They cancelled the contract to allow Boeing a chance to re-bid (even though Boeing was part of the bidding process before). Airbus had won the contract fair and square four months ago as the Airbus air-fueling tankers are superior than the Boeing version. But Boeing complained, stating jobs would be leaving the USA. According to the Times, some of the people lobbying for the Airbus contract to be torn up were Obama and McCain.

Of course we were used to this from Bush - remember the steel tariffs which hurt Corus? The Americans only backed down on them when the EU decided to wade into the argument and threatened retaliatory tariffs on American goods entering the entire EU. When faced with the entire EU instead of just little ole Britain, the costs to American business were brought home, and suddenly Bush changed his mind.

But interesting to see Obama playing the same game. It makes you think that not much will change on Nov 4th even if there is a new President. Protectionism is back.  

This time there isn't anything the EU can do to help, as no tariff has been applied illegally, and hence no treaty breached. Instead, the Americans have claimed to have found "irregularities" in the way the Pentagon conducted the previous bid, and they will then find reasons to award to Boeing despite their inferior plane.

Perhaps we should refuse to award defence contracts to Americans, reserving them only for European companies.