No space for Europe

For several years, Tom Enders, the German who presides EADS (the manufacturer of the Airbus and the Ariane rocket, among other products) had dreamed of a merger with the British firm BAE Systems. This would have created a European aerospace giant capable of competing with Boeing, even for Pentagon contracts. But Germany might have lost some capacity for control over the company, as well as having to accept the relocation of certain activities that currently take place on German soil. Pressed by elections now only a year away, and perhaps not very eager to promote a Franco-British rapprochement in this area, the German chancellor, Angela Merkel, has vetoed the operation, without giving any explanations as to why.

This step is a worrying one for the future of Europe. After this nein in the aerospace sector, which puts a real brake on the process toward European unity in defense, does Merkel’s Germany really wish to advance toward banking, fiscal or other kinds of union if Berlin is not in control? Merkel has now demonstrated that Berlin does not wish to lead Europe, but rather to give orders.

The idea seemed to be an excellent one. In a merger with BAE, a company essentially oriented toward military products, EADS might obtain access to the enormous market of the Pentagon, with which the British firm has a special agreement.

The only demand that Washington made was that the Germans and the French reduce their level of shareholding in the company to nine percent, which both parties had no objection to doing in order to facilitate a merger in which EADS would have 60 percent of the total, and BAE the rest. Berlin added other demands concerning executive posts and headquarters — which, initially, were also found acceptable. And all the governments concerned, including the very liberal British one, were to keep their gilt-edged shares — that is, their ability to veto future acquisitions. Merkel, obviously, has a made a bad use of hers.

A unique opportunity has been lost for the future of the European defense and aerospace industry. Now EADS will have to go looking for other partners, and BAE, left short on capital as defense budgets shrink, will probably have to sell a considerable proportion of its shares.

Amid all of this, it seems rather odd that last Wednesday in Paris, in his public appearance with President François Hollande, Mariano Rajoy not only declined to answer a question concerning the proposed merger, but passed it over to his French colleague, remarking that: “It isn’t reasonable that this question should go to me; I have enough on my hands.”

He might have been reminded that the Spanish state holds 5.44 percent of EADS; that this company contains the former Spanish aeronautical firm CASA (which it absorbed in 1999); and that it is essential to the survival of Spain’s aeronautical industry.