Federico Borsari
So good morning and good afternoon everyone, whether you are in the US or in Europe, we are really happy to have the opportunity to discuss very important topics today. So my name is Federico Borsari. I’m a resident fellow with the Transatlantic Defense Security Program here at CEPA in Washington, DC. And with me today, we have, you know, a group of great–great experts from both the US and Europe, I will briefly introduce them. But before we we start a discussion, I would love to remind everyone that this is on the record–is on the record conversation. So, this is an important aspect to remind everyone. And we are very pleased to have so many people with us today, connected. So let me introduce the speakers, because they bring a wealth of expertise in their own areas and fields. So I will start with Mariana Fakhurdinova, who is a fellow with the Center of European Policy Analysis, and she’s based in Ukraine. So, she can really delve into, you know, the Ukrainian perspective when it comes to defense industrial cooperation. So we look forward to her contribution. Then we have Jason Israel, who is a Auterion Senior fellow with the Defense Technology Initiative here at CEPA, and is a colleague with me in the TDS team as well. So welcome Jason, and he brings a wealth of expertise, because he was, you know, previously also in government. So he can also provide a lot of insightful, you know, perspectives from the government side, which is always important when we discuss this topic. And then, last but not least, we have Jan Karlberg, who is also a Senior Fellow with CEPA and with the Transatlantic Defense Security more specifically. Welcome Jan. Jan has also a lot of, you know, experience and expertise in a variety of areas related to defense and security and in particularly cyber. So, we are also looking forward to his contribution in this respect. As I mentioned, this is an on the record conversation, and I encourage and please, you know, do it. I encourage journalists, and you know, all the people connected, to raise their hands, and you know, answer questions, because we want to really make this conversation interactive, and we want to hear, you know, your thoughts as well. So feel free to chime in in the chat function of zoom and to send the questions or to raise your hand accordingly. All right, so we have around one hour, so we have a lot of different topics that we want to touch upon. And so let me start with a very, you know, broad and general question to, you know, all the speakers actually. So we can then hear from each of them what they think. So I was wondering, What are you–what do you think–what do you think are the kind of general barriers that currently hinder transatlantic cooperation when it comes to defense and security? And of course, defense and security is a very, very, you know, broad area, but in particularly–in particular, sorry, defense industrial cooperation, for instance, which is always a hot topic and is always a controversial one, because we know that, you know, there are very different perspectives and interests as well involved. So if you can, you know, chime in on this and provide your very general overview. What are the obstacles as of now, the barriers that you see hindering this transatlantic operation? Thanks so much. Let me start–let me start with with Jason, who I see is you know, very, very eager to discuss this.
Jason Israel
I know we’re all very eager. So thank you, Federico, and great to be here as well with Mariana and Jan, my tremendous colleagues here. Thank you all for joining us today. And again, as Federico said, we’d like to keep this short, but I’ll give a broad intro on my, my my side, and then would love to hear what your questions are and what is most interesting to you. So to on, specifically on barriers, and having been the the senior defense policy senior director at the National Security Council in the Biden administration, I’ll frame my my comments in the National Defense industrial strategy. And just note that that strategy, which came out in January of last year, and then we had the interim update, as well as the implementation plan that came out in December of last year. A lot of the things that that the Trump administration has done sort of rhyme with what that industrial strategy says. We have not seen them reaffirm or endorse that or decide to create a new industrial strategy. So that’s just something to note, but the way that we view the defense industrial base from both the US domestic side, but also how it should integrate with allies in what we overall called the Global defense production as a concept. And then we had Jake Sullivan gave a speech at CSIS last December that gave a that included some information on that so that that speech is kind of a good also a good milestone to describe what it was that we that we had accomplished so broadly the barriers right now there’s this I’ll just call the category of trust and diplomacy, right the comments that are being made about America First, on the US side, and then, you know this sovereign. What’s the word? I’m blanking on it now, but sovereign, not isolation, but it’ll come to me. But basically the concept that Europe has to, oh, autonomy, strategic autonomy, thank you, has to go out on its own as well. So those two concepts are kind of dueling in the trust and diplomacy side. Then you have the details of export controls, right? And we can have a whole separate panel on that. But the Export Administration regime, the ITAR, the MTC, are these different regimes that, to their credit, the Trump administration and one of the three April 9 executive orders, which are worth looking at. They’re all interrelated. Includes reform on those that those export control regimes, because if you’re gonna have real integration, you need to be able to have those export controls Congress, let’s just say, in the pursuit of the big, beautiful bill. You know, even things that are relatively small and have bipartisan support are not getting the funding in a timely manner that they need. So it was a continuous push to kind of get multi year funding, and that’s both important to enlarge the defense industrial base, but also because companies do not want to put in capital until they’re sure that they’re going to have contracts, or until they already have contracts. And so that multi year procurement is really nothing until they’re funded contracts. So Congress has a big piece of that. And then there’s just the overall barriers to entry in the US Defense industrial base when it comes to cybersecurity standards and meeting all the different requirements for a small company to be able to come in. So if you’re a small, innovative company, the Department of Defense is a is a big, challenging customer. And then, very briefly, because my colleagues, I’m sure will have more on this. And to your questions, it’s just the last several weeks has seen a lot of movement on the European Union side, in the rearm Europe, the safe funding, even the UK-EU deal that was struck this week will have has a lot of have a lot of implications for that. And then just the fact that you’ve seen lots of countries over this past several months commit more funding to NATO. I mean just broadly saying about a trillion dollars over the next 10 years, which is big money. So I’ll just leave it at that. And when I turn over to my colleagues and look forward to your questions.
