"Defence expenditure in the US will equal that of the rest of the world combined within 12 months, making it 'increasingly pressing' for European contractors to develop a 'closer association' with the US, corporate finance group PricewaterhouseCoopers (PwC) says.
Its report - 'The Defence Industry in the 21st Century' by PwC's global aerospace and defence leader Richard Hooke - adds that 'the US is in the driving seat', raising the prospect of a future scenario in which it could 'dominate the supply of the world's arms completely'.
The US defence budget reached US$417.4 billion in 2003 - 46 per cent of the global total.
Less than two per cent of the US defence budget is spent outside its home market, the report notes, and of this around one per cent goes to UK contractors.
Hooke says: 'The message for management teams in all this - apart from the obvious for US contractors to monopolise the industry - is that they will fail to maximise value if they fail to define accurately the business segment in which they operate.
'For Europe and the UK in particular, it means, right now, an increasingly pressing need to develop a closer association with the US market.'"
How long until the WTO steps in about unfair monopoly practices? I don't really envision that, but the Jane's piece does point out information that has global foreign policy implications:
- Emerging democratic powers such as India and Brazil may be better served by building military relationships with the US instead of Europe.
- The European Union nations will continue to fall behind the US in technology and military readiness as they continue to spend small amounts of their GPD on defense. (And a large portion of that goes not to R&D but to keeping standing aging armies)
- The US will likely keep, for the foreseeable future, its military supremacy, which will drive alliances and politics well into the 21st century.