Partnership is a funny thing. The successful ones leave both sides feeling they're better off.
And up until recently, U.S. foreign military sales seemed to function very much that way. The U.S. dominated, generating immense revenue for the industrial base ($33.6 billion for 2016) and ensuring effective platform integration with allies. And in return, allies took advantage of the innovation and investments happening among U.S. manufacturers.
Everybody got what they wanted and needed. It was just perfect.
But as is also true of even the friendliest of partnerships, the time comes when one side thinks that perhaps it's getting a raw deal.
So here's what we see happening now: Both companies and dignitaries around the world want more.
Let's start with two of the strongest U.S. allies, delicately voicing a desire to even the playing field. Morten Tiller, the national armaments director with the Norwegian Ministry of Defence called the relationship historically "a one-way street," though improving. And U.K. Defence Secretary Michael Fallon said that Britain wants to see more of its defense expenditures filtering to the U.S. come back by way of investment in British companies.
Look elsewhere in Europe, and things are more hostile. Guido Crosetto, the head of Italian aerospace and defense industry association AIAD, said the U.S. "had not honored promises" made since Italy joined the F-35 program – delivering only 20 percent of Italy's $1 billion development investment over the last 15 years. (That's far short of the 65 percent promised.) Then there are countries like Turkey, frustrated by the hamstrung regulatory system that prevented (or at least slowed) Washington's ability to sell to the country armed drones to help in its battle against the Islamic State. So Turkey decided to focus on developing its own, with Ismail Demir, Turkey's undersecretary for defense industries, offering this zinger: "I don't want to be sarcastic but I would like to thank [the U.S. government] for any of the projects not approved ... because it forced us to develop our own."
Indeed, a rather arduous process combined with the lack of returned domestic dollars only fosters greater desire among U.S. allies around the world to up investment in their own defense manufacturing. Tack on top of that some disenchantment in the Middle East about the messaging coming out of the Trump administration, both in policy toward the region and in the America first mantra, and there is even more motivation to loosen reliance on the U.S. Bolster their own industrial base, allies figure, for both revenue opportunities and simpler access to defense technology. Why should the U.S. get such a big piece of the pie?
And there's nothing wrong with that. It could be quite powerful, in fact, if U.S. companies see an expanded pool of suppliers overseas. But it will mean changes in how the U.S. and U.S. companies partner with global allies. Buy/sell relationships will continue, of course, but so will cross-development and even overseas acquisitions.
Will we see that now? Not likely until the global discontent reflects in the numbers. That's not happening yet, with the U.S. aerospace and defense industry setting a new record for international sales in 2016 at $146 billion according to Aerospace Industries Association.
But the market is changing. And U.S. defense companies might want to read the tea leaves.