EADS is Welcome to Compete for U.S. Defense Contracts – But First It Must Clean Up Its Act

The Bottom Line

EADS has the technology and resources to be a valuable partner in the defense and security of the United States. But if EADS is to be trusted – and if Americans are to be comfortable buying its products and services – then it will first have to change some of its ways.

The following points are basic, minimum requirements before the company can be considered eligible for a significant role in America’s security and defense preparedness:

1. Resolve the espionage problem. France and other owners of EADS must immediately stand down all espionage operations against the United States. France must make a public accounting of its spying activity that harmed American defense companies and benefited EADS. The French government must supply the FBI and the Justice Department with all information that the U.S. deems necessary to conduct thorough damage assessments, confirm that all espionage has ceased and bring spies to justice. The French government must also compensate American companies and their workers for any financial damage its espionage has inflicted on them.

2. Correct the bribery problem. France, other shareholders of EADS, and the EADS management must provide the United States with all information related to bribery and other corrupt activity they carried out in order to compete unfairly with American businesses abroad. They must make a public accounting of the bribery and corrupt activity to ensure transparency.

3. Remove the Kremlin from the company. EADS must force Russia to relinquish its stake in the company and take transparent measures to prevent the Kremlin and other entities that threaten NATO members from owning shares.

4. Prevent other ambiguous or known bad actors from owning EADS stakes. An EADS partnership with the United States doesn’t need its own version of the Dubai ports scandal. Though officially considered an ally in the war on terror, the Wahhabi-ruled Qatar is playing both sides, as it always has.

5. Resolve the proliferation problem. EADS must never again attempt to provide goods and services to governments and entities that the United States deems to be national security threats. Its attempt last year to arm Chavez gives Americans no reason to trust its management and major shareholders.

EADS must provide a full public accounting of its attempts to arm the Chavez regime and ensure that such incidents will never again occur. EADS must also detail its relationships with Russian military manufacturers such as Mikoyan-Guryevich (MiG) and Sukhoi and provide transparent safeguards against technology transfers to Kremlin-controlled arms producers.

6. Resolve anti-American workforce problem. EADS management and major shareholders must conduct an ongoing and effective campaign to educate the company’s workforce about the value of the United States as an ally and as a customer. Unions representing EADS workers must permanently stop their anti-American activity, and pressure their favored politicians to do the same, if they wish their workers to receive employment from U.S. government contracts.

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1 Samuel Porteous, “Economic Espionage,” Commentary No. 32, Canadian Security Intelligence Service, May 1993.

2 Ibid. For more on European strategic trade policy as it affects the United States, see Under Secretary of Commerce for International Trade Grant D. Aldonas, “Trade and the Competitiveness of the U.S. Aircraft Manufacturing Industry,” testimony before the U.S. House of Representatives Committee on Transportation and Infrastructure, Subcommittee on Aviation, July 26, 2001.

3 R. James Woolsey, “Why We Spy on our Allies,” Wall Street Journal, March 17, 2000.

4 “Airbus’s Secret Past – Aircraft and Bribery,” The Economist, June 12, 2003.

5 “Russian president expects serious coup with EADS,” RIA Novosti, Moscow, February 21, 2007, 1800 hrs.

6 Tom Zaitsev, “Vladimir Putin outlining interest in Russian EADS cooperation including equity stake,” Flight International, October 12, 2006, on flightglobal.com.

7 Pammy Olson, “Putin Hungry for EADS,” Forbes online, February 21, 2007.

8 Zaitsev.

9 Murdo Morrison, EADS rebuffs Russian bid to buy seat on board for $1.2 bn,” Flight International/FlightGlobal.com, September 19, 2006.

10 Chris Noon, “Putin Plays Innocent with EADS Stake,” Forbes Online, September 25, 2006.

11 Pammy Olson, “Putin Hungry for EADS,” Forbes online, February 21, 2007.

12 Pammy Olson, “Qatar interest keeps EADS aloft,” Forbes online, February 19, 2007, 8:25 AM ET.

13 “7-Eleven Cuts Off Chavez; It’s About Time,” Decision Brief 06-D49, Center for Security Policy, September 28, 2006.

14 Roxana Tiron, “Spain’s Sale to Chavez Puts EADS on Defense,” The Hill, June 6, 2006.

15 “Venezuela, Spain, to start sale of military patrol boats,” Pravda, May 26, 2006; Venezuelan Defense Minister Raul Baduel, in a July 28, 2006 news conference, covered the Associated Press in Spanish, July 30, 2006, and ABC(Madrid), July 30, 2006; El Diario de Cadiz (Spain), October 3, 2006. Chavez’s ambassador in Madrid, Arevalo Mendez Romero, told Europa Press on October 6, 2006 that the deal was still “continuing.” The deal collapsed only because EADS CASA could not find proper replacement parts for the planes it was building Chavez.