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Defence & Arms Last Updated: Jun 26, 2019 - 2:47:48 PM


Rivalries in the EU Armament Industry
By German Foreign Policy, 06/19/2019
Jun 21, 2019 - 1:24:43 PM

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In the arms industry, tensions between Berlin and Paris are growing as new steps are made to develop the next-generation of EU aerial combat systems. The signing of new agreements concerning the Future Combat Air System (FCAS) on Monday in Paris was overshadowed by warnings from the German Bundestag that companies from Germany must be granted at least 50 percent of the contracts for the development and construction of the FCAS. At the same time, Berlin is seeking to shift the balance of forces involved in the development and construction of a new Franco-German battle tank to Germany's advantage. The battle tank is conceived to be part of the future Main Ground Combat Systems (MGCS), which - like the FCAS - should operate in close conjunction with other weapons including unmanned systems. While the German government is aiming to establish the Franco-German combat systems as a standard within the EU, to channel as much profit as possible to Germany, Great Britain, excluded from the German - French project, is developing its own rival combat aircraft.

 

"An Important Day for the Defense Union"

Berlin and Paris expedited the development and construction of the Future Combat Air System, (FCAS) by signing new agreements on Monday. These included an agreement on the organization and management structure, and the official integration of Spain into the hitherto bi-national project.[1] Parallel to the signing ceremony in the wings of the world's largest air show at Le Bourget, to the northeast of Paris, a first prototype of the combat aircraft was unveiled. It will be the central element of the FCAS, interacting with individual and swarms of drones, and standing in close contact with satellites and surveillance aircraft. This is an "important day for the European Defense Union," exclaimed German Defense Minister Ursula von der Leyen. The FCAS is expected to replace the Eurofighter and the French Rafale by 2040 and, according to Berlin's plans, will become the central aerial combat system of the EU-forces. The costs will be immense, up to €100 billion, according to observers.[2]

Industrial Rivalry for Market Shares

The signing of the agreements was overshadowed by warnings from the German Bundestag. On June 5, its budget committee allocated the first €32.5 million for the FCAS - the German share of a €65 million concept study, prepared by Dassault Aviation and Airbus Defence & Space as an initial step in the development of the combat aircraft. France's Dassault Aviation will be responsible for developing the combat aircraft, FCAS's central element, and Airbus Defence & Space, headquartered in Ottobrunn near Munich, for the development of the entire system, connected and operable with drones, swarms of drones and other elements. Because Berlin fears being outmaneuvered by Paris with the combat aircraft, the Bundestag's budget committee has obliged the German government to impose a 50 percent share of industrial contracts to be distributed to German companies. The development of FCAS must create "an industrial structure based in Germany," according to the budget committee's decision.[3] This should insure that Germany can benefit from at least half of the newly developed technologies and company profits.

European Industrial Leader in Tank Construction

The rivalry for influencing the FCAS is exacerbated by the new German-French battle tank and the corresponding Main Ground Combat System (MGCS). The MGCS is designed as the hub connecting all manned and unmanned vehicles and is centered on the new battle tank, which is under German industrial leadership. The battle tank will be developed and produced by the German-French KMW + Nexter Defense Systems (KNDS). Germany's Kraus-Maffei-Wegmann and France's Nexter Defense Systems established this joint venture precisely for this purpose. Since some time, Rheinmetall, headquartered in Düsseldorf, has been seeking a larger share in the project. Rheinmetall recently assumed the majority portion of a joint venture with the ground vehicle section of Britain's BAE Systems and is now on its way to becoming Europe's leading manufacturer of tanks and military vehicles. (german-foreign-policy.com reported.[4]) It is in this context that Rheinmetall seeks to join KNDS. The acquisition of KMW is also being discussed.

More then €100 Billion

This of course is meeting serious resistance from France. KNDS is based on KMW and Nexter having an equal economic share - that German and French interests remain in balance within the project. Rheinmetall is much stronger. Its entry would seriously tilt the balance of forces to France's disadvantage. This would be all the more serious, given the fact that the new battle tank - as well as the MGCS that will be centered on it - are due to reap huge profits. Recently, KMW director Frank Haun estimated that by 2050, the European market for armored systems and artillery will be more than €100 billion. If KNDS "reaps only half of that," they will be "happy," Haun was quoted.[5] The Budget Committee of the German parliament, with its eye on those tempting profits, has ordered that the KMW/Rheinmetall issue be clarified. According to the committee's decision, it is important to reach "a consolidation of the German land system industry." To increase pressure on Paris, the parliamentarians are insisting that until "agreement on the MGCS is reached," even progress on the German-French fighter jet should be put on hold and "no further parliamentary steps be taken for debating the FCAS."[6]

Inner-European Cracks

The German-French dispute over their national industrial advantages through the EU's planned massive arms buildup is being exacerbated at a time, when, at least, the FCAS is getting competition. Seven European countries have decided not to wait on the German-French FCAS, but to acquire the US American F-35 fighter jets from Lockheed Martin.[7] In addition, Britain's BAE Systems has begun to develop its own state of the art fighter jet. Since 2014, BAE Systems has been working on the project with Dassault, but was forced out of the project by Airbus in 2018. The Brexit disqualifies Britain from participating in setting up the EU's FCAS, it was reasoned.[8] As a result, the British company has joined with other British firms and Italy's Leonardo to begin working on its own aerial combat system. That project goes under the name of "Tempest." It is said to have similar characteristics to the FCAS, however, it is estimated to be already operational by 2035. In the meantime, Sweden is considering joining Britain's Tempest project.[9] In Paris, it was again reported that resuming cooperation with BAE Systems is still an option. If that does not materialize, Britain's exclusion from the EU's FCAS project will not have been to the advantage of German and French industries, but to their disadvantage. Now they must share the European market with serious British competition.

 

[1] Die europäische Zukunft beginnt heute. bmvg.de 18.06.2019.

[2] See also Europas Kriegsautonomie.

[3] Thomas Wiegold: Bundestag billigt ersten Schritt für deutsch-französisches Kampfflugzeugprojekt. augengeradeaus.net 05.06.2019.

[4] See also Rheinmetall im Aufwind.

[5] Gerhard Hegmann: Unten deutsch, oben französisch - Der seltsame neue Euro-Panzer. welt.de 12.06.2018.

[6] Thomas Wiegold: Weitere Vereinbarungen für FCAS unterzeichnet. augengeradeaus.net 17.06.2019.

[7] This refers to Belgium, Denmark; Great Britain, Italy, The Netherlands, Norway and Poland.

[8] Airbus and Dassault to team up on combat fighter. france24.com 25.04.2018.

[9] Gareth Jennings: Sweden confirms UK Tempest talks, ambivalent on Franco-German FCAS. janes.com 21.05.2019.


Source:Ocnus.net 2019

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