US Concerned About Europe Limiting Military Contracts to American Companies

Ellen Lord, the Pentagon's undersecretary for acquisition, addresses the Defense Innovation Board at its quarterly meeting at the National Defense University in Washingon, D.C., on March 21, 2019. DoD photo by Lisa Ferdinando.

LE BOURGET, France—US officials went to the Paris Air Show this week looking to raise concerns with allies about European efforts to increase defense spending and procurement, which they say could unintentionally push American products and interests out.

The European Union’s Permanent Structured Cooperation policy aims to increase the union’s focus on defense, while also calling for a limit on involvement by third-party states. This effort, known as PESCO, is coupled with the European Defense Fund—an EU account for joint European military projects.

Ellen Lord, the Pentagon’s undersecretary for acquisition, said PESCO’s third party limit is a “large concern across the interagency” leaders in the US government, because “we want to make sure partners and allies have the advantage in utilizing the best technology in the world”—products created by American companies.

Lord and Andrea Thompson, the under secretary of state for arms control and international security affairs, sent a letter to the EU in May saying PESCO had “poison pills” and that a reciprocal policy of the US restricting contracts to Europe would not be welcomed. As of now, the US isn’t rushing to conclusions or doing anything “disruptive” in response, Lord said in Paris.

“We want to make sure that we are interoperable with our partners and allies, working together is of critical importance,” Lord said. “Right now, European companies enjoy an enormous amount of business in the US and we want to make sure US companies have the same opportunity.”

Lord said the European military companies she met with early at the air show were “unaware” of the situation, and she said on June 17 she was “not sure European leaders understand” the impact of PESCO on the US.

The US is looking to increase its defense exports, specifically with munitions and intelligence, surveillance, and reconnaissance. There’s been “a lot of communications,” and the US “constantly [has] allies and partners coming and asking us for more and more. We need to understand how we take care of our own interests while supporting our allies and partners in a secure way.”