Federico Borsari
Wonderful. Thanks so much, Jason, yeah, Jan and Mariana, please.
Jan Kallberg
I mean, I feel more like a tail gunner to Jason here, but I think trust is really important. Trying to buy Greenland, I think was bad dating. It, you know, Europeans are very sensitive about this with borders. I mean, most countries have fought a few 100 years with their neighbors, so it’s a sensitive topic, territorial, territorial gains. Also, I think on the trust side, I think there’s some sort of European soul searching or confusion, because Europeans have betted since the Second World War. This is America. We know America. This is the fifth core in West Germany. We know them. This is it. This is the kid. And suddenly, uh, basic rules of the games is, is not longer there. And I think that’s disturbing. On the barrier for industrial, I also think there’s, there’s a different structure. Meanwhile Europe is pretty mechanical industry and so forth. And look on the information technology sector in Europe is pretty limited compared to the US. Meanwhile, the US maybe have a different design. And I also think that all these rearm and so forth, I think Europe is, as Jason mentioned, not mentioned us, regulated. But, I mean, that’s the primary national sport in Europe is regulation. So deregulation is a part of taking away obstacles. Thank you so much.
Federico Borsari
Thanks so much Jan. . Actually interesting, and when you mentioned trust, this is very intangible, intangible aspect that sometimes, you know, people tend to overlook when we discuss, you know, technical cooperation, for instance, in defense, right and especially when it comes to industry. You know, we always, you know, refer to standards. You know, interoperability, intellectual property rights are also, you know, potential barriers national Genesis when it comes to these specific aspects also, but trust, you know is, is something that you know we we tend to overlook, I think. And so thanks for reminding that, and I think it’s important and and to build on what Jason and Jan mentioned, Mariana, if you have anything to add from your perspective, which is, you know, peculiar, because we know that Ukraine has become really a powerhouse in Europe when it comes to defense industry. You know, you produce a lot of things within Ukraine, sometimes with, of course, foreign funding, but but the capacity to produce it is there. So what do you think you know, from your perspective, in terms of, you know barriers that are at the moment, you know a problem for for Ukraine, for instance.
Marianna Fakhurdinova
Thanks Federico and thanks CEPA for the invitation. I totally agree with colleagues on the issues of trust, which impede the transatlantic cooperation in defense industries, but I would take an Ukraine angle in this–answering this question, because it’s, it’s been pretty, pretty much covered on US-Europe barriers and problems. And in terms of Ukraine, I think it’s obvious for everyone that security risks are the top barriers which preclude cooperation between Ukraine and American partners and European partners, in terms of co-production, in terms of, you know, promoting industrial cooperation. So basically, the risks due to the war and Russian attacks impede many American and European countries to companies to come and invest in Ukraine and open their factories in Ukraine. But I would say that the issue of trust is also there and here, I mean concerns by many, especially American colleagues from American companies, in terms of corruption in Ukraine, even though there have been so much of multiple reporting on on how well the US or EU supplied weapons are handled in Ukraine that there are no, you know, black markets, etcetera, etcetera. But still, when in DC, when having those conversation with American companies, I’ve heard this argument multiple times, so I think it’s the issue of trust and also of communication of Ukraine’s progress in this domain, but that, I would also say so many technical issues as expert controls, which Jason mentioned already, and again, it not only concerns the industrial cooperation between Ukraine and US and EU partners, but also military support for Ukraine. So sometimes partners are hesitant to provide some systems or some weapons because of the concerns that Ukraine may might get some technologies that Russia might then get on the battlefield and China can potentially get access to here, I would also add the limited capacities of Ukrainian military defense industries in terms of funding. So in 2024 it was reported that we had the $20 billion production capacity, but our government could only fund $6 billion if I’m not mistaken, according to some EU estimates, but in 2025 Ukraine will have the capacity to produce $35 billion of worth of weapons. But again, here we’re more interested in investments from our partners, but not in in cooperation, per se. So that’s that’s might be not of much interest to some of partners. And finally, I would say maybe some sort of industrial fragmentation in Ukraine, because since the beginning of the full scale invasion, we’ve really ramped up and scaled up the the military production. But we have so many small companies, small startups, which are effective on their level, but they lack the capacity to scale up and to become more more strategic in this sense. So I think that both issues of trust but also security and technical challenges, they impede cooperation between Ukraine and US and EU in terms of industrial cooperation.
