How does Spain affect the breakdown between France and Germany over the European combat aircraft?

MadridIt has been a business, but also political, outcome that many imagined: the breakdown between France and Germany to move forward with a new European combat aircraft within the framework of the FCAS military program. But the fact that the news has not generated surprise – there had been speculation for some time about the friction between Paris and Berlin around this military project – does not mean that it is not a headache for some. The failure to move forward with this latest generation combat aircraft has left Spain, the other state that is part of the program, trapped. And particularly the defense company Indra.

"It is very worrying news for Europe and for European strategic autonomy. It is undoubtedly a failure," lamented the Minister of Defense, Margarita Robles, this Tuesday from the Senate. In 2020, the State became part of the program that France and Germany had launched some time before: the Future Combat Air System(FCAS, in its English acronym). What has now exploded is the latest generation combat aircraft, although the program goes further and includes projects for satellites, drones, and land and naval units to act in a coordinated manner. Spain participated in one third of the budget and workload of the program, which globally amounted to about 100 billion euros. From the Ministry of Defense, and in response to questions from this newspaper, they do not detail how many millions have been invested so far.

The objective of this military aircraft was to replace the old combat aircraft models used by the three countries: Spain and Germany the Eurofighter Typhoon, and France the Rafale, which according to the defense sector have become obsolete. In fact, the Spanish government itself had planned for the army to stop using the Eurofighters in 2030, but for the moment they will continue in use until 2040. "The [economic] interests of the [defense] industry have taken precedence, not the interests of Europe's security and defense," stated Robles.

Although the Franco-German axis has not reached an agreement – Friedrich Merz recently acknowledged that Germany had different needs from France – the main discrepancies are between the French company Dassault and the German subsidiary of the European consortium Airbus. The two firms could not agree on the budget and the workload sharing. Dassault, for example, intended to have control by participating in 80%. Now, for Dassault, the idea of going it alone is a way to strengthen the French military industry, while from Airbus it is seen as an opportunity to take a step forward and lead an alternative alliance. "The need still exists," indicate industrial sources close to the process.

Indra's role

In the Spanish case, the company chosen by the Spanish government as coordinator of this project was the defense company Indra. SEPI, the State's investment holding and the company's largest shareholder with 28% of the share capital, has asked it to analyze the impact of the project's failure. "We will ask it to carry out an immediate analysis," anticipated the president of SEPI, Belén Gualda, this week in a appearance at Congress. "We will do everything possible so that what was planned [a new fighter jet] does not diminish the autonomy of the defense industry in Europe," she added.

Indra has declined to comment and has not provided figures on the impact. In any case, the market's first reaction has been to interpret that it will be a headache for the company – and also for many small and medium-sized companies that depended on it – and this Tuesday Indra already fell 4.2% on the stock market. Specifically, the company now led by Àngel Simón had a specific role within the project: to develop the electronics systems for the fighter jet.

However, the Spanish defense industry considers the cancellation of the program to be very bad news. Sources in the sector lament to this newspaper that neither Paris nor Berlin informed Pedro Sánchez's government of the project's liquidation, which shows that, despite representing 33% of the project's budget, Spain, and particularly Indra, have "never been at the negotiating table".

Robles assured this week that a "solution" would be sought, after Sánchez unsuccessfully asked months ago for the project to be unblocked "once and for all." In fact, other voices in the sector indicate that the central executive has been lobbying behind the scenes, away from the media spotlight.

In this regard, six of the largest Spanish defense companies – including Indra and the Airbus subsidiary in Spain – signed a "joint declaration of commitment" on Thursday with the FCAS project, in which they express their "support for Spain and Europe in the face of the possible reconfiguration of the program." The document is similar to one presented by eight German companies a few days earlier.

Without a clear plan B

Be that as it may, Spain plans to seek a plan B to avoid falling behind in renewing its fighter jets. "There are alternatives," assured the Minister of Defense, who in any case pointed out the need for "joint [European] programs." The idea that the State will go it alone is cooling down, as France is expected to do through Dassault, which, as it has done so far with the Rafale, will develop its own French fighter jet. Therefore, various options are put on the table, which also apply to Germany, which has also been left without a program.

Among the most plausible, the first is to try to find a place in GCAP, the joint program to develop a new generation fighter jet, the Tempest, in which the United Kingdom, Italy, and Japan participate. A second is to partner with Sweden or buy its Gripen aircraft, developed by the multinational Saab. Another is to acquire future French aircraft.

But time is running out, and if a European solution with a clear timeline is not found, several industry sources believe that eyes will have to turn to the United States. In fact, the FCAS aircraft was already accumulating delays. Here comes into play the American fighter jet F-35, a model that would be capable of renewing this military technology, particularly the vertical landing model B, and which should serve to replace the aging British-made Harrier fighters still used by the Spanish armed forces, although some sector sources point out that the Navy could be left without a new aircraft until 2030.

It is taken for granted that Pedro Sánchez will not open the door to acquiring them, especially considering the diplomatic clashes with the United States, but in a Spanish PP government, should they win the next general election, there are doubts about the refusal. "It is an aircraft that is far superior [to the model Spain uses]," explains one of the consulted sources, who acknowledges that it will be "operational" very soon. The problem with this is that all the technology, such as the software, would be left in the hands of the US. "They [the US] can control at all times whether the aircraft works or not," warn those in the defense sector.