Latest news with #RearmEurope
Yahoo
6 days ago
- Business
- Yahoo
Infighting around EU rearmament undermines grand ambitions for European defense
Despite grand plans, the European Union's hoped-for rearmament remains fully dependent on member nations stepping up their own defenses. In March, European Commission President Ursula von der Leyen announced an 800-million-euro "Rearm Europe" plan to build out a defense architecture that has depended on the U.S. since the Cold War. Russia's invasion of Ukraine and U.S. President Donald Trump's subsequent threats to NATO's security guarantees have alarmed the EU into at least the appearance of action. While some member states like Poland, Finland, or, more recently, Germany, are putting real resources into defense, the collective EU government is nowhere near becoming a military power. Its efforts at collective armament are already falling victim to the same infighting that has long dogged the bloc's most ambitious plans, ranging from the Council of Europe's "European Defense Community" to its failure to mediate the disintegration of Yugoslavia. Consequently, national governments — not Brussels — are driving European rearmament, now and for the foreseeable future. "It was the national leaders sitting at the table with (President Volodymyr) Zelensky," Sven Kruck, co-CEO of German drone company Quantum Systems, told the Kyiv Independent, referring to meetings with the heads of Germany, France, Poland and the U.K. in Kyiv at the start of May in advance of a prospective "coalition of the willing" to protect Ukraine. "I think we are on the right path with the European national leaders. We are not ready with the European (Union) leaders because they are weak." The long-term problem facing the EU is a temperamental U.S. 'European states can't rely on the U.S. anymore. That is clear pretty much across the board,' Patrick Gill-Tiney, a Germany-based fellow focusing on major power relations at the London School of Economics, told the Kyiv Independent. While the problem of the U.S. is clear, potential European solutions are more fraught. The Rearm plan is misleading, says John Foreman, a former military analyst for the EU as well as a one-time U.K. defense attaché in both Moscow and Kyiv. Primarily, he says, that is because Rearm is masquerading as a new source of funding when it is not. Rearm includes some loans, but is primarily a new EU authorization to member nations to take on more debt independently. Rearm's 800 million euros is divided into two parts: one at 150 million euros and one estimated at 650 million euros. The 150 million euros is an EU loan offering to EU members as well as a few non-EU neighbors — notably the U.K., Switzerland, and Ukraine — secured by the union's budget. The 650-million-euro figure is a theoretical maximum amount that member nations could spend on defense over the next four years under new exemptions to the Stability and Growth Pact. The pact itself limits EU nations' deficits to 3% of GDP. The Rearm plan authorizes the pact's 'escape clause' to increase deficit spending if that deficit spending is on defense, meaning no penalties for member nations expanding their deficit spending. The Stability and Growth Pact has been in play since the late 90s. But many EU nations regularly run deficits over 3%. Famously, the pact did nothing to prevent the 2010 Euro Crisis, caused by massive public debt taken on by many of the same nations least willing to spend on defense today: Spain, Italy, and Ireland, as well as Greece, whose large defense spending is mostly out of caution about neighboring Turkey. The Stability and Growth Pact's penalties are rarely enforced and have never resulted in a fine on a member nation. "The whole ecosystem is fixed and the market is closed, with heavy government influence, with long-term contracts and very difficult procurement." "These nations and their defense contractors do not require the EU to tell them that it's okay to rearm," Foreman told the Kyiv Independent, quipping, "It's great, so now we can doff our caps to Brussels and say, 'Thank you, dear Ursula, for allowing us to spend our own money.'" The most favorable to the European Union's proposal will be France and Germany, the EU nations with the largest domestic defense industries, who would therefore be the ultimate recipients of money spent on European-made defense. The rules for Rearm as presented allow manufacturers from the U.K., as well as Ukraine, to participate, but using Rearm funds to buy from non-EU defense contractors will likely draw the ire