After years of delay, work has finally started on putting the UK’s most potent missile onto the Royal Navy’s combat aircraft. To watch the trials, you have to cross the Atlantic, and find a seat on the patio at The Pier restaurant on Solomons Island, Maryland.
The Pier is a good vantage point to see the comings and goings at the nearby Patuxent River air station, where the US Navy trains pilots and tests weapons. It is also where the work is being done on Meteor, a highly-rated European air-to-air missile that will give the UK’s F-35 jets real teeth.
Britain cannot do this vital work itself. New weapons for the aircraft, made by the US defence contractor Lockheed Martin, have to be set up in America. To rub a little salt into UK wounds, the plane being used in the trials is not even one of the Royal Navy’s, but one from the US Marine Corps.
The Meteor work is one example that shows just how reliant UK and European armed forces are on the US. “We and other Nato countries are completely plugged in to what the Americans provide and do,” said Ed Arnold, senior research fellow for European security at the Royal United Services Institute (Rusi), the defence think tank. “It is not just about the kit, but about the command and control of a battlefield, logistics and intelligence.”
Donald Trump’s cold-shoulder to Nato, his decision to block the sharing of intelligence with Ukraine, and last week’s leaked comments from US defence secretary Pete Hegseth about “free-loading” Europeans have forced a rapid reassessment of this reliance.
Military planners from 31 countries met at the Ministry of Defence’s Northwood Headquarters earlier this month to work out how — and whether — US systems and know-how could be replaced. Defence industry sources say a similar exercise is under way for the UK armed forces.
Politicians are promising money will be made available. The European Union will underwrite €150 billion worth of loans to a new defence fund, while last week the Bundestag voted to alter Germany’s constitution to exempt military spending from the country’s “debt-brake” rule. Defence spending could rise to three per cent of GDP, or about €130 billion a year. In her spring statement last week the chancellor, Rachel Reeves, confirmed plans to increase spending to 2.5 per cent of GDP, and 3 per cent in the longer term.
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There is a very big hole to fill. The Stockholm International Peace Institute, the leading independent authority on the arms trade, estimates that, between 2019 and 2023, 55 per cent of Europe’s defence imports came from the US, up from 35 per cent in the previous five years.
Where are the biggest gaps in Europe’s defence capabilities, and which companies might benefit from the spending necessary to fill them?
Surveillance
One of the biggest shortfalls is in airborne surveillance, particularly surveillance of electronic communications. The only large aircraft in this role are three Boeing RC-135s operated by 51 Squadron of the Royal Air Force. The planes operate for the UK and Nato as part of the 17-strong US Rivet Joint fleet. “Being part of Rivet Joint means you can get information from the whole fleet, which is incredibly valuable,” says Douglas Barrie, senior fellow for military aerospace at the International Institute for Strategic Studies. “Big picture surveillance like this has been limited within Europe because it is expensive, and the Americans have provided most of it.”
Experts say the RAF could operate its aircraft independently, but would almost certainly, if America does not co-operate, be cut off from the wider Rivet Joint feed.
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Several European contractors make, or are working on, similar but smaller surveillance systems. Hensoldt, a German-listed technology company, has a contract to supply a new system to Germany that will be carried by three Bombardier business aircraft. Hensoldt shares have almost doubled this year to close last week at €63.20. Thales, the French defence contractor, and Sweden’s Saab have rival offerings. Nato has its own fleet of reconnaissance drones under the Alliance Ground Surveillance programme — but the main contractor is America’s Northrop Grumman.
A replacement for Rivet Joint would take years to develop. Airbus makes suitable aircraft, and European companies such as Italy’s Leonardo make the right kind of sensors. “It could be done, but it would cost billions, probably tens of billions. It is a matter of political will, not technical capability,” one industry executive said.
A related field is electronic warfare — interference with enemy radar and communications, and weapons that specifically attack them. A recent Rusi paper concluded that “two of the most glaring and potentially serious [reliances on the US] are in electronic warfare”.
