In defence of missile defences?
by Tomas Valasek

For those spoiling for another good transatlantic fight, the headlines from last week’s EU summit must have come as manna from heaven. “Chirac hits at US missile plans,” read the headline in the Financial Times after the soon-to-be-departing French leader addressed reporters in Brussels. “Cold War over missile defences,” wrote Le Monde, referring to US plans to place missile defence sites in Europe. Add to that the apparently critical words by Angela Merkel, the German chancellor, from earlier in the week and a new storm would appear to be brewing over the Atlantic.

Unfortunately for the hawks on either coast, closer reading of the actual statement shows a different, much calmer picture. Jacques Chirac did warn against needlessly ruffling Russia’s feathers, as did Angela Merkel. But little in the way of outright opposition to American plans is in evidence among European leaders.

There are two good reasons for that. As with the Iraq war, missile defences are likely to divide Europe itself. Warsaw, Prague and London have all expressed interest in hosting parts of the US system and would naturally oppose any attempt to build a common European position on the basis of opposition to missile defences. Most of the cost of a bruising argument would thus be borne internally, within Europe.

But just as importantly, many EU member-states are hedging their bets, not wanting to rule out the possibility of building a missile shield for Europe as well. The majority of EU member states – the 19 that are NATO members – already approved a 2006 study showing that such a programme is technologically feasible. That does not by itself mean that an allied missile shield will or even should be built: there are differences within NATO as to the gravity and urgency of the missile threat. But the fact that NATO countries commissioned the study at all shows their shared concern over Iranian and North Korean missile plans.

So while a tactical, politically-driven stance against US plans may seem tempting it would be difficult for any European capital to be simultaneously for and against missile defences, which is exactly the position in which those EU member-states that are also in NATO would find themselves. For that reason, chiefly, robust opposition to US missile defence plans is likely to be limited to a handful of European countries.

That is not to say that a debate on the system should not take place amongst European countries, quite the contrary. The discussions so far have already raised interesting questions about two key choices for the Europeans: How should they relate to Washington? And just how much solidarity can and will they show towards Moscow?

On the first point, German chancellor Merkel was absolutely right to say that Washington needs to use NATO more assertively in selling its plans for a missile shield. In saying so, Merkel is in effect echoing Gerhard Schröder, her predecessor, who - in one of his last speeches as chancellor in 2004 - urged allied leaders to involve NATO more in broader policy debates and to start using it to fashion common strategies and threat assumptions, not just military plans. This, Schröder and others argued, would be the most effective way to revitalize an alliance reeling from the aftershocks of Iraq. It could also give Europe a better foreknowledge of, and a bigger say in, US defence plans and strategy, thus reducing the chance of fratricidal arguments like those that shook NATO in 2003. The alliance is already moving toward broader policy debates. It plans to draft a new version of its key guiding document, the ‘Strategic Concept’, by 2009 and in fact, it has already debated US missile defence once, in February. Washington should continue to offer its future military plans up for a robust discussion at NATO, and it should do so early, to allow for a fruitful talks rather than a simple briefing. It may be rewarded with a greater sense of usefulness and solidarity among allies.

It is the European Union that comes out the worse for wear from this debate so far. When Moscow threatened Warsaw and Prague with military reprisals if they allow US missile defences on their territory, Paris and Berlin responded by, in effect, siding with Moscow against their fellow EU member states. While the French and German positions were nuanced – arguing for more consultations with Russia and not directly addressing Russian threats – the Czechs and Poles will no doubt feel that their EU brethren showed far too little solidarity given the gravity of Russian statements. This will do little to convince them to show more faith in the EU's security and defence policy, or to back Merkel's plans to revive talks on the EU's constitutional treaty and the creation of a European foreign minister.

Tomas Valasek in director of foreign policy and defence at the Centre for European reform.

by Clara Marina O'Donnell

The EU is in the middle of a little noticed – but potentially important – debate about defence markets. For the first time, the European Commission could be authorised to help reduce barriers amongst the EU’s segmented national defence markets.

