If there is one lesson to learn from the spectacular collapse of the proposed merger between BAE Systems and EADS, it is that we jeopardise our special defence and intelligence-sharing relationship with the United States at our peril.
The primary motivation for BAE attempting to join forces with EADS was commercial. At a time of shrinking defence budgets in Britain, Europe and America, this country’s largest defence contractor was keen to get a slice of EADS’s booming civil aviation market. For his part, Tom Enders, the former German paratrooper who heads EADS, hoped the link-up would lead to the creation of a European defence and aerospace giant capable of competing with powerful American rivals, such as Boeing and Lockheed Martin.
If the £28 billion deal made good business sense – on paper, at least – the implications for Britain’s long-term security requirements were less obvious. Executives at BAE insisted that, if the deal had proceeded, EADS would have needed to provide cast-iron guarantees that the company’s involvement in key British defence projects, such as replacement of the Trident nuclear deterrent and development of the F-35 Joint Strike Fighter for the Royal Navy’s new generation of aircraft carriers, would be very limited.
Both these projects depend heavily on close cooperation with Washington, as does the bulk of BAE’s business. We rely on America for the missile technology that delivers Britain’s nuclear warheads, while our participation in the development of the F-35 is predicated on the assumption that Britain will remain Washington’s most valued ally when it comes to tackling future global security threats.
But I doubt that the Pentagon would have retained its interest in pursuing these joint ventures if French and German directors of the new company had become involved. Defence cooperation between Washington and Paris has never been close, a situation that dates back to France’s Gaullist refusal to integrate fully into Nato’s command system. Reservations about working with Germany, on the other hand, stem from Berlin’s refusal to support US-led military operations. Having vociferously opposed the 2003 invasion of Iraq, the Germans refused to back last year’s Nato mission to overthrow Muammar Gaddafi.
Indeed, I am told that the main reason the merger collapsed was because of Chancellor Angela Merkel’s distaste for linking Europe’s most successful civil aviation company to one that specialises in building weapons systems. For all the arguments about whether the new headquarters should be based in Munich or London, and how many shares the French and German governments could own, it seems the Germans pulled the plug on the deal because Mrs Merkel did not want her country to be involved in a global defence conglomerate, an attitude that does not augur well for Europe’s future defence needs.
In an era when military budgets are under pressure throughout Europe, increased cooperation between the main European powers is deemed essential if we are to retain the ability to defend ourselves. But the prospects are hardly encouraging when countries like Germany are not prepared to get their hands dirty to provide us with the means to do so. Thankfully, the Americans have no such qualms about building world-beating weapons systems – a good reason for Britain to stick close to its transatlantic partner, and not to jeopardise the relationship with ill-considered deals.
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