of the European Commission. Europe's traditional defense industries are, however, expensive and heavily regulated. Despite already seeing new orders, there has been a serious lag time in actually increasing production. Yet they remain territorial. "European militaries are difficult to sell anything to," Mikko-Pekka Hanski, a Finnish investor in Ukrainian defense companies. "The whole ecosystem is fixed and the market is closed, with heavy government influence, with long-term contracts and very difficult procurement." Even other European nations fond of arming will be less enthusiastic about sending money to the economies of France and Germany to buy weapons that Gill-Tiney says are more expensive and outdated than their American competitors, largely due to economies of scale. European defense contractors are, moreover, embedded in their respective national governments and territorial about where their respective militaries send their money. Despite their potential profits, even French support for the broader EU plan is in question. "It looks likely that either we will have a relatively far-right or far-left president of France, and that either way their commitment to arming Ukraine, their commitment to NATO, will be weaker than under Macron," said Gill-Tiney. Meanwhile, Ukraine is mentioned by name as an acceptable non-EU participant in Rearm Europe. But Ukrainian export barriers mean that during wartime, Ukrainian producers, while eager to be the defense industrial base for Europe, have been sequestered. They also fear that the urgency to stockpile will leave Europe if a ceasefire halts Russia's active, violent invasion in Ukraine. The history of the European Union is not rich in quick, decisive action, military or otherwise. The EU often deliberately precludes decisiveness. Aside from the formation of a prosperous trading bloc, the EU's greatest historical success is that none of its members have ever gone to war with each other, in contrast to the preceding millennium of European history. Long before Trump, the U.S. harangued Europe to provide for more of its own defense. But member nations' low spending levels are a historical novelty. Prior to 1990, France and Germany spent well over 2% of their GDPs on defense, with the U.K. standing at 4%. Indeed, in the 1960s, even Italy reached 3%, while the U.K. was at 7%. Those figures collapsed along with the Berlin Wall and the fall of the USSR. NATO nations 20 years ago agreed on a benchmark of 2% of GDP for defense spending, despite commentators often treating that figure as a unilateral U.S. demand on European allies. While Russia's invasion has added urgency, nations furthest away from Russia fall far short. Ireland spends less than a quarter of a percent. That failure to meet past defense commitments casts doubts on ongoing grand plans to get NATO members up to 5%, says Gill-Tiney. "The real issue for a lot of European states is that they agreed to spend 2%, or the NATO members agreed to spend 2%. And many of them then just didn't follow through with their own agreement. The fact that European states actually agreed to and didn't do it, I think is particularly problematic, or was problematic." "The investments in Ukraine and in European countries' defense sector show us that the full-scale invasion created a new market." Less militarized EU members have already put up barriers to the latest plan for rearmament. Put off by the militarism, and a comfortable distance from Russia, Spain and Italy managed to get the entire plan renamed in its infancy from 'Rearm' to 'Readiness,' though even official channels are still referring to the plan under both names. "They renamed it because they don't want to spend it all on arms, they said, 'We want to spend it on arms and soft power,'" as Foreman described it. "This is a very classic Eurofudge, from the Spain that only spends 1.1% of its GDP on defense. They are notorious laggards. And as soon as the idea comes up, they say, 'We will go spend this money on ourselves. We're not facing Russia's border.'" Persuading European voters that their money is well-spent on weapons rather than roads and schools is much harder without an immediate threat. And some European governments are quietly hedging for a ceasefire, say experts and industry stakeholders who spoke to the Kyiv Independent. Various EU member nations have individually expanded their defense budgets enormously. Under recently elected Chancellor Friedrich Merz, Germany has emerged as the largest spender in the EU. Most new German resources are heading for