European defence markets remain drawn along national lines. Defence-related goods are exempt from EU single market rules. These exclusions were designed for only the most sensitive components of weapons, material and related technology. The trouble is that governments have used the national security argument to exclude everything, from bullets to uniforms, from open competition. And often national security has been little more than a cloak for protectionism.

Moreover, it is difficult to move defence goods from one member-state to another. Each country has cumbersome administrative procedures for export controls. As a result, defence companies with plants in several member-states have to negotiate different sets of national requirements when they want to move their components from one plant to another. The Commission has estimated that, within the EU, the direct and indirect costs of such barriers to transferring military goods amount to €3.16 billion a year. Since requests to move goods within the EU are hardly ever rejected, the value of such extensive and diverging national checks is questionable.

As Europe's paltry defence budgets are barely adequate to maintain today’s spending programmes, the current system makes little sense. So the Commission has proposed two new directives. The first is designed to open a substantial amount of defence procurement to EU competition. The Commission suggests new procurement procedures, specially tailored for defence needs (while recognising that some goods, like nuclear technology and cryptology, will always have to be exempted due to national security). The second proposed law aims to simplify procedures to move goods around the EU. It would encourage member-states to use so-called general licences. (Broadly speaking, goods which benefit from a general licence can move across borders without importers having to ask for specific licences to do so.)

The two draft directives have the potential to bring about significant improvements. Defence companies would get access to previously closed markets, while ministries of defence, and European taxpayers, would benefit from cheaper defence goods. Easier transfer of goods across the EU would make life a lot easier for defence companies. And delays in importing new kit needed by national militaries would be reduced.

In practice it remains to be seen what difference the directives, if agreed, would make. Member-states are trying to maintain maximum control of the initiatives. They get to decide what military goods are considered safe for general licences, and it is likely that only the least sensitive goods will qualify at the outset. In addition the cut-off point for military goods that are considered too sensitive to be subject to open procurement procedures has been left very vague. Here, too, member-states are likely to be very conservative for the foreseeable future.

The impact of the proposals, and particularly the procurement directive, will depend on the willingness of defence companies and the European Commission to contest decisions by member-states, and take them to the European Court of Justice. It is unlikely that large high-tech defence programmes will be open to competition for many years to come. Large defence companies will probably be unwilling to contest decisions made by their biggest customers: national defence ministries. But it is not unreasonable to foresee that in the medium term the directive could have a substantial impact on less sensitive defence sectors, low-value, high-volume goods such as rifles, tanks or even military catering. Defence ministries will have stronger incentives to open up such non-sensitive sectors as a way to cut costs. In addition, such goods are produced by a multitude of smaller companies across the EU that are not always dependent on one defence ministry. Some might conclude they have less to lose and be more willing to take a ministry of defence to court.

The most important impact of the directives would be the cultural shift they would represent. By adopting the initiatives, member-states would be accepting the Commission's oversight in an area they have hitherto jealously guarded. Defence ministries would no longer have the final say in their defence procurement.

The directives would be a minor but incremental step towards improving Europe's defence market. But it is far from certain that they will come into force. The timetable is tight. (The directives need to be agreed before the European Parliament’s term ends in spring 2009, otherwise the turnover of experts in the Commission and Parliament could postpone an agreement by several years.) In addition there are still serious stumbling blocks which member-states and the European Parliament need to agree on. Amongst other things some smaller member-states fear local industry might lose out from more open markets. The big defence companies are concerned about the impact on national research budgets and large-member states, in particular the UK, are trying to defend their case. Some member-states have admitted they will shed no tears if the whole package collapses. But it would be a mistake not to agree the package. With current defence budgets, Europeans cannot hope to maintain a proper defence industrial base without a new approach to their defence market. And if the EU really wants to reinforce its global role, it has no choice but to improve its military muscle.

Clara Marina O'Donnell is a research fellow at the Centre for European Reform.