Uncertainty over the relationship between the U.S. and Europe’s NATO members is already triggering a revival in European arms production, and the current spat between the White House and Germany may speed up that process a little more. As we noted in a recent editorial, not only has the Trump administration announced the withdrawal of 5,000 U.S. troops from Germany, but there was also some confusion over the status of the planned deployment in Germany of greater American long-range missile capability.
The withdrawal of the 5,000 is still on the agenda (there is talk that a number of them would be moved to Poland, which would reduce some of the damage and could even end up as a plus), but the deployment of the cruise missiles appears to be off the table for now. Diplomatically or undiplomatically (take your pick) German Chancellor Merz has said that this does not relate to Trump’s irritation with him (over some remarks the chancellor had made about the war in Iran) but is due to the fact that “the Americans don’t have enough for themselves right now. Objectively speaking, there is virtually no possibility of the US supplying weapons systems of this kind.” Not terrific news if so.
Despite this, the Germans are said to want to buy the systems (Tomahawk cruise missiles together with Typhoon ground launchers) for themselves, although when those could be delivered must obviously be uncertain.
But there is a plan B.
Rheinmetall plans to start producing “deep strike” weapons for Germany and other nations as early as this year as Europe races to fill capability gaps in its plans to deter Russia. The German arms group said its new joint venture with Dutch defence start-up Destinus, announced last month, would start production late this year or in early 2027.
This is a third-best solution, as the first missiles to go into production will have a range (about 400 miles) less than half that of a Tomahawk, leaving an undesirable gap in Europe’s defenses. Nevertheless, it is a plus for the European arms sector and a move into yet another weapons class by Rheinmetall, Germany’s largest arms company.
Meanwhile, the Financial Times reports that Helsing, a German defense technology group (to oversimplify, it makes AI-enabled drones) is set to raise new funding at a valuation of about $18bn. It is a sign of changing times that, if the deal is successful at that price level, Helsing would be one of the continent’s most valuable start-ups.
Another sign of changing times is that its key backer is a Swedish tech billionaire, Daniel Ek, who made (most of) his money as a co-founder of Spotify.