With the election of a Democrat to the White House, Democrats expanding their majority on Capitol Hill, a deepening economic recession and soaring unemployment in the US, there are widespread fears that the stage is set for a new era of protectionism. However, there is at least one area of major interest for European business - US defence spending - where this is unlikely to happen, two Washington-based defence policy analysts have told Europolitics. "There will be no Buy America' in the rulebook. Best value' will remain the guiding principle because the US military simply does not have the money to think of anything else," said Lawrence Korb, senior advisor at the Center for American Progress think tank, who was US assistant secretary for defence from 1981 to 1985.

The immediate test case will be the US$35 billion contract to supply tanker planes to refuel the US Air Force. Europe-based Airbus' parent company EADS is desperately trying to nail this contract in a joint bid with US-based Northrop Grumman, but they face stiff competition from US-based Boeing. With the final decision due to be taken by the Obama administration in 2009, Korb predicted "I do not think this will become politicised. If the rules were changed to favour Boeing, then Northrop Grumman would complain". A view shared by Jeremy Shapiro, a military policy expert at the Brookings Institution think tank: "Obama will not want to be involved in taking the decision. He will want to insulate himself from the negative fallout coming either from Europe or the US depending on who wins the contract".


The EADS-Northrop bid was initially given the contract in February 2008, which made huge waves on both sides of the Atlantic as the Pentagon had never awarded such a massive contract to a non-US supplier before. But European hopes that this was a sign of things to come proved somewhat premature as the decision had to be cancelled in June when an independent arbiter, the Government Accountability Office (GAO), upheld Boeing's complaint that the tendering procedure was biased against it. The Air Force "made a number of significant errors that could have affected the outcome," such as conducting "misleading and unequal discussions with Boeing" and being "incorrect in estimating life cycle costs" of the rival bids, it concluded.aThe restart button was pushed by Defence Secretary Robert Gates in September and both bidders are now resubmitting their offers.


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