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US accused of fighting dirty in Polish plane deal

BAE claims Gripen jets lost out to F-16 because of political pressure.

Neil Barnett
Sunday 05 January 2003 01:00 GMT
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BAE Systems and Dassault of France are claiming that Washington used strong-arm diplomatic tactics to secure central Europe's largest-ever defence order for US group Lockheed Martin. The £2.2bn order by Poland, for 48 new F-16 fighters to replace the ageing MiG fleet, will bring the county's air force up to Nato standards.

BAE's unsuccessful rival bid offered the Gripen, produced by Gripen International, a 50:50 joint venture with Sweden's Saab Aerospace. Gripen International's managing director, Ian McNamee, told The Independent on Sunday: "I was disappointed because we put in a better offer, but not entirely surprised because I always expected this to be a political decision, and that the Poles want to stay close to the US and Nato."

When the decision was announced before Christmas, Dassault chief executive Charles Edelstenne told French journalists: "The political element was the dominating element, much more than the quality of the material and the price. I felt for a very long time that they very much favoured rapprochement with the Americans. So it's not a surprise."

The US embassy in Warsaw told The Independent on Sunday: "The Polish authorities ran a transparent and fair tender but political considerations are important and you want to be flying with the world's premier air force." Allegations of US dirty tricks have been aired in the Polish press and on the internet and one European diplomatic source said that US lobbyists had systematically worked to undermine the credibility of the UK as a partner, and of BAE Systems as a supplier.

In the case of BAE Systems, US diplomats and defence exports officials emphasised shortcomings in the Nimrod and Eurofighter programmes. However, according to Mr McNamee, "the marketing in Poland all came down to the offsets, and I have my doubts about the US offset offer". Offsets are designed to provide reciprocal investment by the contractor in the economy of the customer country. The offset committee of the Polish Ministry of Economy assessed the US offset offer as being of 173 per cent of contract value, compared to 146 per cent for Gripen International.

However, according to Gregor Hollanwicz, Jane's Defence Weekly correspondent in Warsaw, "the Gripen offer was very concrete, with clear opportunities for industrial co-operation. The US offer was larger, but the actual project proposals less promising." Mr McNamee added: "I believe there was tremendous diplomatic and economic pressure on the Polish Prime Minister and President to take this decision. I can't prove it, but this was the general tenor of events."

Against a background of a stagnant world arms export market, re-equipment of new Nato members provides one of the few growth markets. Leading up to the Polish tender, Washington had become increasingly edgy about its failure to capitalise on this.

Poland, Hungary and the Czech Republic joined the alliance in 1999, and both the Hungarians and the Czechs chose Gripen over the US planes. But in November the Czechs cancelled an order for 24 Gripens, citing economic distress caused by flooding earlier in the year. And in the summer, US diplomats in Budapest lobbied the Hungarian government to renege on its order for 14 Gripens, according to defence ministry sources.

In October 2001, a month after Gripen was announced as the winner, the US ambassador to Budapest, Nancy Goodman, made an unsuccessful last-ditch counter offer, irrespective of the Hungarian government's announcement. At present the Hungarians are renegotiating their deal, in particular to get air-to-air refuelling probes retro fitted, at the behest of US claims that aircraft lacking them were "non-Nato compatible" – a view rejected by Gripen International and the UK Government.

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