File this story under the rubric: “Be careful what you wish for.” When the U.S. guided missile destroyer USS Donald Cook (DDG-75) departed Norfolk Naval Base to take up station at the Spanish naval base in Rota two months ago, it set off alarm bells in Moscow. Accusing the U.S. of attempting to set up a “strategic offensive potential” in Europe, Russian President Putin loudly condemned the move. U.S. officials calmly explained that the Cook, and its sister ships USS Ross (DDG-71), USS Carney (DDG-64), and USS Porter (DDG-78), were headed to Spain to set up a missile shield against the Iranian missile threat — and posed no threat to Russia. But Russian State Duma foreign affairs committee Chairman Alexei Pushkov declared this explanation “fake.”
In the Russians’ view, you see, the presence of a fleet of U.S. destroyers in Europe, armed with a version of the Aegis missile defense system tweaked to shoot down ballistic missiles, is a threat aimed squarely at Russia’s nuclear arsenal.
Turns out, they were right about that.
Showing the flag
Ever since Russian armed forces invaded and annexed the Ukrainian province of Crimea last month, the U.S. government has struggled to find an appropriate response. Trade sanctions and visa freezes on Russian government officials could punish Russia for what it’s done in Crimea. But what could the U.S. do to deter further aggression?
This week, it appears the Obama administration hit upon its solution. It took the USSDonald Cook and sent it to Russia. Armed with new Standard Missile-3 IB weaponry fromRaytheon ([font=inherit]NYSE: RTN ) , the Cook boasts a robust version of Lockheed Martin‘s (NYSE: LMT ) Aegis ballistic missile defense system capable of shooting down supersonic, high-trajectory missiles such as Russia uses to carry its nuclear warheads. The warship was modified for ballistic missile defense (BMD) duty as part of a $22 billion project to build shipborne and land-based missile defense stations to protect Europe from Iranian long-range missiles. But just as President Putin predicted, it appears to have use in countering Russian threats as well.[/font]
Departing its new base in Spain, the Cook is now en route to the Black Sea, where it will “show the flag” off the Ukrainian and Russian coasts — a concrete demonstration to President Putin of how aggression in Crimea could bring about the very thing he fears: U.S. ballistic missile defenses set up right next to the Russian border.
Anti-missiles for peace
Will moving a single destroyer into waters off Crimea be enough to make President Putin think twice about his reported plans to invade the rest of Ukraine? Maybe, maybe not.
What this move does show us, though, is that the $22 billion ballistic missile defense system has wider application than it was initially planned for. It can help to contain the threat of a future Iranian nuclear missile and it can help to disarm Russia’s nuclear arsenal as well.
This may help to give the program “legs” even in an era of declining defense spending. From the perspective of investors, the Cook‘s deployment to the Black Sea tells us two things. First, that the Obama administration sees the program as geopolitically useful — and, presumably, worthy of further funding. Second, that BMD may have more uses than originally envisioned. Designed to deter Iran, BMD warships are today being used to keep Russia in line. In future years, the program may grow (bringing further funding for Lockheed Martin and Raytheon) should it be deemed advisable to deploy BMD warships to waters adjacent North Korea or China.
In short, Russian President Vladimir Putin may not like this development much. But investors in Lockheed Martin and Raytheon should be pleased.