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Business

WikiLeaks exposes US-French ‘war’ over jet sales

Text by Joseph BAMAT

Latest update : 2011-01-04

Leaked embassy cables show that US diplomats aggressively pushed foreign governments to purchase Boeing airplanes, helping the US aviation giant in the bitter transatlantic battle with its European rival, Airbus.

In late 2007, the national airline of the Kingdom of Bahrain announced a huge deal to buy airplanes from European aviation giant Airbus. But only a few weeks later, Gulf Air’s decision was suddenly reversed and a new contract signing ceremony with US aerospace rival Boeing was scheduled to coincide with then US President George W. Bush’s trip to Bahrain – the first ever visit of a sitting US president.

Airbus had been sidelined by backdoor dealings at the highest levels, and not even an eleventh-hour appeal by French President Nicolas Sarkozy could undo the damage. It was just one of many incidents of US diplomatic wrangling that led foreign governments to favour Boeing over Airbus.

Hundreds of newly leaked cables, obtained by the US daily the New York Times, show that US diplomats have aggressively lobbied foreign governments to buy commercial jetliners built by the Seattle-based airplane manufacturer.

“United States diplomats were acting like marketing agents, offering deals to heads of state and airline executives whose decisions could be influenced by price, performance and, as with all finicky customers with plenty to spend, perks,” the daily wrote.

The cables describe how US diplomatic staff approached, wooed and sometimes cajoled foreign officials who were still considering whether to buy airplanes from Boeing or Airbus. The bargaining chips included not only presidential visits, but negotiations over landing rights at New York’s John F. Kennedy Airport and private jet upgrades.

The leaked embassy cables shed new light on what is recognised as one of the most bitter and ongoing transatlantic commercial feuds, despite a decades-old trade agreement between US and European leaders to keep politics out of airline deals.

But with billions of dollars and tens of thousands of jobs at stake US and European diplomats felt compelled to intervene, especially during an economic crisis.

While it is common knowledge that diplomats intervene to promote their country’s businesses, the newly leaked cables reveal the extensive backroom negotiations propelling major multinational aviation contracts.

In the case of the Gulf Air contract, it was the former US ambassador, Adam Ereli, who appealed directly to the kingdom’s crown prince to overturn the deal reached between the airline company and Airbus, even though the Airbus deal was 400 million dollars less than Boeing’s offer, the cables revealed.

“Seeing that Airbus had been outmanoeuvred, France’s president, Nicolas Sarkozy, made a last minute bid to save the deal… He offered to visit Bahrain after Bush had left, but that stop-over was cancelled when the Boeing agreement was signed in January 2008,” the New York Times reported.

In 2006, a senior Commerce Department official hand-delivered a personal letter from former President Bush to the Jeddah office of the Saudi King, urging him to buy 43 Boeing jets. According to the cables, the king replied in turn with a personal request: “all the technology that his friend, President Bush, had on Air Force One,” for his own private jet.

According to the New York Times, the cables also suggest demands for bribes “still take place”. But the embassy documents also revealed that Boeing and US officials turned away some requests to hire intermediaries who charge illegal commissions.

Boeing and Airbus each control about half of the global market for commercial jetliners, but Boeing eclipsed Airbus in net orders in 2010, securing 484 orders against 388, according to November data.

The revelations of Washington’s sales pitches for Boeing comes before a much-anticipated contract decision by the US Air Force slated for early in 2011; one which involves rival bids from Boeing and Europe's EADS –the European aviation and defence group that includes Airbus.

The Pentagon’s plan to buy 179 tankers to renew its fleet of Eisenhower-era refuelling aircraft is worth up to 38 billion euros ($50 billion).

The current contest marks the Pentagon’s third try to buy new tankers, which has been dragged out by complaints by both parties of faulty and unfair bidding practices, and claims of illegal subsidies to the aviation giants.

In July 2010, the World Trade Organization partly backed a US complaint that some state support for aerospace giant Airbus is illegal.

The US had complained that Airbus had received “illegal help” from the EU totalling 139 billion euros since 1967. The EU hit back saying that Boeing’s financial assistance from the US government was nearer to 300 billion euros over the same period and has launched an appeal.

Date created : 2011-01-03

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