Trump election means boom for arms makers | Germany| News and in-depth reporting from Berlin and beyond | DW | 11.11.2016
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USA and Europe

Trump election means boom for arms makers

Donald Trump's win in the US presidential election boosted stock trading in the world's biggest arms manufacturers. That was partly down to the candidate's skepticism about NATO, said traders.

The world's major arms manufacturers had a very good day on the stock market on Wednesday. Donald Trump's victory in the presidential election led to a surge in the prices of shares in arms makers, especially large American ones: Northrop Grumman, Lockheed Martin and Raytheon all gained between 5.4 percent and 7 percent in the day following the Republican's victory.

European arms manufacturers could not boast quite such good numbers, but also saw significant increases in their share values. The British firm BAE Systems, which sells everything from warplanes to naval vessels around the world, saw its share prices rise between three and four percent, as did the French Thales Group, which specializes in remote weapons systems, and Germany's biggest military equipment supplier Rheinmetall, which saw its value rise by 2.9 percent.

It wasn't difficult to see the immediate cause for this boost. "Trump has always demanded a bigger contribution from the Europeans in defense efforts," one trader told the N-TV news outlet.

Kombobild Trump/Putin

Both the US and Russia are likely to go on a military spending spree

"Below the line that's all good news for Europe's defense industry." One defense industry manager, who wanted to remain anonymous, told "Die Welt" newspaper: "Now we have two good sellers: Vladimir Putin in Moscow and Donald Trump in Washington."

Not only that, Trump often promised to increase military spending during the campaign, berating President Barack Obama and Democratic nominee Hillary Clinton for allowing the world's biggest military to shrink.

Trump the NATO-skeptic

Analysts have speculated that the skeptical attitude that the president-elect has occasionally expressed about NATO could also lead member states to invest in their own security.

"It's possible that we're going to have to let NATO go," Trump said during his campaign in April. "When we're paying and nobody else is really paying, a couple of other countries are but nobody else is really paying, you feel like the jerk."

"Call up all of those countries... and say 'fellas you haven't paid for years, give us the money or get the hell out,'" he continued, referring to member states' commitment to spending two percent of their GDP on defense every year - in 2016, only five nations met this goal. "I'd say you've gotta pay us or get out. You're out, out, out... [maybe] NATO will dissolve, and that's OK, not the worst thing in the world."

German Defense Minister Ursula von der Leyen already suggested as much in her initial reactions to Trump's victory, when she said, "Europe will have to get used to looking after itself better."

"Of course, we Europeans know as NATO partners that Donald Trump will ask himself what we are contributing to the alliance," she told TV network ARD. "But we will also be asking, what is your position on the alliance? Many questions are open. A responsible and open America is in our interests."

But Sebastian Schulte, defence analyst and Germany correspondent for military magazine "Jane's Defence Weekly," thinks that the advent of Trump is not the direct cause of this increase in military spending.

"What we're observing now with the President-elect Donald Trump is that the world is becoming more complicated and unpredictable - and Donald Trump is not the reason, he's a symptom of that," he told DW. But he also underlined how long term this process would be - "It doesn't take a day to develop a new tank, it takes a decade."

Deutschland Spitzentreffen der Bundeswehr in Berlin Ursula von der Leyen (picture-alliance/dpa/W. Kumm)

Von der Leyen is increasing Germany's military budget


In fact, Germany, like many NATO countries, has been already steadily increasing its military equipment for the past two years - ever since the Russian annexation of Ukraine's Crimean peninsula in 2014. In spring, von der Leyen said that the defense budget would increase by an extra 140 billion euros ($153 billion) by 2030.

Not only that, as part of NATO's plans to reinforce defenses on the Baltic borders, it was revealed at the Brussels summit at the end of October that Germany would be deploying Leopard 2 tanks as well as troops to the area. In 2015, the German government halted plans to scrap many of its tanks and opted to modernize instead and increase its overall fleet to 350.

Earlier this week, the German military also said it was investing 1.5 billion euros in five new military warships, citing its commitments to NATO (despite having told the German parliament earlier in the year that they were unnecessary).

But the western defense industry is dependent on non-NATO buyers as well, and "Die Welt" reported that many German arms makers are concerned that the restrictions on weapons exports imposed by the Social Democrats' Sigmar Gabriel mean that they could lose out on the new boom.

But Schulte thought that German arms companies would do well enough regardless. "I would expect German defense exports to rise, regardless of what a specific political party has to say about it, because the demand is increasing globally," he said.

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