Outlook: Defence concern

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THERE IS no rift in Nato strategy towards the Balkans. But a huge gulf is threatening to open up between the defence industries of Europe and America, which bodes ill for the alliance's ability to fight future wars.

This, broadly, was the message that the US Deputy Defence Secretary, John Hamre, brought with him to London yesterday.

Military experts might dispute his first contention. For all his bellicose rhetoric, Bill Clinton has less appetite for a ground invasion than Tony Blair. He also has Congress to answer to.

As for his second assertion, Mr Hamre might be on to something. The extent of what the military planners like to call "collateral damage" in Kosovo and the apparent inability of Nato's combined might to stop Milosevic's ethnic cleansing machine, suggest that the cohesion between the alliance forces is not all it might be.

Mr Hamre fears this will only get worse if the transatlantic divide deepens and American and European defence contractors develop separate technological capabilities.

The US industrial-military complex is scared stiff of a Fortress Europe mentality for other reasons too. For one thing, it will create European defence giants capable of competing on an equal footing with the likes of Boeing, Raytheon and Lockheed Martin. For another, every merger between two European defence contractors reduces the number of joint venture partners that US contractors can sign up with to bid for work in Europe.

Mr Hamre is already on record as describing the British Aerospace-GEC Marconi merger as an "unhealthy development", and he is certainly not keen to see an outbreak of wider European chauvinism. The model he commends is the DaimlerChrysler merger, which has enabled the Germans to get a toehold in the Pentagon's procurement programme.

The anti-trust implications of transatlantic defence mergers are considerable, but then again, so is the amount of money Europe has wasted on building the Eurofighter when it could have bought US technology off the shelf much more cheaply.

Mr Hamre has not said so in so many words, but the inference of his remarks is that Boeing and Lockheed should be looking to Europe to expand their empires. That is one reason BAe and GEC have told Mr Blair he must not block their merger.