local stalwarts of defense. Rheinmetall, the country's largest weapons maker, has seen its stock rise tenfold on the Deutsche Börse — a growth figure familiar among tech unicorns but unheard of in an established company, especially one making physical products largely dependent on a market of government contracts. The high profile of new technologies like drones and electronic warfare has also given rise to a whole new generation of defense contractors in Europe. "Europe has now understood: It's not solving the problem of Russia and Ukraine," said Kruck. "It's solving the topic of how Europe wants to be and how Europe wants to defend itself." "The investments in Ukraine and in European countries' defense sector show us that the full-scale invasion created a new market," says Hanski. "And parliament members in England or Sweden are now saying, 'How do we get growth in our country?' So many are thinking that security is the growth sector." But the tightest correlation to increasing defense spending remains proximity to Russia, like Hanski's native Finland. Serving in the Finnish military in 1994, in the trough of European disarmament, Hanski recalls that exercises were always directed at a prospective invasion from the east. Even the fastest timelines Europe could manage — for example, a Rheinmetall ammunition plant set to open in Ukraine in the middle of 2026, barring delays — may be too late to help Ukraine in the current phase of the war. Ukrainians are keen to warn that the EU is next on the chopping block. "We are trying to help Europe actually wake up," as Mariia Berlinska, head of volunteer unmanned aerial vehicles (UAV) supplier Victory Drones, put it at a recent panel discussion in Kyiv. "But I don't know if they are processing the fact that while this maniac (Russian President Vladimir) Putin is concentrating on us, they have time to ready themselves. Because sooner or later, this demented maniac is going to turn to them." Hi, this is Kollen, the author of this story — thanks for reading my latest dispatch on European defense from Russian aggression, reported from a Ukraine that is hanging its hopes on EU allies. The Kyiv Independent doesn't have a wealthy owner or a paywall. Instead, we rely on readers like you to keep our journalism funded. We're now aiming to grow our community to 20,000 members — if you liked this article, consider today. Read also: Germany to do 'everything' to prevent Nord Stream 2 restart, Merz says We've been working hard to bring you independent, locally-sourced news from Ukraine. Consider supporting the Kyiv Independent.
Hans India
22-05-2025
- Business
- Hans India
Canada in Talks to Join U.S. Golden Dome Missile Defense Project
Prime Minister Mark Carney confirmed that Canada is in high-level discussions with the United States about potentially joining the ambitious "Golden Dome" missile defense system proposed by U.S. President Donald Trump. Speaking at a press conference, Carney said, "We are aware that we could choose to invest in and help complete the Golden Dome missile defense system alongside the United States. It's under serious consideration and is being discussed at senior levels." Carney, who led the Liberal Party to victory in Canada's March snap election before officially taking over as Prime Minister, cited rising global threats—including those potentially from space—as a driving factor behind the talks. 'These threats could, in the not-too-distant future, come from space. We are taking these risks seriously,' Carney said. The Golden Dome project, modeled after Israel's Iron Dome system, aims to create a cutting-edge, space-based missile shield to protect North America from long-range missile threats. Unlike traditional, ground-based systems, Golden Dome would use a network of satellites to detect and intercept missiles during the early stages of flight. The estimated cost of the program could exceed $500 billion over the next two decades. Carney also noted that Canada is working closely with its European allies on "Rearm Europe"—a broader defense initiative aimed at strengthening European military and industrial capabilities. At the same time, Canada is reviewing its plan to purchase American F-35 fighter jets and has partnered with Australia to advance radar systems for Arctic defense. The North American Aerospace Defense Command (NORAD), the long-standing joint defense arrangement between Canada and the U.S., remains a central element in the region's airspace security. Carney suggested any involvement in Golden Dome would build on that foundation.
