Defence agency will help EU to fight smart

By Dana Spinant

Date: 27/11/03

THE EU took a giant step towards putting its defence warehouse in order last week, with the decision to set up a European armaments agency. To be created in the second half of next year, the agency will be fully operational by 2010.

Its primary aim will be to develop the Union's defence capabilities in the field of crisis management, coordinate member states' military purchases and boost the European defence industry.

The Convention on the future of the EU had already proposed setting up such an agency in the draft constitution (Article 40), seeing it as a crucial basis for a credible European defence policy.

The 17 November decision by the Council of Ministers, to create the armaments agency next year, anticipates the constitution coming into force, but this is not expected before 2006 and negotiations are deadlocked in the ongoing intergovernmental conference (IGC).

Although crucial for boosting the EU's military capabilities, as well as for developing research and making its defence industry more competitive, the agency is no panacea for a European security and defence policy. The main obstacle to its success would not be some "American rival", but the "short-sighted" view of member states whose automatic reflex is "seeing national" instead of "seeing European", as one US official recently put it.

American and EU leaders have repeatedly claimed that Europe should spend more on defence. However, increasing member states' military budgets - unlikely in the present economic climate - will not plug the capabilities gap by itself. For while EU countries spend half as much as the US on defence, their combined capabilities only amount to a tenth of America's, mostly because of duplication and inoperability.

A recent European Parliament report, adopted on 20 November, recognized this, stating that it was not necessary that "more financial resources [be] made available" for European defence. Indeed, as the EU's military ambitions do not amount to building thousands of nuclear warheads or an anti-missile defence system, the Union need not match the United States' spending.

"Before spending more, Europe must make more efficient use of existing resources," said the report's author, Portuguese MEP Luis Queiró.

The key role of the newly created armaments agency will be to organize more efficient purchasing practices, with member states pooling their resources to avoid the aforementioned duplication and incompatibility of weapons and equipment.

For German Conservative MEP Karl von Wogau, if the agency is to succeed, it must focus on the Union's primary defence mission, crisis management, as well as addressing the compatibility weaknesses.

"An armaments agency that is overwhelmed with too many objectives cannot be effective," he says. "You cannot go on a common mission if you are unable to communicate with each other," he adds, referring to the lack of compatibility in telecommunications equipment which was evident during operations by member state forces in the Balkans.

Finally, if the agency is to strengthen the military research and defence industry, a fully functioning common market is essential.

The European arms industry also needs to be rationalized if the European Security and Defence Policy is to be capable of performing the tasks required of it. A competitive defence equipment market would allow economies of scale and enhance the performance of European firms and their competitiveness in the US market.

A sweeping restructuring of national defence-related industry has already taken place, or is taking place, in several EU countries. Such restructuring inevitably entails the loss of jobs and industries for some member states. But concentration in the sector will mean that, after losing a part of their national production capabilities, EU governments will be obliged to purchase from companies based in other member states.

American officials fear the creation of the agency would mean that the EU will only buy European and lead to protectionism in Europe's defence industry. However, this smacks of hypocrisy: in the US, policymakers have repeatedley stated that buying American is a patriotic act.

But can the EU create a common market for armaments - something that will necessitate the removal of national barriers?

At present, Article 296 of the EC Treaty allows a breach of the common market rules in the defence sector. It stipulates that "any member state may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material". It warns, however, that "such measures shall not adversely affect the conditions of competition in the common market regarding products which are not intended for specifically military purposes".

In the past, an excessively restrictive interpretation of Article 296 may have worked against the interests of the European arms industry: the frequent application of this provision has led to the fragmentation of national markets and industries.

Nevertheless, arms are a product unlike any other, and should be treated differently.

The challenge is to make the application of Article 296 (Article III 342 in the draft constitution) more flexible, without abrogating it. Member states should debate about a lighter use of the clause - to allow for protection of this sensitive sector while opening up to intra-EU competition - during the IGC conference.

The armaments agency is an important step towards introducing more efficiency in the European defence spending and planning. But it is only the beginning.

Feature on the EU's agreement to establish a European armament's agency.