TANKERS: Murray Highlights Illegal Subsidies Received by Airbus in Senate Speech

(WASHINGTON, D.C.) – Today, U.S. Senator Patty Murray (D-WA) delivered a speech on the Senate floor to raise critical questions about the Air Force’s leadership and its decision to award a contract to build the next generation of aerial refueling tankers to the European company Airbus – a company the U.S. government has said is illegally subsidized.

In her speech, Murray outlined how Airbus and its parent company EADS have used those illegal subsidies and slick marketing campaigns to try to dismantle the U.S. aerospace industry.   And she pointed out that the U.S. government is so concerned about the subsidies for Airbus that it has brought a case against the E.U. before the World Trade Organization.

“I think it makes absolutely no sense that we would on the one hand, haul Airbus before an international dispute settlement organization, while on the other hand, award it one of the largest defense contracts in history – a contract that will make it a major U.S. defense supplier for decades and further erode the American aerospace industry,” Murray said in her speech.  “It’s as if you caught a thief in the act of stealing your car, but instead of turning him in – handed him the keys and gave him your wallet too.”

Murray said that, in light of the Defense Secretary’s move last week to force out the top Air Force officials, Congress must demand that the new leadership at the Air Force justify why it should give the tanker contract to Airbus. 

“The Defense Secretary has raised serious questions about leadership and oversight at the Air Force, and I think that given those concerns, we must examine this contract very carefully, demand that the Air Force explain its decision in detail, and consider whether it’s in our best interest for EADS to supply these tankers,” Murray said.

The following is Senator Murray’s speech as prepared for delivery:

Mr. President, last week, the Defense Secretary took historic action by forcing out both the Air Force Secretary, Michael Wynne, and its Chief of Staff, Michael Moseley.  It was the first time – ever – that a Defense Secretary has simultaneously dismissed a service secretary and a service chief.  And he did so after finding systemic problems in the Air Force that led him to have a serious lack of confidence in their leadership and oversight.

Mr. President, I have come to the floor today because Secretary Gates’s move raises red flags about many of the Air Force’s recent actions – including the decision to award a $35 billion contract to build the next generation of aerial refueling tankers to the European company Airbus, instead of Boeing.  This is one of the largest contracts in history.  And it’s critically important.  Our tankers refuel planes and aircraft from every single branch of our military.  As long as we control the technology to build them, we control our skies and our security.

So I was astounded when the Air Force announced in February that it would award this contract to Airbus – and here’s why:  Airbus and its parent company European Aeronautic Defense and Space, or EADS, have made no secret of their desire to dismantle the United States aerospace industry.  And we’ve seen time and again that Europe is willing to try anything in order to do that.  EADS is so flooded with subsidies from the European Union that we have accused the E.U. of illegal business practices before the World Trade Organization.  EADS has lied repeatedly about its contribution to the United States economy.  And EADS has given us more than one reason to question how hard it will work to protect our security interests.

Given this history, I have asked repeatedly over the last three months that Air Force leaders explain how they came to their decision.  After all, the Air Force is well aware of these concerns.  And I believe the American taxpayers deserve answers.  But I have been stonewalled again and again.  And so, as the Pentagon moves to restore leadership and oversight at the Air Force, I hope that we will finally get some answers.

We Have Accused EADS of Unfair Trade Practices

Let me begin by talking about the unfair trade practices that led the United States to challenge Europe at the World Trade Organization.

Mr. President, back in 1970, several European governments created Airbus to challenge our country’s aerospace dominance.  But unlike Boeing, which is a private business operating in a free-market system – Airbus follows the corporate welfare model.  Europe views Airbus as a jobs program, and it is willing to provide subsidies no matter what – even if they lose money – and even if their products fail.  That means that Airbus can grow without having to assume the same kind of risk that American companies do.

The United States Trade Representative is so concerned that this has created an uneven playing field, that we have demanded Europe stop the subsidies and play by the rules.  As I said earlier, because of Europe’s illegal tactics, our government has a WTO case pending against the E.U.  So I think it makes absolutely no sense that we would on the one hand, haul Airbus before an international dispute settlement organization, while on the other hand, award it one of the largest defense contracts in history – a contract that will make it a major U.S. defense supplier for decades and further erode the American aerospace industry.

Mr. President, it’s as if you caught a thief in the act of stealing your car, but instead of turning him in – handed him the keys and gave him your wallet too. 

But it’s not just a matter of one government branch contradicting another.  It was that illegal system that allowed Airbus to develop the A-330.  Airbus’s tanker received millions of dollars in launch aid, which significantly reduced its production costs.  Europe is now unfairly using it to break into our defense industry.  And the result could be significant, permanent harm to our aerospace industry.

Boeing spent decades developing the technology and training the workforce to supply our military’s tankers.  Boeing has made American refueling tankers for more than 50 years.  Our workers made them with pride – knowing that they were helping to fortify our military strength.

