- 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.
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- 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.
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- 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.
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- ''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.
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- ''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.
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- 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.
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- 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.
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