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European defence projects need single export licence - Leonardo CEO

Credit: REUTERS/REMO CASILLI

European defence programmes should be issued with a single weapons export licence so policy changes of an individual state do not affect the supply chain, the CEO of Italian defence company Leonardo said on Tuesday.

By Alexander Cornwell

DUBAI, Nov 19 (Reuters) - European defence programmes should be issued with a single weapons export licence so policy changes of an individual state do not affect the supply chain, the CEO of Italian defence company Leonardo LDOF.MI said on Tuesday.

Germany imposed a ban on arms exports to Saudi Arabia in 2018 after the killing of Saudi journalist Jamal Khashoggi.

The ban has been criticised by Germany's European allies since it put a question mark over billions of euros of military orders.

These included a 10 billion pound ($13.27 billion) deal to sell Eurofighter Typhoon jets, built by a consortium of Germany, Britain, Italy and Spain, represented by Airbus AIR.PA, BAE Systems BAES.L and Leonardo, to Riyadh.

Germany has not formally stopped existing deals, but equipment from other European countries with German parts has been held up.

The ban has highlighted how Europe's highly integrated defence industry supply chain can be disrupted by a single government.

Currently, each European company involved in a joint programme must receive an export licence from their respective governments. If one government withdraws or does not issue a licence an export can be unilaterally blocked.

"We have to work on understanding how to have an export licence that could be valid for many countries which are involved in the same programme," Alessandro Profumo told Reuters at the Dubai Airshow.

"If there is a programme where the value chain is integrated we need, in my opinion, the prime country, that at (under) certain conditions, can be the one who gives the authorisation for all the others."

European states are divided on banning weapons sales to Saudi Arabia. Some have banned sales to the country and its ally the United Arab Emirates over their involvement in Yemen.

Others have continued to export and argue decisions like the German ban are damaging to Europe’s defence industry.

Profumo said a single licence would be a decision for European governments but said it was an important consideration for the continent's defence industry.

"It's not up to me to define how (it could work)," he said.

(Reporting by Alexander Cornwell. Editing by Jane Merriman)

((Alexander.Cornwell@thomsonreuters.com;))

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