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Hillary Clinton and Barack Obama, the contenders for the Democrats' US presidential nomination, have criticised a Pentagon decision to award a $40 billion (£20 billion) defence order to a European company rather than to the American group Boeing.
Amid fervent campaigning for yesterday's crucial primaries in Texas and Ohio, the Democrat rivals sought to gain political mileage from the Pentagon's decision to buy air-refuelling tankers from EADS, which owns Airbus.
Their opposition to the deal marks the start of intense political lobbying in the US to overturn the contract and raises the possibility that Airbus could lose out if a Democrat is elected president.
John McCain, the Republican Party's likely nominee for president, said that he would wait to pass judgment on the deal until he had been briefed by the Department of Defence.
The tanker contract is the second-largest defence procurement project on record and will be worth an initial $40 billion for 179 aircraft, rising to more than $100 billion in future years. The UK is expected to pick up at least $6 billion of work because wings for all Airbus aircraft are built in North Wales.
EADS was awarded the contract on Friday in a victory that amazed the defence community. Boeing was seen as certain to win, given its position in the US as a corporate giant capable of wielding enormous political influence.
Mr Obama, a US senator for Illinois, Boeing's home state, said that it was hard to believe that “an American company that has been a traditional source of aeronautic excellence would not have done this job”.
Mrs Clinton said that she was “deeply concerned about the Bush Administration's decision to outsource the production of refuelling tankers for the American military”. In a reference to Airbus, she said that it was “troubling that the Bush Administration would award the second- largest Pentagon contract in our nation's history to a team that includes a European firm that our government is simultaneously suing at the [World Trade Organisation] for receiving illegal subsidies”.
The EU is suing Boeing through the WTO alleging the same thing.
Nancy Pelosi, the Speaker of the House of Representatives and a congresswoman from California, where Boeing has factories, said that there could be security implications from using a foreign company to supply tanker aircraft.
Loren Thompson, analyst at the Lexington Institute in Washington, said that although Democrats were kicking up a fuss about the EADS deal now, they might have to soften the rhetoric before the November general election.
He said: “The second-biggest component of this order will be for General Electric engines to power the aircraft. Those are made in Ohio, and Ohio is the most crucial swing state in the general election. I do not think you can win the election without Ohio.”
Boeing's plane would have used Pratt & Whitney engines from Connecticut, which is already a Democratic state and likely to remain so.
Boeing has the option to challenge the decision of the Department of Defence (DoD) and the company yesterday said it would seek an immediate debriefing from the Pentagon - surprisingly aggressive language for a conservative company. Boeing can make a challenge only if it believes that bidding rules have been broken.
Defence analysts said that this would be hard to prove because the DoD has spent more than two years considering which company to select. However, politicians sympathetic to Boeing could try to block the deal in Congress.
This would require some clever arguments as the DoD has clearly stated that the A330 offered by EADS is a more capable plane than Boeing's 767.
Politicians will not want to be seen to be blocking a deal that the Pentagon says is the best for the armed forces. Mr McCain scuppered an early attempt to give the contract to Boeing.
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You mean European Governments do not pressure their airlies to buy from Airbus? A few years ago there was quite a fuss when successful BA bought 737s from Boeing, its virtual sole supplier for decades. "Our European Friends" , with their ailing state airlines proped up stealthy by the EU, thought BA should make a non commercial decision. BA to it's credit did what was best for BA and ultimately for Britain. Which is not yet unlawful, but wait and see. A similar situation is on the horizon with the new giant airbus and the Boeing 787.
D.L. Stephens, York, England
It's interesting to note that Mobile, Alabama is not a hotbed of engineering or aircraft building talents. In fact, Boeing has a licensee there that does modifications of 757s to freighters and they have a tough time finding 200 mechanics to do this. How is Northrop-Grumman-Airbus going to find 2000 mechanics to assemble and do the military modifications on the A330 in Mobile, Alabama? What I predict will happen is Airbus will cite these problems to complete the assembly in Toulouse, France and the 2000 US jobs will be reduced to 200 jobs.
We can this economic stimulus to the EU along with the indirect subsidies we provide to the EU via our military expenditures to defend them. EU governments spend 10% of the US defense budget as a result and have funds for all their social welfare programs such as national healthcare, free university educations, monthly stipends for each child until 18 yrs of age, and so on. Meanwhile, we're going to make due with our $600 per taxpayer refund
Freddy Max, Los Angeles, CA
What is also being conveniently over looked here is that along with the tankers that will be assembled in the USA, and remember that, they are having final assembly carried out in the USA by American workers, Airbus has also agreed to set up the final assembly lines for all its A330 Freighter aircraft at the same facility in the states. This isn't just new tankers for the US air force, it is a full aircraft production facility being set-up in the US, the first one for forty years, and that is what scares Boeing the most. The incredibly weak dollar to euro ratio is the only reason Boeing are on a level footing with Airbus for orders, aircraft built in the states are cheaper to build because the dollar isn't worth anything anywhere else in the world anymore. Boeing are more worried of Airbus building aircraft in their backyard than they are about the tanker contract. Northrop, remember them, have stated they will be indirectly be giving work to 25000 Americans. That's new jobs.
