The CIA and the U2 Spy Plane
This is perhaps the most compelling of the speculations that surround the Arrow’s demise, and is well developed in Palmiro Campagna’s book Storms of Controversy. It wasn’t well-known in the late 1950s that the CIA had already developed the U2, a top-secret plane capable of flying at 70,000 feet, much higher than any plane besides the Arrow. The U-2 was billed as a weather plane but it was already overflying countries around the globe for surveillance and espionage purposes. The technology of the Arrow, were it to fall into the 'wrong' hands, could allow other aircraft to challenge the U-2. If another country acquired, bought or even captured an Arrow, they might have been able to uncover and match the American surveillance game.
Another interesting connection is that the head of the CIA, Allen Dulles, was the brother of John Foster Dulles, the U.S. Secretary of State who advised Defence Minister George Pearkes that the U.S. wouldn’t purchase the Arrow. Palmiro points out that the Secretary of State was privy to all the details concerning the Arrow, and knew full well that because of the antipathy towards the costly program within the Canadian government, the Arrow would collapse without U.S. sales. If it was contrary to U.S. interests for the Arrow to proceed, no ‘pressure’ was necessary to kill the program – the U.S. could simply balk at buying. Indeed, Campagna records that the USAF, perhaps signaled by the CIA, started to cool off just as the first flights were being flawlessly completed.
The Arrow was threatening to the U-2 in more ways than simply as an example of industrial excellence. As mentioned, sales of it could lead to the U-2’s secret mission being disclosed. (This did finally happen in 1960, when a U-2 was shot down over Russia). The Arrow program was also dominating the world’s supply of titanium, a metal in short supply in the late 50’s, and the U.S. was already planning the Blackbird series of high-altitude supersonic reconnaisance craft, which would require a lot of titanium. Plus there was the risk of the Soviets obtaining the secrets of the Arrow, through espionage or by downing one. All in all, there was little advantage to be gained by letting the Canadians develop a supersonic high-flying fighter.
Crawford Gordon v. John Diefenbaker
This theory suggests that Diefenbaker had a problem with Crawford Gordon, the flamboyant and tempestuous head of Avro, and this affected the decision to bring the Arrow down. Crawford Gordon was one of C. D. Howe's "bright young men" who were responsible for the impressive industrialization of Canada during the Second World War. Dief was well known for his dislike of Liberal C. D. Howe and his proteges. There was no shortage of distrust between Avro and the conservatives, mutual on both sides, and it seems that a personal feud over the Arrow did develop between Crawford Gordon and Diefenbaker. There are a variety of stories of stormy meetings between the two (complete with a model of the Arrow being hurled against a wall). Diefenbaker, a small-city lawyer from the prairies suspicious of industrial Ontario, also had a reputation for vindictiveness.