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French fury as Poland ditches billion euro Airbus helicopter deal

© Iroz Gaizka / AFP | A French military Airbus helicopter

Text by FRANCE 24

Latest update : 2016-10-11

France-based Airbus hit back on Tuesday at Poland’s decision to cancel a multi-billion-euro military helicopter deal, deepening a bitter row that is threatening to turn into a full international diplomatic incident between Paris and its NATO ally.

In an open letter to the country’s prime minister, Europe's largest aerospace group accused Warsaw of shifting the goalposts and disregarding European Union regulations.

Airbus Group Chief Executive Tom Enders accused Poland of misleading the company during negotiations and threatened further action.

“Never have we been treated by any government customer the way this government has treated us,” Enders said in a statement, hours after Polish Defense Minister Antoni Macierewicz revealed that it would buy Black Hawk helicopters from US defence giant Lockheed Martin and that Leonardo-Finmeccanica SpA of Italy could also expect orders. Both firms are major Airbus Helicopters rivals.

Poland later added the Black Hawk helicopters would be made in Poland by the US defence firm. Poland’s defence minister said the helicopters would be made at the Polish factory of Sikorsky Aircraft Corp, a unit of US Lockheed Martin Corp.

Industry sources estimated that the cost to Airbus of running the sales campaign for the helicopters at tens of millions of euros.

“The controversial and contradictory declarations of the Polish government over the course of the procurement proceedings created the impression of unprecedented confusion,” the Airbus boss stated.

Enders added that his company will seek “remedies,” he said, without providing further details.

Polish interest before the EU

Poland’s previous centrist government, which was beaten by rightist Law and Justice (PiS) party in elections last October, had provisionally agreed with Airbus to buy 50 of its Caracal multi-role helicopters in April 2015 as part of efforts to modernise its military amid regional tensions over Russia's annexation of Crimea from Ukraine that year.

In the beginning of October, the new government, which had promised to put Poland’s national interests ahead of the wider European Union, said it was scrapping the Airbus contract.

France reacted furiously, saying Paris would review defence cooperation with Poland and promptly cancelled a presidential visit to Warsaw.

Polish government officials hit back stating that Airbus had had ample notice to adjust its offer, which they said was not satisfactory.

“I would like to explain that the government hasn’t broken the negotiations but ended them when we became certain continuing them made no sense,” Radoslaw Domagalski-Labedzki, a deputy economy minister, told reporters.

Polish jobs

Despite Airbus arguing that their offer would create of 3,800 local jobs and generate more value for Poland than for the European company itself, Poland was dismissive.

Speaking at a press conference in a helicopter repair factory in the city of Lodz, Prime Minister Beata Szydlo said her government wanted the army to be equipped by Polish-made kit.

“We are doing what is being done by all other countries which protect national interests,” Szydlo said. “For Poland, it is important we buy equipment here, in Poland.”

Concessions at the 11th hour

Lifting the lid on the typical, but usually highly-secretive world surrounding defence contracts which include shadowy economic trade-offs or “offsets”, Airbus Helicopters chief executive Guillaume Faury said the decision to cancel the deal came a day after Airbus had offered new concessions.

He said Airbus Helicopters had offered offsets worth 100% of the helicopters.

He also said the Polish ministry of economy had slapped an additional 23 percent in value-added tax (VAT) on the deal, bringing the overall value to 3.2 billion euros.

“Although compensation of a value-added tax through offset is not standard practice, Airbus Helicopters agreed to compensate this gross value,” the letter said.

He said the ministry also introduced other new requirements in August, some of which Airbus had been unable to meet because they contravened European Union laws.

Airbus said the deal would have led to the transfer of 45 items of security-sensitive technology and provided 30 years of work for state-owned companies, modernising an industry depending on servicing “old-generation Russian helicopters”.

Airbus Helicopters’ Faury also claimed Airbus had gone further than its rivals, Lockheed Martin’s Sikorsky and Italy’s Leonardo in offering a state-owned assembly plant.

(FRANCE 24 with AFP, REUTERS)

Date created : 2016-10-11

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