CASA Crash

Questions and concerns about the safety and reliability of EADS CASA aircraft, and about the reliability of EADS as a U.S. defense partner

19 September 2006

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."

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