Summarize this content to 2000 words in 6 paragraphs in Arabic American defence executives are braced for a Donald Trump return to the White House that could be more disruptive than his first term, when he showed a willingness to shake up the status quo and personally intervened in procurement decisions. His insistence in 2018 on a cut-price contract for two new Air Force One planes left Boeing, the long-term provider of the presidential aircraft, nursing heavy losses. This time, industry executives and investors fear the Trump administration will disrupt the established defence hierarchy by giving lucrative contracts to newer players.Since Trump’s election victory in November, shares in most of the main US defence groups have underperformed the wider S&P 500 index amid uncertainty over what a second term holds for defence spending and weapons programmes. The emergence of defence technology groups such as Palantir, co-founded by tech billionaire Peter Thiel, and drone maker Anduril, which have already been aggressively vying for a large slice of the $850bn defence budget, has also unnerved investors in traditional contractors. “I think there’s definitely an interest in the incoming administration in encouraging new entrants into the defence space,” said Stacie Pettyjohn, director of the defence programme at the Center for a New American Security think-tank. During his confirmation hearing on Tuesday, Pete Hegseth, Trump’s defence secretary pick, emphasised the need to speed up weapons development through competition and innovation. He criticised the Pentagon for becoming “too insular”, trying “to block new technologies”, while praising Silicon Valley, which “for the first time in generations, has shown a willingness, desire and capability to bring its best technologies to bear at the Pentagon”.An added unknown is how big an impact the Department of Government Efficiency’s war on waste will have on the defence department and how procurement might change. “For industry and investors it can be very destabilising — no one has a clear crystal ball about what is going to happen in terms of US defence spending and how the sector might change,” said Byron Callan, managing director of research group Capital Alpha Partners.Despite Trump’s unpredictability, industry experts said they saw several battles playing out that would shape US — and by extension European — defence this year.Cuts in some of the large weapons programmes are possible — especially if the Pentagon looks to release spending for new types of defence technology focused on artificial intelligence or software. Lockheed Martin’s F-35 — the world’s largest defence programme — is seen as the biggest target following Elon Musk’s criticism of the stealth aircraft last year in social media posts. It accounts for more than 25 per cent of Lockheed’s sales alone. “Proposing to cut a Virginia-class submarine or 24-36 F-35s buys a lot more autonomous weapons and the networks to operate them,” said Callan. The war in Ukraine has turbocharged the development of drones and other unmanned systems, all of which play to the strengths of the likes of Palantir and Anduril. The latter, along with General Atomics, was selected last year by the US Air Force to build and test drone prototypes for the next phase of the service’s collaborative combat aircraft programme, which seeks to build a fleet of unmanned aerial vehicles. The companies were chosen over Lockheed, Boeing and Northrop in what was seen as a seminal moment for the industry. Even before the war in Ukraine, the Pentagon had been working to diversify its industrial base. Two years ago it established an Office of Strategic Capital, which makes private capital available to companies with technological innovations that can be used for national security. Such efforts are expected to accelerate under Trump. His nominee for the number two role at the Pentagon, billionaire investor Stephen Feinberg, “comes from the Wall Street community so understands the [venture capital-backed defence tech groups] and how they operate. This should help facilitate the bringing in of new capabilities from new players”, said Cynthia Cook, who heads the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies, a US think-tank.Other connections link Trump’s cabinet picks and tech billionaires. Vice-president JD Vance has close ties to Palantir’s Thiel. Some of the large defence groups have agreed collaborations with the new technology contractors but, given the latter’s ambitions, these relations could well tip into full-scale competition. Last October, Palantir published a “treatise”, titled “The Defense Reformation”, on reshaping the Pentagon’s procurement, stoking the ire of many industry veterans. Executives at some of the large contractors have publicly said little about the tech groups’ aspirations. However, one industry adviser pointed to rising concerns among executives. “What I do think [the large contractors] are worried about is whether or not the DOD puts their finger on the scale to help [newer players]” and try to help develop new, rival defence groups, he said. Chris Kubasik, chair and chief executive of L3Harris Technologies — which agreed a strategic partnership with Palantir last year — on Wednesday wrote to Musk and other leaders about the new efficiency drive with its proposed reforms to modernise America’s defence ecosystem. Kubasik says in the letter that America’s procurement systems are “slow and bureaucratic” and do not provide “our warfighters with new capabilities at the speed of relevance to the threats they are facing”. Kubasik’s reforms include easing reporting and accounting standards for defence contractors and setting up a “central contracting arm” within the office of the defence secretary to manage joint procurement programmes. Much of what happens with the defence budget will depend on Congress, controlled by Republicans. But some congressional Republicans are still hawkish on defence spending, not to mention lawmakers with traditional defence manufacturing in their districts who would not want to put jobs and regional economies at risk. Europe’s response to Trump’s new administration is also being closely watched. US defence exports to Europe could be at risk as governments focus on bolstering their domestic industrial base. Oliver Dörre, chief executive of German radar and sensor maker Hensoldt, told the Financial Times last month that Europe should emulate the US by pushing for more local procurement. Others, however, believe governments — and industry — will keep their reliance on US players. “In some cases, Europe does not have the product that the US can supply — the F-35 stealth fighter being the most obvious example,” said Sheila Kahyaoglu, analyst at Jefferies, in a note. Despite the noise, analysts warn, drones and autonomous systems are today no replacement for fighter jets, submarines or ships. Pettyjohn questioned the wisdom of walking away from established programmes. A shift away from weapons such as the F-35 would be neither “feasible, nor . . . smart”, she added.Robert Stallard at Vertical Research Partners, also played down the potential impact from the tech entrants: “I just cannot see the US military taking the risk of giving major programmes to these start-ups without a lot more time and experience under their belts.“Unlike in tech or whatever, the military cannot take unacceptably high levels of risk,” he noted, adding: “Elon can blow up a rocket or two, but if the US military loses a war, it is terminal.”
