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New recruits of the Bundeswehr army, the armed forces of Germany, during basic training on November 29, 2022 near Prenzlau, Germany.
Sean Gallup | Getty images
As Europe plans to pour billions of dollars in defense, many regional leaders are pressing for the money spent locally, but some market observers say it is inevitable that US companies benefit from the imminent security waste.
Last week, a parliamentary vote for Historical Debt Reform He paved the way for a defense spending walk in Germany. Separately, the Prime Minister of the United Kingdom, Keir Starmer, I promised to walk the national spending of Great Britain in DefenseAnd the EU was committed to Mobilize up to 800 billion ($ 867 billion) euros in an attempt to “urgently” increase the safety expense of the block.
“Prioritize European companies,” says the EU
Officials, and companies, have made it clear that they want to keep money within European borders.
An official update on the EU ROARM Europe strategy last week called Member States to “spend better, work together and prioritize European companies.” New spending plans saying The majority of non -member state countries, including the United Kingdom and the USA.
Meanwhile, the CEO of Thales, Patrice Caine, told CNBC Earl this month That Europe should “take their destiny in their own hands” and strive to maintain new defense budgets in the region.
“It’s just a political will to buy European suppliers more and more instead of suppliers outside Europe,” he said in an interview. “The United States provides their defense equipment systems to US suppliers. UU. … Australia does the same, the United Kingdom does the same, so why should Europe do it differently?”
Extremely difficult ‘defense decoupling’
Although the EU seems committed to spending as many defense capital in Europe, maintaining the acquisition only within the region would require considerable change. Several US defense giants currently occupy a great space in the European Military Supply chain.
Lockheed Martin based in Maryland, for example, He has been a supplier from Europe for more than seven decades. In recent years, the firm has been associated with Rheinmetall to provide Germany with a custom rocket artillery system, began the production of a homar-A multiple launch rocket system for the Polish government and sold the air confrontation missiles joint surface to the Netherlands.
The American defense giant Northrop Grumman is another important provider of the European military that has promoted the command and control and control control systems (C2) for NATO and the Ministry of Defense of Britain for 25 years.
Since the beginning of this year, Raytheon de RTX, based in Arlington, Virginia, has won A $ 529 million contract to replace the patriotic air defense system of the Netherlands, as well as a $ 946 million contract To supply air defense systems to Romania.
Michael Witt, international business professor and strategies at the King College London Business School, told CNBC that defense decoupling between Europe and the United States “will be extremely difficult in the short term.”
“Then, certain money will go to the suppliers of us,” he said about the new budgets. “But in the long term, the European defense must be maintained in its own feet, with the least contribution of the United States as possible because the security cooperation of US administrations can no longer be assumed.”
“Of special interest it could be to spend in nuclear weapons to replace the US umbrellas. By Europe: eyelets, delivery systems, etc.,” Witt added in comments sent by email.
The multimillionaire of the United Kingdom TRIDDES NUCLEAR DISMASSION PROGRAM Use missiles built in the United States, and depends on the US for maintenance, According to Chatham’s house in the Think group.
“Continuing depending on the United States for its deterrence seems like a risky option,” said the investigators of the institution in Comment posted Monday. “Trump’s first administration could have seemed an aberration, but its second term may reflect deeper long -term changes in the foreign policy of the United States … Explore options to develop substitute capabilities with European allies can be the next logical movement, despite the challenges.”
Tobias Ellwood, a former United Kingdom politician who held a senior position in the Ministry of Defense of Great Britain during his parliamentary career, also said that the time has come for the United Kingdom to consider reducing its dependence on US manufacturing defense supplies.
“We have to assume that the United States will not be there, that they are marking back,” he said in a phone call. “So what can deny which we are going to have to complete?”
Earlier this month, the United States temporarily Military aid to Ukraine After a public shock between the two leaders of the nations. Washington’s support for Kyiv has resumed since then.
“If things go (below) the trajectory we are seeing, then we can easily see the closure of the defense markets, even our nuclear deterrent element, so there are difficult questions for us,” Ellwood told CNBC.
Capacity problems
However, Europe faces another obstacle to its spending objectives, according to Thierry Wizman, global interest rates and currency strategist in Macquarie Group. He told CNBC that “it may” not be the capacity to prevent new security budgets from reaching US companies.
“The economies of scale in the European defense industry, the highly specialized nature of what is being built and the need to maintain the kit in accordance with NATO standards and interoperability with US systems, which will still be in Europe, all that seems to suggest that a good part can be directed to the United States,” he said in a call.
‘Aggressive’ treatment
Even if the capacity of the supply chain can be solved, American companies could make strategic movements to prevent them from moving away from the growing source of capital in Europe, CNBC, Bill managing director at Brown Gibbons Lang & Company investment bank (BGL).
“It has a situation in which the United States still has a large budget, but potentially it is not growing as fast as what it has, and the dynamics have moved away from larger platforms to smaller and agile companies,” he said in a so -called Farmer, who directs BGL’s activities in the aerospace, defense and governmental services sector.
“While you go to Europe, and there is this great opportunity: the budgets are changing, there is a great opportunity for a greater investment in capital there. Therefore, I think you could see some acquisitions of quite decent size in Europe.”
He pointed out that US defense companies would be “quite aggressive” in the search for agreements with their European peers.
“Leonardo, Rolls Royce, Airbus, SafranSuch: all these have great opportunities in front of them, “said Farmer.” And I think it will see US companies who have conversations with all these people, is there an opportunity for us to make an investment in a company, is it an opportunity for a part of that business to hide us to access that market? “
