June 5 (Bloomberg) -- German Defense Minister Thomas de Maiziere, a confidant of Chancellor Angela Merkel, denied bungling a spy-drone project he halted in May and said extra costs disputed by Northrop Grumman Corp. were partly to blame.
Less than four months before national elections, De Maiziere rebuffed opposition criticism that he was slow to halt the Euro Hawk and wasted taxpayers’ money. Merkel’s government said May 15 it would stop spending for the joint project by European Aeronautic, Defence & Space Co. and Northrop Grumman.
“The decision was right,” de Maiziere said in an advance copy of testimony to the German parliament’s defense committee in Berlin today. “The timing was not too late. Greater damage was averted.” Still, the procurement exposed “deficiencies” that must be fixed, he said.
While Merkel is Germany’s most popular politician, the aborted project associated with one of her most trusted aides risks becoming a liability as she campaigns for a third term in Germany’s Sept. 22 election. Social Democrat Peer Steinbrueck, Merkel’s main election challenger, said that he had come to the conclusion “Germany doesn’t need drones,” Bild newspaper cited him as saying in a speech in Berlin yesterday.
De Maiziere cited additional costs of as much as 600 million euros for airspace certification as one reason for scrapping Euro Hawk. Northrop Grumman disputed the need for extra spending, yet a study by the German government confirmed the cost overrun, he said.
Northrop Grumman had no immediate comment when contacted today.
Germany and the two contractors agreed to develop the drone in January 2007, 14 months into Merkel’s first term. Yet EADS and Northrop Grumman had “such divergent ideas” about the project that this planted “the seed of increasing problems,” de Maiziere said.
A report by Germany’s government auditing office, the Bundesrechnungshof, said the Defense Ministry should have known by 2011 that the technology to ensure the drone’s airspace permit would add to the project’s cost, according to Germany’s ARD public television network.
Merkel and de Maiziere, both members of the Christian Democratic Union party, met around German reunification in 1990. He was Merkel’s chief of staff during her first term between 2005 and 2009 and was named defense minister in March 2011 when Karl-Theodor zu Guttenberg quit after revelations that he plagiarized part of his doctoral dissertation. Merkel sent de Maiziere to attend a crisis meeting of European finance ministers in May 2010 after Wolfgang Schaeuble fell ill.
De Maiziere told lawmakers on May 16 that the government will improve defense contract procedures and pledged to scrap projects “if costs threaten to get out of hand.” Germany signed the Euro Hawk contract in 2007.
The drone is a modified version of the Global Hawk unmanned aircraft used by the U.S. Air Force, with EADS providing the sensor payload after teaming up with Northrop in 2000.
To meet U.S. and German security requirements, Northrop Grumman and EADS separated elements of Euro Hawk work during development. EADS has said that equipment developed for the high-flying spy aircraft can find other uses.
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