Page 90 - Five Forces of Americanisation Richard Hooke 04072025 final post SDR1

The UK Defence Industry in the 21 Century
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The Five Forces of Americanisation

The DSIS and subsequent “Refresh” set out a narrow focus for future spending with domestic
UK suppliers on the nation’s current definition of its self-defence and deterrence needs. This
changed with the arrival of a new UK government in 2024, unlocking a freedom to develop
the country’s agility, responsiveness and capacity for derivative innovation or spiral
development. It also offers the chance to exploit the potential for national wealth creation
arising from export sales in a rapidly expanding worldwide market. In the new, transactional
world shaped by evolving US foreign policy and its focus on coercive dealmaking, it is
important to retain any form of leverage that either projects power or where its absence – as
in the UK’s former ownership of in-flight refuelling technology used in the USAF KC-45 tanker
programme – would compromise its projection or use.
Hence on M&A, a reference to the Competition & Markets Authority (“CMA”) or the Cabinet
Office should be a last resort in determining whether a sale is in the national interest. It should
simply provide public reassurance that the proposed transaction reinforces the strength and
credibility of the UK’s DIB.

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Simply looking at credit rating methodologies demonstrates that the structure, aims and
ambitions of private equity funds are not appropriate to running a British defence company.
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Their management of portfolio risk and their reliance on debt (“leverage”) and arbitrage to
create extraordinary, event-based financial gains are inconsistent with the prudence and
conservatism required to support a nation’s DIB management policy.
3. Integrating Trade, Diplomacy and Defence policy and practice
There is no doubt that the USA market will continue to be vitally important to UK defence
contractors and sustaining or developing military interoperability will continue to be a major
preoccupation. In spite of its government’s attitude of America First and its insistence that its
European allies must now act independently of US military force. For over 80 years, the USA
has fought in partnership with the UK in defence of their respective countries on foreign soil
– not at home. As SIPRI reports, even in today’s war-torn world, “the Americas is the only
region (in the world) not to have had a major armed conflict in the period 2018–23”. So, unless
the UK decides to withdraw from further expeditionary military campaigns, interoperability,
both with the USA and with the EU, will become increasingly important. Its implications for
diplomacy and trade will affect the UK’s development or sustainment of overseas markets,
from the Middle East to Africa, South East Asia and Australasia. A major challenge will be to
maintain or strengthen relationships with allies who have been disadvantaged in any way
(tariffs on exports, withdrawal of funding and support programmes, both directly or via NGOs,
for example) by new US policy

For UK contractors, a presence on existing US programmes and commitments reach far into
the future. This provides significant financial, technological and commercial leverage.

It is worth looking again at how defence programmes are designed. The sale of defence
equipment to a foreign country is a long term business, usually envisaging the threat of a
conflict at some time in the future and configured accordingly. Unsurprisingly, the process
develops intimacy between buyer and seller and involves a wide range of support services and
equipment, from training and maintenance to specialised infrastructure and provisioning. The
duration of the programme spans several years, usually, if relevant, longer than one single
term of government. Very often, the programme involves reciprocal trade.
Back in 2005, according to BAE Systems, “under reciprocal trade, export sales are
conditional upon the provision of industrial or economic benefits to the importer’s
country. “

Trade associated with an arms contract is considered controversial by NGOs and by
governments alike, since it is said to distort the normal course of business. It is also held to

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07/07/2025 Richard Hooke 2025