British defense company BAE Systems and European company EADS have failed to reach an agreement on a proposed merger. Sources close to the merger report that Germany was responsible for blocking the deal, but Britain’s concerns also played a part. European influence over British defense companies could jeopardize important defense ties with the United States:
British officials have said they want state holdings and influence in the merged company reduced. They are in part concerned that European government influence would hurt BAE’s U.S. operations. American officials could restrict BAE’s extensive U.S. operations if they feel that Paris or Berlin were too involved in the company’s operations.
Trends in British politics are slowly moving the country away from the EU, but London is finding it difficult to disentangle itself from its troubled neighbors to the south. It’s up to Prime Minister Cameron to balance these conflicting forces. In this case, Britain has chosen America over Europe, but this will not be the last time the UK faces this choice.