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- Part of Records of the Office of the Chief of Staff (Clinton Administration), Harold Ickes, Jr.'s Files
Extracted text
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INITIALS: SML DATE: 2/27/2023
March 9, 1995
up
2022-0127-5
SUBJECT: EXIM BANK LOAN TO AIRA
(Note confidential information)
The Pratt and Whitney Division of the United Technologies Corporation has applied to
Eximbank for export credit financing assistance, on behalf of itself and 17 other companies,
for the export of $1 billion of parts for incorporation into 20 Russian built passenger
airplanes. The planes are to be sold to Aeroflot, the Russian national airlines.
Because of the potential impact of this project on Russian economic transition and the US
airframes manufacturers and because of the Eximbank policy of not funding US engines or
parts for Airbus aircraft, Eximbank has sought Administration guidance as it considers the
application. Eximbank is an independent agency whose board will vote approval or
disapproval of the application.
Boeing and McDonnell Douglas, and their congressional delegations (Washington and
Kansas), have expressed significant objections to the proposed deal. They believe that if this
deal goes through, it will create a competitor to it like Airbus. Airbus is a consortium of
European firms that are government-subsidized and thus are able to undercut Boeing and
McDonnell Douglas prices for similar aircraft. Thus Boeing and McDonnell Douglas want
the deal stopped. Because of the size of the deal, it will require Congressional approval, and
Boeing has threatened to fight it on the Hill.
Pratt and Whitney and their supporters on the Hill believe that Rolls Royce will get the
business if they don't. Thus they see it as a total loss for the US if the deal doesn't go
through.
Initially, Mickey Kantor wrote a letter to Ron Brown saying he agreed with the Boeing
position. The letter somehow became public, which is why this issue has kicked up in the
press. Kantor met with United Technologies (Pratt and Whitney's parent company) last
night and with the Connecticut delegation recently. He raised some concerns with United
Technologies and is awaiting their response. Thus, he has no current position on the deal.
The concerns he wanted addressed consist of:
1.
How can we ensure that sales of the planes won't hurt US manufacturers, like
McDonnell Douglas?
2.
Access to the Russian market is precarious.
3.
How do we make sure we are not financing another Airbus type competitor?
4.
Will this deal create a precedent that will force Eximbank to finance Airbus parts
manufacturing?
5.
How can we make sure any commitments with regard to these issues are respected by
the Russians?
I have attached for you a great deal of detail in two documents one lays out the trade case