Consolidate or become obsolete, German official tells European arms makers

BERLIN (Reuters) – European weapons makers to consolidate, the German government’s armaments director said on Wednesday, and warned that failing to reduce the continent’s fragmented defence industry could make Europe obsolete.

Arms makers need to move beyond mere cooperation agreements and deepen ties, Benedikt Zimmer told hundreds of industry executives and military and government officials at the Berlin Security Conference, and said the drive was supported by the top levels of the German government.

“You can call me a dreamer, but if we don’t get it done, we are on the best way to making Europe obsolete,” Zimmer said. The German call for consolidation is significant — it was the German government that in 2012 blocked the merger of Britain’s BAE Systems and Airbus, worried that it could result in the loss of high-paying jobs. Mergers in sensitive areas such as defence must be approved by national governments and European Union authorities, so a green light from Germany could help stimulate more M&A activity, industry executives said.

In a separate speech in Berlin, German Finance Minister Olaf Scholz echoed Zimmer’s comments, saying European Union member states should work together more closely on arms procurement to save money and become more effective. Mergers would also have to occur, he said.

“It’s no secret: There will be and there must be consolidation in the European armaments industry,” Scholz said. Scholz, a member of the Social Democrats, who often oppose exports of German arms, said a unified European approach would also ease pressure on companies to export their goods to sometimes problematic buyer countries outside Europe.

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