NATO’s guideline of each member spending 2% of its GDP on defense within a decade is about to be reviewed as the alliance’s heads of state meet in Vilnius this week. Of 31 nations, 10 meet the benchmark, with the United States leading in total expenditure. In light of increased tension due to Russia’s invasion of Ukraine, NATO arms deals are experiencing a boom, with U.S. State Department approving $50 billion worth of arms sales to 14 alliance members this year. Meanwhile, the defense industry business is stirring with potential sales and acquisitions.
Key Points:
- Since NATO’s Defense Investment Pledge in 2014, 10 out of 31 member nations now meet the 2% of GDP defense spending goal. The U.S. leads with an $851 billion defense budget in 2023.
- NATO arms deals are on the rise, as the U.S. State Department approved over $50 billion in major arms sales to 14 alliance members this year. This is a notable increase compared to 2022, mostly due to Russia’s invasion of Ukraine.
- With its significantly increased defense spending, Poland accounts for a large portion of the approved deals, with a $15 billion missile defense deal and $10 billion for High Mobility Artillery Rocket System launchers.
- L3Harris Technologies is contemplating selling its $1 billion avionics unit, pending a decision to purchase Aerojet Rocketdyne for $4.7 billion. Several defense companies and private equity firms compete to buy Ball Corp’s aerospace business.
- New contracts have been awarded in the defense industry, including the Army granting RTX a $117.5 million contract for the production of 3rd Generation Forward Looking Infrared sensors and a $37 million contract awarded by the Defense Ordnance Technology Consortium to design the Next Generation Evolved SeaSparrow Missile Launch System.
Source: https://www.defenseone.com/business/2023/07/defense-business-brief-july-10-2023/388345/
