MBDA official: Defense industrial cooperation must survive Brexit

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MBDA official: Defense industrial cooperation must survive Brexit

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MBDA official: Defense industrial cooperation must survive Brexit
By: Pierre Tran 10 hours ago MBDA official: Defense industrial cooperation must survive Brexit MBDA official: Defense industrial cooperation must survive Brexit A European Union flag, with a hole cut in the middle, flies at half-mast outside a home in Knutsford Cheshire after the Brexit referendum results, in Knutsford, United Kingdom. (Christopher Furlong/Getty Images)

PARIS — The European Union should ensure Britain’s withdrawal from the group will not weaken defense cooperation at a time when “critical mass” in the arms industry relies on close cross-border work, said the secretary general of missile-maker MBDA.

“It is absolutely fundamental — whatever the conditions for Britain leaving the European Union — that the European Union in its negotiations with Britain in the coming months find an intelligent means to ensure, at least for defense, that Brexit … does not have any impact and that we can work as we did before,” Olivier Martin said Nov. 16 at the conference “Financing Defense: What solutions for what requirements.”

BAE Systems, which holds 37.5 percent of MBDA, will be a “non-European” company in a few years when Brexit — or the British exit from the EU — goes into effect, he said. Airbus also holds 37.5 percent stake in MBDA, with Leonardo owning 25 percent.

MBDA and other companies, including Thales, stood to be hit if the EU took a strict view of what constituted a European company.

Concern over the terms of Brexit have risen, with British media reporting London was ready to pay double its leaving bill to £40 billion (U.S. $53 billion) in a bid to win favorable terms of trade with the other 27 EU member states.

A little-known but significant Anglo-French partnership lies with the Materials and Components for Missiles, Innovation and Technology Partnership, a research and technology program set up 10 years ago, Martin noted.

“Today, missiles we are preparing for the present generation benefit from results of studies launched some 10 years ago,” he said. “So in reality, it works.”

There is an annual €13 million (U.S. $15 million) for research and technology, with funding split 50-50 among government and industry, he said. Firms in the supply chain, research centers, small and medium enterprises and startups can apply for funds.

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France and Britain cooperated on the Storm Shadow/SCALP program, which allowed Paris to buy 500 cruise missiles on a smaller budget than the amount previously planned for 100 units, he said.

“That can be measured in tangible terms,” he said.

The Meteor air-to-air missile was a second example of European cooperation, he said, with funding from six countries and arming three fighters — the Gripen, Eurofighter and Rafale. The weapon is a “best seller” that has attracted attention of several countries including the U.S., he added.

The EU is now pushing for defense industrial cooperation, but the detailed terms remain to be adopted.

For instance, Ratier Figeac, a propeller maker and one of the oldest names in French aviation history, is a subsidiary of United Technologies Corporation, conference attendees were told. Could such a foreign-owned company apply for EU funding for research and development?

Issues such as ownership of intellectual property, independent governance and a head office in Europe are key elements in a European company status, Martin said.

“Well-executed European defense cooperation will not be easy but is a significant factor to reaching critical mass,” he said, essentially saying that national champions are too small to compete in the world market.

Anglo-French cooperation “through Lancaster House generally works well from our point of view,” he said. Cooperation with Germany is also being pursued, following an agreement signed in July. And 23 EU countries have signed a defense cooperation agreement, known as permanent structured cooperation, or PESCO, he said.

Defense cooperation calls for certain key conditions, including sharing the same policy, operational requirement, timetable and export rules, he said.

The conference at which Martin spoke is an annual event held by Defense Economy, an academic research office, backed by the French Armed Forces Ministry and industry, namely MBDA, Naval Group, Renault Trucks Defense, Safran and Thales.


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