While the U.S. federal government refused loan guarantees for America’s largest passenger airlines, it has been “unusually generous” with U.S. taxpayer money by buying Poland 48 fighter jets –for nearly $100 million per plane.
The U.S. government is paying out $3.8 billion for Poland to obtain 48 fighter jets made by Lockheed Martin Corp. The details of the agreement reveal a great deal about the relationship the U.S. is building with the former communist countries of the “new” Europe and why 10 of those states voiced support for the U.S.-led war in Iraq.
“We can call this the contract of the century,” the Polish defense minister, Jerzy Szmajdzinski, said about the $3.5 billion purchase that involves “offset” investment compensation for Poland reported to be worth as much as $12 billion. The agreement is the largest military package ever in the former communist Eastern Europe.
According to the Poland’s Deputy Defense Minister, Janusz Zemke, “48 F-16’s complete with weapons and all the maintenance and logistics components [will cost] $3,478,946,936. With interest, the total price comes to $4.7 billion.”
“The airplane that the Polish government is going to receive is the finest F-16 that’s flying. They’re getting the latest in modern electronic warfare, the latest in weapons. The performance of the airplane is not exceeded anywhere. This airplane has capabilities in it that actually exceed the capabilities of the United States Air Force’s F-16s,” Mac Stevenson, Vice President for Business Development at Lockheed-Martin said in February.
The package contains more than $6 billion in so-called offset credits, which are investments that Lockheed and its contractors will make in the Polish economy to offset the cost of the aircraft purchase. The offsets are worth twice the purchase price for the aircraft. The package of offset projects will reportedly bring economic benefits in excess of $9 billion to Poland far beyond the ten-year lifespan of the offset program.
The deal promises some $6 billion in investment in the Polish economy, much in the form of pledges to buy Polish goods. “We have offered more percentage-of-offset to Poland than we’ve ever offered anywhere else in the world,” Stevenson said. “There will be good business for Poland and good business for the F-16 program.”
Congress approved a low interest loan of $3.8 billion to pay for the aircraft in October 2002. In the first eight years, Poland will only have to pay the modest interest charges, with repayment of the loan deferred to between 2011 and 2015.
Poland needs the planes to meet the standards of NATO, which it joined in 1999. Apart from the aircraft, the contract covers spare engines, missiles and bombs, and training for Polish pilots. Deliveries of the planes are to start in 2006. The Polish aircraft are earmarked for the NATO Rapid Reaction Forces.
U.S. and European defense companies competed heavily for the contract. The British-Swedish consortium BAE Systems-Saab that produces the Jas-39 Gripen, and France’s Dassault Aviation, which makes Mirage 2000-5, also bid for the contract.
“The $3.5 billion cost of the 48 F-16 Fighting Falcons comes cheaply for the Poles because of unusually generous American terms which will leave the U.S. taxpayer footing much of the bill for years to come,” The Guardian (UK) said about the deal that was signed at an airbase south of Warsaw on April 18. “The U.S. government is, in effect, paying Lockheed Martin to supply Poland with the aircraft from 2006,” it said.
Many American manufacturing jobs will be lost due to the “offset” investment that moves some of the jet production and assembly work to Poland where it can be done more cheaply.
Dan Coulom, a spokesman for Pratt & Whitney, who builds the engines for the F-15 and F-16 fighter jets, informed the International Association of Machinists and Aerospace Workers on April 24 that it will soon be cutting at least 170 jobs in Connecticut. Pratt & Whitney is a division of United Technologies Corp. (UTC), which is headquartered in Hartford, Conn.
Pratt & Whitney also told the union that manufacturing work on F-100 fighter jet components will be moved to Rzeszow, Poland, by next year, Coulom said. The Polish deal with Lockheed Martin Corp. requires that manufacturing jobs be moved to Poland, Coulom said.
“We have to be willing to place work in countries that are buying the engines,” Coulom said. “We have to understand what it takes to do business internationally, especially in aerospace.”
The plant in Poland, PZL Rzeszow, in which Pratt & Whitney is the majority shareholder, will manufacture components for the F-100 engine and carry out final assembly, according to Flug Revue of March 2003.
Pratt & Whitney will produce engine parts for the F-16 and other aircraft at its Rzeszow factory. A similar plant in Krosno, Poland, already manufactures landing gear for every F-16 made, according to Flug Revue.
Connecticut lawmakers wrote to George David, chairman of Hartford-based UTC, calling for an urgent meeting among the delegation, company executives and union leaders to discuss the job cuts.
“While we understand the difficulties facing the aerospace industry, we do not understand how sending U.S. jobs overseas or outsourcing jobs to other companies strengthens Pratt’s position,” the lawmakers said in the letter. “The decision will have far reaching adverse effects on the livelihoods of those workers, their families and the communities.”
Apart from the British, the Poles were the only Europeans to join the coalition and send soldiers into combat in Iraq. Poland sent a small contingent of troops that assisted in the military effort to overthrow the regime in Baghdad.
While most European states want the UN to oversee Iraq’s reconstruction, the Poles are looking for business contracts and a role in reconstruction of post-war Iraq.