Federico Borsari
Fantastic. That’s, I think, a great overview to start a discussion. Because we know, I mean, that Ukraine is now deeply, you know, connected with, you know, European weapons production and a lot of companies are also now looking at Ukraine as a, you know, potential partner to establish joint joint production. And now, with the some of the new tools that the European Union is putting in place, we can expect Ukraine to become even more involved in European projects. But we will touch upon this aspect later on in the discussion. But I think this, you know, comprehensive set of factors, you know, from trust to, you know, trade barriers and, you know, regulation, some of the aspects that, also Jason mentioned from the US side, and that the new administration is also trying to kind of smooth a bit. It’s a great, it’s a great start for this conversation. Let me, let me now move, you know, very quickly, to the to the to the NATO side of things, because we know that, you know, in less than one month, basically, there will be a summit in the org in Europe, a very important one, actually, but we don’t know much about the details about, you know, what the alliance will will decide in terms of, you know, broad defense industrial cooperation. And I’m curious, you know, to hear from, from our speakers, from our expert, you know what you think and what you expect from, from the NATO Summit, in terms of, you know, announcements, or in terms of initiatives related to defense industrial cooperation. And I know that, you know, there has been some, some, you know, announcements regarding a potential NATO Industry Forum meeting, but we don’t know many details about that. So maybe let me, let me ask. Let me start with Jason was, was also tracking this aspect more closely, what he thinks about this, and what, what is, is, you know, sensation.
Jason Israel
No, well, thank you. Look, I think there’s more questions and answers about what we’ll see next month. Right now, I think that, having been on a few of these, particularly NATO 75 which we hosted here last summer and helped to co plan that. This, they’re, you know, being furious negotiations on agenda and the communique and things like that right now. So I’m no longer the inside of that. But can, can, can look at see that we don’t really have much of an agenda yet, or an understanding of what the plan, the overarching plan, will be. I think that is because, you know, it is the new. Secretary General’s first as Secretary General. It’s in his hometown. It’s in Mark Rutte, his hometown, in The Hague. And it’s coming at a time where the overarching kind of back to what all my colleagues and I said about this trust and diplomacy, that he will Mark Rutte will want to just at least show that the that the alliance is still unified, and you know, the the NATO Treaty is still there, so there’s lots to build on when it comes to that. I do think that likely the big news will be, you know what the numbers are, and have been, as far as commitment goes. We just know that historically, the big thing to look out for is how much of those numbers are real dollars. And how can you compare each country’s commitment to each other. There’s country commitment that’s always a challenge. You mentioned Federico that I think it’s you. Somebody else could find something else. I’m looking at this every day. I’m very interested. We held the first ever NATO Summit defense forum in Defense Industry Forum last year at Washington 75 there is also a NATO Industry Forum that is separate, that will be in Romania, I believe, in November this year. But to have one on the actual summit dates, we thought was big last year because so many leaders were in town, and so many industry leaders were in town anyway. So what I’m looking out for is a that they will have it. It is on the Netherlands website that says that they have one, it just says details will be forthcoming. I checked this morning, that’s still what it says. And then the second thing I’m really looking out for is, will they reaffirm or add to the NATO industrial capacity expansion pledge that that all the countries signed last summer, that you can look that up and see what all the specifics are of it, but I think that would show at least that we’re still, you know, affirmed to that. So I’ll leave it there. There’s a lot of more detail I could get into pending your questions.
Federico Borsari
No, thanks so much. And that was that was great also, because, yes, I agree with you that, you know, having so many leaders convening in the arc for the summit, and along with, you know, industry representatives, would be a major, a major opportunity to have also, you know, high level engagement, you know, around surrounding, you know, the defense industrial cooperation. So we look forward, you know, to see what, what that you know, event will, will bring but, but let me, let me, let me highlight for for you know, for our, for our audience, that it’s important also to have their, you know, contribution to the discussion. So if anyone has a specific question, feel free to, you know, to raise your end. We are more than happy to, you know, to hear from you. And we want to, we want to have your your input as well. But I see a question actually in in the chat. So let me just briefly do a second round of you know questions for our speakers, and then we will start, you know, the Q and A part of the conversation. And we really look forward to your your questions, so feel free to jump in and to ask. Let me. Let me go to Mariana now, because, I mean, we know that, since you know, the beginning of the full scale invasion, Ukraine, defense industry has expanded a lot, as I mentioned before, and Ukraine is now, you know, a major a major powerhouse. How do you see Ukraine contributing to the European security and especially from an industrial perspective, you know, the European Union has recently announced, you know, through a variety of of initiatives, and in particular the rearm initiative that Jason also mentioned, that, you know, Ukraine could potentially be part of, you know, European procurement programs. So Mariana, do you think this is, first, a good start, and second, how do you see Ukraine, to, you know, potentially contribute to this, to disaster, to these European efforts?
Marianna Fakhurdinova
Yeah, thanks. Federico. Great question. So even though there have been, I would say, mixed opinions regarding the rearm initiative, I see I still think it’s, it’s a positive document, which [inaudible]
Federico Borsari
Yeah, I think there is someone with an open microphone. So we invite, we invite him to… Yeah, okay, mute himself. Okay, yeah, yeah, please, Mariana.
