Air Force Deal Could Cost European Jobs

Airbus' contract with the Pentagon for in-flight refueling aircraft may lead to an accelerated exodus of jobs to Asia and the U.S.

by Dinah Deckstein, Cordula Meyer and Gabor Steingart

Trans-Atlantic relations don't have to be contentious when money is at stake. Last Wednesday evening, Henry Kissinger, éminence grise of American foreign policy, was campaigning for donations to rebuild the Berlin city palace -- a royal residence heavily damaged in World War II and demolished by the Communists -- in faraway Germany.

At a charity dinner at the German embassy in Washington, Kissinger said that in New York, where he lives and works, there is little understanding for the fact that he is raising money for Berlin. But if the donations start adding up, he promised a high-level visitor from the United States at the 2015 opening of the palace: John McCain will show up, he said, "as a president, then in his second term." The comment was met with polite chuckles and a toast to common interests.

But as cozy as Kissinger's event was, a cold trans-Atlantic wind was blowing across the country at the same time. Last week, the US Defense Department announced it was awarding the second-biggest contract in its history to a consortium that includes the European Airbus Group, leaving domestic aviation giant Boeing on the outside looking in. A political flap among politicians of all stripes quickly ensued, with calls for the contract to be reviewed and warnings that US national security may be at risk.

On its surface, the deal looks simple enough -- the contract is for several hundred in-flight refueling aircraft. But days of protest have made it clear that the issue at stake is more one of production locale than logistics -- and the formula of global economic power.

In Chicago, home to both Boeing's headquarters and Democratic presidential candidate Barack Obama, the Senator recently said that he could not believe that "an American company that has been a traditional source of aeronautic excellence would not have done this job." His Democratic rival, Hillary Clinton, said that she was "deeply concerned about the Bush administration's decision to outsource the production of refueling tankers for the American military." Her fellow Democrat, House Speaker Nancy Pelosi, agreed and wondered aloud about the "national security implications of using an aircraft supplied by a foreign firm."

Meanwhile, Republican presidential candidate John McCain was surprisingly cautious in his remarks. He merely said that he was "interested to learn how the Air Force came to its contract award decision here and whether it fairly applied its own rules in arriving at that decision," adding that he wanted to examine the details of the deal before commenting on it. Nevertheless, the Republican Party base is incensed.

Many consider the contract award to be unpatriotic. A deep-seated fear of globalization has taken hold among large segments of the population. For many Americans unrestricted world trade, a sign of imperial strength not too long ago, is now seen as a threat.

In a recent survey conducted by the Washington Post, 80 percent of respondents in heavily industrialized states like Ohio believe that free trade is the main cause of job outsourcing. With voters loudly demanding protection for their jobs, politicians have been eager to take up the issue. In short, the potential political success of those currently running for America's top political job have come into direct conflict with Airbus' success on the global marketplace -- and the success of that marketplace itself.

It is a divergence that has been coming for some time. Blue collar laborers in the US are unhappy and have seen the number of industrial jobs in the US decline by a third in the last three decades. Most of these jobs were lost in traditional working-class states like Ohio, Michigan and Illinois. The United States, once the world's largest net exporter, has racked up an enormous balance of trade deficit. And now even the federal government, by awarding major contracts to foreign companies, has given the appearance of having lost confidence in domestic industry.