Friday, December 24, 2010

Modern Bribes (from Jadaliyya)

"The UAE has proven especially visionary in its pursuit of offsets – pioneering practices like “offset banking” – which allows multiple defense contractors with offset obligations to dump money into a fund designated by the government, as well as the increasingly popular “pre-performance” offset, in which companies make an investment in the procuring country before the bidding process even begins. So far at least three firms that set up businesses in the UAE in hopes of securing future contracts eventually lost out to competitors or saw the predicted deals disintegrate: McDonnell Douglas (now Boeing) set up a Berlitz Language School in the run-up to its (ultimately) failed bid to supply fighter jets; Newport News (now part of Northrop Grumman) created Abu Dhabi Ship Building in anticipation of subsequent deals for fast patrol vessels it likewise failed to secure; and British Aerospace (now BAE Systems) helped start the aircraft leasing company Waha, for yet another deal that never transpired.[3]  Perceptions of the success of the UAE’s program have been so compelling to the Emirates’ neighbors that Abu Dhabi’s annual conference on defense offsets is attended by leaders from almost every Arab state, even those who claim not to engage in offsets – usually because they rely on U.S. military aid which technically prohibits them from demanding offsets from U.S. firms. Efforts have also been made in the GCC to consolidate regional offset programs in order to leverage the members’ collective purchasing power and compel defense manufacturers to meet increasingly stringent offset requirements." (thanks Laleh)