the German Chancellor Friedick Mertz
saying as well overnight that a meeting
between Ukrainian President Vladimir
Zilinsky and the Russian uh the Russians
Vladimir Putin is unlikely to happen
even though of course that is something
that had been touted by the US president
President Trump. Uh Russia as we now
know overnight unleashing a new wave of
drone and missile strikes on Keev
killing at least 20 people. The attack
comes in defiance of course of US calls
for an end to the fighting. Critically
we've seen UK infrastructure and EU
infrastructure in Kev being hit. Maybe
this is the reason why we are seeing
some of these defense names being pushed
a little higher this morning. Uh our
global defense editor Jerry Doyle
joining us around the table.
It does see it seems logical to me this
morning that you've got a situation that
is deteriorating once again in Ukraine.
We do seem to be seeing a an escalation
in a conflict that is already fairly hot
at the moment and has got it's going to
be interesting to see how it develops
over the next few weeks. We're seeing
European kit being hit. It does seem as
if there's maybe renewed interest from
the Europeans in providing support to
the Ukrainians. Is that why maybe we're
seeing the reaction we're seeing so
strongly in defense names this morning?
>> That could be part of it. Um there's uh
if if there were security guarantees
that that was part of a peace process
that now seems to be deeply in doubt
with all the attacks in recent days uh
then there would be movement and and
purchases from those European defense
companies. If there's not a peace
agreement, if there's not security
guarantees, if the war continues the way
it is, there's still going to be those
orders.
>> Sorry, just before jumps in, which one
of those two things on balance provides
more support to the European defense
companies in terms of the orders they
are likely to receive?
>> I think it's difficult to say. Um, if
the war escalates and if the European
countries get more deeply involved than
they already are, then it could
certainly lead to a ramp up in
industrial activity. Well, speaking of a
ramp up, I believe Ry Matal has just
recently uh opened its new factory in
operation. Talk to us just about that
kind of capacity ramp up if you can. I
mean, we've been talking about this in
the market with this fiscal spend for so
long. It feels like we're finally seeing
that actual ramp up take place.
>> Yeah, I think a lot of it had been sort
of happening quietly over the last two,
three years, an expansion of industrial
capacity, things that aren't necessarily
making big headlines, you know, small
arms, ammunition, bullets, and things
like that. This Rhymatl factory is the
largest artillery ammunition plant in
Europe, perhaps even the world at the
moment. Uh so that's a big deal for them
and it shows this investment in in
industrial capacity on the defense side.
>> And if you were in the defense industry,
what are you watching most for when it
comes to the Modi she uh Putin summit
that's coming this weekend?
>> Well, I think the uh it's less in terms
of the the military hardware. you know,
China and India aren't going to pro
provide that kind of material support
for Russia. I think where you're going
to see more impact is on the energy
side. Obviously, India has gotten uh in
some recent hot water with the the
president of the United States about
their purchases of Russian oil and that
Russian oil is really the main thing
that's keeping the Russian economy
ticking along right now as it's on a war
footing. Um but even that's causing
problems for them because they budgeted
for a much higher uh price for oil this
year about $70 a barrel and it's much
lower than that at the moment. So that
that's putting strain on on their war
machine. How much capacity does Europe
now have to meet the war needs of
Ukraine? I what this morning was
Denmark, Norway, and the Netherlands
potentially buying 3,350.
These are these are standoff cruise
missiles, but they're buying them from
the United States in order to feed them
in to Ukraine.
that that signals to me that Europe
still doesn't even with the success of
MBDA and all all the kind of missile
production we have here that we still
don't have the capacity to do what we
need to support Ukraine from a purely
European point of view.
>> Well, some of it is a matter of
capability and some of it is a matter of
capacity. I think these is a good
example of capacity. These were missiles
uh developed last year by the United
States sort of using parts that were
found under the couch cushions, right?
These aren't these aren't
>> these are low cost lower cost.
>> Exactly. Exactly. So um the these are
sort of assembled in in an ad hoc or
expedient way as a means of providing
Ukraine with a large number of standoff
weapons uh in in a short amount of time.
And so what's happening is these
European countries are buying them from
the United States and transferring them
to Ukraine. Um it's basically the same
as if Ukraine had bought them
themselves. Although that uh that
particular mechanism has become more
fraught lately.