WEBVTT - Europe Defence Lobbyist Talks Military Spending, Political Roadblocks

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<v Speaker 1>Now. Shares and defense companies rallied on Monday, and European

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<v Speaker 1>bonds slipped on the growing expectation of more military spending

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<v Speaker 1>in Europe and potentially more government borrowing to fund it.

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<v Speaker 1>Joining US now is ASD Secretary General Jan P. The

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<v Speaker 1>ASD is the voice of the European aerospace, security and

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<v Speaker 1>defense industries based in Brussels. Yeah, thank you so much

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<v Speaker 1>for joining us this morning. Your members must be gearing

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<v Speaker 1>up for more defense spending. Do you have any idea

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<v Speaker 1>of how much defense spending we could be seeing?

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<v Speaker 2>Well, it's difficult for me, so first of all, thank

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<v Speaker 2>you for inviting me. It's difficult for me to actually

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<v Speaker 2>point the numbers on how much we would be seeing.

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<v Speaker 2>But we expect the major race in the defense spending

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<v Speaker 2>on the European side. I think what we're looking at

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<v Speaker 2>is to pay the price for the underinvestments indicates if

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<v Speaker 2>the US is pulling out, and obviously this is going

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<v Speaker 2>to be for European industry to ramp up and to

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<v Speaker 2>deliver towards what would be expected from member states to

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<v Speaker 2>be able to continue first of all the support to

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<v Speaker 2>themselves and to continue to support their support to Ukraine.

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<v Speaker 2>I think we are in for a very tough situation.

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<v Speaker 2>But the further you would push that down the line,

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<v Speaker 2>the tougher it would be. And I think at the

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<v Speaker 2>same time, it's evident that we have extremely good examples

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<v Speaker 2>of how quickly European industry can ramp up when we're

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<v Speaker 2>given the orders. We see that on the ammunition side,

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<v Speaker 2>with the Iran metall as an example, gearing up from

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<v Speaker 2>seventy thousand rounds of one fifty five millimeter ammunition to

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<v Speaker 2>one point one million in five years. We see sab

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<v Speaker 2>Net recruiting six three hundred employees in only two years,

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<v Speaker 2>and we see MBDA, and the list could be made long.

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<v Speaker 2>MBDA is making a lot of own investments. So when

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<v Speaker 2>we're getting the orders, the industry is ramping up quickly.

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<v Speaker 2>The problem today is that for the bigger systems, for

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<v Speaker 2>the bigger platforms, we don't get the orders. There's a

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<v Speaker 2>lot of policy making, a very little action on the

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<v Speaker 2>European side.

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<v Speaker 3>President Trump, though, who suggested that you can buy US

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<v Speaker 3>made weapons to give to Ukraine to use for themselves

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<v Speaker 3>as well, are you concerned that there will be pressure

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<v Speaker 3>on Europe to buy American Are you concerned that domestic

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<v Speaker 3>European manufacturers will be bypassed.

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<v Speaker 2>And that's absolutely a major concern. I think there will

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<v Speaker 2>be a huge political pressure for European leaders to place

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<v Speaker 2>the orders there on the US market, and I think

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<v Speaker 2>this is one of the biggest mistakes and failures Europe

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<v Speaker 2>can do. If you want to have a sustainable and

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<v Speaker 2>strong and non dependent European defense industrial base, the only solution,

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<v Speaker 2>the only way to get there is to place the

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<v Speaker 2>investments on the European side. So I think what our

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<v Speaker 2>leaders need to do is to stay firm against that

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<v Speaker 2>and actually invest in the European defense industry.

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<v Speaker 1>When we're looking at investments in the defense industry, are

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<v Speaker 1>you having your eye on whether Europe will agree to

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<v Speaker 1>joint financing for this debt? Is that something as something

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<v Speaker 1>in your view, can make the amount of defense spending

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<v Speaker 1>even larger.

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<v Speaker 2>It's one of those things where it's a bit difficult

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<v Speaker 2>for us to have a view on exactly how things

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<v Speaker 2>should be done when it comes to the scope or

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<v Speaker 2>the size of the spendings that needs to be done.

