Dak Hardwick’s Post

https://lnkd.in/dWc8N7vw IMPORTANT - The European Commission is set to unveil a comprehensive "European Defense Industrial Strategy" aimed at bolstering the EU's defense capabilities. Key aspects of this strategy include: 1) Sourcing at least 50% of its defense system purchases from within the bloc by 2035. 2) The establishment of a new entity, the Defense Industrial Readiness Board, to facilitate better investment coordination and monitor essential products and supply chains within the bloc. 3) The introduction of the European Armament Program, a legal framework designed to unify and streamline procurement processes and funding mechanisms. This includes incentives like tax exemptions and the option for EU nations to leverage EU grants as security for issuing bonds. THOUGHTS 4) For the U.S. defense industry, the EU's strategic pivot could have some notable implications. For example: - A decrease in direct sales and FMS to EU countries as the bloc increases internal procurement. - A potential rise in joint ventures or partnerships with EU defense firms to access the changing European market. - Enhanced focus on other international markets or sectors within the defense industry to offset potential losses in the EU. 5) Enhanced coordination across the EU could lead to significant cost reductions by leveraging the benefits of larger economic order quantities. Despite the inherent challenges of joint programs, the pressing need for substantial volumes of military hardware, coupled with budgetary constraints, underscores the necessity of such collaboration. A 2023 European Parliament study highlights the potential financial benefits, estimating that the EU could save 24.5 billion euros annually by eliminating duplicative efforts. These savings could increase to as much as 75.5 billion euros per year if EU countries further consolidate their R&D and equipment procurement efforts. (see comments for a link to the report). 6) The US is grappling with a similar challenge: an expanding array of threats and obligations against the backdrop of a stagnating budget environment in real terms. The potential economies of scale achievable through well-executed joint programs could be a crucial factor in counteracting this concerning trend. However, as the EU shifts its focus inward, the U.S. might miss out on valuable opportunities for joint defense programs. 7) I recall an insightful/relevant article by Richard Aboulafia. The key takeaway is by the late 2030s, the global fighter jet market (and defense market in general) will become more fragmented and less U.S.-centric. If Washington doesn’t adapt by prioritizing the sale of the systems and technologies that power other countries’ jets, the United States will fall behind in the global defense market. (see comments for a link to the article)

Should there be an Undersecretary of Defense for the Defense Industrial Base? Someone looking beyond individual contracts and building capacity domestically and with partners? Defense reforms are finally taking root and paying off. The question is whether larger primes and OEMs can adapt to provide defense articles at scale.

𝗧𝗵𝗲 𝗜𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗼𝗳 𝗮 𝗦𝗲𝗰𝗼𝗻𝗱 𝗧𝗿𝘂𝗺𝗽 𝗣𝗿𝗲𝘀𝗶𝗱𝗲𝗻𝗰𝘆 𝗳𝗼𝗿 𝗘𝘂𝗿𝗼𝗽𝗲’𝘀 𝗗𝗲𝗳𝗲𝗻𝘀𝗲 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝘆 For War on the Rocks, I explored the potential defense industrial consequences of a second Trump presidency for Europe. Never have I written something I hope to be proven wrong. Despite repeated calls across Europe to treat this as a wake-up call for achieving greater autonomy in security and defense affairs — and despite Trump’s demands for Europe to step up its defense spending — my analysis suggests that Europe may become even more dependent on the United States. Trump’s enthusiastic promotion of U.S. arms exports could further marginalize European firms, which already struggle with export dependence and a fragmented market compared to their self-sustaining U.S. counterparts. The future president's likely insistence on linking American security guarantees to the purchase of U.S.-made weapon systems would undercut any autonomy gains Europeans might achieve through increased defense spending. The likely result is a more fragmented European defense industrial base and an increasing reliance on bilateral ties with the U.S. rather than strengthening collective European defense capabilities. This would perpetuate Europe’s inescapable tension between equipping their forces efficiently and securing their long-term industrial capacities. The stakes for a more capable Europe have never been higher. Read the full article here: https://lnkd.in/eFVe-Bp5

#ICYMI: This weekend, Secretary of Defense Lloyd J. Austin III and Secretary of State Antony Blinken met with their Japanese counterparts, Minister for Foreign Affairs Yoko Kamikawa and Minister of Defense Minoru Kihara, in Tokyo to advance bilateral progress in building a global partnership for the future while enhancing U.S.-Japan Alliance deterrence. This includes further accelerating work on co-production, co-development, and co-sustainment to advance innovation, strengthen U.S. and Japanese industrial bases, promote resilient and reliable supply chains, and invest in the strategic industries of the future. The Ministers heralded the recent convening of the Forum on Defense Industry Cooperation, Acquisition, and Sustainment (DICAS), as well as its working groups on missile co-production, ship repair, aircraft repair, and supply chain resilience. They also welcomed high-priority efforts to pursue mutually beneficial co-production opportunities to expand production capacity of Advanced Medium-Range Air-to-Air Missiles (AMRAAMs) and Patriot PAC-3 Missile Segment Enhancement (MSE), in order to meet critical demands for such advanced systems, address timely procurement and readiness requirements, and deter aggression. #SucceedThroughTeamwork

