Rapid Fire September 14, 2012: Changes of Command at DoN | More on BAE/EADS
- As he announced earlier this month, Admiral John C. Harvey is retiring from the US Navy. Here is his long parting message as the Old Salt since Adm. Mike Mullen retired last year. It is a worthwhile read on efficiency vs. effectiveness and readiness. Adm. Bill Gortney replaces him as Commander, US Fleet Forces (January announcement). Meanwhile Rear Adm. David Dunaway takes command of Naval Air Systems Command (NAVAIR) as Vice Adm. David Architzel is also retiring.
- The US House of Representatives passed another defense funding bill (in a continuing resolution package) that the Senate will just ignore. The White House said it would veto it [PDF] in any case. Its belated report to Congress on sequestration is expected today.
- In an interview with the Guardian, British Ministry of Defence Philip Hammond said the UK had already closed 52 military bases in Afghanistan out of an initial 86, and will have a remaining 9,000 troops in the country at the end of the year. The pace of their drawdown could be accelerated next year.
- The US Army War College’s SSI published a scathing perspective on Russian foreign policy. It notes that for many Russians animated by a strong anti-American sentiment, the Cold War never really ended. In the meantime, Putinism worked for a while until it didn’t:
“In Russian political thinking, Russia’s place in the world system is conceptualized not just as one of the great powers or poles in the multipolar world, but also as a unique position determined both by geography and by its development along a particular path. This model of a strong state directing economic and social development combines some features typical for Western democracies and some characteristics of the emerging powers, so that Russia could swing between various groups as it sees fit. The problem with this ambitious vision is that the model does not work.”
- L’Usine Nouvelle wonders why [in French] the French government has remained silent on the proposed EADS-BAE merger. They repeat La Tribune’s earlier assertion that a leak forced the companies to announce their plans earlier than they planned to and taking everyone flat-footed. Beyond timing issues that might explain what may still be temporary passivity, Francois Hollande has offered a stark contrast to Nicolas Sarkozy’s kinetic style, to the point that even some of supporters are starting to wonder whether his choice of exercising power as a “normal president” is up to the daunting tasks facing France and Europe.
This project brings two key intertwined questions. First, how much control will the involved governments want to retain? And second, will the US government allow a top prime contractor to emerge with continued backing from European states all the while it is involved in major US programs? If divestiture of key parts of BAE’s US presence turns out to be the strings attached to a deal, that would strongly undermine the rationale for the merger. If a merger is allowed at all that is, in Europe and in the US, as such deals have a tendency to become hairy. After all, the European Commission single-handedly blocked the merger [PDF] between General Electric and Honeywell – two American companies – a decade ago. The Americans were not amused at the time by the antitrust decision taken by a team led by a certain Mario Monti (who incidentally is now Italy’s prime minister).
On paper this merger may involve many power players but, as hinted by silence from the French authorities, it remains unclear whether interfering with it will be high on their agenda, given the bigger fiscal fish Western governments have to fry. The merger might get a relatively smooth ride if it comes with guarantees that jobs will be preserved, which might trump other concerns in light of the current macro environment. But first there are also considerations of relative shareholder value at play like in more ordinary consolidations between listed companies. Some analysts think [in French] that a 75/25 split in favor of EADS would have been a fairer assessment of the companies’ respective long-term outlook.
