Sunday, March 2, 2008

Sweet Home Alabama

A quick word on the EADS tanker contract that's getting so much blog attention. (Kevin here, Art here, Danger Room here and here.) Some mention was made of EADS' promise to build the aircraft in Alabama as a way to placate Congress. It's important, though, to point out that as early as last December, EADS was floating suggestions of outsourcing operations to Alabama as a way of counteracting the collapse of the dollar to third-world currency status correction in the dollar's exchange value. So while the move might make for some good Stateside p.r., it makes for some even better bottom line.

There are still some potential rough patches for the deal, though. To begin with, EADS, while publicly traded, counts among its major shareholders both the French and Spanish states, as well as a Russian state-controlled bank. The resulting public-private hybrid could trip the kind of ad hoc (read: politically motivated) American national security sensors that killed the Dubai ports contracts in 2006.

But perhaps just as dangerous will be how outsourcing EADS operations to America will play in Europe, where both France and Germany have often displayed protectionist impulses to what's considered an industrial feather in Europe's cap. It's hard to stick up for a national industry when the soundtrack for its payroll is more Lynyrd Skynyrd than Marseillaise.

Cross-posted to World Politics Review.

Posted by Judah in:  European Union   Markets & Finance   

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