The Implications of a Second Trump Presidency for Europe’s Defense-Industrial Efforts Lucas F. Hellemeier November 26, 2024 Paradoxically, despite Trump’s insistence to cut down on U.S. security commitments to Europe, the incoming president’s transactional approach will likely exacerbate existing dependencies, pushing European countries to prioritize U.S. procurement over building autonomous capacities. While European defense spending may increase, the strategic alignment of those resources could drift toward reinforcing bilateral ties to Washington, rather than fostering a genuinely integrated and self-sustaining European defense industry. In this environment, Europe’s pursuit of strategic autonomy continues to be more rhetoric than reality, as geopolitical pressures and market realities accumulate to keep Europe tethered to American defense production and a benevolent presidential administration.  https://lnkd.in/eGd4a3Bn Christophe Gomart Pierre Gattaz Gilles ATTAF Olivier Lluansi Anaïs Voy-Gillis

One of the lines of effort from the U.S.-Japan Security Consultative Committee meeting on July 28: The United States and Japan further accelerated work on co-production, co-development, and co-sustainment to advance innovation, strengthen their industrial bases, promote resilient and reliable supply chains, and invest in the strategic industries of the future. > The Ministers heralded the recent convening of the Forum on Defense Industry Cooperation, Acquisition, and Sustainment (DICAS), as well as its working groups on missile co-production, ship repair, aircraft repair, and supply chain resilience. > The Ministers welcomed high-priority efforts to pursue mutually beneficial co-production opportunities to expand production capacity of Advanced Medium-Range Air-to-Air Missiles (AMRAAMs) and Patriot PAC-3 Missile Segment Enhancement (MSE), in order to meet critical demands for such advanced systems, address timely procurement and readiness requirements, and deter aggression. > The Ministers supported Japan's revision of its Three Principles on the Transfer of Defense Equipment and Technology and its Implementation Guidelines, which supports efforts to leverage both countries' respective industrial bases to meet the demand for critical capabilities. https://lnkd.in/gmeUAw9N

The European Union has released a new defense industry strategy and program in response to Russia's invasion of Ukraine, calling for increased collaboration among member states and greater spending on defense procurement within the bloc. The plan includes mobilizing 1.5 billion euros of the EU's budget for defense over 2025 to 2027 and setting up an office in Kyiv to promote cooperation between Ukraine's military and businesses and EU firms. Former US President Donald Trump has expressed concern about insufficient European military spending, but the European Commission Vice President emphasized the importance of the EU having its own defense strategy. #AsiaRisk #GeopoliticalConflictandDisputes #Japan Follow us for daily updates on risk and operations in Asia! https://lnkd.in/gz34V-Dj

The United States will need to reassure the ROK that it supports the ROK’s legitimate aspirations for defense self-reliance and sovereign defense industrial capabilities. The ROK meanwhile aspires to be treated the same as other U.S. allies on defense industrial cooperation and become a trusted supplier to the U.S. defense industrial base and not just a buyer. The Yoon administration and future ROK governments will need to demonstrate that the ROK is prepared to shoulder its fair share of the collective burden of arming allies and partners around the world rather than just viewing defense industry as an extension of export-led growth.

The 23rd annual US-Taiwan Defense Industry Conference is underway in Philadelphia, highlighting defense cooperation between the US and Taiwan. Key figures in attendance include Taiwan's Deputy Minister of National Defense, Hsu Yen-pu, and US Principal Deputy Assistant Secretary of Defense Jedidiah Royal. Discussions focus on forming global coalitions, countering China's gray zone tactics, and preparing for a D-Day style scenario. Additional topics include resourcing Taiwan's defense efforts and the potential impact of the upcoming US presidential election. Hosted by the US-Taiwan Business Council, the event features five sessions over two days, beginning with a welcome reception. Representatives from Taiwan's three major political parties are engaging in discussions on US arms sales to Taiwan, weapon manufacturing collaboration, and a backlog in military procurement. President Biden has approved $5.71 billion in arms sales to Taiwan, marking the lowest level since 2001, excluding the OObama administration's freeze. Annual arms sales have declined since 2022, raising concerns over diminishing US support for Taiwan's military modernization. Despite an increasing military budget in Taiwan, the reasons behind the falling arms sales remain unclear, even as US officials note the significant threat to Taiwan. #AsiaRisk #GeopoliticalConflictandDisputes #Taiwan Follow us for daily updates on risk and operations in Asia! https://lnkd.in/g5iTqdzt