Periods of tension are not new to the Western alliance, from the 1950s divisions over Suez to France’s 1966 split with NATO’s command, and the “freedom fries” era of the early 2000s. Despite these temporary disagreements, the long-term transatlantic alliance has persisted.
To foster the shared benefits of our alliances, the US Defense Department, Congress and industry should laser focus on maximizing integrated defense cooperation.
Despite having the most lethal fighting force in the world, and a budget that dwarves Europe’s, Senator Roger Wicker is right to say the US is spending historic lows as a percentage of GDP on defense — at a time when global security threats are growing.
And, while plans for a potential trillion-dollar 2026 defense budget are encouraging, resource challenges will persist. As Admiral Samuel Paparo, Commander of US Indo-Pacific Command, has noted: “The more partners and allies we have, the less will be the bill, across all domains.”
To revitalize the American defense industry and advance US interests, we must;
- Incentivize foreign direct investment and technology transfer to the US;
- Expand interoperability of systems, including modernizing the International Traffic in Arms Regulations (ITAR) to improve collaboration; and
- Prioritize the use of commercial/dual-use technology in defense.
The White House’s February announcement of fast-tracked reviews of in-bound investment by allied and partner sources is a good start.
Many foreign defense and dual-use commercial firms have invested in the US and become powerful force multipliers for the Department of Defense and the American taxpayer. Some have also willingly embraced special governance regimes mitigating foreign control and influence over their US defense activities. Companies like BAE Systems, Leonardo, Rheinmetall, Rolls Royce, Fincantieri, Elbit, Safran, Hanwha, and my own company, Airbus, have made major investments in shipyards, repair facilities and final assembly lines in the US.
They have generated large numbers of American jobs and increased manufacturing capacity, which is exactly what we need to strengthen the US defense industrial base.
The COVID pandemic and the humanitarian and economic tragedies of the Ukraine war underscore the critical need for robust allied supply chains. International companies frequently have multiple supply streams, helping ensure industrial resiliency and mitigating production bottlenecks.
Ensuring tariff policies incentivize, rather than penalize, such inbound investment would help foster resilience. For instance, there are good reasons for duty-free treatment of defense products involving allied countries with reciprocal defense procurement agreements.
Even more compelling are cases where allied companies have made significant US-based defense investments, especially since many have supply chains in their home countries. A tariff policy that requires a foreign investor to establish a large US footprint to assume all the tariff risk of importing subcomponents from allied nations dulls incentives to invest.
The Trump administration’s insistence that European nations increase NATO defense spending makes sense, and many allied governments have responded to the call, creating opportunities for greater collaboration that will benefit American warfighters and taxpayers.
With allied nations spending more on military hardware, the Pentagon can tailor its procurement in more cost-effective ways, accelerating the development of interoperable, attritable, and affordable defense technology. Leveraging European defense firms’ design of new systems will save on research and development and provide American warfighters with technology proven on the battlefield at a fraction of the cost.
We can and should leverage each other’s investments to accelerate the development of new capabilities and build up existing ones. Focusing on collaboration during the design phase, rather than post-development, would foster greater interoperability.
The US must protect truly sensitive information, but the approach should be consistent and pragmatically balance the sensitivity of information with the potential benefits of collaborating with allies. This is particularly the case with the Five Eyes intelligence-sharing network and key NATO allies, where joint development is likely to yield massive benefits and save money.
Accelerating security clearance reviews will also help deliver derivative tech in a faster, more affordable way. The current process can be prohibitively slow for new entrants to the US defense market, with some clearance reviews taking longer than the relevant period of contract, rendering the application academic.
Despite the Department of Defense’s worthy pursuit of more competition, rapid prototyping, and its drive to accelerate the fielding of new technology, the current pacing of clearance reviews can result in reduced competition, less innovation, and fewer options for the warfighter.
History is littered with the unintended consequences of ITAR, a well-meaning regulation developed in the 1970s. In the 1990s, for example, the US industry had more than 60% of the global satellite market before some components were added to the ITAR US Munitions list. Market share fell precipitously to a minority position as competitors sought to market “ITAR-free” satellites.
One of the most successful transatlantic aerospace collaborations in history, between GE Aerospace and Safran, nearly cratered at the outset due to licensing delays, which required the involvement of US President Richard Nixon and his French counterpart George Pompidou in 1973. Industry cannot rely on such highest-level interventions.
The AUKUS alliance between the US, Australia, and the UK holds great promise for what might be achieved with allied commitment. It should be viewed as a model for expanded NATO cooperation, especially the easing of ITAR constraints, to ensure interoperable solutions can be used in the Indo-Pacific as well as across Europe.
For many firms, ITAR can disincentivize investment and technology development in the US for fear of ITAR tainting otherwise commercially viable technology. Restrictions placed on the use of ITAR weapons systems in Ukraine will only further discourage defense collaboration if there is no reform.
Where there are not readily available US solutions, Washington must leverage and incentivize greater use of allied dual-use and readily available technology. The White House’s Executive Order calling for the rapid fielding of emerging commercial-off-the-shelf technologies, reform of the acquisition process, and explicit direction for the defense industrial base is superb.
The Defense Innovation Board noted the value of commercial companies in delivering innovation and speed, with product development, sales, and investment risk borne by industry instead of the taxpayer. While the US defense industry builds exquisite military systems, it is self-defeating to ignore commercial products, including those built by allies.
Developments in industry have shown the US government can utilize commercial-off-the-shelf solutions for its defense requirements. And the recent boom in commercial space companies starting federal and national security-based divisions indicates commercial companies also see value in this sector.
Airbus US Space & Defense, for example, is taking heritage commercial satellite, fixed wing, and rotorcraft technology and modifying it to meet national security requirements.
By better integrating allied defense companies into the US industrial base, we can foster American greatness for generations to come. I am optimistic and stand ready to help achieve this goal.
Robert A. Geckle, Jr. is a Board Member of the National Defense Industrial Association and Chairman & CEO of Airbus U.S. Space & Defense, Inc.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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