Time might do it for business

There must be an old saying in some language that runs along the lines of: time will deliver what common sense fails to bring. The general realities of life should give rise to such a saying, but a wonderful example is to be found in the European Defence Agency (EDA).

Before its creation Brussels - and many other quarters of the EU - was full of nay-sayers, claiming it would be everything from unnecessary to unsuccessful, mainly because the member states would not co-operate. Most especially it was deemed a sound and obvious truth that every single member state would object to giving even an inch with regard to Article 296 - which exempts a member state from opening certain issues to EU competition on the grounds of national security - a fact that would doom the EDA even before it found a site to house itself, let alone get any work done.

Not even three years later - the agency was created in July 2004 - the EDA has not only found itself splendid offices, sensibly slightly removed from the doubters of Rond-Pont Schuman, but also created a new reality: a de facto sharing of defence-related contracts between member states. Since opening its first portal, for member states to publish defence-related contracts, there has been a stunning €7 billion worth of contracts posted - and that is only a conservative estimate of senior officials in the EDA. At the end of March a second portal was launched for business to business contracts (B2B), a very important step that will allow for small- and medium-sized enterprises (SMEs) to benefit more fully from cross-border contracts. By the sheer dint of their size such companies can only afford to network within quite limited areas, so this may prove a much needed boost to the many SMEs that are the real backbone of European industry. And that is really the point: the EDA has started so successfully because it is about the industry part of defence, not the security part of it.

The EU was an entity created to ensure peace, meaning that all matters related to ‘war’, such as security and defence, were deemed firmly in the remit of the member states rather than a collective matter. That most of them then chose to go off and deal with defence collectively through NATO is another matter. But what became enshrined, regardless of the organisation, was the notion that all procurement related to national defence and security must remain solely under the supervision of each state, and not subject to regular commercial rules. Hence Article 296 of the EU treaty - and hence also Article 21 of the World Trade Organization’s rules.

In both cases the original logic was sound, but in both over the years the logic became protectionist - and in some cases plain daft. It is one thing when a state is buying a missile or a fighter jet - but it is entirely another when a state is buying boots for its soldiers or taps for the sinks (not to mention the sinks themselves) for military barracks. Other than the end customer, it is hard to see how these are in any way security related.

Over the years Article 296 became a cushy number for national suppliers and an article of faith for member states which took to ritually polishing it with high words of sacred national right and security without actually noting what was at stake.

The EU being a notably secular organisation may explain the speed with which this article of faith has been banished - to the benefit of the citizens of the Union, who now may have a chance of benefiting from sensible competition for most defence-related contracts rather than governments doling out contracts to a small circle of suppliers. Unfortunately, such decisions still reside in the hands of the member states rather than the EDA. But who knows? Now that they have started to publish their contracts they may actually take the best bidder. It is common sense - but it may just take time…

• Ilana Bet-El is an academic, author and policy adviser based in Brussels.

There must be an old saying in some language that runs along the lines of: time will deliver what common sense fails to bring. The general realities of life should give rise to such a saying, but a wonderful example is to be found in the European Defence Agency (EDA).