But with this decision, we are letting it all slip away.  And once our workers move on to something else, we can’t just recreate it all over night.  And I think that we as a Congress – and as a nation – need to think long and hard about whether that is the best decision for our national security.

EADS has a History of Lying About its Impact on the Economy

But Mr. President, it isn’t just Europe’s record of subsidizing EADS that I am concerned about.  EADS and Airbus also have a long history of creating slick marketing campaigns that distort their contribution to our economy.  So I want to turn to that next – because I fear EADS is being less than honest about its plans to create jobs with this tanker contract.

Mr. President, five years ago, when Airbus was first working to unravel Boeing’s tanker contract, Airbus and EADS hired a small army of P.R. specialists to assert to us that their business was good for America. 

Well, as you can imagine, I was skeptical.  So I asked the Commerce Department to investigate their claims.  And guess what they found?  They found that Airbus’s numbers were hugely inflated.  Airbus claimed that it created 100,000 American jobs.  But, after looking into it, the Commerce Department found that the real number was just 500.  Airbus said it contracted with 800 U.S. firms.  But the Commerce Department found that it was really 250.

And then, Airbus did something funny – it decreased the number of contracts it said it had made from 800 down to 300.  And then it increased the alleged value of those contracts from $5 billion a year to $6 billion.  As I said at the time, “You just can’t trust Airbus’s funny numbers.”

And the same is true today.  When you scrutinize the facts, Airbus’s numbers just don’t hold up.  This time, Airbus says it will finish its tankers here in the United States at a factory in Alabama.  But that plant hasn’t been built, and the workers have yet to be hired.  And, Mr. President, economists are now saying we will actually lose jobs if Airbus supplies our tankers.  A study last week by the nonpartisan Economic Policy Institute shows that Boeing would create at least twice as many American jobs as Airbus.  In other words, we stand to lose as many as 14,000 jobs here in the United States by contracting with Airbus.

And, Mr. President, I can’t think of a worse time for a worse decision.  Last month, our country saw the biggest increase in unemployment in more than two decades.  And that was on top of a mortgage and credit crisis and skyrocketing gas prices.

Now, the Air Force has said that it didn’t have to consider jobs when it considered Airbus’s bid – and so it hasn’t even tried to justify its decision.  But I believe that, as members of Congress, we must look long and hard at whether this contract is in the best interests of American workers and the American economy – especially at a time when families are struggling just to get by.

EADS has Given us Reason to Worry About Security

Finally, Mr. President, I have serious concerns about giving a company – owned by foreign governments – control over our military technology.  Airbus and EADS have given us plenty of reason to worry about how hard they will work to protect our security interests. 

Here are just two examples:

In 2005, EADS was caught trying to sell military helicopters to Iran – despite our concern about Iran’s support of terrorists in Iraq – and despite their efforts to develop nuclear weapons.

And in 2006, EADS tried to sell C-295 and CN-235 transport and patrol planes to Venezuela – a circumvention of United States law.

Now – as with the other questions I’ve raised today – I’ve repeatedly asked the Air Force whether we can trust a foreign company to keep our military’s best interests in mind – particularly one that has a history of trying to sell weapons and military technology to unfriendly countries.  And I haven’t gotten an answer to this one either.

Mr. President, this is a critically important matter.  What happens if France – or Russia, which is pushing to increase its stake in EADS – decides it wants to slow down our military capacity because it doesn’t like our policies?  Do we want another country to have that kind of control for decades to come?  Especially given the concerns the Defense Secretary has raised about decision-making and leadership at the Air Force, I think we must push for an explanation before we move forward on this contract.

With Changes in Air Force Leadership We Must Demand Answers

Mr. President, I’ve just detailed three very serious concerns about Airbus and EADS.  And the facts are clear:  When it comes to international trade, EADS doesn’t play fair.  It has repeatedly lied about its impact on the American economy.  And it has – more than once – given us reason to worry about how hard it will work to protect our security interests.

Now, the bidding process for the tanker contract was so flawed that Boeing has filed its first-ever protest of a defense contract decision with the Government Accountability Office.  And we are all awaiting the GAO decision.  But the GAO can only look at whether the Air Force followed procurement laws and regulations.  It can’t answer whether the Air Force should have awarded Airbus the contract in the first place.

Congress must ask that question.

Now, Mr. President, I have raised that question in hearings – in letters to Pentagon officials – and in face-to-face meetings.  Yet no one at the Air Force – or the Pentagon – or even the White House – has even begun to justify why we should award a $35 billion contract to supply the linchpin of our military strength to a company that another branch of our government has accused of illegal business practices, one that distorts its record, and that doesn’t have our national security interests at heart

As I said at the beginning of my remarks, the Defense Secretary has raised serious questions about leadership and oversight at the Air Force, and I think that given those concerns, we must examine this contract very carefully, demand that the Air Force explain its decision in detail, and consider whether it’s in our best interest for EADS to supply these tankers.

As I have said before, we owe it to our taxpayers to get answers.  And we owe it to our service members to get answers.  And I hope that with new leadership and oversight at the Air Force, we will get them.