Europe First

Scholz echoes French call for EU defense to cut US dependency

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German Finance Minister Olaf Scholz struck the axe into another pillar of the trans-Atlantic bridge on Wednesday. Visiting his French counterpart Bruno Le Maire, he urged a consolidation of Europe’s defense industry to make the European Union less dependent on US suppliers.

Without directly mentioning Donald Trump, Mr. Scholz said he could not rule out the collapse of established alliances within the United Nations or NATO. The US president has criticized both organizations. “We need a common approach to military equipment,” Mr. Scholz said at a business conference near Paris, where he met with Mr. Le Maire. It would require consolidation of Europe’s weapons makers “including mergers” across different EU nations, said the German minister.

His call for more European cooperation followed Monday’s announcement by French President Emmanuel Macron for Europe to take responsibility for its own defense. “Europe cannot rely on the United States only for its security,” Mr. Macron told ambassadors in Paris. “It’s up to us to meet our responsibilities and guarantee our security, and therefore European sovereignty.”

Both Mr. Macron and Mr. Scholz’s messages align with a new trans-Atlantic policy outlined last week in Handelsblatt by German Foreign Minister Heiko Maas. The Trump presidency has further widened the divide between the US and Europe, requiring Germany, France and other EU nations to draw together and offer a counterweight to Mr. Trump’s whims and the United States’ retreat from the international stage, Mr. Maas said.

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Mr. Scholz’s call will not immediately lead to cross-border mergers in Europe, where military contractors are by and large national players. Mr. Scholz, who is also vice chancellor, noted that 80 percent of military procurement and 90 percent of defense research in the EU took place at the national level. The US, he said, deploys 30 weapons systems, while the EU has 178.

Examples of pan-European mergers in the industry are rare. The merger of German tank maker Krauss-Maffei Wegmanna and French peer Nexter faced some hurdles before the two joined forces in 2015. German weapons maker Rheinmetall last year decided to cooperate with US peer Raytheon, while Germany’s MBDA has been mandated to develop a new air defense system together with US peer Lockheed Martin. Plane maker Airbus, which started as a Franco-German project in the 1970s, is a positive example of European cooperation, although its A400M military transport jet has been plagued by cost overruns and delays since the project was first started in 2003. It prompted Germany and France to order planes from Lockheed Martin.

Despite these setbacks, the EU’s defense policy is headed in a clear direction: Europe first. German Defense Minister Ursula von der Leyen has repeatedly indicated that she wants companies to form consortia or to merge so that they can compete with US companies in bids for upcoming contracts. Chancellor Angela Merkel has already reached an agreement with President Macron to produce a joint French-German tank and the order could reach €40 billion, if widely adopted across Europe. The two leaders also want their countries to develop a new generation of fighter jets and combat helicopters, while Berlin is looking into developing a Euro drone.

European defense forces are also teaming up: Some 25 EU member states last year set up a new organization, called Permanent Structure Cooperation (PESCO) to advance defense cooperation. It will initially have access to €5.5 billion to fund joint military research projects and purchase defense assets together to cut procurement costs. Last spring, the EU also set up a joint European command center, which operates separately from the trans-Atlantic NATO alliance. The ultimate goal: A — Trump-free — European Defense Union.

Martin Greive and Jan Hildebrand are Berlin correspondents for Handelsblatt. Darrell Delamaide and Gilbert Kreijger adapted this article into English for Handelsblatt Global. To contact the authors: grieve@handelsblatt.com and hildebrand@handelsblatt.com.

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