Marianna Fakhurdinova
So basically, okay, I forgot what my point was. But yeah, I believe that the VRM Initiative is a good framing document for deepening. Industrial cooperation between EU member states and Ukraine, as you mentioned, Federico, Ukraine has done big contribution to security and defense in Europe since the beginning of the full scale invasion, but also including in terms of industrial military cooperation. Just few brief points to remind to the to our audience, like how Ukraine have contributed to that. So basically, Ukraine has become like a testing ground for Western weapons, and we know that Ukrainian military has often been providing feedback to European to American companies on how effective their weapons are, and we’re ready to share the lessons learned on use of some weapons. And I think that’s the big, the biggest, actually input which we could make to European security in terms of industrial cooperation. Ukraine is also a very innovative country. So you’ve seen like, how well we are in terms of drones, in terms of electronic warfare, in terms of the use of AI tools. So everything this innovation and this sort of young energy is something that that EU lacks and will definitely can learn from Ukraine. I think, if we’re moving to the white paper into the RE arm initiative, already, it’s also been mentioned by the European partners in those documents that actually the war in Ukraine and the need to support Ukraine. They have moved. They have pushed European partners to develop military mobility more first of all, in order to move military support to Ukraine faster and more efficient. But also European, European Union as such, will contribute from will benefit from that, in case of some big war on the European continent. Also Ukraine has contributed a lot in terms of cyber and hybrid warfare experience. So in this sense, I think we’ve done a big contribution, but we have a big potential to contribute more and to cooperate more with the European partners, and I think it’s in the whole re arm strategy, the whole document. The only interesting thing for Ukraine is this safe initiative. So basically the opportunity for Ukrainian companies to participate in joint procurement with the European with the EU member states. But the thing is that the document is still not, not officially finalized, that it’s just the framework for discussion. So basically, we still don’t know whether Ukraine will have access to those funds and whether the EU member states will agree on those measures, but I think it’s great that Ukraine will be able to buy basically European weapons through your EU funds. Through EU, you know, loans, that’s of critical importance to us, especially the times when, when American partners are decreasing their military support. But it’s not very positive that interim within this, the safe framework, Ukraine will not be able to purchase or to procure weapons from the US, for example, because the the EU demand is that the those should Be only European companies. It theoretically, Ukraine can also participate in this process, and European partners can buy from Ukraine. But given the fact that we now have experts bounds and basically, we cannot earn money on that, so that’s Ukraine won’t be able to participate in this process fully and completely. But I think the overall closer integration of Ukrainian industries into European defense market, into European single market, is very positive. I think we’ll have closer alignment in terms of regulations, which is also very positive for for Ukraine. So in this sense, I think it’s, it’s a good initiative. There are still questions on how it should be, how it will be implemented. But overall, I think at this point, it’s positive for Ukraine, at the time when we’re very hungry for cooperation and for military support from from our West, Western allies,
Federico Borsari
Wonderful. I think we will touch upon the safe initiative later on. But let me–I know there are already a couple of questions plus raised hand so let me just go to Jan very briefly. For–for his assessment on a specific area of transtlantic defense cooperation, which regards the cyber domain and and Jan, I know you have been tracking this, you know, our area very closely. So what your what is, what’s your kind of assessment of of the current, you know, collaboration in that specific field, which is a critical one, the cyber is an operational domain for both, you know, for NATO and for all the, all the allies. So, what do you think it’s it’s cooperation. What do you think of this, you know, this area?
Jan Kallberg
So sad to say, I think it mostly exists in PowerPoints and really great presentations. There is no mechanism where an ally can request some sort of cyber tool or cyber weapon from another native country. It has to be mutually agreed, but at an operational speed that’s really intense. You can’t add on a political process to agree. On the other hand, a cyber weapon is a significant investment in time. And here’s the bad, bad news for any, any you know, offensive operations, the dense densities of vulnerabilities becoming less and less. Securities, companies become better, people become better, patching and border corporate and government. So there’s maybe not so much opportunity. So when you have this tool and done, this investment is a one shot. So I think the corporation maybe look really good on paper and when people either were diverse, but in reality, I don’t think there is any real incentive to cooperate, because you also have the concern of lateral movement that you share it with Hungary ba boom, you get hit by China in the Pacific with the same tool that slide it out of their control. So I think these, I think in cyber that’s the all the incentives is on the standalone part, and there’s no cyber armor in the in the woods, we can go and get new cyber weapons. It’s a it’s a high investment, one shot, and I think people will hold that close. They will not share it, nation states. Thank you,
Federico Borsari
And thanks. Do you have any any, any sense of, you know, initiatives in when it comes to cloud, for instance, which I know is also something that you’re that you’re looking at?
Jan Kallberg
Yeah. I mean, Cloud is also how we share data and how we harbor data, and so forth the and that’s the general security as we go to cloud, is not only on the defense side, you can also look on corporations, where, 15 years ago, a CIO, Chief Information Officer, controlled 90% of the data. He had his own server rooms and serve server halls. Now he may be controlling 10% the rest is of his department is a compliance department dealing with cloud providers. So there might be a lot of things to from a European perspective, to ensure the resilience and of course, several of these big cloud providers is actually American companies, Microsoft, Google, Amazon, web service, Oracle, IBM Cloud as a few example. So that’s actually a great opportunity and direction trying to pursue. Thank you.
