EU on the offensive about defence

by Daniel Keohane

Published 22-28 July 2004

Despite a large budget, the EU's defence lacks coordination. Its new agency could change that, writes Daniel Keohane

The 25 EU governments spend roughly €160 billion on defence, second only to the US which spends €330bn. On paper, that amount of money should be enough to cover Europe's defence needs. But despite their considerable financial resources, Europeans do not have nearly enough useful equipment or professional soldiers, because they spend defence money ineffectively.

Too much European cash is wasted on conscript troops and outdated equipment. The US has more than 200 long-range transport planes that can carry the heaviest loads. In contrast, EU countries have four such planes – all of which are used by the UK. Even allowing for the fact that Europeans do not have nearly so many global commitments as the US, that number is unacceptably low.

No single European country can afford to buy or develop every conceivable category of weaponry. Governments, therefore, have to combine their resources to acquire major new capabilities. But the record for multinational defence in Europe is poor: attempts have often been dogged by delays and budget overruns. For example, the first deliveries of the Eurofighter jet – a four-country venture – arrived in 2003, ten years after the original target date. It therefore follows that governments need to improve how they cooperate on purchasing and developing weapons systems.
To improve their defence performance, on 12 July governments finalized the details of a new EU defence agency, tasked with encouraging the member states to boost their military capabilities.

All EU members may join the agency, which will start work by the end of 2004 and focus on harmonizing military requirements, coordinating research and development, and encouraging convergence of procurement procedures. Javier Solana, the EU's high representative for foreign and security policy, will head the 80-person agency. The agency will not have a procurement budget, so it will not buy equipment nor manage multinational programmes. Instead, it will provide political guidance to all the existing armaments-related institutions in Europe and ensure they work together more efficiently. The new agency will need to work closely with NATO. Both NATO and the EU are trying to improve European military capabilities and it is important that they work together in a mutually reinforcing way.

Another organization the agency will work closely with is Bonn-based OCCAR (the Organization for Joint Armament Cooperation), a five-country organization that brings together Belgium, the UK, France, Germany and Italy. OCCAR will not form part of the agency, since its membership and that of the new defence agency will not coincide. Its key task is to bring about more efficient management of multinational armaments programmes. Its first major programme is the seven-country A400M transport plane, built by Airbus, and the first deliveries are expected in 2009. The defence agency should also promote the integration of Europe's defence markets. Governments have allowed some cross-border consolidation in the defence sector, which has led to the creation of transnational companies such as the Franco-German-Spanish EADS (the European Aeronautic Defence and Space company).

But the European defence market, unlike the single market for commercial goods and services, remains fragmented. Estimates state a single defence market would save Europe some e6 billion per year. The six main European arms-producing countries signed the so-called Letter of Intent in 1998. This was supposed to make it easier for companies such as EADS to operate in those six markets and simpler for those governments to organize joint projects such as the A400M. But the Letter of Intent has not had much impact. The European Commission would like to take up this issue and is preparing proposals to open up Europe's defence market. However, the main arms-producing governments are reluctant to give regulatory power to the Commission, in order to protect their defence markets. Thus, a single defence market remains some way off.

But perhaps the most important role the new agency could play is a political one. EU governments have signed up to a new 'headline goal' – a list of capability commitments that governments have agreed to meet by 2010. This requires member states to acquire assets, such as transport planes, to increase their military prowess. The agency will evaluate and report annually on member- state progress towards meeting those commitments.
If those reports were made public, the agency could then 'name and shame' those member states that are holding up progress and put them under political pressure to improve their performance. In short, if the EU agency does manage to improve European cooperation in armaments, the beneficiaries would be a more competitive defence industry; armed forces that would get badly needed military equipment at a better price, and; taxpayers who would get better value for money.

Daniel Keohane is research fellow at the Centre for European Reform, an independent think-tank based in London. www.cer.org.uk