U.S. officials have threatened to limit defense cooperation with Britain in a row over the seizure of a secret technology provider for nuclear submarines.
Intelligence sources say Kwasi Kwarteng, the business secretary, will jeopardize future partnerships between the two countries if he blocks the sale of £ 2.6 billion of Ultra Electronics to the Boston-based private equity business. Advent International.
Mr Kwarteng has been accused of unfairly discriminating against US companies after ordering a national security investigation into the takeover of Ultra, which manufactures military communications equipment that includes highly rated equipment for Trident nuclear submarines.
The Americans added that Congress has recently lifted restrictions on British companies such as BAE Systems and Rolls Royce, allowing them to operate more freely across the Atlantic.
A U.S. congressional intelligence source said:
“Congress has already taken steps to ease some of the restrictions on British defense companies operating in the US. But instead of taking a similar approach, it seems that the British government is determined to impose unnecessary obstacles that make it difficult for companies U.S. defense agencies operate in the United Kingdom. “
Kwarteng told the Competition and Markets Authority (CMA) to examine the acquisition in August last year.
He has received an initial report on the deal and last month agreed new talks with Advent to try to find a compromise so he can move forward.
If these discussions fail, the business secretary is likely to order the CMA to conduct an in-depth review of “Phase 2,” which could eventually lead to the acquisition being blocked.
Britain and the United States are committed to deepening their ties of defense cooperation to counter the threat posed by hostile powers such as Russia and China.
Last year, the United States signed a trilateral security pact with Britain and Australia, known as Aukus, to cooperate in building a new generation of nuclear-powered submarines.
Negotiations are now underway to expand the deal to cover other military research projects, such as the development of hypersonic missiles.
U.S. officials argue that the British government is misusing the powers introduced in January that are designed to limit the ability of hostile powers such as China to acquire companies with ties to the British security establishment.
They say these powers should not be applied to close allies like the US, as Britain and America already enjoy intelligence-sharing agreements under the Five Eyes alliance.
There is also close co-operation between the two countries to maintain British nuclear deterrence.
A senior US official said: “We make no distinction between a British investor in a US company for national security reasons.
“It’s not fair for the British government to treat American companies this way.”
U.S. officials fear further delays could end with the takeover of Ultra.
Officials from the Department of Business, Energy and Industrial Strategy have indicated that the deal could still be approved as long as Advent is ready to make commitments to alleviate national security concerns.
An Ultra spokesman said he was working with British authorities to prepare “appropriate commitments to protect the UK’s national security interests”.