Federico Borsari
Wonderful. And I appreciate the fact that, of course, you know corporate and then the private sector is becoming a, you know, prominent, if not like the leading actor, and you know, defining and shaping the policies, you know, for especially cloud services, and you know, capabilities at the end of the day, as well as cyber. So it’s that’s something that we sometimes tend to, tend to forget. Thanks so much, Jan. Let me, let me turn it to the to the questions from the audience, because we have already a few. So let me start with George Allison from the UK defense journal. George has, what impact, if any, is reduced trust in the US administration having on short term transatlantic defense industrial cooperation and between defense manufacturing majors. So that’s the first question he has. I don’t know if anyone of the speaker wants to jump in. On this, I see Jason as a muted Yes,
Jason Israel
just very briefly, great, great question, George. So in the piece that I wrote, that I think was was linked, is I believe that there is a very strong ability for and an interest in the in ties between the companies to continue even amidst this trust, diplomacy, deficit that we talked about, I make the term the case for a grand bargain where companies could really make enormous contracts, or at least mo use that explore big contracts between companies, because the interests are there, the large budget commitments in Europe, the desire for defense industrial base in the United States to grow, and just the fact that the the European defense and technology industrial base, as they call it, the ED TIB, is just smaller, and the these funds, the safe fund, and others, allow for its growth, but it’ll take, you know, a decade to ramp up to the ability to supply that kind of that kind of level. So I think in the near term, just like always, a US defense company, will look for opportunity, and then they will continue to, just as I did in the Biden administration, receive a lot of input on how export reforms should be conducted. And then this goes back to when I mentioned those April 9 executive orders that said a lot of what we said in our in our foreign military sales reform proposals, which is, we need to be able to be more flexible and move faster. An interesting term in one of those executive orders is the Trump administration said From now on, only the most sensitive, only the most critical and sensitive technologies will be protected by the export control regime. Now, that still has to be interpreted in a certain way, but exactly how that’s going to be interpreted will be very telling when it when it comes to this. So back to the question previously on the NATO Summit, like I would look for and try to engage companies to make joint ventures. And there’s one other interesting thing you know, that popped up with the with the rearm Europe, which is, whereas much of that could look protectionist, it doesn’t actually say 100% of the European finished goods have to be from Europe. It starts to it works with different percentages, somewhere between 40 and 70 based on different things and different timelines, but it also starts to include other, you know, other partners. And the UK EU deal that was signed just this week includes something at least the UK announced that it paves the way for the UK to be part of it. But if I’m a US defense firm, I’m certainly looking for partnerships that I could have with European firms, both for, you know, in the in the dynamic with Ukraine, but also just in order to take advantage of these new European Union funding vessels.
Federico Borsari
Thanks so much, Jason. That was, that was a very comprehensive answer. We have also Tim, Tim Martin from breaking the fence, who is asking, is it feasible that US decides to make cuts to its forces in Europe before the NATO Summit and derailed the focus on Mark Rutte’s new spending pledge proposal, or how far along is such a debate in the Pentagon. So I guess you know both, both Jason and Jan, who are, you know, familiar with the US environment? Can can provide some some feedback on this? So
Jan Kallberg
I start. I’ll let Jason take the US part. So I think there’s a sobering up in Europe that they may be lived in the in the illusion of these reforged return of forces to Germany. And I think they start realizing that if you’re going to move an infantry division from Colorado Springs to Eastern Poland. It will not happen overnight, so it will take 456, weeks. Once they reach Antwerpen, or whatever they’re going to port, they’re going to arrive at the distance from there to Eastern Poland is the same from New York to Chicago, so with several river crossings. So I think the Europeans, the administration, doesn’t need to say, You better take care of your own business. I think they realize that they already have to take care of their own business. Yes, because of of the velocity, the speed of how events can unfold. Of course, US can provide a lot and rapidly, rapid response forces, air power, intelligence and so forth. But the main component, the bulk of the forces, would take a while. And I think that realization is so. Bring up that that pushes the European in the same direction as the administration points out. Thank you.
Jason Israel
No thanks, Jan. And I’ll just just add that more logistically. John, I don’t see it as feasible. Or Tim, sorry to see it as feasible in the near term, just because it’s, you know, weeks away, and the amount of work that goes into the global posture review, I think we finished in the Biden administration in November of the first year, and and so I believe that that that’s still very much in the sort of staffing process now, whether there is a because this administration often moves fast top down, sort of from announcement to details. That doesn’t mean that they couldn’t make some announcement and then try to use it as leverage, whether it’s behind the scenes or publicly within the NATO Summit, to kind of get to your point of whether it would derail the discussion. But my view is, you know, there’s a lot of there’s NATO defense plans, and there’s also, of course, the Germany brigade that’s ramping up over the next several years in Lithuania. And if I were in that position, you know, linking those things, which is, we’ve always said that the US presence is a dynamic and rotational at a certain level. So we’ll there will be remain troops. But being able to say, well, there’s always been, you know, something where we could rotate certain troops out to be able to match our national security interests. But then, you know, link that with the NATO forces, also putting in, not just, you know, people, but also resources, into the into the global posture and European posture area.
Federico Borsari
Thanks. Thanks so much, both Jan and Jason. Mariana, if you have any thoughts on this, feel free to to chime in from from your your perspective from Ukraine.
Marianna Fakhurdinova
No, just a very brief point. I agree with Jason. I think it’s really too little time left before the summit, so there is really no incentive to take such steps. And just a very brief comment, I think CEPA has been doing recently lots of research and comments on the potential withdrawal from Europe and the need to keep us basis in Europe. So please feel free to check more on our website.
