Where will the European defence market emerge from?

Participants in a New Defence Agenda conference debated
the future transatlantic defence deals and how a market for
defence equipment can emerge in Europe.

Against the backdrop of a 30-40 per cent increase
in US defence spending over the last four years, a
key question is how much of an effect this
will have in boosting the emerging
European market for defence equipment.

The issue was debated at the New Defence
Agenda conference “Is the transatlantic defence marketplace
becoming a reality?” on 17 January 2005 in Brussels.

Pierre Chao, director of Defence Industry Initiatives for the
Center for Strategic and International Studies (CSIS), spoke
of the need to “pierce through the mythologies” about US
technical superiority and imbalance in the transatlantic
defence market.

“If you look ‘under the hood’ on both sides you will
find European-made components in US defence material and vice
versa,” he said, while stressing that the European landscape
has changed over the past six years with governments backing down
from their previous dominating role and companies becoming
more shareholder-orientated.   

The president of Lockheed Martin Europe, Scott
Harris, shared this assessment of the changes in transatlantic
exchange by saying that the “floodgates are open”.
In an era marked by the fight against terrorism and its
ill-defined enemies, everybody will look for capabilities and
alliances where it is possible, he said. 

Harris described the peculiarities of the defence market where
governments often have the role as both buyer, supplier and end
user. He stated that the problem for the European defence
industry is “that governments don’t buy enough to sustain the
industry, and it can’t exist without it”.

He warned against believing that the recent creation of the
European Defence Agency in itself will do the trick: “The market
cannot be created from Brussels. It will have to come from the
demand side. The European defence industry will also need
access to outside funding.” Harris envisaged painful
restructuring where some companies will have to shut down, as
has already happened in the US.

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