M Day, Weston super mare, UK
Principles and rule of law should matter than a contract though of $ 40 biilion or $100 billions. of course the defence contract involve national securiy but it should be presumed that it is not so when military department approved global tenders for such contract on merits.
democratic presidetial conteders both obama and clinton not to forget political ideals, basic principles of free trade national policy as a model to world to come and use nationalistic rhetoric just for some special interests or for primary votes.
It also indicaes that US is falling behind the Europe in technology leadership. Doesnot matter we are now moving to global world economy and there should be further liberalisation of immigration rules for tranfer of skilled labour instead of opposing the contract on pernicious nationalistic lines. nationalism leads to protectionism, moving away from globalisation, and towards unwanted global recession.
let us not act unwisely for moments sake!
s.lakshma reddy, hyderabad, india
Reversing this decision for political reasons would be short term madness and against the freemarket ideals that politicians are supposed to support. The US military would end up with an inferior aircraft and there is the possibility that European governments and consumers would try to pressure European airlines into buying Airbus passenger aircraft instead of Boeing. All in all very messy.
James, Jakarta, Indonesia
I love how the Americans go round the world preaching free trade until they lose out on a contract then we get idiots writing to their congressmen complaining: Grow up USA and stop acting like a spoiled kid - you are not alone in the world and if you want to be part of it you have to play by the same rules as everyone else.
George, Glasgow, UK
The threshold of american pride should not be ignored.
Bad news on all "fronts" are somewhat to much at the moment...
Peter Vernunft, Berlin, Germany
Javier - I'm sure after a 2 year tender process that led to the contract being awarded to the most compliant offer at the best price, that your letter will almost certainly lead to a reversal of their decision.
Paul, Melbourne, Australia
"Politicians will not want to be seen to be blocking a deal that the Pentagon says is the best for the armed forces."
Well, you cannot serve God and Mammon, can you?
Besides, notwithstanding the fact that the American military "deserves the best" (according to Boeing workers demonstrating in a few days ago), it would be rather strange to see American politicians preaching the free market Gospel one moment and, the moment after, refusing to admit the very proof that globalisation and free markets work (at least by providing the best for the American military).
RONNIE, PARIS, FRANCE
Well I did not hesitate to write to my Congressional representatives and Senators so as to inform them of my extreme displeasure with this contract.
After the lack of support showed by the German and French government in Afghanistan, along with their unwillingness to purchase any of our major weapons systems in the last 20 years, I urged my representatives to VOID this contract and award the purchase to Boeing.
Let's face it, in the end this contract will not be given to EADS. Politics trump everything.
Javier Arroyo, Silver Spring, Maryland, USA
If the deal is blocked by Congress the implications could be even worse for Boeing than for EADS. Does anyone seriously think that European governments won't pressure their national airlines to drop Boeing aircraft from their fleets? Privatised or not, EU politicians could make like extremely difficult for any European airline that chooses Boeing over Airbus in the future - and I would hope so. The US invented the term "Global Economy" but it seems they only want to adhere to the principals when it suits them.
Brian, Kowloon, Hong Kong
Sen Clinton thought it was great win Lockheed Martin (Owego, NY) used a foriegn aircraft to win the Presidential Helicopter replacement competition. In addition, when Lockheed proposed a variant of the same foreign tanker for the AF Combat Search and Rescue competition and lost she piled onto the protest process avocating that Lockheed be given another chance to win the contract. Like the Northrop Grumman's proposal, Lockheed proposed using a foreign built product while performing the military modifications in the US. If Congress did not want a foreign product to win, they should have passed legislation last year. The AF was open and fair and followed the procurement laws. The warfighter gets the best capaility while the US taxpayer gets the best value. Let the AF do their job and replace these 50yr old tankers before one falls out of the sky like our aging F-15 fighter fleet of late!
Lara, Fort Worth, TX
basically the USA needs allies and it needs allies badly and what better way to get them than buy them - this is what's happening here - the USA is buying friends - ahh shame!
Jason Walker, Oxfordshire , UK
Why let Northrop bid in the first place if your not going to let them have the contract? Northrop will have to be compensated if you take it from them. Why not just give it to Boeing without going to tender? McCain's previous position is the only logical one - the best tender wins, and that is what happened. Any other position is just pandering to national parochialism. What the USA needs right now is leadership, and I hope McCain sticks to his principles. Protectionism has a place, but if you change the rules after the finish it is going to cost you, and it makes a farce of the tender process and the market economy or what is left of it. The reason the USA is going through a "tumultuous period" is because of the intervention that caused the real estate bubble to prop-up stock markets. Now people call for more intervention against market forces and the very competition that made the USA a world power.
BrianOH, Auckland, NZ