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McDONNELL DOUGLAS RELEASES WHITE PAPER ON F-15 SALE TO SAUDI ARABIA

McDONNELL DOUGLAS RELEASES WHITE PAPER ON F-15 SALE TO SAUDI ARABIA
 ST. LOUIS, July 7 /PRNewswire/ -- McDonnell Douglas (NYSE: MD) today released a white paper stating that Germany's withdrawal from the European Fighter Aircraft (EFA) program sets the stage for Saudi Arabia to become an equity partner in a restructured European program.
 "Saudi Arabia's potential transformation from a customer that buys European military equipment to a financial partner investing directly in European weapons programs would have dire long-term consequences for U.S. interests," states the paper, entitled, "The F-15 Sale to Saudi Arabia: Competitiveness and Arms Control."
 "European governments and aerospace companies, intertwined by ownership and subsidy, could use the substantial cash flow generated by direct Saudi investment in combat aircraft programs to help pursue their goal of eroding U.S. dominance of aircraft production -- eventually collaborating to overtake the U.S. as the world's chief supplier of commercial and military aircraft," the paper states.
 "Direct Saudi investment in EFA, or in a restructured program called by another name, taking place against a backdrop of deep cuts in U.S. defense spending and ongoing European subsidies of the Airbus Industrie consortium, could be the catalyst that enables Europe to accomplish in aerospace what Japan has accomplished in the automotive industry. This is a primary reason why the U.S. Government's decision on the Saudi F-15 request represents a watershed for the U.S. aerospace industry," the paper states.
 Edward Djerejian, assistant secretary of state for Near Eastern and South Asian Affairs, told the House Foreign Affairs Committee earlier this year that Saudi Arabia was "very serious" about participation in the EFA program, according to the March 23, 1992, issue of Defense Daily.
 "As a partner in the EFA program, the Saudis would be able to configure their EFAs to their own specifications, and the capabilities of those aircraft could be significantly enhanced in the future without U.S. knowledge, consent or control," the McDonnell Douglas white paper states.
 "In contrast, a U.S. decision to allow the sale of the F-15 to Saudi Arabia would significantly impair the ability of Europe's combat aircraft industry to develop a next-generation fighter that would be sold freely in the Middle East," the paper states.
 "While supporting U.S. and Middle East security interests, granting the Saudi request for 72 F-15s would inject $5 billion into the U.S. economy, provide $13 billion in income and $3 billion in tax revenue over the 20-year life of the program, and preserve 40,000 American aerospace jobs," the paper states.
 Opponents of the F-15 sale have suggested that Britain and other nations would abandon arms sales to the Middle East if the U.S. would lead the way.
 Recent historical precedent demonstrates that such an approach is ineffective. In the mid-1980s, the U.S. Government did precisely what opponents of the F-15 sale are recommending now -- it chose not to support a request Saudi Arabia made then for more F-15s.
 Rather than establish multilateral arms control, that decision led directly to the world's largest arms export program as the British and their partners in Germany and Italy stepped into the vacuum to create Project Al-Yamamah, valued at $29 billion.
 British Prime Minister John Major announced April 4 that Britain had accepted an additional $2.7 billion cash injection from Saudi Arabia to further expand Project Al-Yamamah.
 "The fact that Major made the announcement at a time when U.S. media were reporting that the proposed sale of F-15s to Saudi Arabia would encounter resistance in Congress, and that the Bush Administration had made no decision on the matter, sends an unmistakable message that another denial of F-15s to Saudi Arabia is unlikely to dissuade the British from further expansion of Project Al-Yamamah," the white paper states.
 The paper also points out that Russia remains an active arms marketer in the Middle East. Upon completion of a sales tour through the region earlier this year, Russian Foreign Minister Andrei Kozyrev said, "I am not shielding the fact that this visit was a move in the struggle for markets, including the arms market. We have developed a huge military industrial complex and now profitable markets for exporting Russian arms have to be found," according to the May 13-19, 1992, issue of Flight International magazine.
 "U.S. policymakers and elected representatives can exert far more influence toward true arms control in a market dominated by U.S. companies than in a market governed by investment partnerships between Middle Eastern governments and Europeans or Russians," the paper states.
 "Turning down the Saudi F-15 request will compel Saudi Arabia to look for alternatives, such as additional Tornados and an equity partnership in EFA. These or any other foreign alternatives to the F-15 will result in reduced U.S. control of weapons flowing into the region, and could result in the very expansion of unrestrained Middle East arms sales that U.S. arms control advocates are trying to prevent," the paper states.
 "For several reasons, support of the Saudi F-15 request is clearly in the U.S. national interest. The U.S. Government must act with as much determination in supporting American national interests as British, European and Russian governments display in support of their interests. Timing is crucial -- Middle East regional security, U.S. national security, effective arms control, international aerospace competitiveness, the U.S. defense industrial base, and 40,000 American jobs are hanging in the balance," the paper states.
 -0- 07/07/92
 CONTACT: Lee J. Whitney of Douglas Aircraft Co., 314-234-0685
 (MD) CO: DOUGLAS AIRCRAFT CO. IN: ARO ST: CA -- LA024 -- X888 07/07/92
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Date:Jul 7, 1992
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