Politics & Policy

Tainted Tanks

EADS comes with a pernicious past.

Dwight Eisenhower once observed, “History does not long entrust the care of freedom to the weak or the timid.” The danger of weakness in prosecuting the War on Terror brings to mind the wisdom of Eisenhower’s prescient observation.

Consider the recent decision by the Department of Defense to award a $35 billion contract to build America’s fleet of refueling tankers to the French-owned European Aerospace Defense and Space Company (EADS). In one of the most colossal blunders of the struggle against the terrorists, we have handed over the future of a vital tool in the projection of U.S. power over to bureaucrats and politicians in Russia and France.

The tanker contract has sparked bipartisan outrage in Congress. A crescendo of opposition is now building, from conservative and pro-family U.S. Senator Sam Brownback to liberal Democrat Jack Murtha, to reverse the decision or deny funding to the Pentagon to implement it.

The lack of ease that accompanies the decision is hardly surprising; the catalogue of horrors at EADS reads like a “how not to” primer in a business-school ethics class. The company has a long and sordid history of bribing governments to purchase their airplanes, especially when competing with U.S. aerospace firms. Former CIA Director James Woolsey has called the practice rampant, and concluded that it was an integral part of EADS’ corporate culture. A European Parliament report in 2003 confirmed these corrupt practices, and that EADS has been embroiled in bribery scandals in Canada, Belgium, and Syria.

According to a New York Times report just last October, a French financial regulator turned over evidence of insider trading by senior EADS executives to prosecutors. The executives failed to inform the public about production delays in the A-380 jumbo jet while they quietly dumped their own stock. When the delays became public, unwitting shareholders watched their holdings plummet in value. The co-CEO and co-chairman of EADS resigned under pressure, and now some EADS executives may face indictments.

Even more worrisome is the power grab by Vladimir Putin, who is buying up the depressed shares of EADS like a corporate raider. The prospect of the authoritarian Russian leader, whose political opponents are harassed and jailed while prying journalists turn up missing or murdered, having a heavy hand in EADS affairs is deeply troubling. Russia opposed the invasion of Iraq and has sought to undermine U.S. plans to deploy a missile defense system in Poland and the Czech Republic.

The most troubling aspect of the tanker contract is the danger it poses to U.S. national security. According to a report by the Center for Security Policy, EADS has been a leading proliferator of weapons and technology to some of the most hostile regimes in the world, including Iran and Venezuela. When the U.S. formally objected to EADS selling cargo and patrol planes to Venezuelan despot Hugo Chavez, EADS tried to circumvent U.S. law by stripping American-built components from the aircraft. Chavez is now building an oil refinery in Cuba to keep Castro’s failed Communist state afloat, funding terrorists seeking the violent overthrow of Colombia’s government, and recently meddled in the presidential election in Argentina with secretly smuggled cash contributions. If EADS had its way, Chavez would now be advancing his anti-American designs in the Western hemisphere with U.S. technology and components.

EADS entanglements with Venezuela make the Pentagon’s decision to waive the Berry Amendment, which prohibits the export of technology that might be developed during the building of the tanker to third parties, indefensible. Given the sophisticated radar and anti-missile capabilities of military tankers, this is no small matter. Such technology falling into the hands of state sponsor of terrorism would devastate our war fighters.

And such a scenario is hardly unreasonable. EADS executives recently attended an air show in Iran and were caught red-handed trying to sell helicopters with military applications. When confronted, an EADS executive said the company was not bound by the U.S. arms embargo against Iran. EADS also sold nuclear components vital to exploding a nuclear device to an Asian company that in turn sold them to an Iranian front operation.

There is no question that America desperately needs to replace its aging tanker fleet, which dates to the time of Eisenhower, with new aircraft. Given the thousands of sorties flown by U.S. fighters and bombers over Iraq and Afghanistan, the tanker has become a critical tool in winning the war on terror. But outsourcing this vital aircraft to a proliferator of technology to our worst enemies, with partial ownership by the French and Russian governments, is an act of military malpractice.

Relying on foreign governments that are wary of U.S. power, as long-term suppliers for a strategic program so critical to projecting U.S. power around the globe is short-sighted and foolish. France has not demonstrated that it is a reliable ally of the United States, and EADS has not been a reliable supplier.

EADS must end its bribery problem, resolve its insider trading scandal, stop its proliferation of weaponry to bad actors like Chavez and Ahmadinejad, kick the Kremlin out of its board room, and stop using anti-competitive trade practices like subsidies from foreign governments. Then — and only then — can it compete for U.S. defense systems with U.S. contractors on a level playing field.

Lenin once said that capitalists would sell him the rope with which he would hang them. In this case, the Department of Defense is buying from EADS a rope that it might someday find around its neck. The Pentagon should cut its losses and reverse this ill-advised plan. 

– David N. Bossie is president of Citizens United.

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