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Battle Begins for NATO Contracts

July 15, 1999

WARSAW, Poland (AP) _ British Aerospace PLC and Saab AB of Sweden fired the first salvo Thursday in what is sure to be a fierce battle for a $1.5 billion-defense contract from NATO’s expansion into Central Europe.

The British-Swedish consortium announced the offer to sell 60 Gripen jet fighters to Poland just hours before a French delegation of defense contractors and Prime Minister Lionel Jospin flew in for talks likely to include the airplane deal.

Such high-level lobbying is part of a European push to make its defense industries more competitive against U.S. giants such as Boeing Co. and Lockheed Martin Corp., whose equipment supplied NATO’s air campaign in Kosovo.

Loath to be trumped on their own continent, European contractors are taking on the Americans for the business of NATO’s three newest members _ Poland, Hungary and the Czech Republic _ former Warsaw Pact nations that need to upgrade their military hardware to NATO requirements.

At stake are the contracts, along with a major foothold in the former Soviet bloc a decade after the fall of communism.

``It’s big money we’re talking about,″ said U.S. Embassy spokesman Tom Delaney. ``It’s highly competitive.″

The Poles would like to buy 150 aircraft, but lack the money to pay now. Their aged fleet of Soviet MiGs requires major renovations, and making them compatible with NATO standards is both economically and politically unfeasible.

So Poland asked British Aerospace-Saab, Boeing, Lockheed Martin, Dassault of France and DaimlerChrysler Aerospace AG of Germany for preliminary sales pitches by Wednesday on an initial order of 60 advanced jet fighters.

British Aerospace and Saab spoke about their $1.5-billion offer Thursday in Poland and Sweden. That offer included 60 new Gripens, which normally cost $30 million each or $1.6 billion, and the loan of a squadron of 18 Swedish Air Force Gripens to enable Poland to make what British Aerospace promised would be a smooth transition to NATO-required air power.

Julian Scopes, the British Aerospace vice president for Central Europe, also emphasized that Polish companies would be given contracts and training of that matched the value of the jet fighter contract. The deal, he said, would ``bring Polish aerospace into the heart of European (defense industry) activity.″

Later Thursday, Jospin opened a two-day official visit accompanied by representatives of Dassault, which makes the Mirage fighter and leads a consortium producing the Eurofighter. Boeing offers the F-18 and Lockheed Martin the F-16.

U.S. planes have long been the front-runners for the Polish contract, but Poland’s economic constraints delayed the bidding process as has the political issue of choosing a U.S. or European company.

A Warsaw conference on the NATO policy views of the alliance’s three new members was postponed last week after U.S. objections that it would give British Aerospace _ one of the sponsors _ an unfair lobbying advantage.

British Aerospace chief executive officer John Weston and British Defense Minister George Robertson were to participate in roundtable discussions on NATO policy and European defense issues _ without U.S. or Western Europe representatives.

``We just want to be sure that it’s a transparent process,″ said Delaney of the U.S. Embassy.

The conference organizer, Janusz Reiter of the independent Center for International Relations in Warsaw, called suggestions that the conference was for lobbying ``completely groundless.″

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