* Severe euro zone crisis could impact F-35 program
* Dempsey eyes potential for civil unrest
* "The euro zone is at great risk" - Dempsey
By Phil Stewart
WASHINGTON, Dec 9 The top U.S. military officer
said on Friday he believed the euro zone was at great risk and
warned that any breakup could have consequences for the
Pentagon, even threatening its top weapons program.
General Martin Dempsey, chairman of the U.S. military's
Joint Chiefs of Staff, said he met U.S. Federal Reserve
Chairman Ben Bernanke for two hours last week following a
half-day visit to the Fed in New York last month.
His comments appeared to partly reflect what he learned in
those sessions, part of an effort by Dempsey to get up to speed
on global economic issues likely to shape his decisions as
chairman - a post he assumed in September.
"The euro zone is at great risk," Dempsey told an event
hosted by the Atlantic Council, a Washington-based think tank.
"I know that they've taken some measures here with the 17
members of the euro zone to try to better align - and I guess
that's the right phrase - monetary and fiscal policy. But it's
unclear, to me at least, that that will be the glue that
actually holds it together."
Global stocks rebounded and the euro rose on Friday after
nearly all European Union leaders agreed to build a closer
fiscal union to address the region's debilitating debt crisis.
It was unclear if Dempsey was aware of the accord when he made his remarks.
A four-star general with a master's degree in English,
Dempsey acknowledged he was no expert on economics and it
is rare for a chairman of the Joint Chiefs of Staff to comment
so extensively on economic issues.
But Dempsey suggested part of his concern was that the U.S.
military could be exposed to any unraveling of the euro
zone. "I mean (exposed) literally, through contracts and
programmatics, but also because of the potential for civil
unrest and the breakup of the union that has been forged over
there," he said.
He did not elaborate on concerns about civil unrest but
experts cite the potential for riots, shortages and bank runs
in the event of a euro zone breakup. The United States' militaryhas more than 80,000 troops in Europe and more than 20,000
Dempsey pointed to the F-35 Joint Strike Fighter, the
Pentagon's costliest weapons program, which the United States
is developing together with partners including Britain and
Italy. A crisis in Europe, if it were serious enough, could
force allies to re-allocate spending which had been earmarked
for the F-35, he said.
That, in turn, could drive up the cost of individual U.S.
aircraft at a time when U.S. defense budgets are squeezed.
"It will clearly put them at risk if all the economic
predictions about a potential collapse were to occur -
inflation, devaluation," Dempsey said.
"Obviously they'd have to make some national decisions
about reallocation of resources that would, could potentially
affect the JSF."
(Editing by Todd Eastham)