Federico Borsari
Thanks so much. Mariana, yes, you’re right. There are, you know, for the audience, there are plenty of articles and takes on, you know, what are the actual interests of the US in having, you know, presence in Europe and why? You know, forward bases there are extremely important and strategic for for for the broader us, you know, global footprint, actually. So it’s not just about Europe itself. It’s, it’s about, you know, how these bases can, you know, support us, presence, also in other regions. But thanks for reminding that. I think that’s that’s very important. We have Rishi younger we raised his hands, Rishi, please feel free to chime in.
Rishi Iyengar
Yeah. Hi. Rishi Iyengar from Foreign Policy magazine, I just wanted to ask about President Trump’s decision to attend the NATO Summit, his his attendance of the NATO Summit, he’s had a tense relationship with NATO and Europe. To say the least, I My question is, what do you think he is hoping to achieve or looking for in his attendance of the summit, and from Europe’s perspective, how will his attendance of the summit sort of change the change the dynamic or the conversation, or impact the dynamic of conversation?
Federico Borsari
I see? Okay, this is a more kind of political level kind of, kind of question, but yeah, I mean, any of our speakers, can you know the jump in and comment on this? If they have any, any observation, any any thoughts
Jason Israel
Well, I, I will jump in. I will say that very, very frankly. And look, this is not to meant to be glib, but my, you know, the the ability to try to guess what Trump is thinking or what his intentions are, you know, are very difficult. I would say that my, my best estimate here is that that he wants to go and you see that, that that looking calling your other leaders friends. Um, even if he broadly talks about Europe in a certain way, he has a track record of saying, well, this person is my friend, and I have a great person relationship with this, you know, whether it’s Mark Rutte, his recent visit, and you look at the dialog, there they were, you know, really patting each other on the back. I or Finland or Italy, and so, you know, getting him there, and being in the family photo, and you know, saying, you know, trying to have bilateral meetings where, where he can deliver, what you know is likely to be a consistent message that he’s delivered. But also, you know, you know, again, if history continues that he will continue to say, well, this person is my friend and, you know, and they’re doing a great job, even while the Trump Vance team, clearly, in broadly talking about Europe, has a very different tenor there. But as far as the European perspective, you know, I would just say that that trust diplomacy deficit is there. You know, the first term, we felt that there was like, okay, well, this might be a one off type thing. But he was reelected. And I know that the perspectives there have changed significantly, you know, and I feel that both here in DC with the diplomatic corps, but also in, you know, when you actually look at the policies and the dialogue that are coming out of the administration. So yeah, and as far as the European perspective, also happy to have my colleagues jump in, but that’s my take, and a very good question Rishi.
Jan Kallberg
I–I think it’s your European perspective might be also that it validates that America is in it’s part of the not opting out fully. I also think that, as little European mannerism, you know, I’m not afraid to take a critique straight in my face. I’m here as a person, and I think that’s good. They maybe not like his ideas. They maybe not like his direction, but the fact that he comes there and give them an opportunity to communicate, I think it’s actually trust building. Thank you.
Marianna Fakhurdinova
Yeah. My take is also, I agree with colleagues. I believe that at least from what we’ve heard, from what I’ve I’ve heard from the perceptions of European efforts towards increasing their military spending, building up their defense industrial complex, etc, are perceived rather positively in the current administration, at least, that’s the information that I’ve heard. So probably again, coming to the NATO Summit, President Trump will give the opportunity for European leaders to demonstrate their progress in this realm, for them to communicate what efforts they’re taking in terms of becoming more independent in investing into their own defense. So and again, for Ukraine, it’s very important to still see all of the partners coming and collaborating and keeping discussing the the issue of the war in Ukraine and of the further military support to Ukraine. Yeah, we’ve seen multiple messaging from the current administration on probably not being that interested in further participating in negotiations. But still, for Ukraine at least, it will be very much desirable to see all of the partners at the table discussing the issue and partaking.
Jason Israel
Yeah, no. Great point Marianna. And I would just follow up that, you know, I can’t say that there are lessons learned. But you know, President Trump has had large lessons, you know, hitting him hard when it came to when it comes to dealing with Putin and what his, you know, January 20th view about Europe and Ukraine and what it is now must be different. Whether he has internalized those lessons and will change based on it, but he is seeing how adversarial and untrusting-untrustworthy Putin is. He has seen that, and now he’s going in to meet with a whole lot of leaders that he can at least commiserate with, if not actually apply those, those lessons. And all of this is in the backdrop, which we haven’t gotten into here, of what we called, at the Biden administration, adversary alignment, which is it’s not an alliance, but you can go and look at the way that Iran, North Korea, Russia and China are helping one another, particularly in the material, dual use, components and supply chains that are helping Russia ramp up. So that’s another context in this as well.
Jan Kallberg
I also think that is an insurance against others stepping up and taking the lead in NATO, because there’s this old cartoon from the 60s, General de Gaulle answers the phone and said, L’Europe, c’est moi, Europe, It’s me. And I think the French are ready to put in their supreme commander. I think their discussions which have been aired already in France about creating a European nuclear command and so forth. And I think President Trump acting a little more active and engaging reaffirms that US has a leading role. Thank you.
