* Poland brings forward decision on missile system
* Lockheed Martin sees more demand in eastern Europe
* Western Europe defence budgets unlikely to increase
By Victoria Bryan and Cyril Altmeyer
BERLIN, May 21 The crisis in Ukraine may prompt
governments, especially in eastern Europe, to move more quickly
on defence procurement decisions - but western Europe is
unlikely to loosen its restraint on spending, industry
executives said on Wednesday.
With eastern European states nervous about Russia after it
annexed Ukraine's Crimea region and massed 40,000 troops on
Ukraine's borders, Poland already brought forward a planned
decision on a new multi-billion-dollar missile defence system.
Other countries close to Russia and Ukraine may also start
looking to boost defences or order more helicopters, executives
at the ILA Airshow in Berlin said.
Lockheed Martin, which heads the MEADS consortium
bidding for the Polish missile tender, said it was seeing
increased interest in the missile system, notably from eastern
"We're seeing greater interest throughout the region and
throughout NATO," Marty Coyne, business development director for
Lockheed's air and missile defence business, said.
"Should Poland make a decision, there's interest in eastern
Europe in how they could participate in a component type system.
So instead of a 'Polish shield' it would grow to an 'Eastern
European' shield," he added.
Airbus Helicopters said the Ukraine crisis had led
to increased enquiries for its products and could lead to new
purchase tenders. Military helicopters are of interest because
they are used to transport troops quickly from place to place.
"Everybody in Europe and outside Europe is evaluating the
consequences of this crisis on defence equipment, on military
scenarios and I believe this will have an impact on acquisition
programmes, both in quantity and in nature," Guillaume Faury,
CEO of Airbus Helicopters told reporters.
"Russia was more and more considered as a non-issue and now
it's back," he added.
Russia said on Wednesday troops were pulling back from the
border with Ukraine where eastern regions have fallen largely
under the control of pro-Russian rebels.
A withdrawal could ease tension before Sunday's presidential
election in Ukraine, but the crisis has left its mark on demand.
"If you move to the east, it becomes more perceptible, but
it has not transformed into anything concrete or tangible,"
Christian Scherer, head of marketing and sales at Airbus Defence
& Space, said.
ALL QUIET IN THE WEST?
While eastern European countries may be reviewing plans and
pushing through decisions, it seems unlikely that western
governments will be increasing defence spending any time soon.
Defence budgets in the five largest Western European markets
- Britain, France, Germany, Italy and Spain - decreased by 1.3
percent in 2013 according to IHS Jane's.
In Europe overall, budget defences are expected to fall to
$237 billion by 2018, compared with $242.8 billion in 2013,
Jane's also said in the report published earlier this year.
Glynn Bellamy, UK head of Aerospace and Defence at KPMG,
said while he thinks the crisis will accelerate decision making,
it won't necessarily lead to an increase in overall spending.
"A threat such as that will inevitably cause people to
reprioritise," he said. "But countries have realised they have
to balance their books. If, for example, they have to increase
spending on missile defence, does that mean they will have fewer
Germany's new coalition government is carrying out a review
of its defence portfolio and the outcome is not expected until
the second half of this year, frustrating many at the airshow.
Proposals announced on Monday by Airbus, France's Dassault
Aviation and Italy's Finmeccanica for the
development of a new European drone met with a cool reception
from German defence minister Ursula von der Leyen, who said
there was no rush to make a decision.
Germany did however announce a stopgap measure to provide
more Israeli drones while Europe produces its own technology.
(Additional reporting by Sabine Siebold and Tim Hepher, editing
by Louise Heavens)