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Arms deal { January 14 2003 } Original Source Link: (May no longer be active)
http://commondreams.org/headlines03/0114-02.htmhttp://commondreams.org/headlines03/0114-02.htm
http://www.boston.com/dailyglobe2/014/nation/Arms_deals_criticized_as_corporate_US_welfare+.shtml
Published on Tuesday, January 14, 2003 by the Boston Globe
Arms Deals Criticized as Corporate US Welfare
by Charles M. Sennott
LONDON - After Lockheed Martin clinched one of its largest deals ever in Europe, Prime Minister Leszek Miller of Poland was taken for a spin last week in the same kind of F-16 fighter jet that his country is purchasing. He watched from the cockpit while a second F-16 performed rolls and tactical maneuvers for his benefit.
Consider this private air show a kind of customer perk, which the Pentagon confirmed was paid for by the US government at the end of a long marketing campaign by Lockheed. The US government also provided a $3.8 billion loan to Poland, on very favorable terms, to finance the purchase of 48 F-16s, which are manufactured in President Bush's home state of Texas.
When they meet at the White House today, Miller and Bush are sure to toast this huge deal. For Poland, the purchase is a matter of national pride, reflecting the country's recent military transformation as a new member of NATO. The deal highlights Bush's personal involvement in pushing for arms deals in which former East Bloc countries switch to American weapons systems.
But arms-industry watchdog groups say the cost of the private air show is just one example of the kind of corporate welfare that goes into these massive and complex business deals. These critics contend the prime minister's test flight raises the question of who is taking whom for a ride in such a massive arms deal.
''The Poland arms deal is corporate welfare at its finest,'' said Ivan Eland, a military analyst at the Cato Institute, a Washington-based, free-market policy group. ''The companies are private enterprises, but they are in effect wards of the state when the US government supports and underwrites the deals.
''There are all sorts of hidden subsidies that the US government gives to arms manufacturers, and the Polish prime minister's flight would be just one of them,'' he said.
Jose Ibarra, a Pentagon spokesman, confirmed that the US government paid for the F-16s to be sent to Poland for the prime minister's flight. ''If the US government deems it in our national interest, we pay for it,'' he said.
Ibarra did not know the cost to taxpayers, but said, ''It ain't cheap, that's for sure.'' Having Air Force pilots take two fighter jets from the US airbase in Aviano, Italy, to Poland could run as high as hundreds of thousands of dollars, one US official estimated.
Washington's support helped Lockheed beat out the French Dassault Aviation offer of Mirage jets, as well as a Swedish-British consortium's offer of Grippen fighter jets, in what industry analysts say is the largest deal for a US arms manufacturer ever in Eastern Europe. The decision was announced Dec. 28 with little fanfare, and approval for the loan sailed through Congress.
In a shrinking and fiercely competitive arms industry in Europe, Lockheed's victory has sparked the ire of European economic ministers, especially the French. European critics have accused Poland of betraying their neighbors just after they were invited into the European Union. Some critics in Poland questioned the need for such weapons at all.
At the North Atlantic Treaty Organization summit here in November, the industry battle for the Polish deal was underway behind the scenes. The summit brought seven new Eastern European and Baltic states into NATO and effectively redrew the military map of Europe, bringing the military alliance forged in the Cold War to the borders of Russia. Poland joined NATO in an earlier expansion, in 1998.
Bruce Jackson, director of a bipartisan, nonprofit advocacy group called the US Committee on NATO, had worked for at least six years for the enlargement of NATO and was in Prague celebrating the fruits of that hard work. For Jackson, who recently retired as vice president of Lockheed Martin, the expansion of NATO was more than just a dream of ''uniting Europe whole and free,'' as he put it. It was also helping to create a new market for the US arms manufacturer that had employed him.
And there may be more deals to be had among the new members of NATO admitted at the Prague summit. The Czech Republic, Romania, and other Eastern European and Baltic countries are now being courted by US arms manufacturers to upgrade their military capacity to be NATO ''interoperable.'' That means buying Western hardware to replace older equipment that countries of the former Soviet bloc used in the days of the Warsaw Pact. The transition to NATO often means buying American.
Jackson's advocacy work in the expansion of NATO and Lockheed's arms deal with Poland highlight the political and corporate linkages that make the NATO expansion both a matter of strategic significance for the United States and economic advantage for its arms manufacturers.
Jackson scoffed at critics' complaints that his political passions have anything to do with his former employer's interests. He said he believes that a stronger, bigger NATO means greater security for the United States. Officials from NATO, Poland, and Lockheed all said he carefully avoided lobbying for the company on the F-16 sale.
But William Hartung, a senior research fellow at the World Policy Institute who has researched the costs of NATO expansion to taxpayers, said, ''Arms manufacturers like Lockheed are looking to Eastern Europe as the last frontier to squeeze out big fighter jet deals, and they are looking to the US government to pick up the tab.''
Industry watchdogs like Eland and Hartung said the Polish arms deal shows how US taxpayers often end up subsidizing these sales, while arms manufacturers walk away with huge profits.
Richard Kirkland, Lockheed's vice president for corporate international business development, said that while the enlargement of NATO did present an important new market, it was a relatively modest one, compared to regions such as the Middle East and Asia.
The Polish sale was supported by the US government through the Pentagon's Foreign Military Financing fund, or FMF, Pentagon officials said. Poland will not have to make payments for eight years and will have at least 15 years to pay back the money at a level of interest which US government officials said they are not allowed to disclose.
The deals are structured around what are known as offset agreements, business arrangements that bring everything from production jobs to technology transfers to the purchasing country as an inducement. In the Polish arms deal, the offset agreements are said to be worth $6 billion to $9 billion.
Labor unions said the offsets encourage the export of jobs overseas. In the Polish deal, for example, the contract to build the F-16 engines was awarded to Pratt & Whitney of Connecticut, which US officials confirmed has agreed to assemble the engines in Poland.
To Hartung, Jackson embodies the link between politics and the arms industry on the road to enlarging NATO.
''You would like to think that the people deciding whether this [NATO expansion] is a good idea for the country would not be being led around by a person like Jackson, whose company has such a great financial interest in the expansion of NATO,'' Hartung said.
Jackson answered: ''The yellow journalism approach of trying to link American internationalists to venal financial motives is all rather depressing. ... I believe that democracy is worth defending. The Poles made the right decision, which will make the [NATO] alliance stronger and share the responsibilities of collective defense more equitably between the US and our European allies.''
Lockheed officials and Jackson himself say he was never a registered lobbyist on behalf of Lockheed. Lockheed also said that it never gave money to the US Committee on NATO, which Jackson helped found. And US and Polish officials said that Jackson, 50, was always careful about avoiding conflicts of interest in his dual roles.
© Copyright 2002 Globe Newspaper Company
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