Stanley's blog

The news that the Pentagon has cancelled the Air Force’s award of the $35 billion tanker contract, requiring Boeing and EADS to submit new offers, may have unfortunate consequences.

Senior Defense Department civilians have for some time lack of confidence in the Air Force’s ability to manage the contract. The new bidding will be overseen by the Pentagon and not the Air Force.

Whatever the rights and wrongs of the decision, you can be sure that it will be perceived as a political exercise of economic nationalism, alongside the blocking of the CNOOC bid for Unocal and Dubai’s DP World’s bid for the management of six US seaports, on the pretence that they threatened national security.

This will make it much more difficult to combat economic nationalism elsewhere, particularly in China.

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  1. It’s not really “economic nationalism,” but national security that is the reason behind the Boeing v. EADS air tanker contract.

    When it was announced that the contract would go to EADS, a huge stink was made about this in the nationals media, especially CNN. Various congressmen got involved and are “fighting” to have the contract awarded to Boeing. This is all about national security and the notion that military hardware should be made in the USA. Also part of this are jobs for Americans…

  2. I don’t think it’s as much about national security as about some in Congress wanting to cater/protect local constituencies. I mean we’re talking about a refueling tanker contract, not the next generation of Patriot Missiles Air Defense System.

    It is surprising though that the Pentagon reopened the contract, and speaks something about Boeing’s lobbying power. After all, EADS did not bid solo; its American partner was Northrop Grumman, so at least some of the jobs were going to be in the U.S. regardless.

    Presumably, EADS-Grumman bid was cheaper so U.S. taxpayers were going to save money; if only that were a consideration in the decision making calculus.

  3. Agree with author, it’s sligh moving to nationilize the economy of US. Remember the past, when the economy no matter reason, the security always created the fundament for government to “grasp” economy of a country to its hand. The case with EADS, i think the same way. Future will show…

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