* Poland cancels multi-billion-dollarzloty helicopter deal
* French company threatens legal action
* Polish officials say offer was not viable economically
By Pawel Sobczak and Marcin Goettig
WARSAW, Oct 12 Poland's government has blamed
Airbus Helicopters for the breakdown last week of a
multi-billion-dollar deal, escalating a row that is likely to
fuel tension with foreign investors and delay massive army
Airbus has accused the Polish government of shifting the
goal posts as it competed with U.S. and Italian rivals to sell
Poland multi-purpose helicopters. On Tuesday, it threatened
legal action over the cancellation of the contract.
Defence Minister Antoni Macierewicz said the French company,
not the Polish government, had walked away from talks, and
Airbus should compensate Poland for any financial losses.
The decision appears to be the latest effort by the year-old
government to make eastern Europe's largest economy less
dependent on foreign money. But it adds to mounting displeasure
with Poland in western Europe.
The country's euro-sceptical government opposes the European
Union's immigration policy and has tried to reform the
Constitutional Court, which western governments see as a threat
to democratic checks and balances.
By souring ties with France, NATO member Poland also risks
losing an important ally in its push for tough EU policy toward
Russia, just as Moscow is flexing its military muscles by moving
nuclear-capable missiles into the Kaliningrad enclave bordering
Macierewicz defended the economic rationale behind the
cancellation, saying the Airbus offer had been expensive and
offered insufficient offsets - agreements by a seller to buy
products from a customer that typically go with defence
"The contract was geared towards the French producer and
disregarded the Polish producer," Macierewicz told the
broadcaster TVP Infor. "There is a question of compensation here
which Poland should seek."
MILITARY FUTURE, DOMESTIC POLITICS
The helicopter deal is part of a $40 billion long-term army
refurbishment project. It aims to bring Poland's largely
Soviet-era military hardware up to NATO standards.
Poland's former government, in power until October 2015
election, had provisionally selected Airbus to sell it 50
Caracal multi-role helicopters, as part of this effort.
Before winning the October election, the Law and Justice
party (PiS) had criticised the Airbus talks, accusing the
government of putting local industry at a disadvantage.
Grzegorz Schetyna, the head of the former ruling party,
Civic Platform, in turn questioned an announcement on Tuesday
that the government would buy military helicopters from
factories in the Polish towns of Mielec and Swidnik. Both are
areas where PiS enjoys strong public support.
The two factories are controlled, respectively, by Sikorsky
Aircraft Corp, a unit of Lockheed Martin Corp, and
AgustaWestland, part of Italy's Leonardo-Finmeccanica.
"We don't know what led to these decisions," Schetyna was
quoted as saying by the newspaper Gazeta Wyborcza on Wednesday.
"The public must know the details of this grim story which
takes us out of the EU and turns us into a 'banana republic'
where procedures and law ... are not obeyed."
PiS officials have not specified whether the helicopters
from the Mielec and Swidnik factories would replace all the
hardware which Airbus would have supplied or whether any new
tenders would called.
Despite public signals that PiS was opposed to the Airbus
deal, French officials appeared surprised by the cancellation.
Discussions over the offset provisions had continued until the
Sources familiar with the discussions said the meeting to
end talks lasted 10 minutes and the French had been handed a
brief letter saying the offer didn't meet Poland's security
($1 = 3.8193 zlotys)
(Additional reporting by Pawel Florkiewicz in Warsaw and Tim
Hepher in Paris, writing by Justyna Pawlak, editing by Larry