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  • Europe's Tanker Outrage and Could it Backfire?
    Posted by Robert Wall 4:28 PM on Mar 17, 2010

    Ever since the Northrop Grumman/EADS team decided to opt out of the U.S. Air Force KC-X tanker competition, Europe has been aflame in complaints about perceived anti-competitive behavior in Washington.

    So what is behind the outrage and the sustained high-level complaints?

    Clearly, there is a good deal of understandable frustration in Europe. When Northrop Grumman/EADS got the nod to provide the A330 as the tanker, it was clearly a coup and having the award overturned on procedural issues was doubly painful. What’s more, and hardly surprisingly, much of Europe doesn’t understand U.S. defense contractual processes, so the GAO protest and the crafting of the new RFP in the way it occurred reeks of back-room deal making to the outsiders and aggrieved.

    But there is clearly more to the vitriol coming out of Paris, Berlin and London: domestic politics. All three governments have huge domestic political problems they are trying to paper over.

    Gordon Brown is fighting for his political survival in London in advance of the May general election. Nicolas Sarkozy’s domestic political agenda has stalled since the economic downturn set in and there is more attention in Paris on whom he and his wife are respectively sleeping with than any political issues. And in Berlin, Angela Merkel’s coalition government also is struggling to send out a coherent political message, with infighting between the coalition parties.

    Nothing is more opportune, at such a time, than some good old fashioned America bashing. These days, no European politico is going to lose a vote for speaking ill of Washington.

    When Europe still had a love-affair with then-candidate Obama, he called Europe out on the situation when he said: “in Europe, there is an anti-Americanism that is at once casual, but can also be insidious.” It was a comment that was notably ignored in Europe.

    The question now becomes whether there is a risk to EADS and other European firms (many of whom are far further along in building their industrial footprint in the U.S. than EADS) that the political grandstanding will drag on too long and create a political backlash in the U.S.

    EADS is playing the long-game in the U.S. which explains why EADS CEO Louis Gallois has been careful not to let his disappointment color the tenor of his discourse on KC-X. While quick to argue he’s got the better plane, he’s shied away from lobbing verbal hand grenades. EADS understands there are future competitions to come: the U.S. Army’s armed scout helicopter, the U.S. Air Force’s CVLSP helo program, and myriad others. That’s clearly not the calculus driving the company’s political backers.

    Tags: ar99, KC-X, EADS, Northrop, Boeing

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