By Patryk Wasilewski
WARSAW--Poland on Tuesday said it planned to split $8 billion in
planned missile-defense and military-helicopter purchases between
U.S. and European contractors, in a sign that European military
spending is increasing as countries react to the Ukraine
conflict.
Raytheon Co.'s Patriot missile-defense shield was selected as
part of Polish President Bronislaw Komorowski's $40 billion effort
to modernize the country's armed forces as Russia adopts a more
assertive foreign policy.
Poland chose the U.S. defense company's bid over a rival
European offering and one from the MEADS consortium led by Lockheed
Martin Corp. Officials also selected a unit of Airbus Group NV to
supply 50 military helicopters--down from its previous plan for
70--over bids from U.S.-based Sikorsky and AgustaWestland, a
European consortium.
Poland has pledged to increase its military spending amid
concerns that the smoldering separatist conflict in eastern Ukraine
will erupt into a full-scale military conflict. Warsaw plans to
return to its earlier policy of spending 2% of gross domestic
product on its armed forces in 2016, after it scaled back spending
in recent years to shore up its public finances.
"[It's] an encouraging sign that European defense spending may
finally be stabilizing given the increased risk to the East," said
RBC Capital analyst Robert Stallard in a client note.
The move marks a big win for Raytheon, which recently won a $2
billion deal for the Patriot system from an unnamed Middle Eastern
customer--widely reported to be Saudi Arabia--and signals the tough
task for MEADS in its battle to win an order from Germany.
Lockheed executives on Tuesday said they remained confident of
winning the German deal, noting that they supply the PAC-3 missiles
for the Patriot system. Analysts said Lockheed accounts for about a
third of the Patriot program's value, and the company said it is
still pursuing a short-range-missile defense deal with Poland.
Polish Defense Minister Tomasz Siemoniak is set to visit
Washington, D.C., in May to negotiate an intergovernment agreement
to buy the Patriot. Warsaw wants to receive two Patriot batteries
within three years after the deal is signed and five more by 2025,
the country's defense ministry said on its website on Tuesday.
The missile shield is expected to be a part of the North
Atlantic Treaty Organization's long-running project to deter
missile attacks in Europe. The project is hotly contested by
Moscow, which argues its aim is to threaten Russia rather than to
protect itself from a potential threat from Iran, as NATO has said
in the past.
The announcement comes days after Russia threatened Poland over
its involvement in a larger U.S. missile-defense program. Russia
says the system, which the U.S. contends is aimed at intercepting
longer-range missiles from Iran, is aimed at shooting down its
intercontinental ballistic missiles. NATO said the U.S. system
wouldn't be capable of shooting down Russian strategic ballistic
missiles.
The tentative selection of the Airbus helicopters could also
influence plans by Sikorsky parent United Technologies Corp. to
spin off Sikorsky, said Byron Callan, an analyst at consultant
Capital Alpha Partners LLC.
Mr. Callan said the Polish deal was the largest export deal
being pursued by Sikorsky. United Technologies on Tuesday said it
planned to decide by midyear on the unit's strategic future, having
flagged a potential spinoff of the business.
Write to Patryk Wasilewski at patryk.wasilewski@wsj.com
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