Al Jazeera
28-04-2025
- Business
- Al Jazeera
Europe leads global defence spending rise, awakening to security deficit
Europe led a record international rise in defence spending last year, according to a report from the Stockholm International Peace Research Institute (SIPRI). European expenses rose in real terms by 17 percent to $693m, spearheading a global rise of 9.4 percent to $2.7 trillion, marking the highest level of defence spending since the fall of communism in Europe. Russia's war in Ukraine was the principal driver of the new trend, SIPRI said on Monday. 'The rapid spending increases among European NATO members were driven mainly by the ongoing Russian threat and concerns about possible US disengagement within the alliance,' said Jade Guiberteau Ricard, a researcher with SIPRI. The protagonists in that war still bore the brunt of its expense. Russia saw the biggest annual rise of any single country at 38 percent, as it suffered devastating material losses in its war in Ukraine. It spent $149bn, more than 7 percent of its economic output. Ukraine spent its entire tax income of $64.7bn on its defence, and was the country devoting the biggest proportion of its economy – 34 percent – to the military. But apparent US reluctance to continue to fund Ukraine's defence means more of the burden may fall on Europe. That might not be as onerous as it sounds. The size of the European Union economy meant that it needed to spend only 0.12 percent more of its gross domestic product (GDP) to replace US military support for Ukraine, the think tank Bruegel estimated last February. Most of Europe's defence spending increase, experts told Al Jazeera, addressed the need to rebuild defunct European militaries. 'The increase was expected, though it was still somewhat shocking to see it unfold,' retired US colonel Seth Krummrich said, as it reflected the end of US supremacy on the global stage. Krummrich, who is now vice president of Global Guardian, a security consultant, believed this was the start of a new trend. 'I do believe we will see further increases in the years ahead. Europe recognises the need to stand on its own and not rely as heavily on the United States,' he said. 'That's not to say the US will not support Europe, but the 'guaranteed certainty' of US support is no longer felt.' The EU last month relaxed deficit rules, allowing national budgets to spend an additional 650 billion euros ($740bn) on defence off the books. Greece became the first member to announce a multiyear rearmament under the new rules on April 3. Within Europe, Germany rose most steeply of all (by 28 percent), as an extraordinary 100-billion-euro ($113.5bn) fund announced in 2022 finally swung into action. However, every EU member state except Malta raised its defence budget, reflecting an increasingly widespread Russian threat perception. The relaxed EU deficit rules, known as Rearm Europe, along with a 150-billion-euro ($170bn) fund to boost EU defence products and a German parliament decision last month to devote up to 1 trillion euros ($1.14 trillion) to infrastructure and defence all advocated in favour of what Krummrich predicted. Experts cautioned that expenditure would take a long time to translate into force projection. 'Major military capability takes years to develop,' said Lukas Milevski, a lecturer in international studies at Leiden University. 'It takes time to train people, to buy the stuff, to build the stuff, to deliver the stuff,' he told Al Jazeera. Germany, for example, promised Lithuania a brigade in 2022. Its barracks are built in southwest Lithuania, but the brigade is not expected to be manned, trained, equipped and operational until the end of 2027. Milevski also cautioned that the money would have to be sustained over many years. 'By the time you actually need to pay for the stuff, all those exemptions that came with Rearm Europe have expired, and the year-by-year continuation doesn't provide the stability that defence policy needs,' he said. Another concern is what the money is spent on. The staggering US defence budget of $997bn, for example, is often described as bloated with pork-barrel procurements rather than what a modern military needs. Europe suffers from a similar problem of redundancy, with different states competing to have their tank or rocket launch system adopted as the EU standard and funded to great heights. Krummrich believed the EU now enjoys a 'significant opportunity' to avoid squabbling about which older systems to preserve, and 'leap forward technologically through military innovation and investment'. It was enough, he said, to observe how 'the dirt laboratory of Ukraine has revealed a new evolution in warfare, especially regarding drones and unmanned vehicles'. Others expressed concern about Europe's go-it-alone approach. 'It's capabilities that matter, and how those capabilities are built and controlled,' said Hugo Bromley, an economy and geopolitical expert at Cambridge University's Centre for Geopolitics. The US and Europe should not be decoupling, but working together to provide specific needs in both Europe and the Asia Pacific, Bromley told Al Jazeera. 'The scarce assets America needs, particularly in an Indo-Pacific focus, are the very high-end [air]lift, missiles – capabilities that the current focus of European expenditure is not designed to create … because these are the capabilities that nation states wish most to keep to themselves,' he said. 'So we need to have an honest conversation about which countries are prepared to work together on these issues … and if you look at where our natural partners are to develop those high end capabilities, it is East Asia, Germany, to a lesser extent France and Britain, and what I think of as Commonwealth – so Australia, Canada.' This internationalist approach is currently out of favour on the continent, where the concept of strategic autonomy now drives renewed European defence resolve. Finally, there is concern that money, even if effectively spent over sufficient time to deliver force, is going to lead to tragedy in the Ukrainian theatre, which is largely depleted of its professional militaries. 'The operational map remains largely stagnant,' said Krummrich. 'Gone are the highly trained troops and great campaign plans. This is now a conscript war with negligible front-line movement,' he said, calling it a 'meat grinder'. 'In my opinion, high spending will not turn the war decisively for either side; it will only result in further death.'
