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The USS New Orleans fires a surface to air intercept missile from it's Rolling Airframe Missile launcher while off the coast of California during a live-fire exercise in 2013.

U.S. Navy

The USS New Orleans fires a surface to air intercept missile from it\’s Rolling Airframe Missile launcher while off the coast of California during a live-fire exercise in 2013.

Qatar’s purchase of 254 surface-to-air missiles from an American weapons manufacturer has cleared a major hurdle after securing the approval of the US State Department.

The Defense Security Cooperation Agency announced the decision regarding the $260 million order from Raytheon Missile Systems in a statement published over the weekend.

The agency stated that selling the weapons to Qatar would improve the national security of the US “by helping to improve the security of a friendly country.”

It continued:

“Qatar is an important force for political stability and economic progress in the (Gulf) region. This proposed sale will provide Qatar with military capabilities to protect its naval forces and nearby oil/gas infrastructure from air and missile threats.”

It added that the missile sale “will not alter the basic military balance in the region.”

Arms buildup

However, questions about the region’s military balance have appeared to stall other arms deals involving Qatar and US firms.

Silent Eagle fighter jets

Boeing

Silent Eagle fighter jets

For example, US ally Israel’s concerns about its “qualitative military edge” have reportedly been one of the factors holding up the sale of 36 F-35 fighter jets from Boeing to Qatar, although Reuters cited unnamed defense officials last week as saying a deal is imminent.

Qatar has been rapidly building up its weapons arsenal in recent years, ordering billions of dollars worth of tanks, attack helicopters, warships, artillery and coastal battery systems.

The Raytheon deal includes two variations of the company’s RIM-116C rolling airframe missiles, which rotate in the air like a bullet fired from a gun.

The US Navy describes the weapons as a “high-firepower, low-cost, self-defense system against anti-ship cruise missiles … and asymmetric air and surface threats.”

The State Department’s approval of the deal came shortly after US President Barack Obama met GCC leaders in Riyadh last week in a visit many interpreted as an effort to shore up the relationship between the US and the Gulf states.

According to the US Defense Security Cooperation Agency, Congress would have to pass legislation prohibiting or modifying the proposed sale in order for the deal to be blocked.

Thoughts?

Photo for illustrative purposes only.

Rolex

Photo for illustrative purposes only.

Qatari officials increased their spending on gifts to American officials last year to nearly $170,000, a quarter of which went toward presents for the US Secretary of Homeland Security and his family, recently released records show.

That’s up from $99,664 in 2013, according to an annual disclosure of gifts given to US federal employees from foreign governments around the world, which was released last week.

The official who received the most expensive items was Homeland Security Secretary Jeh Charles Johnson, whose family was given some $44,000 in gifts, including a $15,700 Cartier platinum bracelet and a $6,600 Rolex watch.

US Secretary Jeh Johnson met with Sheikh Abdullah Bin Naser Bin Khalifa Al-Thani, Prime Minister and Interior Minister in Qatar.

US Department of Homeland Security

US Secretary Jeh Johnson met with Sheikh Abdullah Bin Naser Bin Khalifa Al-Thani, Prime Minister and Interior Minister in Qatar.

Qatar Attorney General Ali Bin Fetais al-Marri also gave both Johnson’s daughter and wife $3,200 gold Cartier necklace pendants engraved with their initials and the word “love.”

The gifts were received around the time that al-Marri met with Johnson in the US.

Several weeks later, Johnson traveled to Qatar and participated in a panel discussion on government treatment of the commercial aviation industry during the International Air Transport Association’s annual general meeting, according to a press release published at the time.

Lavish spending

US government officials are not allowed to keep most valuable gifts given to them on the job. But according to the disclosure, they accept some offerings, to “avoid embarrassment to the donor and the US government.”

Photo for illustrative purposes only.

Nadia Priestley/Flickr

Photo for illustrative purposes only.

Most items given to US government employees are then either transferred to the General Services Administration, a government agency that handles federal property, or put to “official” use.

It’s not clear where Johnson’s gifts ended up. The registry lists the items as being stored in what appears to be a Homeland Security building.

