Europe loses out in race to supply weapons to new NATO members

Date: 03/07/1997

POLITICIANS are not the only ones welcoming NATO's present and future rounds of enlargement.

The world's largest defence companies are in a headlong race to secure some of the potentially lucrative markets promised by central and eastern Europe.

By the looks of it, however, the US is already beating Europe hands down.

Although defence budgets in the region are not large by western standards, defence analysts believe that there could be more than 5-billion-ecu worth of trade in aeronautics in the former Warsaw Pact countries, as well as big opportunities in communications equipment.

New NATO members will need to become 'inter-operable' with other alliance troops through upgraded equipment, while those still trying to get in are being subtly convinced by defence companies that top-of-the-range hardware will improve their chances.

“It also seems that the thought for some of these pilots of finally flying an F-16 is too much to resist,” GEC-Marconi's chairman Sir Geoffrey Pattie told European Voice, only half in jest.

Lockheed-Martin has already won the contract to provide “air sovereignty operations centres” throughout the 11 former Warsaw Pact countries, thus securing “the central node out of which all future air defence systems will grow”, according to a report from the Brussels 1997 European Defence Procurement Conference.

The benefits do not all flow one way, however. Hungary, for example, is milking western companies for their technology and other industrial sweeteners in return for promises of future trade.

Nevertheless, in the long term the American military-industrial complex looks likely to emerge, as usual, the big winner.

The dominance of the US in eastern markets marks yet another step in the gradual decline of Europe's defence sector. American companies are in a better position because they are bigger, can cooperate with each other more easily and benefit from strong ties with the US department of defence.

By contrast, EU companies remain strongly bound to their national governments and find it very difficult to cooperate with each other.

MEPs and defence industrialists are warning that, at a time when European defence budgets are falling, it is becoming increasingly difficult for national concerns to keep up with their transatlantic competitors - and time is growing short to reverse that trend.

Ironically, Europe now also has too many defence companies for its markets and unless it manages to keep up with the US in the race for foreign contracts, further cutbacks are likely. Eastern European defence companies are also starting to enter the fray, adding to competition.

While none of this is new, there is an increasing fear that Europe is now facing a last chance to cooperate before its defence industry starts to collapse.

“I cannot help feeling pessimistic,” said Pattie.