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<v Speaker 2>It's really a political issue. We try to deliver when

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<v Speaker 2>we get the orders. What we see right now is

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<v Speaker 2>that it seems to be blocking in the system where

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<v Speaker 2>the need is very well identified and the orders are

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<v Speaker 2>still not coming. So indeed there's a huge challenge to

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<v Speaker 2>find the money. What I personally is very concerned about

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<v Speaker 2>is every time I hear that Europe cannot afford to

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<v Speaker 2>build up or ramp up its own defense industrial base

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<v Speaker 2>or defense capabilities in general. I think this is simply,

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<v Speaker 2>if you excuse my language, economy, it's only about priorities.

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<v Speaker 2>Europe has the GDP, it has the economy, it has

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<v Speaker 2>financial strength, but it needs to get it's act together.

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<v Speaker 3>Okay, all right, so it's a strong language on that.

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<v Speaker 3>What do you make then, as you say, Europe knows

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<v Speaker 3>the difficulty. It's a German defense minnester only a few

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<v Speaker 3>months ago talked about Russia's military producing in three months

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<v Speaker 3>what Europe produces in a whole year. How do you

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<v Speaker 3>assess Europe's defense production capacity? Now you've talked about when

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<v Speaker 3>you get the orders you can ramp up. How quickly

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<v Speaker 3>do you think you can really ramp up to a

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<v Speaker 3>level that we you know, potentially needs to deter Russia.

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<v Speaker 2>Well, I think, as said in the beginning, I think,

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<v Speaker 2>first of all, to be very blant and very honest

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<v Speaker 2>this is going to be tough, but I think at

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<v Speaker 2>the same time, European defense industry today as we speak,

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<v Speaker 2>is not challenged at is maximum capacity. Even now. What

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<v Speaker 2>we see is a number of companies that are challenged

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<v Speaker 2>to a hard capacity or high capacity level on certain products,

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<v Speaker 2>but we do have major European players that are not

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<v Speaker 2>even challenged at all. Even the contrary, they could be

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<v Speaker 2>challenged to keep production going at a low rate for

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<v Speaker 2>as long as possible, And an excellent example of that

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<v Speaker 2>is the A four hundred M where we see I

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<v Speaker 2>don't recall the exact numbers, but if I take it

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<v Speaker 2>from my back of my head, roughly some hundred and

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<v Speaker 2>sixty or some one hundred and sixty to one hundred

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<v Speaker 2>and seventy aircraft or something like that has been ordered.

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<v Speaker 2>Three quarters of that has been actually delivered. And now

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<v Speaker 2>maybe with a ten or twelve deliveries per year, there's

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<v Speaker 2>a few more years to go, three or four more

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<v Speaker 2>years to go before before the quarter is filled and

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<v Speaker 2>we don't get new orders. And when the last aircraft

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<v Speaker 2>has been delivered, if Europe then realizes we need more

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<v Speaker 2>four one hundred a four hundred M and the last

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<v Speaker 2>aircraft has already been delivered. The supply chain has been dissolved,

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<v Speaker 2>you lose the capability, so we won't be able to

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<v Speaker 2>ramp up correctly. So my point being that as we speak,

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<v Speaker 2>there are so many companies that are not being challenged

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<v Speaker 2>to their maximum capacity, so it's simple important to have

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<v Speaker 2>that part of the picture as well.

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<v Speaker 1>Are your members focused on making more interoperable weapons across

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<v Speaker 1>Europe or is manufacturing for these products still siloed?

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<v Speaker 2>It is unfortunately siloed to a very large extent. It

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<v Speaker 2>is not what our members want. What we ask for

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<v Speaker 2>on the industry side is harmonization of the military requirements.

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<v Speaker 2>We ask for consolidation. On the demand side, we ask

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<v Speaker 2>for much large, larger procurements. But the consolidation really needs

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<v Speaker 2>to come on the demand side. As long as every

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<v Speaker 2>nation is playing on their own ground, if I may

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<v Speaker 2>say so, dealing with the detailed requirements that the other

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<v Speaker 2>the neighboring nation didn't have, what they don't align budgetary processes,

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<v Speaker 2>et cetera, et cetera. As long as that is the situation,

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<v Speaker 2>we will have a fragmented industry as well. Industry wants

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<v Speaker 2>the consolidation, so get that right, because if we don't

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<v Speaker 2>get it. We believe that we will have a very

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<v Speaker 2>tough being a competitive in the long run.

