A consolidated defence industry presents challenges for American military policy, competitiveness and international peace and security. How can the costs of weapon development be kept in check? With fewer competitors, how can innovation be assured? Is a more internationally-oriented industry compatible with continued US dominance in leading edge weaponry? Can proliferation of sophisticated conventional weapons be avoided? This work documents the defence industrial changes of the post-Cold War decade - why they happened and what they portend. It concludes by offering three different visions of the future: a fortress US/fortress Europe standoff; a go-at-it-alone American security strategy supported by a transnational defence industry; and a co-operative security/conflict resolution oriented alliance, which would slow arms innovation and restrain the spread of conventional arms.