Yahoo
23-04-2025
- Business
- Yahoo
RTX Corp (RTX) Q1 2025 Earnings Call Highlights: Strong Growth Amidst Global Challenges
Organic Sales Growth: 8% increase. Segment Margin Expansion: 120 basis points improvement. Free Cash Flow: $900 million improvement versus prior year. Commercial Aftermarket Sales: Up 21%. Commercial OE Sales: Up 3%. Defense Sales: Up 4%. Adjusted Sales: $20.3 billion, up 5% overall and 8% organically. Segment Operating Profit: $2.5 billion, up 18%. Adjusted Earnings Per Share (EPS): $1.47, up 10% from prior year. GAAP EPS from Continuing Operations: $1.14. Free Cash Flow: $792 million in the quarter. Capital Returned to Shareowners: $890 million, primarily through dividends. Backlog: $217 billion, up 8% year-over-year. Collins Sales: $7.2 billion, up 8% adjusted and 9% organically. Pratt & Whitney Sales: $7.4 billion, up 14% adjusted and organic. Raytheon Sales: $6.3 billion, down 5% adjusted, up 2% organically. Raytheon Book-to-Bill Ratio: 0.70 for the quarter, 1.35 on a rolling 12-month basis. Warning! GuruFocus has detected 10 Warning Signs with RTX. Release Date: April 22, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. RTX Corp (NYSE:RTX) reported an 8% organic sales growth in the first quarter of 2025. The company achieved a 120 basis points expansion in segment margins, with strong contributions from all business segments. Commercial aftermarket sales increased by 21%, and defense sales grew by 4% year-over-year. RTX Corp (NYSE:RTX) generated strong free cash flow, improving by $900 million compared to the previous year. The company made significant progress in its innovation pipeline, including FAA certification for the GTF Advantage and advancements in the LTAMDS program. RTX Corp (NYSE:RTX) faces potential cost impacts of $850 million due to tariffs, which could affect profitability if they remain in place. The company has not included potential tariff impacts in its outlook for the year, indicating uncertainty in financial projections. There are concerns about supply chain disruptions due to tariffs, which could impact operational efficiency. The Raytheon segment experienced a 5% decline in adjusted sales due to the divestiture of the Cybersecurity business. The company is closely monitoring the dynamic global trade environment, which poses risks to its operations and financial performance. Q: Are you seeing the Rearm Europe effort as a big opportunity for Raytheon, and do you still expect the Raytheon business to have a book-to-bill above 1.0 this year? A: Yes, the EU's focus on ramping up defense spending presents a significant opportunity for Raytheon. Countries like Poland, the UK, and Germany are increasing their defense budgets, and the EU has announced $850 billion in additional defense spending over the next four to five years. Raytheon is well-positioned with its integrated air and missile defense systems, and we expect a book-to-bill of 1.0 or more this year. - Christopher Calio, President & CEO Q: Regarding the $850 million tariff impact, is that a gross or net number after mitigations? And what ability do you have to pass on costs to customers? A: The $850 million is inclusive of mitigations. We have regulatory, contractual, and operational mitigations in place. We've been operating in an inflationary environment and have experience in passing on costs through pricing. However, the situation is fluid, and we'll adjust our strategies as needed. - Christopher Calio, President & CEO Q: Could you discuss the potential changes in customer buying behavior and operational disruptions due to tariffs, particularly regarding China? A: We are closely monitoring the supply chain and customer behavior. The aerospace industry has been used to a duty-free environment, and we are working with our supply base to mitigate disruptions. China is an important market, and we are developing multiple global sources to ensure supply chain stability. - Christopher Calio, President & CEO Q: Can you provide an update on the NGAD program and its potential impact on RTX? A: We received a $550 million award in Q1 for NGAD, and we are pleased with the progress and feedback from testing. Pratt & Whitney has a strong record in fighter propulsion technologies, and we are optimistic about the program's future benefits. - Christopher Calio, President & CEO Q: How are you addressing the potential impact of the SPS fire on Collins or Pratt operations? A: We are working closely with SPS and other suppliers to mitigate the impact of the fire. We are optimistic about avoiding notable disruptions by leveraging alternate suppliers and maintaining strong supply chain relationships. - Christopher Calio, President & CEO For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Euronews
26-03-2025
- Business
- Euronews
Readiness 2030: How is Europe planning to rearm and can it afford it?
