Not flashy but effective: Closer EU co-operation in defence investments

Not flashy but effective: Closer EU co-operation in defence investments

Written by Clara Marina O'Donnell, 13 December 2013

This month, European leaders will discuss how to strengthen EU military co-operation. It is the first time that defence has been on the European Council’s agenda since 2008 and EU officials had hoped the member-states would unveil bold initiatives to stem the deterioration of their armed forces. But governments remain wary of ambitious joint efforts in defence. So the best that can be hoped for is that the Council will endorse EU military reforms which are relatively modest, but easier for member-states to support. One of these should be closer co-operation in regulating private investments in European defence companies – somewhat technical and unspectacular but nonetheless useful.
European governments acknowledge that the case for EU defence collaboration is even stronger today than it was when France and the UK launched the Common Security and Defence Policy (CSDP) fifteen years ago: the US will not always be able or willing to help Europeans stem violence in their neighbourhood, so European states must be capable of upholding regional security alone. And EU countries could save money through closer co-operation amongst their armed forces, and by more integration between their fragmented defence markets.
Over the last decade and a half, however, EU states have often disagreed about which parts of their neighbourhood threatened their security and how to respond. Many governments have been averse to putting their troops in danger. They have also been wary of pooling military capabilities without knowing where or how the equipment would be used. And since the outbreak of the economic crisis, governments have also worried that voters would be angry if they funded large joint equipment programmes when ministries of defence are cutting civilian and military personnel.
As a result, EU defence co-operation has struggled. Member-states have deployed under the EU flag 29 times. But many of the missions have been civilian operations. At times, the security restrictions EU states have imposed on their personnel have hampered operations’ effectiveness. Recently, for example, some of the staff from an EU mission designed to help the Libyan authorities improve border security were evacuated to Malta because of concerns about their safety. 
The EU published a security strategy in 2003 (and updated it in 2008) in which governments committed to tackle global threats together. But member-states have not paid the strategy enough attention or based national defence planning on it. The European Defence Agency (EDA) has helped member-states improve some of their capabilities, by providing helicopter pilot training for example. But EU countries continue to do much of their maintenance and logistics alone. The EU has introduced rules to make it easier for governments to use competition to drive down prices when buying defence equipment, and to reduce the bureaucracy needed to send military equipment to the armed forces of another member-state. But many equipment programmes are still inefficiently duplicated across the EU. For example, according to the European Commission, there are 11 suppliers of frigates in the EU. Even Europe’s largest defence companies remain relatively small, limiting their ability to reduce costs through economies of scale and to be more innovative. The average American aerospace firm is over 20 times bigger than top EU companies. The challenge for the EU is to find the sweet spot between an oligopoly of suppliers who can raise prices at will, and a proliferation of niche manufacturers serving national markets, whose high unit prices reflect short production runs.
If EU governments want to boost their contribution to international security without increasing their defence spending, they will have no choice but to overcome their various aversions to closer European co-operation. As the CER’s Ian Bond argues, member-states ought to base their co-operation on a common security strategy. Otherwise they will continue to disagree on where to deploy, and refuse to own military equipment in common. But as the last 15 years attest, it will take time for EU states to forge a common military culture. So in the meantime, EU governments should exploit those collaborative measures which are relatively easy to introduce.
One example would be harmonising the system for regulating domestic and foreign investments in their defence companies. Large shareholders can influence a firm’s decisions and access sensitive information, so government checks on investors are essential to national security. But rigid and excessive state controls can unnecessarily restrict the ability of European defence firms to access capital. In France, an EU country with particularly cumbersome controls, the government can investigate attempts by foreign investors to acquire more than a 33 per cent stake in any French defence firm. The state also controls its defence industry through golden shares – enabling it to bloc acquisitions of more than 10 per cent of shares in Thales. And the government itself is a large, and sometimes exclusive, shareholder in several defence firms. In contrast in Sweden, where investment safeguards are lighter, the state has no equity or golden shares in Swedish defence companies. According to former US official Jeffrey Bialos, foreign investors need merely to receive the government’s approval in order to buy a Swedish defence firm (and the CEO must remain Swedish).
As the CER has argued in the past, EU states could streamline their controls on investments in defence companies by relying primarily on ministerial committees instead of inflexible rules and government ownership. As these committees draw on advice from officials and independent experts to examine investment requests on a case by case basis, they reduce the risk of blocking investors unnecessarily.
As a safeguard for the interests of other member-states, EU governments could also make it a legal requirement to consult each other before accepting a sizeable domestic or foreign investment in one of their defence firms. An investment in one EU state could adversely affect another country’s security of supply. For example, the German army might rely on radios produced by a company in Sweden. Deployed German troops could be put at risk if new owners of a Swedish firm decided to stop producing such equipment. The six European countries with the largest defence budgets are already committed to consult each other on such matters. And the EDA has been encouraging all EU member-states to do so. But according to EU officials, governments still rarely check with their neighbours. Legally-binding commitments would change that.
In preparation for the European Council, the European Commission has proposed that it should identify shortfalls in national controls on defence industries and explore options for an EU-wide monitoring system for investments. EU heads of state and government should encourage the Commission to pursue its proposal in close co-operation with the EDA, in order to avoid any duplication of efforts.
Not all European governments yet feel ready to jointly own fleets of drones, or rely on other countries to provide minesweepers for the entire EU. But it would be a missed opportunity if leaders did not use the December European Council to improve the workings of the European defence market in ways that do not require large sums of money or even shared security priorities.


