Washington defense group calls for sanctioning EADS CASA

The Center for Security Policy, a Washington-based education and action group, argues in a Venezuela policy paper that EADS CASA be shut out of Pentagon procurement contracts.

The reason, according to the Center's Decision Brief, is that EADS CASA is teaming up with Russia to modernize Hugo Chavez's air power. [Note, February 2007: The link goes to a Google cache of the Decision Brief, as the Center has not incorporated its database into its new Website.]

As it normally does in its tersely worded but reportedly influential papers, the Center is to the point. Congress and the White House should remove "the EADS CASA C-295 from consideration in the JCA program and [remove] funding for purchase of the aircraft by the Coast Guard Deepwater program."

The Center for Security Policy is the first group in Washington institutionally to call for sanctions against EADS CASA. This could spell problems for the C-295 program in the US, as the Center is highly influential with senior Pentagon officials, including Defense Secretary Donald Rumsfeld.

Forbes smells a rat in Russian EADS purchase

Forbes magazine is suspicious about the Russian government's recent purchase of 5 percent of EADS. The financial publication thinks the deal is bad for the United States.

Russian President Vladimir Putin reportedly assured Europeans that his intents toward EADS are "not a sign of aggression."

The KGB man is "seeking to allay European fears about his company's muscling in on the Franco-German company EADS as a full strategic partner," and "announced an entente cordiale to study Moscow's role in the aerospace giant," Forbes reports.

"The risk is that Russian state bank Vneshtorgbank, which recently bought a 5% stake in EADS, will try to boost its interest in the company without agreement from its French and German shareholders."

"Putin called the Vneshtorgbank purchase 'a game of the financial markets,' saying the bank bought into EADS after well-publicized delays to the A380 superjumbo program and a management shake-up. However, it is hard to believe Vneshtorgbank bought EADS because the stock was cheap. A more likely explanation is that the bank is acting as a front for the Russia's rusting aviation industry."

French welcoming Russia in EADS to counter US

The French government of Jacques Chirac might be welcoming Russia into the EADS tent as a means of countering the United States.

According to Forbes, "the push for closer defense and aeronautic ties isn't one way traffic [from Russia]. Chirac has long hoped to draw Moscow deeper into th EU's defense arm, believing that Russia's military might is necessary for Europe to match the US as a global superpower."

And some US senators want to hire EADS to build the new Joint Cargo Aircraft (JCA) for the Pentagon.

Is senator trying to force CN-235 on Coast Guard?

Aviation safety advocates are concerned that a single senator is trying to force the EADS CASA CN-235 on the U.S. Coast Guard, despite Coast Guard concerns about the aircraft's limitations and engine reliability.

Senator Richard Shelby (R-Alabama) has been pushing Congress to fund procurement of the CN-235 for the Coast Guard's Deepwater program. Allegations of influence-buying have arisen due to EADS CASA's announcement that it would build production facilities in Shelby's home state. While such influence-buying is not illegal, it nevertheless raises questions about the integrity of the senator's insistence that the Coast Guard wants and needs the CN-235.

Coast Guard officials seem to indicate that they don't want the European-made plane.

In 2004, according to Sea Power magazine, Shelby took the Coast Guard to task for his dissatisfaction with how the service was running the Deepwater program, and the fact that the Coast Guard used federal funds to upgrade its existing helicopters instead of buying the airplane.

"Sen. Shelby remains concerned with the Coast Guard's management of the Deepwater procurement and how the Coast Guard is prioritizing use of its funds," a Shelby aide said at the time. "The Coast Guard and [the White House Office of Management and Budget] appear to have lost sight of the priorities of legacy replacement and the goal of reduced operational expenses."

Shelby was upset that in January 2004, the Coast Guard decided to re-engine its HH-65 Dolphin helicopters with $67.7 million from the Deepwater budget instead of buying an EADS CASA plane.

Coast Guard raised safety issues about CN-235

Top Coast Guard officials raised safety concerns about the CN-235 two years ago, and angered Senator Shelby when they used federal funds to upgrade existing helicopters instead of buying the EADS CASA plane.

Rear Admiral David Belz, Assistant Commandant of the Coast Guard for Operations (pictured), said that Commandant Thomas H. Collins had personally approved the funding priority, according to Sea Power.

In an apparent reference to the CN-235, Belz cited "operational limitations on the aircraft" and news about "engine-related mishaps" as motivators of the Coast Guard's decision not to buy the plane for FY2005. As CasaCrash.com reported in December 2003, the French military had just lost a similar plane, at the cost of the lives of seven servicemen.

Sea Power identified another safety problem with the CN-235 procurement: "Another issue likely to draw congressional fire is the Coast Guard's lack of programmed funding for a training and simulation facility to support new aircraft entering into service, according to industry sources familiar with the plan. So when the Coast Guard takes delivery of the first aircraft in 2006, it is unclear whether there will be a full-motion simulator in place to train pilots to fly them, industry sources said."

Congress restores $109 million for CN-235

House and Senate conferees have restored $109 million earmarked to start buying the EADS CASA CN-235 under the Army-Air Force Joint Cargo Aircraft (JCA) program.

Senate Armed Services Committee Chairman John Warner (R-Virginia) helped the two senators from Alabama, Richard Shelby and Jeff Sessions (pictured), push the money back into the 2007 defense budget.

EADS CASA has turned the CN-235 into what critics call a pork barrel project for Alabama by offering to build an assembly plant in the state.

According to the Press-Register of Mobile, Alabama, "The Army currently is scheduled to take delivery of the first of 75 planes beginning in 2008; the Air Force would receive the first of its 70 planes beginning in 2010. . . . the support of Warner, the chairman of the Senate Armed Services Committee, should ensure a swift approval, Sessions said.

A new security twist: Russian ownership of EADS

The Russian government's attempt to influence or control EADS is raising concerns in Washington about the reliability of the aerospace company as a responsible U.S. partner.

EADS lobbyists in Washington are trying to keep quiet about Moscow's recent purchase of more than 5 percent of the company as they lobby Congress to buy the EADS CASA C-295 for the Coast Guard, Army and Air Force.

And while EADS officials say they won't let the Russians determine company policy or gain a seat on the board, the Kremlin says it might buy up even more shares to take control of the company.

"Russian government officials have said they hope Vneshtorgbank's (VTB) purchase of €950 million ($1.2 billion) in traded shares - equivalent to 5.02% of EADS - could be turned into a blocking stake," Flight International reports today.

Approximately 30 percent of EADS shares are exchanges on the international stock market, meaning that if Moscow wanted to use its oil dollars to acquire a strategic stake in the European military manufacturing sector, it could conceivably take control of the company.

"A spokesman for Russia's president Vladimir Putin said the Kremlin wants 'real participation in the control' of EADS as 'a full-rights member of the directors' council,'" according to Flight International, "and may try to raise the stake to 25%."

And that could represent a severe shift in EADS' relationship with the United States. "Congress won't look too kindly on a European military supplier that's in bed with Putin and the Russians," a former Senate staffer tells CasaCrash.com. "It looks like EADS is having trouble again choosing whose side it wants to be on."