the contract being awarded to EADS, and Obama is distinguishing himself as the "guardian of American jobs".[6] "If the United States would get a Democratic administration, Boeing's chances would grow," reasons Sascha Lange, the government advisor from the German Institute for International and Security Affairs (SWP).[7]

McCain

A victory of the Republican candidate is seen as being more advantageous for transatlantic trade in general, and for the EADS arms contract in particular. Though McCain is considered a military hard-liner, he takes stronger stands in opposition to protectionist measures and in favor of free trade. Before the contract was awarded to EADS, he had even advocated not discriminating against the German-French arms corporation. Government advisors are therefore hoping that his presidency will permit better conditions for the European and particularly the German economies, that only recently had made major strides in bettering their position [8] in relationship to their US rivals: "With McCain, I think that the transatlantic economic partnership would have better prospects than under Obama", predicts Stormy-Annika Mildner, an expert at the SWP.[9] But once it was learned that 3 members of his Washington team had lobbied for EADS, McCain has been under enormous political pressure. The democrats are accusing him of undue proximity to EADS as well as lacking patriotism.

Weak State

Even in the Republican camp, there is strong resistance against granting such an important arms contract to European rivals. Already before the deal was made, the influential Center for Security Policy (CSP), that maintains top-notch relations with the US government, the military and the US arms industry, had declared that the German-French arms producer is unacceptable as a US armed forces supplier.[10] This opinion is supported by former US ambassador to the United Nations, John Bolton, who is a "senior fellow" of the American Enterprise Institute for Public Policy Research (AEI). The AEI's neo-conservative strategists are reputed to have had a very strong influence on the Bush administration, particularly on foreign policy issues. Bolton declared, that for a task such as refueling the Air Force, which for a world power like the USA is of extraordinary significance, potential rivals cannot be allowed to have influence. "It is not enough to say that EADS is largely owned by allies of the United States, because we may well differ with allies on key issues of national security."[11] In the Boeing-EADS competition, Washington has behaved like a "weak state" toward the European rivals, adds the think-tank Family Security Matters, which also has close ties to influential government circles. A re-bidding for the contract, it is said, would provide the possibility to correct the mistake and place the national interests in the forefront.[12]

Counteroffensive

In fact Berlin is expecting that if it comes to a re-bidding on the tanker project, Boeing will be awarded the contract.[13] EADS' highly proclaimed thrust onto the largest arms market in the world, will have been brought to a halt for the time being. Furthermore, Boeing is preparing a counteroffensive. The US company has announced that, alongside the EADS subsidiary, Astrium and the OHB technology company in Bremen, it will participate in the bidding for the European Galileo navigation system. According to the original plans, Galileo is intended not only as a rival to the US GPS system, but also as a means of making possible EU military missions against US interests.[14]

[1] Boeing und Airbus entfachen PR-Krieg; Handelsblatt 31.03.2008
[2] Rückschlag für EADS in Amerika; Frankfurter Allgemeine Zeitung 19.06.2008. EADS droht schwere Schlappe in den USA; Handelsblatt 19.06.2008. Umkämpfter Rüstungsauftrag: EADS lässt bei US-Tankern nicht locker; Financial Times Deutschland 19.06.2008
[3] Transatlantische Muskelspiele; Süddeutsche Zeitung 20.06.2008
[4] see also Kein Kurswechsel
[5] Obama verspricht Wandel in der Außenpolitik; www.cap-lmu.de 04.06.2008. Präsidentschaftswahlen in den USA: Worauf sich Deutschland einstellen sollte; Einsichten und Perspektiven 01/2008
[6] Gigantische Luftnummer; Süddeutsche Zeitung 20.06.2008
[7] US-Rüstungsmarkt bleibt unzugänglich; Financial Times Deutschland 21.06.2008
[8] see also Transatlantische Positionsgewinne
[9] McCain Would Be Good for Trans-Atlantic Trade, Says Expert; www.dw-world.de 08.02.2008
[10] see also Krieg and Irritationen
[11] John R. Bolton: The Hidden Security Risk; Washington Times 17.06.2008: "There is no justification for putting this unimaginably important capability at risk by manufacturing critical elements of it abroad. It is not enough to say that EADS is largely owned by allies of the United States, because we may well differ with allies on key issues of national security. Consider, for example the widely differing views between America and 'Europe' on Arab-Israeli affairs, on NATO expansion, on Iran's nuclear program, or on a host of other issues."
[12] Tanker Bid Shows Weakness of U.S. Policy; www.familysecuritymatters.org 20.06.2008: "In their analysis of the Boeing-Airbus competition for world leadership in the aviation industry, John G. Francis and Alex F. Pevzner concluded in the Winter 2006-07 Political Science Quarterly, 'We submit that the inability of America to maintain dominance in the large commercial aviation market is, in large measure, the result of the Western European achievement of acting as a strong state in this particular global sector.' The other side of the coin is that Washington has acted like a weak state. The GAO ruling gives Washington another chance to act with the strength the country needs to remain on top, and support American production over that of a foreign rival."
[13] US-Rüstungsmarkt bleibt unzugänglich; Financial Times Deutschland 21.06.2008. See also Transatlantic Axis and Vorstoß
[14] Boeing greift nach Galileo; Handelsblatt 15.06.2008. See also EU-Musterland and Knallharte Industriepolitik