Brexit should not fundamentally alter strong US-UK ties: Pentagon

By: | Published: July 11, 2016 5:35 PM

U.S. arms makers, most of which have big offices in London, are keeping a close on the situation, and some are now considering setting up offices in other parts of Europe.

U.S. arms makers, most of which have big offices in London, are keeping a close on the situation, and some are now considering setting up offices in other parts of Europe. (Reuters)U.S. arms makers, most of which have big offices in London, are keeping a close on the situation, and some are now considering setting up offices in other parts of Europe. (Reuters)

Britain’s vote to leave the European Union is not expected to fundamentally alter its ties with the U.S. military or weapons-related trade, the Pentagon’s chief arms buyer said.

U.S. Defense Undersecretary Frank Kendall said it was too early to assess specific trade impacts since it would take a long time to formalise Britain’s exit from the EU, but he did not foresee a big impact on the strong bilateral relationship.

“I don’t see any reason why it should fundamentally affect our relationship with the UK or our business deals with the UK,” Kendall said.

He said he hoped the decision would not affect Britain’s requirements for military equipment since it would remain a key partner in NATO.

U.S. arms makers, most of which have big offices in London, are keeping a close on the situation, and some are now considering setting up offices in other parts of Europe.

U.S. government and industrial officials say they do not expect a significant short-term impact on the Lockheed Martin Corp F-35 fighter jet programme, despite the fact that UK firms builds about 15 percent of the content of the plane.

Air Force Lieutenant General Chris Bogdan, who runs the F-35 programme for the Pentagon, told reporters this weekend that his office was carefully assessing any potential impact on trade and tariffs stemming from Britain’s vote to leave the EU.

A drop in the value of the British pound could help lower some costs.

At the same time, the lower pound could affect Britain’s ability to afford new equipment, industry executives said.

Britain’s top defence procurement official Philip Dunne last week said he did not expect the drop in the currency to have a big impact on the F-35 program since the ministry had hedged its currency rates weeks before the vote.

Bogdan said the F-35 program office also engaged in currency hedging to some extent, which would partially, but not completely, mitigate the impact of the drop in the UK currency.

Jeff Babione, Lockheed’s F-35 program manager, also said he did not foresee any near-term effect on the cost of the jets.

“In the near term I don’t see anything that would affect the affordability of the F-35,” he told reporters last week.

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