Alphen, Netherlands. 13 September. There is not much these days on the news that makes me sit up and say, “what”? However, the news that BAE Systems, Britain’s leading defence contractor, is in talks to “merge” with EADS made me sit bolt upright. The proposed “merger” is nothing of the sort. It is a straight forward take-over of BAE Systems by the French and Germans who will together own 60% of the new company. BAE Systems say the imperative is purely business, driven by the massive cuts to the UK defence budget that the British government has foisted on the armed forces. For the French and Germans the imperative is purely strategic; to make the costs of any future British departure from the EU exorbitantly high and effectively kill at birth any hope of an alternative defence Anglosphere.
A few years ago I would have fully supported such a move. In November 2010 Britain joined France at the heart of efforts to better integrate the European defence effort. Falling defence orders and defence cuts were driving up the costs of defence production and with it the cost to the taxpayer of each piece of military kit. Moreover, with Britain, France and Germany representing 88% of all defence-technological research in Europe merging the efforts of Europe’s prime contractors made for some strategic logic.
And then came the Eurozone crisis which has changed all Europe’s strategic and political relationships and shifted Britain from being one of Europe’s big powers to a high-paying, low benefit peripheral irrelevance. This deal will only make a bad situation worse. BAE Systems is not any old company.
Therefore, if PR-Meister Cameron has any political and strategic nous at all (and I am really beginning to wonder) he would understand that London needs as much strategic room for manoeuvre as possible. This is particularly important in the defence realm which for all the damage done by the accountants remains about the only ‘strategic’ card London can play in the re-ordering of European power that is taking place.
And yet, the very day European Commission President Manuel Barroso calls for more treaty changes and a federation of European states BAE Systems announces that it is seeking to tie Britain into a political Europe that Britain and the British people want no part of. The political implications of this move will not have been lost on Paris and Berlin.
Furthermore, BAE Systems has spent years making itself a player in the dominant US market. Not only would such a merger raise profound questions about BAE Systems access to US contracts, be it as a prime contractor or as a partner, the EADS takeover will raise serious doubts in the American mind as to whether Britain can any longer be trusted with sensitive defence-technological information.
London is making much about guarantees and ‘golden shares’ but in reality when the takeover is complete Britain will find the defence-industrial tail wagging the defence-strategic dog. The usual meally-mouthed nonsense has of course been uttered about protecting the national interest. A spokesman (who are these people?) said, “Given the nature of the companies’ activities we would of course want to ensure that the UK’s public interest was properly protected”. And yet the Government feels unable to veto this deal as it is purely of a business nature. It is not!
This is simply another example of an incompetent government that does not understand the strategic implications of its own weakness sacrificing the strategic long-term for the balance-sheet short-term. Can you imagine a French or German government being as supine? Absolutely not!
By all means deepen defence collaboration BETWEEN BAE Systems and EADS and indeed between Britain, France and Germany, as there is a long and by and large successful history of such joint ventures. However, to permit Britain’s one true defence prime contractor to be effectively taken over by a company that operates under the edict of two foreign governments who have shown themselves to be less than friendly to Britain of late is utter folly. Two governments who are spearheading a political venture that is increasingly at odds with Britain’s strategic interest. When will British governments realise that the job is not to keep foreigners happy, but to stand up for the British people and their strategic interests?
London has led Britain into the worse of all Euro-worlds. The relationship between costs and benefit of EU membership for Britain is already so distorted as to render Brussels an appalling tax on British jobs and society. Britain gets nothing from the EU; it is about to get even less.
BAE Systems is selling Britain down the Euro Drain. The British Government is letting it happen. This is a strategic error of the first magnitude - the wrong decision at the wrong time. Why am I not surprised?