Commentary should reflect developments across the aerospace and defence sector, but the most pressing matters are in the defence sphere. This does not mean that the aerospace and aviation sector has been quiescent. The third runway at Heathrow, full year results from Airbus, the travails at Boeing and the continuing quest for ‘jet zero’ are all topics to be examined presently. In the meantime recent developments, and their implications for our defence sector, press in.
The Munich Security Conference
There was much clutching of pearls amongst European policy makers at the recent Munich Security Conference. The idea that anybody was surprised at the pronouncements from representatives of the Trump administration is an indictment of the political reporting from their embassies. Many commentators have been warning that the USA was getting ‘burden fatigue’ dating back to the days when Obama spoke of ‘European free riders’.
Leaving the wider geopolitical conversations about a ‘new world order’ to more expert pundits, Commentary will focus on what this all might mean for the UK’s defence sector.
Trump’s disruptive approach seems to be working, as he has got European policy makers thinking hard about how to organise a European defence that is credible. This is not an opportunity to produce a ‘European army’ as some leaders have mentioned, as NATO already exists. But an increased capability in Europe is needed. The Trump administration is focussed on one real threat, as they see it, which is China. Russia is not their main concern. Getting a settlement of sorts over Ukraine is a way of ensuring that the US does not get dragged into a European war. The statement that the US would veto Ukrainian membership of NATO implies that the US still wants to remain a member of the Alliance.
The newly elected German chancellor has questioned the future of the Atlantic Alliance, echoing Macron’s repeated calls for European strategic autonomy. The UK government may yet find itself having to re-make the arguments for the Atlantic Alliance to its European neighbours.
Any talk of an ‘interim peacekeeping force’ should not deflect efforts by the UK and its European allies to beef up their capability now. Policy makers need to be able to talk about what force generation capability can be assembled in 3 – 6 months, not years.
Money
The consequence of the political and diplomatic conversations at the MSC means that the UK government now has to think seriously about increasing defence expenditure. The UK cannot be a leader in Europe, if its level of defence expenditure falls below what is now being asked from members of the Alliance. Moreover, any discussions about a possible UK contribution to a peace keeping force will need troop levels that the UK cannot provide in the short term. The government and the MOD need to be thinking about the use of the Reserve to meet this need.
What does this mean for the UK defence sector and its supply chain? Even if a peace keeping force does not materialize, the UK will need a credible deterrent capability. If there is a peace deal in Ukraine, Russia will see this as a victory and will use the cease fire as an opportunity to regroup. It will remain a belligerent power for as long as Putin is in control in Moscow. Hitherto the UK government has been taking a Business As Usual approach to its Strategic Defence Review, which is already being dismissed by some observers as a resources led exercise.
The EU is discussing the question of funding defence expenditure, to provide funds for industry to generate the equipment that will be needed. To do this there is a conversation going on about ‘Defence Bonds’. The UK needs to pay attention to this, if the EU does succeed in agreeing to pursue this and they come to the financial market with ‘EU Defence Bonds’ the bankers will all be in. How will the UK government raise the finance it needs to fund public services? Could the UK pursue the same route and issue UK Defence Bonds?
On the topic of money – there are numerous reports from industry sources that defence contractors are not being paid promptly by MOD, despite being on contract. If this is the case, it is shameful. We surely cannot have a defence industry that is starved of cash while bureaucrats sit on their hands awaiting the outcome of the spending review or the Strategic Defence Review. Whilst he was prime minister, Rishi Sunak spoke of putting the UK’s defence industry on a war footing. Surely his successor would agree with this? In which case, let the Treasury step up and pay the bills!
In a speech to the Institute for Government in London on 18th February, the Secretary of State laid out the achievements of the new government. Recent moves to appoint a National Armaments Director and a Military Strategic HQ are welcome, as they suggest a more operational approach to managing the armed forces and the MOD. But a greater sense of urgency will be needed by the tenured bureaucracy if this is to translate into a credible force. There are many learned seminars and conferences taking place about the role of AI on the battlefield, and increasing the lethality of the armed forces. But there is a real need for capability now, if the UK’s place in the NATO Alliance is to remain credible.
A combination of increased force numbers and new equipment will require additional resources. As has been mentioned before in this Commentary series, the government can adopt the same approach to the MOD as it is taking with the NHS; evidence of reform in return for more funds. For its part, industry needs to be ready to bring forward capabilities that can achieve early wins. MOD needs to have an up to date audit of the readiness of the armed forces and its kit holding and state of repair – so it’s ready to ‘fight tonight’!
Margaret Thatcher
In 1975 Margaret Thatcher was elected as leader of the Conservative Party in the UK. Her legacy is still the subject of debate, but her impact on the international scene is undoubted. Her championing of the Al Yamamah contract with Saudi Arabia was a landmark event in helping the UK to secure its presence in a strategically important region. Her personal chemistry with Ronald Reagan, and her role in bringing Mikhail Gorbachev in from the cold, was also significant.
Whilst her personal style was combative – she needed persuading that the UK should be part of the Eurofighter / Typhoon programme, once she was convinced she was supportive. In this new era of ‘strong man’ politics, where are the statesmen and women in the UK now, who can credibly engage with the US and Russia today? Do we have to accept a culture of mediocracy in our political leadership?
Nick Watts
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