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27-02-05, 11:40

Europe Wants China Sales but Not Just of Weapons


FRANKFURT, Feb. 23 - To some critics, Europe's plan to lift its arms embargo on China is simply a way to make sure its weapons makers claim a slice of one of the world's largest military budgets. But much more is at stake in Europe's decision than whether it sells French fighter jets or German submarines to Beijing - namely broader commercial ties and some genuine diplomacy.

That, political and military analysts here say, is why European leaders appear ready to defy the United States, which opposes lifting the embargo. The conflict has bubbled up during President Bush's visit here this week, injecting a discordant note into his otherwise harmonious tour.

"Europe wants to sell cars and perfume in China," said Willem van der Geest, the director of the European Institute for Asian Studies, a research group in Brussels. "Its nonmilitary economic objectives weigh far more in this decision than any gains it would get from selling arms."

Beyond improving Europe's commercial prospects in China, Mr. van der Geest said, lifting the embargo has become a symbol of the European Union's efforts to deepen its relationship with China, which it views as a strategic partner rather than merely an ally.

"Going back on this would be a major setback to E.U.-China relations," he said. "The Chinese would take it very badly."

European leaders seem determined to act soon, perhaps as early as June, though they promise to scrutinize the sales to keep particularly advanced technology out of Chinese hands.

"Europe intends to remove the last obstacles to its relations with this important country," President Jacques Chirac of France said Tuesday, after Mr. Bush expressed "deep concern" about such a move.

Few analysts question that China will be an eager consumer of weapons in coming decades. The Pentagon estimates China's military-related spending at $50 billion to $70 billion. (By contrast, the United States, which has the world's largest military budget, will spend about $500 billion on the military and activities in Iraq and Afghanistan this year.)

For years, China's trade has been dominated by Russia. Israel is China's second-largest supplier, and its role has particularly troubled American experts because it specializes in technologically advanced equipment, like drone aircraft.

Such equipment, the United States worries, could tilt the security balance between China and Taiwan. Washington has supplied Taiwan with enough armaments to discourage Chinese attack.

Neither Russia nor Israel observes the embargo, which was imposed after China's leadership massacred pro-democracy demonstrators in Tiananmen Square in 1989. France and Germany do observe it, but even so are believed by some experts to be the next largest suppliers to China, though with much smaller sales..

Like many embargos, this one is porous; some governments have allowed military suppliers to sell to China. Military experts say China has been able to buy engines for fighter planes from Rolls-Royce, the British company, and Allison, an American manufacturer.

"The sanctions regime, both on the part of the Europeans and the Americans, is applied somewhat selectively," said Robert Karniol, Asia-Pacific editor of Jane's Defense Weekly in Bangkok.

Executives from French military companies have begun traveling to China, overcoming years of being blacklisted by Beijing for selling Mirage fighter planes to Taiwan more than a decade ago.

If China were allowed to trade freely with Europe, Mr. Karniol said, it would probably seek to buy advanced weapons systems rather than tanks, fighter jets or submarines. After decades of investment, China is able to build much of its war-fighting equipment domestically.

That would still leave plenty of room for European suppliers that specialize in defense electronics.

In keeping with its strategy in nonmilitary industries, China would probably seek to form joint development projects with the Europeans. That would give it faster access to their technology, which is precisely the development most feared by strategic planners at the Pentagon.

The question is whether the Europeans would risk antagonizing the United States to make such deals. BAE Systems, Britain's largest military contractor, sells more than $5 billion a year to the American military, making it the Pentagon's 12th-largest supplier. It has 30,000 employees in the United States.

"America is where we're looking for our growth," said Charlotte Lambkin, a company spokeswoman. "If that becomes mutually exclusive with doing business in China, then we will go with the U.S."

Ms. Lambkin said her company viewed the arms embargo as a "government-to-government issue," but was sympathetic to the Bush administration's concerns about the transfer of technology to China. "We've encouraged the U.K. to replace the arms embargo with a stricter system of export restrictions," she said, referring to the United Kingdom.

Officials at another defense company, EADS, or the European Aeronautic Defense and Space Company, voiced similar views, though they said their company could not be as public because it is French- and German-owned. France and Germany have been the most vocal in their support for lifting the embargo.

"Most of the European defense firms that do business with the Pentagon stand to lose more than they gain from selling to the Chinese," said Loren Thompson, a military analyst at the Lexington Institute.

Still, there are powerful incentives for cooperating with China. EADS and BAE Systems jointly own Airbus, the aircraft maker that is in a fierce global battle with Boeing. China Southern Airlines recently ordered five Airbus A380's, the company's new superjumbo jet.

Chinese orders are crucial to the success of the A380, and decisions on new planes are notoriously political. Mr. Chirac has traveled to China twice in recent years to promote Airbus and other French companies.

Chancellor Gerhard Schröder of Germany has also made pilgrimages to China, riding on a futuristic train in Shanghai that was built by a German company and helping to open a Mercedes car factory there.