Qatar is far from alone in gifting expensive items to US officials. Saudi Arabia, for example, gave Michelle Obama, the First Lady of the United States, a diamond and pearl jewelry set worth $570,000.

Some of the most notable items given by Qatari officials this year include:

  • Two boxes of Habanos and Cohiba cigars, as well as a 4′ x 6′ Persian rug. The gift has a total value of $7,360 and was given by al-Marri to Stephen Preston, general counsel of the Department of Defense;
  • A white leather Gentili humidor worth $1,500, also to Preston from al-Marri, which will be “retained for official use in the general counsel’s office.”
  • A gold scallop shell with a Qatari pearl inside a red leather presentation case worth $445 given to US Secretary of State John Kerry by his counterpart, Qatar Minister of Foreign Affairs Khalid Bin Mohammed Al-Attiyah;
  • A 32GB iPhone 5, as well as a Dior men’s and ladies’ watch set with a Dior pen in a wooden box. The gift has a total value of $8,025 and was given by Gen. Ghanim Bin Shaheen Al Ghanim, Qatar’s Armed Forces chief of staff, to Heidi Grant, the deputy under secretary of the Air Force for International Affairs.

As in past years, senior members of the US Armed Forces and Department of Defense received the largest number of gifts, likely reflecting the deep security relationship between the two countries.

Security relationship

Qatar is home to Al Udeid Air Base, one of the largest American military outposts in the Middle East that’s been described as the “regional nerve center” for US-led strikes on ISIL.

Al Udeid Air Base

316th ESC/Flickr

Al Udeid Air Base

General Dennis L. Via, the commanding general of the U.S. Army Materiel Command, received gifts worth more than $12,000 that included five watches, two wallets, cufflinks, a suitcase and a gold State of Qatar statue.

Gen. Via’s department oversees the research, development, maintenance and parts distribution of weapons systems. The gifts were officially received a week before Qatar announced plans to purchase billions of dollars worth of US-made military helicopters and missile defence systems.

In addition to providing glimpses into the world of diplomatic protocol and hospitality, the gift registry also provides occasional insights into joint programs.

In 2013, for example, Qatar’s Ministry of Interior spent more than $15,000 on the travel and lodging costs for senior Homeland Security officials to discuss the establishment of a joint US- Qatar law enforcement training academy.

Photo of Lekhwiya vehicle for illustrative purposes only.

Chantelle D'Mello / Doha News

Photo of Lekhwiya vehicle for illustrative purposes only.

Qatar announced it was creating a police college in late 2013 without mentioning American involvement.

Qatar’s generosity hasn’t always precluded awkward moments with its allies.

US Senator Lindsey Graham received a $4,000 rug on two occasions from Qatar’s attorney general in 2014.

However, earlier this year he said the five former Taliban prisoners released by the US to Qatar may be looking to return to the battlefield and had “reached out” to individuals fighting American forces in Afghanistan who had come to meet with them.

That prompted Qatar’s foreign minister to defend his country’s handling of the former prisoners.

Thoughts?

Boeing 787 Dreamliner

Simon Boddy/Flickr

Boeing 787 Dreamliner

For the first time, a trio of US airlines has offered detailed figures to support claims that Qatar Airways, Emirates and Etihad receive government funding that allows them to unfairly compete against American carriers.

In the case of Qatar Airways, those state subsidies are alleged to have added up to more than US$16.5 billion since 2004.

“While Qatar Airways claims it is not subsidized, the truth is the exact opposite: without the subsidies, the airline would not be commercially viable,” the airlines’ critics charge in a report released late Thursday.

A380 Qatar Airways

Qatar Airways

A380 Qatar Airways

The report was submitted to US government officials last month, but not released to the public until a few days ago.

US airlines have long argued that they face unfair competition from the Gulf. Those claims have been consistently denied by Qatar Airways CEO Akbar Al Baker and his counterparts in Dubai and Abu Dhabi.

Earlier this year, the three largest US carriers – American, Delta and United – renewed those allegations with claims that the Gulf carriers have received billions of dollars in government subsidies.

Saying this violates the spirit of the country’s Open Skies agreements with Qatar and the UAE, the carriers are calling on American politicians to renegotiate those deals.