Clara Marina O’Donnell is a senior fellow at the Centre for European Reform and a non-resident fellow at the Brookings Institution 

Comments

Added on 13 Dec 2013 at 22:29 by J. Tattersall

An interesting article, but I fear it misses the point. Nation states field defence forces in order to further their own national strategic interests; and not those of their neighbours, let alone Europe. Any Europeanisation of defence, be it by cooperation or via EU wide rules, is only going to be accepted if there is a forseeable (as opposed to theoretical) prospect of furthering individual member states' national strategic interests. The Commission's recent forays into the functioning of the defence market are largely perceived as having made no practical benefit, while at the same time having caused much unwelcome bureacracy. The balance of the evidence seems to be that calls for the Europeanisation of defence has, at best, been a strategic distraction, or more likely, to paraphrase Monty Python, a case of 'THIS CSDP's DEAD!'

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Roundtable on 'America, Asia and Europe: Pivot or spin?'

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Malina TV [Russia]
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Link to video:
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Obama w pułapce - Interview with Ian Bond

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Division and indecision over Syria

Division and indecision over Syria

Division and indecision over Syria

Written by Rem Korteweg, 18 September 2013


The deal on chemical weapons reached by Russia and the United States marks the latest chapter in the West’s effort to stay out of Syria’s civil war. After Russia’s diplomatic initiative, a military strike has been avoided. The White House says that diplomacy backed by a credible military threat has succeeded, and European leaders claim that their appeal for a UN process was heard. Obama’s wish to avoid military solutions may have created new momentum for negotiations with Iran. But this moment of jubilation could be short-lived: a daunting task at the UN awaits; military action may still be needed; and transatlantic cohesion has been damaged.

For more than two years, US and European governments have successfully navigated developments that could otherwise have formed a casus belli and led to Western entanglement in Syria. In the summer of 2012, the Syrian military shot down a Turkish air force jet, and was accused by Ankara of lobbing mortars over the Turkish-Syrian border and staging car bombings in southern Turkish towns. The attack on a NATO member-state could have triggered military action against Syria, but instead the alliance showed restraint and sent German, Dutch and US air defence batteries to southern Turkey.

In November 2012, France and the UK – followed a month later by the US  –  stated that President Assad no longer represented the Syrian people, but no action was taken to force a change of regime. The US and Europe have also long resisted arming the rebel groups. When it became clear in early 2013 that Assad was winning, the European Union – under French and British leadership – and the United States lifted the arms embargo. But the subsequent flow of arms to rebels has been limited, reflecting concerns that the weapons might end up with Al Qaeda affiliates. The US, UK and France have been providing jeeps and communications technology, and possibly small arms, but most heavier material, mortars and anti-tank weapons, are sent by Qatar and Saudi Arabia.

The aftermath of the chemical weapons attack on August 21st is the closest the US and its allies have come to military intervention in Syria. If it were not for the use of poison gas, the US and others would have remained on the side-lines, but moral imperatives and presidential credibility required action, however reluctant. European division and US foot-dragging followed.

What makes the current crisis so uncomfortable and damaging for the West is that it is largely self-inflicted; Obama’s red lines on the use of chemical weapons, when crossed, forced his hand. European divisions have made matters worse, particularly when Britain’s prime minister David Cameron – initially in favour of a strike – deferred to the House of Commons and lost, while the French president remained committed to military action. Without a united Franco-British front, Germany, the Netherlands and others continued to prevaricate and say they had not been asked to support a military strike, or – like Poland – did not have relevant military capabilities. Other European states, including Italy, Spain and Belgium, believed the UN should act. Only Denmark backed the French.

Meanwhile, more than two weeks of intense diplomacy passed before the EU’s High Representative Catherine Ashton was able to forge a common European position. A carefully-worded statement agreed on September 7th said that “a clear and strong response is crucial” to the poison gas attack, but it fell short of calling for military action. Instead it urged the Security Council to push for a political solution.

A divided West was inching towards a military intervention for which there was little political appetite and even less public support. President Putin’s initiative to get rid of Syria’s chemical weapons could be the ‘deus ex machina’ to avoid an unwanted military campaign.

While it is impossible to know for sure, Putin’s diplomacy may be informed by the fear that any US military involvement could decisively turn the tables on Assad. A shift in the military balance would cause Moscow to lose an ally in the region and perhaps its Mediterranean naval base, but Putin’s support for Assad is fuelled by the concern that Al Qaeda-linked groups might take over in Syria and could eventually spread to Russia.

