European defence capability : Pool it or lose it

In December the European Council, the inter-governmental summit of the EU, will discuss defence and security policy. Previously the preserve of NATO, the EU is now examining its capability as a defence actor on the international scene. This will be a landmark event both for the politics of the way Europe arranges its defence and security affairs, but also for Europe's defence industry. EU officials agree that the wider public need to understand that "defence matters" but Europe will face a real challenge to achieve more bang for its euro.
The EU has slowly been accumulating competences in the area of defence and security since the Treaty of Nice in 2000. The division of labour hitherto has been that NATO does the 'war fighting' operations such as Afghanistan, while the EU undertakes 'stability' operations as has been the case in Chad, South Sudan and currently the anti-piracy operation off the coast of Somalia. These operations which the EU began mounting in 2003 bring together its full range of capabilities in the defence, policing and development fields, writes Nick Watts, Deputy Director General, U K Defence Forum.

The challenge for politicians and planners is how to make Europe's collective defence efforts credible at a time of shrinking budgets. A recent Oxford Analytica study points out that in 2012 defence expenditure in the EU was EUR 194 bn ($263 bn), in 2001 it was EUR 251 bn. It adds that Most EU members spend less than 1% of GDP on defence, against a NATO recommended minimum of 2%. At a time when the US is focussing its efforts away from Europe, as well as reducing expenditure under the sequestration plans, Europe needs to rediscover its ability to look after affairs in its own neighbourhood.

Arguments about levels of defence expenditure risk becoming sterile if they do not concentrate on the 'outputs' from the budget, rather than the inputs. A US general in the civil war spoke about the need to "get there fastest with the mostest" which still holds true today. Both NATO and the EU have arrived at the same problem; how to provide an adequate amount of equipment to support their efforts. NATO talks of 'smart defence' while the EU speaks of 'pooling and sharing'. This was summed up at a recent Eurodefense conference in The Hague: 'pool it or lose it.'

Quantity has a quality of its own. A small proportion of European military capability is deployable. In 2007 the US had 1.37 million men and women under arms, the EU 27 members 1.86 million. But in July 2008 the EU force in Chad comprised 3,250 troops. The three largest contributors, France, Ireland and Poland accounted for 2,400 personnel. The balance, some 850 troops, came from 21 contributing nations.

Defence budgets and equipment programmes are jealously protected by national governments. Military capability is seen as a Sovereign competency. The challenge facing European politicians and planners has long been foretold: the cost of equipment has increased. This means that reduced budgets only purchase so much equipment. The inefficiency inherent in 27 EU Member States each having their own equipment plans is obvious. Politicians are slowly inching towards the recognition that if Europe is going to be a credible actor in the international arena it must deliver capability – and quickly.

The lessons of the Libyan and Mali campaigns point towards deficiencies which need to be remedied, particularly in Air to Air refuelling, ISTAR and strategic lift. All of which are on the wish list of European force planners. To underpin a credible CSDP Europe recognizes that it needs an efficient market and a competitive defence industry. The challenge for European politicians is to decide how best to allocate resources. Cue national lobbying for research grants and facilities to be based in their countries.

To develop the technologies needed to combat an emerging and agile threat requires Research and Development funds. As the Oxford Analytica report notes Europe's R&D spend has fallen by 14% between 2005 and 2010. Comparison of R and D funding shows a 4:1 ratio in favour of the US against the EU, but because of the dispersed efforts in Europe some estimates put this at 6:1. More worrying is the R&D funding levels in developing economies in Asia and Latin America. Europe needs to retain its technological edge to maintain its ability to 'export security.'

The idea of harmonizing equipment requirements has been floated but this might be a bridge too far for one summit. Worthy policy studies have been produced by the European Commission on the better arrangement of European defence industry. In the face of declining budgets and increasing competition industry has already begun to rationalize its production facilities and supply chains, which means that 'British' 'Italian' or 'French' equipment is in fact multinational in its composition through their supply chains. The abortive attempt to merge EADS and BAES ultimately foundered on political grounds rather than on commercial ones. Politics still trumps industrial logic.

The Eurofighter and A400M are good examples of what can be achieved where the will exists. But Europe has several key capability gaps – not least in the UK which lacks both carrier strike and maritime patrol aircraft. Pooling and sharing might be a way to address these gaps – and also provide industry with reassurance that Europe takes defence seriously. The current requirement identified by the EU Military Staff is for enduring surveillance in the form of RPAS capability; Air to Air refuelling (A2A) and lift – in the form of helicopters.

If the EU summit is to prove to the citizen that "defence matters" then the politicians must show some leadership. European summits are long on ringing declarations which often get lost in translation – or to use EU speak transposition – implementation. Strengthening a European Defence and Technological Industrial Base must not be protectionism by another name.
One positive outcome of the European summit in December will be a reform of the EU's export licensing arrangements. These currently require multidomestic European defence contractors to apply for export licenses to send equipment to one of their branches in another EU country. Removal of the Offset requirement between EU countries would also eradicate scope for political interference in equipment choices. The cyber domain too needs action to promote better awareness of the threat. Moreover, defence needs to be on the agenda at EU summits more often.