ADVERTISEMENT The European Union has committed to bolstering European defence capabilities. The European Commission's proposal, originally labelled 'Rearm Europe' and now known as 'Readiness 2030', prioritises the supply of strategic equipment, like air and missile defence, artillery systems, missiles, ammunition and drone and anti-drone systems. Military expenses would be excluded from strict European fiscal constraints. If each member state was to spend 1.5% of its GDP on defense, on average, the combined amount would be €650 billion. In addition, the plan provides for €150 billion in loansto buy defence capabilities mostly made in Europe. Additional funding sources for defence are under study, including the mobilization of private EU is also studying the harmonisation of requirements and joint procurements to ensure a more efficient market, reduce costs, guarantee the cross-border access to supply chains and to increase the competitiveness of the defence sector as a whole. Manufacturing of UAVs at Primoco UAV headquarters Euronews In total, around 2500 SMEs operate in the EU defence industry. In the outskirts of Prague, Czech Republic´s capital, we visited one of them. Every year 60 staff produce here 70 Unmanned Air Vehicles.** These UAVs have both civil and military applications. They are currently being used for surveillance, communication and intelligence operations in conflict zones in Ukraine and Iraq. Their latest model has just received a key certification that should help speed up its deployment across NATO members, claims Ladislav Semetkovský, the company´s CEO. Manufacturing of UAVs at Primoco UAV headquarters Euronews 'The process of certification has been going on for five years with over 40 experts working on it' explains Semetkovský. 'In total, they have processed more than 28,000 pages of texts and implemented hundreds of flights.' Manufacturing of UAVs at Primoco UAV headquarters Euronews The company´s turnover should this year amount to some 40 million euros. It has set up a partnership with European giant Airbus Defence and Space. Managers say their UAVs are totally made in Europe. Ladislav Semetkovský, CEO of Primoco UAV Euronews 'I think that companies like us are terribly important for maintaining the security of Europe, because the domestic defence industry can ensure the stable supply and operation of any technology, whether military or civilian', says Semetkovský. 'So cooperation with European manufacturers is crucial for Europe's defence.' Yet this cooperation has often left them frustrated, managers say, as excessive bureaucracy and regulation have limited the signature of contracts that would effectively scale up production and create more jobs. Jan Sechter, Chairman of the Supervisory Board of Primoco UAV Euronews 'I really think the biggest problem is that politics have moved away from what a truly innovative industry can do, and there is, let's say, a gap or simply a lack of dialogue with each other', claims Jan Sechter, Primoco UAV´s Chairman of the Supervisory Board. 'And this can be a source of concern for industry, when it comes to public procurements, for instance. We need greater and better communication between the States, research, development and industry. This is quite common in the United States, and also here in Europe we have to get used to it and support it.' Europe´s defence sector provides some 600.000 jobs. The new scenario could help deliver even more. But can debt-burdened Europe really afford this massive rearm effort in the current unsteady economic situation? In Pilsen, Zdeněk Rod, an Assistant Professor on International Security at University of West Bohemia says that, given the new geopolitical context, Europe has little options but to press ahead. Zdeněk Rod, Assistant Professor of International Security at University of West Bohemia Euronews 'If you look at the Cold War era, the NATO member states, they were approximately spending about four, five, even 6% on defense. So those numbers have already been here. So it's something which is not unimaginable. Of course, in the current context, it's slightly complicated because the national debts are pretty high. We can see more than 50% of the European Union members have some, let's say, serious fiscal issues. So the question is, what do we get in money from', explains Rod, who is also CEO and co-founder of think-tank Center for Security Consulting. 'We know that Europe is based on a strong welfare state. So we have to find some balance between security and the welfare we want to maintain. For instance, you can increase taxes, which I guess would be highly unpopular in most of the states. If you don´t want to borrow more money or increase taxes, then the only thing that is left is to cut something within the national budgets', says Rod. Europe plans to set a minimum threshold that 65 percent of the military components eligible for funding must be European.