Federico Borsari
Thanks so much for the answers, and we have two more questions. Actually, very interesting ones, specifically on defense industrial cooperation. So John Seward from Notus, how impactful will the SAFE Act been on shifting military contracts and sales to European firms and manufacturers, and specifically is asking, is the US, FMS slow down large enough in conjunction with the SAFE Act to significantly impact the defense sales market in the US? So I think that’s a that’s actually a very interesting question, because we know that the sale initiative is not officially approved yet, but there are, there have been leaks about, you know, the percentage of, you know, the percentage that European Union firms, as well as Norway and Ukrainian, Norwegian and Ukrainian companies can have in European projects is, which is around 65% whereas for you know, foreign companies, it has been, you know, mentioned around 35 between 15 and 35% depending on the type of on the type of project. So what’s what’s your to all the speakers, what’s your take on on this question?
Jason Israel
Um, I’ll just jump in one note that the theory is that the pie is enlarging so much between the the Trump and Secretary of Defense promise that there will be a $1 trillion budget and then all of these new commitments, as well as the European Union commitment. The theory is that the pie is so large that the only that all industries should that the the effects should be that all industries actually get more business because of the size of the US defense budget. The safe is actually relatively small, but it will again, back to before the defense industry will see opportunity, and they will look for ways that they can be joint venture with a UK or EU firm to to be able to take advantage of it. That said, and I think another question that I saw shortly after, which kind of ties in, right from from Sebastian, is just, and we can get to that specifically, but that that these industry ties could certainly overcome some of the trust diplomacy deficit, as we’ve been calling it. And I would think that, you know, having been in the White House, you do get here that CEOs call directly to leadership and use their influence to like, let them know that something that was that came out is something that would harm their business interests, so that I’m sure that pressure is coming in again, whether or not the decision is made based on that pressure, I It’s hard to say, because it’s a very unpredictable administration. But I think we saw, I think it was a, it was a verified discussion, but that Secretary Rubio, Secretary of State, had discussed with in the closed door in Brussels and said, hey, we, we very much want to make sure that we are still capturing European business. And you know, somebody as savvy as Secretary Rubio would know that that he wants to do that. I also would just call your attention to Jovita Neliupšienė. She’s the European Commission ambassador, or European Union Ambassador to United States. She wrote a op-ed yesterday that really spoke, you know, she knows her audience, and she she said that this is all a big opportunity for American companies. I think she might have, I don’t know if it was the exact words, but she went as far as saying, we can’t do, you know, basically, we can’t do this without you, without American companies. And so I think that will be very well received. So I tried to answer kind of both questions at once as well.
Jan Kallberg
I jump in quick also. We’re coming into politics, we don’t like that, because it always disturbs everything but, but, I mean, there’s a political reality coming to midterm that US industrial, military industrial base is pretty much in Republican voter based states, red states. Bell helicopters. F 35 is made in Texas, Javelin made in Mississippi, high Mars, made in Arkansas, plus defense industry in Pennsylvania and so forth. So I think there is a political interest too to take in consideration. Also these European buyers, in most cases, are cash buyers. They don’t need some advanced financing, where pretty much us. Have to pay for their own export for quite a while, so that, I think, is also an upside that we we could see. Thank you.
Marianna Fakhurdinova
Yeah, answering Trump’s question, honestly, I don’t, I don’t see this happening in the nearest time on safe was shifting military contracts to European firms, actually, if we just recollect the 2020 2020 2024 Draghi report on European on the state of European defense industries. They were stating that, basically, European defense industries are very fragmented, and 80% of procurement is taking place outside of the EU and mostly in the US. Now, even with the increased investments into the European defense sector, it will, it will really take time for European companies to scale up, to develop and and I think the need is so big these days, because both European and American companies, European states and the US, they need to replenish their own stocks in terms of weapons that they have sent to Ukraine already. There is the existing companies, both in EU and US are over contracted for years ahead. Again, having the need both to replenish their own stocks and to manufacture some weapons for Ukraine that increasing those investments, both in EU and US, will only contribute to flourishing of the sector on the both sides of Atlantic. In my personal view, I don’t see the much scope for competition here because of the big demand, again, in the current situation where everyone needs to buy and to buy a lot of things.
Federico Borsari
Thanks so much to every, to everyone for the comments. And I think if I can, just like, provide a brief, you know, also consideration on the questions from both from John and Sebastian, which are in a way correlated. I think certainly we will see some some changes in specific capability areas, and especially Europe, is trying to become more, let’s say, independent. But it will take time for this. Make no mistake. It will take, you know, between five and 10 years to be really, to become really kind of semi independent in certain capability areas, such as, you know, deeper strikes. You know strategic and critical enablers, such as, you know strategic airlift, you know, air refueling ISR, and especially strategic ISR. So space, space capabilities that currently United States provide extensively to Europe. So in these areas, which are critical focus of the European Union and European Defense Agency, also in these areas, it will take a lot of time. And so in the midterm, I personally don’t expect as much as a shock in terms of, you know, contracts, and in terms of, you know, the Transatlantic defense industrial base. And actually, what we are seeing is also a series of attempts, especially from the US side, also to establish, join, procure, sorry, joint production of specific capabilities in Europe, you know, ray metal and lock it, cooperating together to, you know, produce new long range strike missiles in Europe. And there are also other initiatives in this respect. So I don’t see immediately, you know, shocks emerging. But of course, the Europeans are trying to become more independent in certain in certain capability areas, so we may see this, you know, kind of impact later on, but not, but not as of now. This is just my kind of addition to what the speakers already said about the about the two questions we still have a couple of minutes left, you know, before concluding the conversation. So let me, let me just use the privilege of being the moderator to ask our speakers, you know, what, what the what they do, they see in terms of, you know, good, actually, initiatives on the part of the US administration to, you know, kind of change or improve the current. Status of the US Defense industrial base. I know this is a more specific on the US side, but we also know that, you know, the United States have always led in terms of, you know, how they approach defense. And so for Europeans, sometimes it’s also, you know, important to look at what the United States do. So the new administration has also pledged to reform the procurement system to make it more agile and, you know, fit for the software age, as many in the Pentagon now, you know, called this historical period. So what’s, what’s your assessment of this? And you know, we can start with Jason and Jan, and then Mariana from from the Ukrainian perspective.
