Dangers ahead in Air Force procurement: Aircraft contracts could reward Russia, French espionage and bribery, and other bad behavior

Moscow is trying to cripple US manufacturers for EADS

Putin is already using EADS to benefit his state-controlled companies and harm American aircraft manufacturers. In what is seen as a protection of his stake in the company and its future, and a demonstration of his power even outside the EADS management, Putin has demanded that the state-controlled Aeroflot airline cancel its order for 22 Boeing 787 jets, and to buy 22 Airbus A350s instead.11

Owners of Al Jazeera want stake in EADS

EADS might even turn to the owners of Osama bin Laden’s favorite satellite TV station, Al Jazeera, to buy up the shares that Russia wants. The market reacted favorably amid news in mid February that the state-owned Qatar Investment Authority might bid for 10 percent of EADS.12

Though officially considered an ally in the war on terror, the Wahhabi-ruled country is playing both sides as it always has. Qatar was a major financial backer of the Taliban in Afghanistan the regime provided Osama bin Laden with sanctuary and support in 2001, and was one of the last countries in the world to send condolences to the U.S. after the September 11 attacks. Although Qatar hosts U.S. military facilities, the state and its ruling family founded and own bin Laden’s favorite TV channel, Al Jazeera.

Procurement would reward France for espionage and bribery

By making EADS a substantial defense supplier, the United States would be rewarding the company – and its French government patrons – for years of espionage and bribery that inflicted billions of dollars’ of damage on the American aircraft industry and betrayed any trust that they would have earned as credible defense partners.

A 1993 study by the Canadian Security Intelligence Service (CSIS)13 found that Airbus depended on French espionage against U.S. and other companies to break into the American dominated aircraft manufacturing market. The French government, it said, built Airbus on its “strategic trade policy” (STP) of Paris that integrated state intervention to subsidize domestic businesses and use dirty methods to sell them abroad.

Proponents of STP advocate “government assistance through properly targeted subsidies to domestic firms deemed strategic. By lowering their costs in this manner, governments theoretically allow these firms to provide more of these excess profits or externalities that benefit the country as a whole,” according to the intelligence study. “The European consortium, Airbus, is often presented as a successful example of strategic trade policy.

“Proponents of economic espionage argue that the provision of valuable economic intelligence could provide strategic industries with the equivalent of a subsidy,” the Canadian report said.  “The intelligence provided through economic espionage would lower the firm’s costs and thus potentially result in increases in market share and consequential benefits for the domestic economy.” 

About J. Michael Waller

J. Michael Waller is Senior Analyst for Strategy at the Center for Security Policy. His areas of concentration are propaganda, political warfare, psychological warfare, and subversion. He is the former Walter and Leonore Annenberg Professor of International Communication at the Institute of World Politics, a graduate school in Washington, DC. A former instructor with the Naval Postgraduate School, he is an instructor/lecturer at the John F Kennedy Special Warfare Center and School at Fort Bragg.