DN - Defence Notes

The elusive goal of harmonising European defence

6th December 2017 - 01:12 GMT | by ​Neil Thompson in Brussels

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Despite Brexit hurting the budget of the European Defence Agency, EU leaders seem confident they are on track to harmonise cooperation with NATO and strengthen Europe’s fragmented defence industry.

Significant questions linger, however, about whether modest beginnings will turn into great structural changes in the near future.

At this week’s European Defence Industry Summit (EDIS), one noticeable element was missing from the ranks of the speakers who had been brought together to discuss Europe’s security situation – European defence industry representatives.

Although they’d been invited, none had been able to make it, leaving Europe’s defence industry to have its interests looked after by representatives of its longstanding US industry partners, such as Raytheon.

Nevertheless, the summit made good on its claim to be the first event of its type in Europe to bring defence industry representatives and political leaders together to discuss ways of integrating the fragmented defence sector.

Throughout the conference, the speakers’ concerns reflected the much-changed security environment for Europe since the last NATO report on future defence trends was released in 2013.

One major issue was whether or not promises of funding to the proposed European Defence Fund would be kept by the EU Commission.

Camille Grand, the Assistant Secretary General for Defence Investment at NATO, stressed that it was important that the two batches of €250 million in EU funds currently proposed for 2019 and 2020 were ‘clean money’ – in other words that the funding was really an increase in Europe’s combined defence budget and not just reshuffled from previous financial commitments made by EU member states.

He added some of the money would have to be spent on issues like space technologies to help the Europeans pull their weight in this area alongside the US.

Pierre Delsaux, the Deputy Director General DG GROW at the EU Commission, stressed that ‘transparency’ would be needed between the EU and NATO in the years leading up to 2021, after which the EU hopes to make a big jump in the size of the European Defence Fund.

'Once you start carving off different sectors, where do you stop? Where does it lead to? You lose the benefit of the whole past development.'

Chris Lombardi, Vice-President European Business Development, Raytheon

He commented that the EU Commission was focused on creating a strong and integrated European defence industry, rather than a federalist ‘European army’ feared by NATO members such as the UK, and was helping to counter the fragmented approach to defence taken at present by the continent’s numerous defence departments.

How the new funding becoming available from 2019 onwards would be spent was also an issue the speakers at the EDIS wrestled with.

The obvious solution to the cumbersome size of the alliance meant some European states could be tempted to work more closely together in certain specialised areas like cyber-warfare, but this approach risked undermining the NATO standardisation office and standardisation committees.

Speakers also struggled with the fact that this system existed in a European context where weapons procurement contracts were still locked into national supply chains, making it difficult for smaller countries or SMEs to break into the pan-European defence market.

Interoperability was probably the key buzzword of the summit, and this automatically falls by the wayside once different states began building to different standards.

Different industries could address different areas, Chris Lombardi, Raytheon’s Vice-President for European Business Development, commented.

‘I think once you start carving off different sectors, where do you stop? Where does it lead to? You lose the benefit of the whole past development that’s been done… If you can’t coordinate across those lines, then you are going to risk operations together and that is a problem,’ Lombardi added.

Regarding the industrial squabbles over how to share out the EDF funding, a problem which Europe has always had to struggle against when it comes to harmonising defence planning.

The recently-announced European Defence Industrial Development Programme (EDIDP) aims to support more competitiveness and innovative capacity in the EU defence industry as a whole.

Member states would be eligible to at least compete for funding from the EU Commission, marking a new use of EU funding to bring different countries together.

The ultimate aim would be for smaller countries to find a niche for themselves in other states’ supply chains.

Giedrimas Jeglinskas, the Lithuania Vice-Minister of National Defence, seemed cautiously optimistic about the ideas behind the EDIDP, but suggested that countries would have to understand exactly what their companies’ competitive edges were if they were to succeed.

Small countries’ largest defence companies were essentially SMEs by Western European standards, he pointed out.

From an industry perspective, however, when Raytheon’s Lombardi was asked about the European Defence Fund reducing the political factors distorting Europe’s industrial base, he didn’t deny political pressure could still be part of the process of getting a contract.

A company would need certain capabilities to make it into the pan-European defence supply chain and, without those, Raytheon could not work with them even if a country’s government wanted the company too.

Even so, Lombardi admitted there were many ‘subjective criteria’ in picking a partner to work with on some projects.

‘There are standards in and of themselves… and we don’t change those. We look at gaps in our capabilities that we need partners to fill when we don’t [have] or manufacture that speciality. If there is a political benefit in terms of partnering with somebody in a country and… it meets all of our [other] criteria, then that is obviously beneficial.’

It seems that despite efforts to streamline and integrate Europe’s defence industry, which are starting to have some impact, there is still much more work to be done.

Already, industry analysts are beginning to look ahead to 2021, when the EDF budget could treble to – a still modest – €1.5 billion euros a year, thus creating a more attractive ‘pie’ for firms to compete over.

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