Jason Israel
Yes, no, well, thank you, and thank you for ever–again for everybody for being here. I will start by answering, I think, the second part of Sebastian’s question, because I didn’t get to it, which is, what would you see as some true shocks to the transatlantic defense industrial base, because I think it’s a tie in to your question Federico, which is contracts. So we’ve seen pledges and numbers, but the big question will be, do those translate to contracts? And are there going to be European only production contracts? The contracts that you see, will they be interoperable products with United States products. When the US builds new contracts, will those be export, exportable variants of those of those products, those questions to me, if they there is a, I think, an opportunity for there to be a true shock, you know, or what I call, you know, a really a reset in the in the transAtlantic, integrated, transatlantic defense industry, to be able to do that when it comes to specific things the Trump administration that I mentioned, the April 9, three executive orders, and they do get at a lot of what I think the the issues are, again, some of them, I think, are, you know, echo what we did In the National Defense industrial strategy. But there is some, you know, there are, there are some, some good things there. Over to colleagues…
Jan Kallberg
So I’ll be super quick. I was saying, I think procurement, I mean, the joke used to be, if the army had to make a cell phone, it’s still be a Motorola flip phone from the 90s. I mean, it’s, it’s takes forever, seven, eight years, to procure something in today’s environment, and it’s a procurement system with the legacy from the 70s and 80s. And I think the administration do a great job trying to address that and speed it up, because it matter of efficiency. But I also think that pushing the industrial base in the US would actually increase security availability, of course, Europe. And here’s the big elephant, sorry for introducing it at 11:01. The big elephant is the fragmentation of defense industry in Europe. There’s like six, seven different shipyards that can do submarines. There’s six something producers, infantry, fighting vehicles. It’s pretty much only tanks that have been consolidated. So that fragmentation makes it much harder to scale up. Plus for Kongsberg in Norway, Norwegian government will be the biggest customers. So it becomes suddenly politics again. So Norway–Norwegian government has to agree whatever they want to do. So saying, having the US military industrial base, ability to scale up once these administrative harnesses is slightly removed, I think it’s great. And I think that would be improve everybody’s security. Thank you.
Marianna Fakhurdinova
Yeah, I’m not that very well aware on the positive steps taken by the current administration in this domain, but I would say what we, from Ukraine expect or hope for, for the new administration, to which steps to take. So I agree completely with Jan, if the scale up of the military production, because, again, we as Ukraine, as the consumer and receiver of both US military aid and potentially buying US weapons in in future, we need those in in big scales and in big portions. Then I think a defense acquisition reform in us is really important, because, judging through my time in US and talking to officials, it’s something which really takes time. It’s really a very long process which sometimes tailored for the peaceful times actually, but at the time of crisis which needs to be made more faster and more efficient. So I think that’s something important which we’re really looking forward to. And I think again, due to the over contracted companies, the long lead times is another problem that we have to wait for weapons contracted for Ukraine for years, and then the the demands and the needs on the battlefield change quickly, and we’re still waiting for weapons which we have ordered like two two and a half years ago. So I think that’s another thing which is important, which needs to be addressed. Hopefully, it will be by the new administration, but we will see how things will develop.
Federico Borsari
Wonderful. I think we are over time already. But just to conclude, I think we have seen and we have discussed a lot of a lot of different, you know, aspects that, importantly, are both of a technical nature, but also more intangible, as trust, that has been mentioned several times, but, but the all the speakers. So I think you know, for as a takeaway, for for the audience, you know, sometimes you also need to have, you know, a good focus on improving trust you know, and increase the level of you know coordination and sometimes also interpersonal you know connections and relationship at the diplomatic level, to have also the spillover in a good way on the technical side. I will conclude with this, with this, you know, consideration and now giving the floor to to my colleague, Sarah Krajewski, will, you know, provide more details before losing the conversation. Thanks so much everyone for attending. Thanks so much to our speakers and see you next time for you know, the next press call.
Sarah Krajewski
Thanks so much Federico. Thank you to all of our experts for providing the wisdom, and of course, all of you for your insightful questions. I will be in touch with a recording and a rough auto generated transcript following this briefing, a full transcript will be available on our website in the coming days. If you are interested in connecting with any of our experts and have any further questions for them, please feel free to reach out at press@cepa.org, or just reply to the invitation that you had to this briefing and enjoy your days wherever they may take you. Thanks so much everyone. Bye.
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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