New recruits of the Bundeswehr Army, Germany armed forces, during the basic training on November 29, 2022 near Prenzlau, Germany.
Sean Gallup Getty images
When Europe plans to pour billions of dollars in defense, many regional leaders strive to spend money locally – but some market observers say it is inevitable that American companies will benefit from the upcoming security security.
Parliamentary voting last week Historical debt reform He paved the path for a journey with defense expenses in Germany. Separately the prime minister of Great Britain Keir Starmer He swore to wander British defense expensesand the EU has committed itself Mobilize up to EUR 800 billion ($ 867 billion) In order to “urgently” increase block safety expenses.
“Priorittish European priorities,” says the EU
Officials – and companies – explained that they want to keep money within European borders.
Official Updating of the European Strategy Europe last week EU he cried Member States “spend better, cooperate and prioritize European companies.” New expenditure plans he said Most of the countries that are not members-in this United Kingdom and the USA, would be cut off from order processes, unless they signed the partnership and defense partnership agreements with the EU.
Meanwhile, the general director of Thales Patrice Caine said CNBC at the beginning of this month that Europe should “take its destiny to its own hands” and try to keep new defensive budgets in the region.
“It is only political readiness to buy more and more from European suppliers than suppliers based outside Europe,” he said in an interview. “The US is provided by defense equipment systems from American suppliers … Australia does the same, Great Britain does the same – so why should Europe do differently?”
Defense of separation of “extremely difficult”
Although it seems that the EU undertakes to issue as many new defense capital as possible in Europe, maintaining orders only in the region would require a significant change. Many US defense giants currently occupy a large space in the European military supply chain.
For example, Lockheed Martin, Headquartered Maryland, He has been a supplier in Europe for over seven decades. In recent years, the company has established cooperation with Rheinmetall to provide Germany with a non-standard rocket artillery system, began producing the Homar rocket system for the Polish government and sold the Netherlands common distance shells from air to surface.
The US Northrop Giant Giant Northrop Grumman is the next main supplier of European military men who fed command and control systems (C2) for NATO and the British Ministry of Defense for 25 years.
From the beginning of this year Raytheon RTX – based in Arlington, Virginia – he won Contract worth $ 529 million supplement the Air Defense System of the Patriots of the Netherlands, as well Agreement worth $ 946 million provide air defense systems to Romania.
Michael Witt, professor at the King's College London's Business School and the King's College London's School and Strategy, said CNBC that the defense of separation between Europe and the USA “will be extremely difficult in a short period.”
“So some money will certainly go to US suppliers,” he said about new budgets. “But in the long run, European defense must stand on its own feet, with the MIREMEST contribution in the USA, because security of security by US administrations can no longer be established.”
“Expenses for nuclear weapons can be special interest to replace the American umbrella over Europe – heads, delivery systems, etc.” – Witt added in the comments E -Mail.
Multi -billion dollar in Great Britain TRIDENT nuclear deterrent uses missiles built in the USA and depends on the US for maintenance, According to Think-Tank Chatham House.
“Continuation of relying in the United States due to deterrent seems to be a risky option,” said scientists from the institution Comment published on Monday. “Trump's first administration may have looked like aberration, but its second term may reflect deeper long -term changes in US foreign policy … Examination of the option of developing substitute skills with European allies may be another logical move, despite the challenges.”
Tobias Ellwood, a former politician of Great Britain, who held an older position in Great Britain of the Ministry of Defense during his parliamentary career, also said that it was time for Great Britain to consider a reduction in relying on defense inventory in America.
“We must assume that America will not be there, that they are going back,” he said on the phone. “So what can they deny, what will we have to fill in?”
At the beginning of this month, the USA He stopped military assistance to Ukraine after Public clash between two leaders of nations. Since then, it has resumed support for Kiev.
“If everything goes (down) the trajectory we see, we can easily see the closing of the defense markets, even our nuclear deterrent, so there are difficult questions for us,” said Ellwood CNBC.
Capacity problems
However, according to Thierry, Wizman Europe faces another obstacle in its expenditure, global interest rates and currencies at the Macquarie Group. CNBC said that simply “may not be ability” to stop new security budgets from reaching American companies.
“The scale economy in the European defense industry, a highly specialized nature of what is being built, and the need to maintain a set in accordance with NATO standards and interoperability with American systems, which will still be in Europe – all this seems to suggest that a large part can be directed to the USA,” he said at the call.
“Aggressive” conclusion of contracts
Even if problems with the range of ability and supply chain can be solved, American companies can make strategic movements to avoid cutting off the growing source of capital in Europe, Bill Farmer, managing director at Investment Brown Gibbons Lang & Company (BGL), said CNBC.
“You have a situation in which the United States still has a large budget, but potentially does not grow as fast as it has, and the dynamics moved from larger platforms to smaller, more agile companies,” said Farmer on the phone, which conducts BGL activities in the aviation sector, defense and government services.
“While you are going to Europe, and there is a huge opportunity – budgets are changing, there is a great chance to increase investment in capital. So I think that you potentially saw some decent acquisitions in Europe.”
He suggested that American defense companies would be “quite aggressive” in continuing contracts with European peers.
“Leonardo, Rolls Royce, Airbus, SafranThales – all of them have great opportunities ahead of them, “said the farmer. “And I think you will see how American companies are conducting talks with all these people, is it possible for us to invest in a company, is it possible for us to lecture this business to access this market?”