France vows retaliation against US in air tanker dispute [View All]

France has vowed to retaliate against the United States for allegedly shutting Europe's aviation giant EADS out of a $50bn (£33.4bn) defence contract, warning of potential damage to the Atlantic alliance.

By Ambrose Evans-Pritchard - Published: 7:33PM GMT 10 Mar 2010

"This is a serious affair," said France's Europe minister Pierre Lellouche. "I can assure you that there will be consequences."

"You cannot expect Europeans to contribute to global defence if you deny their industries the right to work on both sides of the Atlantic," he said, adding that French president Nicolas Sarkozy would take action "at the appropriate time".

The escalating spat comes after EADS withdrew this week from a joint bid with Northrop Grumman to supply the Pentagon with A330 air refuelling tankers, alleging that the procurement terms had been rigged to favour Boeing.

EADS had already won the contract before, offering a larger and more efficient aircraft than Boeing's 767, which is based on technology dating back to the early 1980s. The original deal was struck down after an appeal by Boeing.

Defence disputes fall outside the ambit of the World Trade Organization so Paris is looking at other ways to strike back. "It is obvious that if we roll over and do nothing after a fait accompli by the Pentagon, it is the end of Europe's credibility," said Mr Lellouche.

Rainer Brüderle, Germany's economy minister, has also expressed outrage, alleging that the tender "had clearly been designed to favour Boeing under political pressure."

Joachim Pfeiffer, Bundestag spokesman for the Christian Democrats, said the Pentagon's conduct was "scandalous", a sentiment echoed by a string of politicians on Wednesday.

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