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Raytheon seeing growth in missile defense systems because of rising 'threat dynamics'

  • Defense company Raytheon is seeing a growth market in missile defense systems in Europe and the Middle East due to increased "threat dynamics."
  • Last week, it was reported that the Swedish government was going to spend over $1 billion for Raytheon's U.S.-made Patriot surface-to-air defense missile system, largely due to the perceived increasing threat from Russia.

Defense company Raytheon is seeing a growth market in missile defense systems in Europe and the Middle East due to increased "threat dynamics," the company's international chief executive told CNBC at the Dubai Airshow.

"There is (a growth market in Europe) as a direct result of the threat dynamic that our customers are seeing. They want to have the ability to protect their sovereignty," Raytheon International Chief Executive John Harris said Monday.

Last week, the Swedish government said it was going to start negotiations to spend over $1 billion for Raytheon's U.S.-made Patriot surface-to-air defense missile system that it expects to be operational by 2025 at the latest.

The purchase comes amid increasing tensions near the Baltic Sea. The Baltic states (Estonia, Latvia and Lithuania) have fears over possible aggression from their neighbor Russia. Nordic countries, such as Sweden, have reportedly looked to deepen their defense cooperation with these Baltic states in response to this aggression.

The patriot missile is manufactured at Raytheon's Integrated Air Defense Center in Andover, Mass.
John Tlumacki | The Boston Globe | Getty Images
The patriot missile is manufactured at Raytheon's Integrated Air Defense Center in Andover, Mass.

Remarking on the deal, Harris said that the Patriot system was "the world's only combat-proven integrated air missile defense system" and that he was "really proud" to be able to supply the system to the Swedish government.

He added that there had also been an increase in interest for Raytheon's defense systems in the Middle East amid increasing instability in the region, particularly between Saudi Arabia and Iran.

"There's been demand signals because of the threat dynamic in our core competencies which are integrated air missile defense, precision-guided munitions, cyber, mission support, all areas that give our allied nations the ability to protect their sovereignty."

Criticism

Despite the increased interest in missile defense systems from national governments, there is widespread criticism of arms manufacturers such as Raytheon and BAE Systems in the U.K., for their arms sales to countries like Saudi Arabia, which has led airstrikes against Houthi rebels in Yemen. More than 10,000 people have died during the conflict, according to the United Nations, and a humanitarian disaster is ongoing in the country.

Harris rebutted criticism, however, saying Raytheon sought to train its customers on how to use its systems "appropriately."

"We do the hard work of making sure that the countries that employ our systems have the very best training and the ability to use the system in an appropriate manner and that's a thing that we're very interested in making sure we do."

North Korean threat

Raytheon is building missiles that may feature prominently in the effort to repel a possible attack from North Korea.

Last week, congressional defense committees authorized a $700 billion defense spending plan for fiscal 2018. While the National Defense Authorization Act (NDAA) still needs to be passed by both houses of Congress and then signed into law by the president, the legislation incorporated a bigger budget for missile defense following the White House's last-minute request to add $4 billion for "urgent missile defeat and defense enhancements to counter the threat of North Korea."

Harris told CNBC on Monday that his company intended to "help our nation to protect its needs."

"There's been a keen need for missile defense capability and we're proud to be a meaningful part of that," he said.

- CNBC's Morgan Brennan contributed reporting to this story.

Correction: This story has been updated to reflect that John Harris is the chief executive of Raytheon International.