MBDA, the manufacturer of the British Brimstone missile, is set to be the main economic beneficiary of last week’s parliamentary decision authorising UK airstrikes in Syria.
With expectations that the air campaign could last for at least three years the Brimstone missile, which costs £175,000 apiece and is marketed as the “most accurate precision strike product on the market”, is likely become a steady earner for MBDA, a European defence consortium which specialises in missiles and missile systems.
The company – which is jointly owned by the UK’s largest defence company BAE Systems (37.5 per cent stake), Airbus Group (37.5 per cent) and Italy’s Finmeccanica (25 per cent) – produced 3,000 missiles in 2013 and has an order book of €10.8 billion (£7.8bn) which is now set to increase significantly as missiles used in Syria and Iraq are eventually replaced.
The accuracy of Brimstone was used by Prime Minister David Cameron during Wednesday’s 10-hour debate in the House of Commons to make the case for British intervention in Syria.
But the RAF has yet to say when the first Brimstone missiles will be used in Syria: the weapons used to destroy an IS-controlled oil field in eastern Syria within hours of the decision in Westminster on Wednesday evening were US-built 500lb Paveway IV missiles.
Two Tornado ground attack warplanes equipped with Brimstone explosives left for RAF Akrotiri in Cyprus from RAF Marham in Norfolk later the same day.
With little appetite among the coalition forces to put boots on the ground other defence companies are unlikely to directly benefit from Wednesday’s parliamentary decision unless coalition aircraft or drones start being downed in significant numbers over the “operating area”.
Although the international coalition’s war against Islamic State is set to boost spending on Europe’s industry by $50 billion (£33bn), last week’s decision by the UK to start bombing in Syria has so far had only a muted impact on the share prices of UK defence companies.
The reason being that defence stocks were already riding high following last month’s terrorist attacks in Paris and the UK government’s announcement that it planned to spend £12 billion on extra military equipment as part of its strategic defence and security review.
The shares of some of the UK’s main defence firms – including BAE Systems, Rolls Royce and Babcock – surged in the last week of November following Cameron’s announcement that government spending on new equipment will increase to deal with “diverse” threats.
The government pledged to create two new “strike brigades” of up to 5,000 military, capable of tackling Paris-style attacks; up to 600 armoured vehicles; nine maritime aircraft and 24 new F35 fighter jets.
In the same announcement Cameron also warned that the cost of renewing the UK’s Trident submarines would likely increase £6bn to £31bn. Over the next decade UK spending on defence is now expected to climb to £178bn.
Defence spending by NATO countries declined by an estimated 1.5 per cent this year to $893bn (£595bn) according to figures released last week by the 28-nation defence alliance, slowing from a 3.9 per cent fall in 2014.
Last year Britain, Estonia, Greece and the US were the only members to meet an agreed target of spending 2 per cent of gross domestic product on defence. However, after years of austerity imposed by the global slump, spending on defence is expected to hike because of the geopolitical threat posed by the Syrian crisis as well as heightened tensions with Russia following last year’s annexation of Crimea.
In addition to the UK’s earmarking of a further £12bn of additional defence spending, France has recently halted plans to cut almost 10,000 military personnel while Germany – which on Friday decided to deploy military personnel to Syria in a non-combat role – will spend an extra £8bn on defence.
HOW THE BRIMSTONE MISSILE COULD BE A GAME CHANGER
Although the US and France are considering buying the British-designed laser-and-radar-guided Brimstone missile, Britain and Saudi Arabia are currently the only two countries that have bought the missile, which is designed to be so precise that the surrounding area of a hit is virtually undamaged, reducing civilian casualties and collateral shrapnel damage.
The hi-tech smart missiles, which have seen service with the RAF in Libya and Afghanistan, are capable of hitting moving targets travelling at speeds of up to 70mph and can be launched from an aircraft up to seven miles away and from as high as 20,000 feet.
Because of their pinpoint accuracy, the state-of-the-art missiles have been used to devastating effect in Iraq since last September against cars, armoured vehicles and fortified compounds. The MoD recently disclosed that 93 Brimstone missiles were fired in Iraq in the year to September.
Brimstone’s ability to deliver so-called surgical strikes could prove to be the UK’s main contribution to the coalition military campaign against ISIS in both Syria and Iraq by broadening the range of enemy assets that can be destroyed at minimal risk to civilians.
The international coalition countries who have so far carried out strikes in Syria don’t have the capability of launching missiles of Brimstone’s size from fast jets and instead have to do so from unmanned aerial vehicles or helicopters, so Britain’s decision to start operations in Syria could be of critical military importance in a campaign that aims to degrade ISIS forces by targeting individual jihadis who may be living among civilians used as human shields.
The accuracy of the Brimstone will also be useful if infrastructure is targeted as oil fields can be repaired more easily once recaptured from ISIS if there is less widespread damage.
But Brimstone missiles rely on good intelligence on the ground and from spy planes for their effectiveness – and to justify the high cost of their deployment.
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