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Europe risks falling victim to a heightened power play between the US and China if it does not “pull together” and take a unified approach to prepare for a future conflict, one of the region’s largest defence contractors has warned.
Michael Schoellhorn, chief executive of Airbus Defence and Space, said the re-election of Donald Trump in the US was only the “most recent wake-up call” for Europe.
The question for Europe was “do we keep our leverage and our means to shape our future or . . . do we become victims to big power competition between the US and China”, he said in an interview with the Financial Times.
“There is a risk. If you are a bystander you will become a victim. One leads to the other,” he said, calling for the region to take a more “holistic approach” towards its defence at a time of pressure on several fronts in the wake of the war in Ukraine.
“Trump being elected is not the game changer, it is just one more step in that direction,” he added.
The European aerospace and defence champion is also one of the world’s biggest defence and space groups. The division, which employs about 35,500 people, builds fighter jets, drones and satellites. It is also a partner in the Eurofighter Typhoon industry consortium and a shareholder in MBDA, Europe’s missile group.
European governments announced significant increases in their defence budgets after Russia invaded Ukraine nearly three years ago, with Germany announcing a €100bn fund to modernise the country’s armed forces. Manufacturers, however, have said more was needed to be done to boost the resilience of the region’s defence base.
Following Trump’s election victory, industry executives have stepped up calls for more investment and greater collaboration across the bloc amid warnings that the US will be much less willing to pay for Europe’s security. Although most countries have now met Nato’s designated target to spend 2 per cent of GDP on defence, experts expect the US to push for more.
Schoellhorn said “money” was key to driving change in Europe, adding that “it is a clear sign: now we are serious”.
Echoing other executives, Schoellhorn said it was also critical to tackle Europe’s fragmented approach towards procurement, which experts have said has hindered upgrades to the bloc’s capabilities.
The region also needed to incorporate the lessons from Ukraine in terms of where to invest for future capabilities, with an emphasis on technologies such as drones, cyber and electronic warfare, he said.
Europe, added Schoellhorn, had to pull together. He said it was “very clear with regards to both the US and China, you can only really negotiate if you are manoeuvring yourself in a position of power”.
Schoellhorn said that following the recent collapse of the German government, it was important for a new administration to keep spending on defence. The €100bn modernisation fund “needs to be the lower limit”, he said. “That needs to be what Germany has to spend continuously, every year.”
Despite its size and clout, Airbus has struggled to turn around the fortunes of its space business in particular which has suffered from increased costs and stiff competition from the likes of Elon Musk’s Starlink. The division said last month that it would cut up to 2,500 jobs.
Airbus is reviewing all options for its space activities, including tie-ups with other companies and a potential sale of part of the business. Schoellhorn said the main focus was on restructuring the business to make it profitable but the group was also “taking seriously” exploratory talks with potential partners.
The company is in early talks with Thales and Italy’s Leonardo about an alliance to create a European space company.
Schoellhorn declined to comment on the partners but said Airbus has had “first discussions with the main stakeholders, whether they are national governments or the European Commission”, adding that a deal was not guaranteed given previous failed attempts.
