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PARIS: Pentagon threatens to cut out European suppliers

The US Department of Defense (DoD) is considering a range of responses – including threatening to cut out European companies from its supply base – should the EU adopt policies that prevent American companies from being able to compete for contracts within joint European military projects.

During a 48h visit to the Paris air show, Ellen Lord, undersecretary of defense for acquisition and sustainment, said she plans to hold bilateral meetings with representatives of seven different European nations, as well as a number of European companies, to underline the USA’s concerns about the EU’s European Defence Fund (EDF) and the Permanent Structured Cooperation (PESCO).

“The US is very concerned about provisions in EDF and PESCO that limit the US and other third parties outside of the EU in terms of participating in programmes moving forward. We want to make sure that we are interoperable with our partners and allies. Working together is of critical importance,” says Lord. “Right now European companies enjoy an enormous amount of business in the US, and we want to make sure that US companies have the same opportunity.”

At the show Lord plans to meet with around a dozen companies, including a number of prominent European defence manufacturers, to raise the USA’s concerns.

Lockheed Martin

Airbus Defence and Space CEO Dirk Hoke believes a German acquisition of the F-35 is “a threat” to the Franco-German Future Combat Air System (FCAS)

“Many of the European companies that we have spoken with were unaware of the situation that exists and some of the unintended consequences,” she says. “I had a meeting with Thales this morning. And we had very productive discussions, because they frankly were unaware of the concern that we had as the US.”

The USA interprets the EDF and PESCO policies as shutting out US defence manufacturers completely.

“As we read the language right now, even European-based subsidiaries of US corporations, with European facilities and European employees, would not be allowed to participate with intellectual property exchange and a number of other issues of programmes that grow out of EDF – and more importantly PESCO,” Lord says.

Lord stresses that the USA has no plans for swift retribution against EU and hopes the disagreement can be worked out.

“We are not rushing to any conclusions. We are not rushing to any actions,” she says. “At this point there is no intention of doing anything abrupt or disruptive.”

Still, Lord’s whirlwind tour of European countries and defence manufacturers comes at a time when some a presenting the USA’s defence industry as unwelcome competition. At a pre-Paris briefing on Friday, Airbus Defence and Space CEO Dirk Hoke said he still believes a German acquisition of the F-35 is “a threat” to the Franco-German Future Combat Air System (FCAS). “If Germany buys [the F-35], French and German co-operation will fail. We firmly believe it is not a choice for Germany,” he warns.

On the flip side, American involvement with FCAS, or the UK’s notional sixth-generation fighter, the BAE Systems’ Tempest concept, is so far small.

“Personally, I don’t know enough about them,” says Will Roper, assistant secretary of the air force for acquisition, technology and logistics. “We’ve had a couple of initial discussions, but that’s very different from being given the full technical details.”

Lord says she doesn’t plan to have any conversations about FCAS or Tempest with France, Germany or the UK. “I have not yet had any conversations this week on that,” she says. “That isn’t on my agenda right now.”

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