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'Britain is forging a new relationship with Europe...I have no doubt at all that is where the future interests of my country lie.' Thus spake Tony Blair having announced the 'historic' St Malo Declaration on 4 December with French President Chirac and Prime Minister Jospin. This was a declaration of intent to build a unified European military force. It came just weeks before the 1 January 1999 launch of the European single currency, the euro. Trevor Rayne reports.

The St Malo Declaration states, 'the union (EU) must have the capacity for autonomous action, backed up by credible military forces, the means to decide them, and a readiness to do so, in order to respond to international crises.' Dependence on US forces in former Yugoslavia and their role in the Gulf demonstrate the relative incapacity of the European bloc to assert its interests abroad by force.

In British Aerospace and GEC/ Marconi, Britain had Europe's two biggest arms producers. Combined EU defence expenditure is 60% of that of the USA. However, Europe has 10 main contractors for military aircraft and helicopters, the USA has 5; Europe has 4 contractors for tanks, the USA has 1; Europe has 12 contractors for missiles, the USA has 3. The costs of weapons research and production force a concentration of the European arms industry and the British firms would naturally be at the centre of it. The alternative is dependence on the USA.

The British ruling class must draw closer to the European project for economic, social and political reasons. However its multinationals, with overseas investments exceeded only by those of the USA, and the global role of the City, make it dependent on linking up with US military force to protect its global interests - witness the Gulf. For the USA, Britain can play the role of Trojan Horse, providing an entrance into and undermining attempts to build an independent European bloc: a Fortress Europe. The dance of the defence consolidation game reflects these counter-points.

While British Aerospace conducted negotiations to merge with Germany's DaimlerChrysler Aerospace (DASA) to form the core of a European Aerospace and Defence Company, which the French and others would later join, GEC/Marconi encouraged suitors from the USA, Lockheed Martin and Northrop, with some enticement to the French Thomson thrown in for good measure to boost the selling price. Lockheed has partnership agreements with 75 British companies and is a major supplier to the RAF. GEC/Marconi was the sixth biggest defence contractor to the USA, having purchased a Texas firm Tracor. The US state favours such trans-Atlantic deals.

British Aerospace and DASA between them own 58% of Europe's main airframe manufacturer Airbus and will assemble 412 of the 620 Eurofighter aircraft ordered. They looked suited to launch the new European arms endeavour. But, in the midst of £220-a-night hotels with accompanying helicopter pads and South African golfing breaks, their executives could not agree on values of shares in the proposed merged company, nor could they agree on control over it. Would it be a British-German firm or a German-British firm?

Fearing that GEC would sell Marconi to the USA or France and challenge its lucrative British government orders, British Aerospace bought the business for £6.9 billion instead. German and French executives claimed they had been stabbed in the back and the route to European consolidation blocked. Now British Aerospace is second only to Lockheed Martin for weapons sales with $16 billion a year. The nearest European rivals sell $5 billion. British Aerospace is now Britain's biggest manufacturing company with 99,500 employees.

British Aerospace's sales to the US have increased from 12% of the total to 22%. It has straddled the trans-Atlantic and European positions. British Aerospace holds 35% of Saab of Sweden and is negotiating similar deals with Spain's Casa, Alenia of Italy and Norway's Konigsberg. Whatever the French or Germans do, British Aerospace presents them with a fait accompli; it intends to dictate the future course of the European defence industry and the City will not be sidelined.

There are 'left of centre' governments in 13 of the EU states. Writing in The Independent, 17 December 1998, Ken Livingstone states, 'We need to spell out quite clearly the benefits of Britain being part of a euro-currency bloc large enough to resist the attacks of speculators which have so often in the past derailed the plans of Labour governments.' Social democracy spreads the illusion of a progressive European project, all the better to allow the giants of finance capitalism to build a powerful imperialist contender, getting ready to challenge for the world title.

FRFI 147 February/ March 1999

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