FLUG REVUE May 2005: MEADS approval not sure in Germany

May 2005

TRANSATLANTIC WRANGLING

By Karl Schwarz

The Budget Committee of the German Bundestag is due to take a decision on an extremely important new defence programme: the deadline for participating in the development of the ground-based Medium Extended Air Defence System (MEADS), which has already been extended by partner nations the USA and Italy, expires on 25 April. As one would expect, the Greens and the SPD are having difficulty reaching agreement. On the one hand doubts have been expressed as to the urgency of MEADS, which is intended to protect German and Allied troops on deployments all over the world against hostile aircraft, unmanned air vehicles and ballistic missiles with a range of up to 1000km. On the other hand, this tactical air defence system, which is expected to cost almost Euro 1 billion to develop and nearly Euro 3 billion to procure, will be hitting the defence budget at a time when major projects like Eurofighter and A400M are drastically curtailing the resources available.

But that is not the only issue involved. MEADS is currently the only sizeable European-American collaborative programme in which Germany could be involved, which gives it a special political dimension: it is essential for Germany to prove its dependability as a member of the NATO alliance. As the German partner in the MEADS International consortium, EADS is vehemently arguing the importance of the programme for the retention of critical technologies in the guided missile sector and the preservation of 450 high-tehc jobs. “For European industry, MEADS is the opportunity to keep up with advances in technology in the USA. Never before has there been such a far-reaching technology transfer on a transatlantic project as there will be on MEADS,” said Thomas Enders, joint CEO designate of EADS. But the Federal Audit Office sees otherwise, and has informative examples to back its scepticism. The idea of gaining a peek into US “black boxes” continues to be absurd, not just for Germany but also for the JSF programme partner nations. Hence, only a pressing military requirement can justify participation in the MEADS programme.

While German parlamentarians were still wrangling over the military co-operation programme in Berlin, the situation escalated over another transatlantic problem area escalated just before Easter. Washington abruptly announced that the discussions initiated in January on financial assistance for the development of large airliners were in deadlock as the EU was not prepared to stop assisting such programmes with launch aid. If no progress is made, a complaint lodged with the World Trade Organisation will be pursued at full force. The stakes are high in this poker game, and there is a danger that brinkmanship leads over the edge into a trade war. Nevertheless, the EU should hold firm. Relinquishing the system of repayable launch aid in return for vague American assurances on greater transparency over indirect aid given through military programmes and tax credits would place Airbus at a disadvantage. And if the case does end up at the WTO, it could be a good opportunity to clarify the subsidy system used in other countries, such as Japan, which has a major stake in the latest Boeing 787.

From page 4 of FLUG REVUE 5/2005

Last updated 14 April 2005

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