Defense Deal Would Roil Industry

The much-talked-about defense deal between the three world powers has been a subject of political controversies. France, Britain, and Germany while trying to build a global unifying force, have been in a series of meetings to merge Airbus Aeronautic Defense and Space Company and Britain Systems Company. The merger will be considered a milestone between Britain and European countries. However, this business talk has created political tussles between the US and her ally Britain. United State owns the world’s biggest defense space company named Boeing Company and will have a new competitor should the talks between BAE and EADS come to a better conclusion. Chief executives of both companies have shown their plans of selling major stakes to the three governments. Policymakers in the three countries see this move as a tool for destruction. Germany is reluctant to push this deal forward because of the seeming political difference between her and the United States. The control of the stakes of the possible merger by Britain will see the influence of the allies of Britain as an important influencing reason (“Defense Deal will Roil Industry, “2012).

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The United States may break ties with Britain, should this deal be completed because, the US will not want its high defense budget to shrink by the merger. Boeing Defense Company, which is owned by the US, has a sales record of $68 billion in the previous year and will want a continuous increase in their revenue. A possible merger of British giants and Germany-controlled company would cause a decline in sales for Boeing Company. This will result in a large-scale shortfall in defense budget spending by the US. To forestall such impending effects the US will try to arm-twist Britain who currently is a big ally with the US to shift grounds on the merge talks.

Aside from the political reasons attached to the merger, these three world powers have been in a political clash for over a decade. Interests in the Middle East crisis have also played a major role in the merger. Germany and France are of divergent views on the issue in the Middle East, and Britain stands apart from their views, this is seen as a setback for a merger between the two companies (“Defense Deal will Roil Industry,”2012). Britain believes that it would not reduce her significance with European nations because of the merger.

The possible merger will largely affect the defense industry. Besides, it will reduce the monopoly of the United States in deciding the way forward of a country’s defense and space budgets. Until now, Boeing Company owned by the US has dominated sales over the years. Fears in job cuts may likely become an effect of such a merger, job cuts will affect the UK, and this can influence the unemployment rate in the UK (“Defense Deal will Roil Industry,”2012).

Finally, if the political differences between France, Germany, and Britain can be put into a positive negotiation, it will increase the involvement of European industries in the space and defense business market. It will close the huge gap created in Europe because of World War II. It will also reduce the monopolistic trends of Boeing Company in the defense industry. A change in business policy for both companies will increase their profit margin. Europe will regain its status in the economy should the merger be successful.

References

Defense Deal would Roil Industry. (2012). The Wall Street Journal. Web.

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