Airstrip One

Bae's Future Prospects - 7th July 2003, 23.01

Like this government, BAE does not know which way to turn: Europe or the United States? Our defence company, as all of its rivals have vanished or entered niche roles, has entered a new alliance with Finmeccanica, the Italian state-owned defence electronics group. Such an alliance polishes Berlusconi's Atlanticist instincts and strengthens BAE's hand in Europe compared to the inefficient continental behemoth, EADS.

More of note is the recent alliance between Lockheed and BAE on missile defence systems. This is an inevitable marriage after the agreement of EADS and Boeing on the same area of technology. Boeing is always painted as the suitor for BAE but Lockheed may be the eventual winner in a transatlantic merger.

As the Telegraph points out, BAE's value stems from its relationship with the Ministry of Defence. Its managers wish to flog it off and the government would promote a merger of our last defence company with the US military industrial complex in order to maintain access to the best technology on the planet. One slight problem for the sceptics amongst us:

Boeing is planning to merge with BAE in the same way as I merged with a takeaway Chinese meal last night. BAE would be inside the belly of the giant US beast. It would be acquired, subsumed, taken over, devoured.

Intriguingly, when I talk to ministers and government officials about this potential risk, they seem unperturbed. How so? Well the imperative, they think, is to secure access for BAE to US technology, which is far and away the best in the world. And, slightly to my surprise, they seem to believe that the US government will not prohibit the transfer of such valuable and sensitive knowhow.

If we lose any pretence at an independent defence manufactory, we will have contracted out our security to the States and our domestic policy to Europe. I cannot call Blair power mad any longer since he seems hellbent on giving most of ours away to someone else.