As they stand, airlines – rather than governments – decide on the frequency, capacity and fares of flights between the two countries.

Up until late last week, the US carriers had failed to provide any details to support their allegations. However, an advocacy group called Americans for Fair Skies has since released a 55-page report that forms the basis of the airlines’ most recent accusations.

Government benefits

Qatar Airways is owned by the government and does not disclose its financial results.

Photo for illustrative purposes only.

Qatar Airways

Photo for illustrative purposes only.

However, its critics say they obtained summaries of the airline’s annual account filings from “certain third country jurisdictions” that they claim show the Qatar government has provided financial assistance to the carrier “since its inception” in 1993.

“The subsidies – over $16 billion in the past decade alone – have enabled Qatar to expand at a rate that would have been impossible otherwise and to remain in business in spite of its poor financial performance,” the report states.

The specific allegations include:

  • $8.4 billion in loans that were “unsecured and interest-free with no fixed repayment schedule,” many of which were ultimately forgiven;
  • $6.8 billion in loan guarantees. By promising other lenders that it would bail out Qatar Airways if it ran into financial difficulties, the government enabled the carrier to continue raising money despite being otherwise uncreditworthy by US standards;
  • $452 million in free land. A 2011 financial report is said to show that the airline was given three plots of land by the government that it sold off two years later;
  • $616 million in airport fee exemptions and rebates. Passengers transiting through Doha are exempt from a QR40 fee levied on other departing passengers, which disproportionately benefits Qatar Airways, the only carrier that has such passengers. Additionally, financial statements are said to show various rebates that appear to be refunds to Qatar Airways of the passenger fees assessed on airlines using the airport;
  • $215 million in airport revenues. Qatar Airways apparently receives the proceeds of various airport operations such as parking and facility rentals without shouldering any of the associated expenses; and
  • $22 million in grants for “incentives and route subsidies.”

Additionally, Qatar Airways is accused of receiving “unquantifiable benefits” from its monopoly on alcohol sales in the country through its Qatar Distribution Co. division.

Takahiro Hayashi/Flickr

Hamad International Airport

The report also asserts that the landing fees at Hamad International Airport “are among the lowest in the world, and far too low to cover the airport’s capital expenditures.”

In other words, Qatar Airways’ rapid growth was helped by the government’s multi-billion dollar financial support of HIA’s construction.

The national carrier has not yet specifically commented on the report that was released Thursday.

However, questions have been raised over what exactly constitutes an unfair “subsidy.” For example, some aviation observers have pointed out that some US carriers have benefited from American bankruptcy protection laws that allow companies to continue operating as they restructure.

Last month, Al Baker didn’t deny that Qatar Airways received money from the government, but characterized it differently:

“We don’t receive any subsidy. What the government has given us is equity into an airline which it owns.”

Implications

The US carriers disagree with Al Baker’s interpretation and, citing the World Trade Organization’s definition, argue that the financial infusions amount to subsidies that violate the spirit on the Open Skies agreements.

Mike Mozart/Flickr

For illustrative purposes only

This, critics charge, runs counter to US aviation policy, which seeks to “(e)nsure that competition is fair and the playing field is level by eliminating marketplace distortions, such as government subsidies…”

Furthermore, the Open Skies agreement between the US and Qatar states that airlines in both countries should have “a fair and equal opportunity” to compete.

If the US airlines are successful in convincing American lawmakers to renegotiate the agreements with Qatar and the UAE, the Gulf carriers could face restrictions on the number of US flights they’re allowed to operate.

That’s currently the case with other countries such as Canada, which limits Qatar Airways to three weekly flights to Montreal despite the airline’s interest in expanding service to the country.

Boeing 777-8X & 777-9X

Boeing

Boeing 777-8X & 777-9X

However, it’s not clear how much popular support the American carriers have in the US in their fight against the Gulf carriers.

They are among the largest customers of US plane manufacturer Boeing, which has benefited from the airlines’ rapid expansion.

Meanwhile, the success of the Gulf carriers in the US has shown that many American passengers prefer the service offered by Qatar Airways, Emirates and Etihad over their own country’s carriers.

Thoughts?