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<v Speaker 3>Yeah, I mean, and potentially Europe looks to be fragmenting

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<v Speaker 3>already in terms of a core number of countries gathering

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<v Speaker 3>in Paris, and the proposals may be put to a

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<v Speaker 3>wider group in March. But you know, it's that core

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<v Speaker 3>kind of capability that gathered with Immanuel Macon yesterday, including

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<v Speaker 3>I should say the UK. Britain has had a really

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<v Speaker 3>disastrous run in terms of large purchases and in terms

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<v Speaker 3>of acquisition of military hardware. The Public Accounts Committee and

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<v Speaker 3>Defense Committee have called defense procurement in the UK broken

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<v Speaker 3>in twenty twenty three. They call for root and branch

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<v Speaker 3>reform to break a cycle of costly delay and failure.

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<v Speaker 3>Britain supposedly wants to be sort of at the forefront

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<v Speaker 3>of a defense in Europe, maybe even sending troops to Ukraine.

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<v Speaker 3>Is that credible. As far as the industry that you

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<v Speaker 3>lead as concerned that the UK could ramp up enough.

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<v Speaker 2>Well, you know, from our perspective, a UK is a

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<v Speaker 2>very appreciated member of AD and I think roughly the

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<v Speaker 2>UK industry is behind some one third of the middle

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<v Speaker 2>of the industrial defense industry capabilities in Europe as a whole.

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<v Speaker 2>So to us, the UK is an extremely important component.

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<v Speaker 2>It has knowledges, it has skills, it has competency, it

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<v Speaker 2>has technologies that we desperately need on the EU side.

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<v Speaker 2>If iMac so then and vice versa. So the interlinqual

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<v Speaker 2>we think, I know Brexit was a fact and it

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<v Speaker 2>is what it is. We have to live with it.

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<v Speaker 2>We think Brexit was wrong from the very first day

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<v Speaker 2>day and also the our UK members had that feeling

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<v Speaker 2>and our a SD members in the rest of the

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<v Speaker 2>organization had the same feeling. It is what it is.

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<v Speaker 2>We have to live with it. But it doesn't change

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<v Speaker 2>the fact that that UK is part of Europe and

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<v Speaker 2>the industrial corporation across the channel is very strong.

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<v Speaker 3>Terms of a timeline, you know, some parts of Europe

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<v Speaker 3>are it would seem perhaps more on a war footing.

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<v Speaker 3>Obviously Ukraine deeply in conflict for three years. How quickly

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<v Speaker 3>do you think things are going to move in terms

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<v Speaker 3>of the industry expectations now for actual spending. This is

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<v Speaker 3>what the Trump administration is talking about all the time. Action,

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<v Speaker 3>less talk, more action. When do you think the action

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<v Speaker 3>or more spending might actually come through to your mind.

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<v Speaker 2>Well, that is again it's it's a very tricky question

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<v Speaker 2>because it's a political decision making that we're looking for.

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<v Speaker 2>If you, if you, if I take it from my

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<v Speaker 2>perspective and say what would we want to see, we'd

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<v Speaker 2>say that we're already too late, too slow, too little.

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<v Speaker 2>All the orders that would be placed in order to

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<v Speaker 2>have a European defense industrial base that is ready to

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<v Speaker 2>sustain are the members military capabilities if Europe would be

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<v Speaker 2>in a large scale conflict with Russia. Those orders should

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<v Speaker 2>have been placed five years ago, not tomorrow, and still

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<v Speaker 2>we don't see them in place as we speak. We

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<v Speaker 2>see it Frome's we see ammunition, but we see a

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<v Speaker 2>lot of For example, on battle tanks, we only see

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<v Speaker 2>orders to replace those battle tanks that has been sent

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<v Speaker 2>to Ukraine. We don't see orders to increase the stocks

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<v Speaker 2>of battle tanks in Europe. So, from from my perspective,

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<v Speaker 2>what we see is far too slow. The political leadership

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<v Speaker 2>seems to know what to do, but do not dare

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<v Speaker 2>to do it or do not find the finances to

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<v Speaker 2>do it. So it is extremely will it change expectations

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<v Speaker 2>on our side? Is hopefully yes. Of course. This is

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<v Speaker 2>really what we want to see, is that there would

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<v Speaker 2>be a major shift in going from policy making to action,

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<v Speaker 2>and in that perspective, I think mister Trump is absolutely right.

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<v Speaker 3>Okay, yeah, and Pet, thank you so much for your

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<v Speaker 3>time with us this morning. We really appreciate the front conversation.