An Arsenal of Its Own

Since World War II, Western Europe has been generally content to regard the U.S. as "the arsenal of defense," concentrating on its own efforts on producing the stream of consumer goods that brought about its unparalleled postwar prosperity. Now, for reasons of pride, politics and profit, the Continent is gradually developing its own defense industry. Though modest compared with the huge $53.7 billion U.S. defense budget, the European arms industry is already big enough to be taken seriously, particularly at a moment when Europe is feeling the slows in other economic areas.

Billions for Defense. The four major NATO nations in Western Europe--Britain, France, Italy and West Germany--have increased their defense spending an average 45% since 1959 to $15 billion this year. Despite the trend in Britain to lean more and more on the U.S. for its major defense protection, its defense budget this year is $5.2 billion, or about 7% of its gross national product (v. almost 10% for the U.S.). President de Gaulle, with his longing to have his own independent force de frappe, has set France's 1963 defense spending at $3.7 billion, or 5.1% of its G.N.P. Italy will spend $1.3 billion, West Germany $4.7 billion; even neutralist Sweden has hiked its 1963 defense budget to $675 million. Thousands of European firms, from such giants as Italy's Fiat and France's Sud Aviation to makers of uniforms and rifles, are getting interested in defense work.

Because European businesses are so closemouthed about themselves, they do not publicly scrap for defense contracts. Most industries live more from civilian orders than from guns, but there are signs that some are beginning to count on government arms spending. The West German government's announcement last week that it will spend $800 million on speedy, new German-built tanks and tank destroyers will raise the amount of German industry dependent on defense contracts to 4% ; already the German aircraft industry, which employs 32,000 people, is 90% dependent on government spending.

Into Orbit. Since Western Europe already has a labor shortage, it does not need arms-making to make jobs. The real advantage of defense contracts is the research sophistication that may pay off in commercial products. Out of its military experience, France leads the world in the development of STOL (for short take-off and landing) transport planes. Sweden's plane-and-automaking Saab is now turning out compact computers for the commercial market, having learned to make them for its jet fighters. Most European contractors, however, have so far found the commercial side-effects disappointing. Britain, despairing of competing in sophisticated weaponry, has decided to concentrate its technology on commercial aspects and its armory on more conventional weapons.

Western European nations have also banded together into two multinational space agencies to build a three-stage rocket and undertake space probes. The Europeans are not interested in putting a man--or even a mouse--on the moon, but they are considering putting into orbit their own worldwide satellite communications system by 1968.

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