In spite of comments by President Obama that a strike would be limited – or in Secretary Kerry’s words “unbelievably small” – any military action has unpredictable consequences. A strike was meant to ‘deter and degrade’ Assad’s capability to use chemical weapons. The US was aiming for a ‘Goldilocks’ intervention; too soft, and it would only be a symbolic punishment; too hard, and it might topple Assad, strengthening jihadist rebel groups. But reality is never so straightforward, and the adversary always has a vote in a conflict. Assad could make life difficult for any US-led coalition, for instance by using chemical weapons again; placing human shields around potential targets; or using Syrian-sponsored Hezbollah to strike Western assets or Israel. US credibility would then demand further escalation. By regaining diplomatic momentum, Putin was able to protect his interests, and his client in Damascus. Whatever the outcome, Moscow will have bought time for Assad, and Russia will step up its arms shipments to Syria, hoping to tilt the military balance in favour of Assad. The US, UK and France should consider balancing this by increasing their efforts to arm moderate rebels.

The agreement between Russia and the US will have to be enshrined in a UN Security Council resolution. France, the US and UK prefer a resolution under chapter 7 of the UN charter, which could allow the use of force in the event of non-compliance. But Russia has said an explicit reference to military action is unacceptable.

If the Russians stand firm, Obama will face a choice between a resolution without ‘teeth’, or circumventing the gridlocked Security Council. In the first case, the Russians and the Syrian regime will claim that UN-backed military enforcement is off the table; and Obama will be criticised by US hawks in Congress for weakness. But the outcome could be more ambiguous. During the Iraq crisis ten years ago, the UN Security Council adopted resolution 1441, pushing Iraq to fulfil its disarmament obligations. It was adopted under chapter 7, but did not explicitly mention the use of force. The Security Council could pass a similar resolution now.

Washington and Moscow have an interest in agreeing a resolution because the alternatives are less palatable. But given the distance between the Russian and US positions, a face-saving compromise would leave the enforcement mechanism deliberately vague. In 2003, as Saddam Hussein continued to defy the UN weapons inspectors, this clause – and its lack of specificity – became the focus of a dispute in the Security Council. Unfortunately, a similar resolution on Syria will sow the seeds for future US-Russian disagreement. The technical obstacles associated with a verification mechanism in a war zone are plentiful, and if Syria breached the resolution, a fractured West could still end up being drawn into the conflict.

Nevertheless, if a resolution is adopted and the Syrians carry out their side of the bargain, this may do more than just prevent Syria’s future use of chemical weapons. Iran’s new moderate president, Hassan Rouhani – strengthened by a policy of US restraint in Syria – has signalled a willingness to talk to Obama. This positive momentum offers the best hope for some time to move diplomacy on Iran’s nuclear programme forward, and should be embraced by the US and Europe.

Progress on chemical weapons could also create some momentum for a general ceasefire and the start of a peace process. The EU ought to be able to unite around this goal, at least. It should now start working with Russia, the US, Iran as well as the groups in Syria to get the Geneva 2 negotiations underway in the hope of moving towards a political solution.

A stalemate at the UN would be damaging; Putin could say he produced an olive branch that the US was unwilling to accept, and paint Obama as a warmonger; while members of Obama’s own party and isolationist Republicans will accuse him of risking US entanglement in another war. The EU would find itself in an uncomfortable position. Fundamental to the EU’s foreign policy is support for international norms, of which the prohibition on chemical weapons is one (the 2003 EU security strategy describes the proliferation of weapons of mass destruction as “potentially the greatest threat to our security”) and support for the United Nations is another. These conflicting norms would ensure that Europe remained divided.

The worst option for US credibility is if a resolution is not agreed and the United States shies away from military action. Credibility is an important currency in international relations. It would be seen as a victory in Damascus, Tehran and Moscow, it would sap the morale of Syria’s rebels and it would send a message that the use of chemical weapons may go unpunished. It would make Israel and Saudi Arabia uncertain about US assistance on Iran’s nuclear programme. Pyongyang’s hand would be strengthened, and among allies in the Asia-Pacific – where US security guarantees are considered crucial to check the rise of China – signs of US weakness would make leaders nervous. Western impotence in Syria will reduce America’s – and by extension the West’s – international standing, strengthening those that believe Western decline creates opportunities to expand their influence.

Deal or no deal, the crisis has negatively affected transatlantic relations. In 2011, then-Secretary of Defense Robert Gates complained publicly that Europe was not equitably sharing the burden of military risks and expenses. Not much has improved since then. In Libya, eight out of twenty-eight NATO allies participated in the bombing phase of the air campaign. Now an even smaller number of Europeans would stand by the US. Washington has not drawn upon NATO’s command headquarters or common surveillance assets (as happened in Libya) or even mentioned NATO. The US probably wanted to avoid bringing Europe’s division into the North Atlantic Council, where unanimous support would be needed. While much has been made of the US rebalance towards Asia and the consequent need for Europe to bear a greater burden for security in its neighbourhood, most of Europe is still passing the buck to Washington. Once again, the US and Russia get to sort out a security issue in Europe’s neighbourhood without Europe being at the table.

Rem Korteweg is a senior research fellow at the Centre for European Reform.

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Link to press quote:
http://www.nytimes.com/2013/09/06/world/europe/syria-crisis-reveals-new-paradigm.html?_r=0

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