Poland showed its support for military action against Iraq when it signed a letter, published in The Wall Street Journal on Jan. 30, which affirmed “the real bond between the U.S. and Europe” and asserted that Iraqi weapons of mass destruction “represent a clear threat to world security.” Spain, Italy, Portugal, Britain, the Czech Republic, Denmark, and Hungary also signed the letter.
There is a close connection between Poland’s support for the war in Iraq and the Lockheed Martin deal according to John B. Judis, who wrote a revealing article about Bruce Jackson, one of the key players at Lockheed who was involved in the eastward expansion of NATO and the war against Iraq. The article, “Minister Without Portfolio” was published in The American Prospect of May 1.
Jackson, a military intelligence officer, was assigned to the Pentagon during the Reagan and first Bush administrations, where he worked under the Zionist neo-conservatives Richard Perle, Paul Wolfowitz, and Dick Cheney.
After Jackson left the government, he joined Martin Marietta in 1993, which merged in 1995 with Lockheed. In 1997 he became director of global development and was put in charge of finding new international markets for Lockheed.
One prominent neo-conservative familiar with Jackson describes him as the “nexus between the defense industry and the neo-conservatives. He translates us to them, and them to us.” In the late 1990s, while working for Lockheed Martin, Jackson avidly promoted the expansion of NATO into Eastern Europe.
Jackson founded the U.S. Committee on NATO in 1996 and served as its president. Board members included Perle, Wolfowitz, and Stephen Hadley, now the deputy national-security adviser but then a partner in the Shea & Gardner law firm, which represented Lockheed.
In 1997 Jackson’s committee played a key role in gaining Senate approval for the admission of Poland, Hungary and the Czech Republic to NATO saying that the cost to each taxpayer would be the equivalent of a candy bar.
Jackson’s committee then started preparing the way for a new group of members, later dubbed the Vilnius Ten. These were Romania, Bulgaria, Slovakia, Slovenia, Croatia, Albania, Macedonia and the three Baltic states. U.S. Ambassador to NATO Nicholas Burns called Jackson “an indispensable part of our efforts in reaching out to these governments.”
Lockheed subsequently promoted Jackson to vice president in 1999.
Jackson is extremely active in Republican politics and drafted the foreign-policy plank of the 2000 Republican convention platform, according to Judis.
In 2002, Jackson left Lockheed and devoted himself full-time to NATO expansion and other lobbies. In the fall of 2002 the Bush administration called on Jackson to set up the Committee for the Liberation of Iraq. “People in the White House said, ‘We need you to do for Iraq what you did for NATO,’” Jackson told Judis in a phone interview.
Jackson used his NATO connections to garner support for the administration’s war plans for Iraq. When the Bush administration desperately needed allies, Jackson helped draw up the pro-war declaration from the foreign ministers of the “Vilnius Ten,” the 10 Eastern European countries that are up for NATO membership. “The newest members of the European community agree that we must confront the tyranny of Saddam Hussein and that the United Nations must now act,” the foreign ministers declared on the same day that Secretary of State Colin Powell addressed the United Nations.
Jackson tells these candidate countries what they should do to win NATO membership, Judis says. According to John Laughland of the Helsinki Human Rights Group, Jackson “told Bulgaria that winning NATO membership would depend on it selling the national tobacco factory to the ‘right’ foreign buyer.” Jackson also advised the NATO-candidate countries “on the proper stance toward war with Iraq.”
Jackson set up the Committee for the Liberation of Iraq with Randy Scheunemann as its president. Scheunemann worked closely with Jackson on the NATO committee and has been a registered lobbyist for Latvia, Macedonia and Romania, as well as a consultant on Iraq policy to Secretary of Defense Donald Rumsfeld.
Jackson and Scheunemann’s engineered the Vilnius Ten declaration, which was the product of a dinner Jackson attended in late January at the Slovak embassy in Washington with representatives of the 10 candidate nations. Jackson’s contribution was to tell the Vilnius Ten foreign ministers that signing the declaration would help win U.S. approval of their membership in NATO.
“They clearly wanted to do stuff to impress upon the U.S. Senate the freedom-fighting credentials of these new democracies,” Jackson told the International Herald Tribune. According to a United Press International report, “Albania, Croatia, Bulgaria and Macedonia received private and public assurances that their NATO applications now stand a better chance.”
In Slovenia, Foreign Minister Dimitrij Rupel came under attack for signing the declaration. On Feb. 13, he distanced himself from the declaration. “In everything that it does … Slovenia is representing the stance that the Iraqi crisis must be resolved within the United Nations, i.e., within the Security Council,” he said.
When the war began, Slovenian Prime Minister Anton Rop said it had been a mistake to sign the declaration. The Slovenian press blamed pressure from Jackson, acting on behalf of the United States, for the initial decision to sign. Rupel, columnist Sasa Vidmajer wrote, had “buckled under … Bruce Jackson’s threat.”
“OK, OK, I’ll do it!”: Slovakian President Rudolph Schuster gets his marching orders with a friendly slap on the back from Bruce Jackson (right) at a Washington soiree