WSJ: Airplane Politics



Airplane Politics
Asian Wall Street Journal Editorial August 10, 1999 It cannot have been a pleasant scene in Taipei yesterday when a group of U.S. congressmen grilled officials there about China Airlines' decision to buy Airbus passenger jets. The $2 billion decision, made public at the weekend, ended months of waiting for an award that was long expected to go to Boeing. Now allegations are flying that Taiwan switched vendors at the last minute to punish the U.S. for the Clinton administration's lack of support during Taipei's recent fracas with Beijing. There are flaws in that theory. Most observers had indeed considered Boeing to be a shoo-in. But the company itself was quietly expressing alarm about losing out to Airbus (for non-political reasons) even before Taiwan President Lee Teng-hui caused a ruckus last month by expressing a wish to negotiate with China on a state-to-state basis. At any rate, while partially-privatized China Airlines insists its decision to buy the Airbus was purely a commercial one and not the result of governmental pressure, hardly anyone believes that--for the simple reason that the U.S. administration has behaved abominably toward Taiwan. George Melloan details this behavior, which began long before President Lee's July 9 remarks, (see article). Concern for Taiwan's well-being is what brought some members of the U.S. Congress to Taipei this week. The Airbus/Boeing decision popped up unexpectedly. As they met President Lee on Monday, the primary issue on congressional minds must have been the implications for American policy as expressed by Mr. Clinton's top military commander in Asia, quoted recently dismissing Taiwan as a piece of excrement fouling U.S.-China relations. If Taipei didn't make the aircraft purchase decision to punish Washington for things like that, maybe it should have. It is one thing for Senator Slade Gordon from Boeing's home state of Washington to hop a plane to Taipei at the weekend in an attempt to wrangle back a lucrative contract for 12 long-distance B777s on behalf of his constituents. He is bound to try; it's his job in a way. But what about those officials of the U.S. administration jumping in to signal Taiwan: Hey you, be good to your friends in the U.S. Don't be irresponsible and let politics get in the way of business. Can you believe it? Actually we can, coming as it does from an administration which has habitually made policy decisions on the basis of financial considerations. Still, the subtext here, a quasi-warning based on the notion that Taiwan somehow owes the U.S., is beyond the pale. In the first place, the Clinton administration has already done so much to undermine Taiwan--and America's own strategic interests in the region--that there is not much more to threaten the island with. More to the point, the way Washington has been marching in lock-step with Beijing, it practically pushed China Airlines into the arms of Airbus. Commercial considerations aside, the airline would have been crazy not to consider further diversifying away from a reliance on one, American, supplier for planes and spare parts. Only China Airlines knows precisely why Airbus was named as the passenger jet supplier of choice last week, though the carrier appears to have chosen Boeing for a cargo jet order worth about $2.5 billion. One curious aspect of the more hotly contested passenger plane bidding is the way Boeing was crying foul over a month ago. The whispers that reached our ears then mentioned Airbus playing unfair with money, though no specific crime was alleged. The issue of Taipei perhaps seeking to punish the U.S. never came up. What did emerge in the whispering, however, was the suggestion that if Taiwan didn't buy Boeings, its friends in the U.S. might be upset and even abandon support for the island in protest. It seemed to us then, and it does now, that Taiwan ought to be free to buy jets where it likes. Americans will always want to root for their companies, and they can insist on a level playing field. Yet any idea that the U.S. or its companies are ITAL owed UNITAL specific contracts as a payment for strategic services rendered should be banished. Apart from a moral commitment to defend a fellow democracy, the U.S. has very real interests of its own in the continued survival of a stable, friendly government in Taiwan. If Taiwan's friends can't see that, then they are no friends. Anyone who dreams of making a simple aircraft deal a nail in a coffin had better get more than one box ready.

Airplane Politics

Asian Wall Street Journal Editorial

August 10, 1999

It cannot have been a pleasant scene in Taipei yesterday when a group of U.S. congressmen grilled officials there about China Airlines' decision to buy Airbus passenger jets. The $2 billion decision, made public at the weekend, ended months of waiting for an award that was long expected to go to Boeing. Now allegations are flying that Taiwan switched vendors at the last minute to punish the U.S. for the Clinton administration's lack of support during Taipei's recent fracas with Beijing.

There are flaws in that theory. Most observers had indeed considered Boeing to be a shoo-in. But the company itself was quietly expressing alarm about losing out to Airbus (for non-political reasons) even before Taiwan President Lee Teng-hui caused a ruckus last month by expressing a wish to negotiate with China on a state-to-state basis.

At any rate, while partially-privatized China Airlines insists its decision to buy the Airbus was purely a commercial one and not the result of governmental pressure, hardly anyone believes that--for the simple reason that the U.S. administration has behaved abominably toward Taiwan. George Melloan details this behavior, which began long before President Lee's July 9 remarks, (see article). Concern for Taiwan's well-being is what brought some members of the U.S. Congress to Taipei this week. The Airbus/Boeing decision popped up unexpectedly. As they met President Lee on Monday, the primary issue on congressional minds must have been the implications for American policy as expressed by Mr. Clinton's top military commander in Asia, quoted recently dismissing Taiwan as a piece of excrement fouling U.S.-China relations.

If Taipei didn't make the aircraft purchase decision to punish Washington for things like that, maybe it should have. It is one thing for Senator Slade Gordon from Boeing's home state of Washington to hop a plane to Taipei at the weekend in an attempt to wrangle back a lucrative contract for 12 long-distance B777s on behalf of his constituents. He is bound to try; it's his job in a way. But what about those officials of the U.S. administration jumping in to signal Taiwan: Hey you, be good to your friends in the U.S. Don't be irresponsible and let politics get in the way of business. Can you believe it?

Actually we can, coming as it does from an administration which has habitually made policy decisions on the basis of financial considerations. Still, the subtext here, a quasi-warning based on the notion that Taiwan somehow owes the U.S., is beyond the pale. In the first place, the Clinton administration has already done so much to undermine Taiwan--and America's own strategic interests in the region--that there is not much more to threaten the island with. More to the point, the way Washington has been marching in lock-step with Beijing, it practically pushed China Airlines into the arms of Airbus. Commercial considerations aside, the airline would have been crazy not to consider further diversifying away from a reliance on one, American, supplier for planes and spare parts.

Only China Airlines knows precisely why Airbus was named as the passenger jet supplier of choice last week, though the carrier appears to have chosen Boeing for a cargo jet order worth about $2.5 billion. One curious aspect of the more hotly contested passenger plane bidding is the way Boeing was crying foul over a month ago. The whispers that reached our ears then mentioned Airbus playing unfair with money, though no specific crime was alleged. The issue of Taipei perhaps seeking to punish the U.S. never came up. What did emerge in the whispering, however, was the suggestion that if Taiwan didn't buy Boeings, its friends in the U.S. might be upset and even abandon support for the island in protest.

It seemed to us then, and it does now, that Taiwan ought to be free to buy jets where it likes. Americans will always want to root for their companies, and they can insist on a level playing field. Yet any idea that the U.S. or its companies are ITAL owed UNITAL specific contracts as a payment for strategic services rendered should be banished. Apart from a moral commitment to defend a fellow democracy, the U.S. has very real interests of its own in the continued survival of a stable, friendly government in Taiwan. If Taiwan's friends can't see that, then they are no friends. Anyone who dreams of making a simple aircraft deal a nail in a coffin had better get more than one box ready.