Rusi suggests, however, that Europe has the technology to make replacements. BAE Systems already makes an electronic warfare-equipped version of the Typhoon aircraft, while France’s Dassault produces a similar variant of the Rafale. The RAF’s Autonomous Collaborative Platform strategy, which proposes a new fleet of multipurpose drones flying by the end of the decade, could be an ideal route to a rapid increase in electronic warfare capability.
Satellites
Europe is heavily dependent on US satellites. Nato stopped operating its own satellites in the 1970s, and instead relies on US-provided imagery, and a joint service called Aquila, which compiles images from commercial systems, and individual members’ assets. Last month the UK signed a contract with Airbus for two new surveillance satellites — the Oberon programme — to be operational in 2027. These pale in comparison to the US capability; the Pentagon operates about 250 satellites, with plans for a rapid expansion in numbers by the end of the decade.
Satellite communications is — potentially — less problematic. Ukrainian troops have become heavily reliant on Starlink, the satellite broadband service provided by Elon Musk’s SpaceX. If this were withdrawn, there are potential replacements, notably OneWeb, a satellite service that the UK government saved from collapse by buying it five years ago. OneWeb is now majority-owned by Eutelsat, the French satellite company, whose shares went up more than five-fold last month — from €1.20 to €7.85 — on the threat of Starlink’s withdrawal. They have since receded to €4.07. Analysts believe OneWeb could in theory replace Starlink, but say it would struggle to replace it quickly given the former’s ubiquity and low cost.
Missile defence
Europe is short of homegrown defences against missile attack, with a scarcity of systems to rival Raytheon’s Patriot, the interceptor system made famous from its role in the two Gulf Wars, and more recently in Ukraine. “This is now not just about protecting military assets from attack, but civilian centres too, something Europe hasn’t really had to think about since the end of the Cold War,” Arnold said.
One genuine rival to Patriot is SAMP/T, a system made by MBDA, the missile manufacturer owned by BAE Systems and Airbus, which have 37.5 per cent each, with the remainder held by Leonardo. Éric Béranger, ) MBDA’s chief executive, said at the company’s recent results that it had seen a big pick-up in inquiries since the souring of relations between Trump and Nato. “We are being consulted by countries who historically were always relying only on American capabilities,” he said.
Land warfare
Europe has less of a problem when it comes to the weapons used in traditional ground battles — tanks, guns and soldiers. Germany’s Rheinmetall, whose shares have roughly doubled this year, makes the Leopard tank that many European armies have sent to Ukraine. Britain’s BAE Systems, one of the best performing shares in the FTSE 100 over the past two years, makes the Challenger, also in use in Ukraine. Both companies have plans for successors, Panther and Challenger 3 respectively.
War in Ukraine has, however, made clear the volume of production needed to maintain a campaign. John Howie, chief corporate affairs officer at the British defence contractor Babcock International, recently told the business select committee: “It has changed people’s perceptions about the scale of war, the sheer volume of equipment that is being used.”
One bottleneck is the manufacture of high explosives. Europe has two large explosives makers — Eurenco, owned by the French government, and Chemring Nobel, a division of the FTSE-250 defence group Chemring.
Combat aircraft
Europe has a strong record in making combat aircraft. Typhoon is a joint project between the UK, Germany and Italy, with BAE Systems and Airbus the principal contractors. France’s Dassault makes Rafale, while Sweden’s Saab has the Gripen. None, of them however is a “fifth-generation” aircraft, with a low “stealthy” radar signature. That’s why more than ten European countries, including the UK, have ordered the F-35.
“You will eventually have a European fleet of about something like 500 F-35s, which is a pretty potent force,” Barrie said. “Curtailing additional procurement of the F-35 would mean far fewer low-observable aircraft in European air forces until the early 2040s.”
That is when GCAP, a joint programme between the UK, Italy and Japan — and possibly soon Saudi Arabia — is expected to enter service. The contractors are BAE Systems, Leonardo and Mitsubishi Heavy Industries.
Exports
As well as extra orders from Europe, America’s changed stance could bring a surge in business elsewhere. “The belief was that if you bought US kit, you also bought an implied degree of protection from the US,” said Francis Tusa, editor of Defence Analysis. “That no longer applies, so why buy American? If the chance is grasped, the complete unattractiveness of US defence equipment should mean that European offerings’ attractiveness soars.”
