European Military Capabilities, the Defense Industry and the Future Shape of Armaments Co-operation

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  • This article was downloaded by: [University of Illinois at Urbana-Champaign]On: 05 October 2014, At: 06:24Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office:Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

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    European Military Capabilities, the DefenseIndustry and the Future Shape of ArmamentsCo-operationAndrew James aa PREST, Manchester Business School , University of Manchester , HaroldHankins Building, Oxford Road, Manchester, M13 9PL, UKPublished online: 01 Jul 2010.

    To cite this article: Andrew James (2005) European Military Capabilities, the Defense Industryand the Future Shape of Armaments Co-operation, Defense & Security Analysis, 21:1, 5-19, DOI:10.1080/1475179052000341470

    To link to this article: http://dx.doi.org/10.1080/1475179052000341470

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  • Defense & Security Analysis Vol. 21, No. 1, pp. 520, March 2005

    Within the North Atlantic Treaty Organization (NATO) and in the European Union(EU), the shortfall between European capabilities and European political and militaryaspirations is a source of considerable concern. In November 2002, the NATO PragueSummit adopted a Capabilities Commitment aimed at enhancing the military capabil-ities required for the full range of future NATO missions. The new NATO ReactionForce is to act as a catalyst for change and is an essential element of NATOs transfor-mation agenda, focusing on and promoting improvements in NATO capabilities. Thecreation of the new NATO post of Supreme Allied Commander for Transformationaims to give further impetus to the process. In parallel, the European Unions HelsinkiHeadline Goal and the European Capability Action Plan (ECAP) process has sought tosecure the necessary capabilities to fulfill the Petersburg tasks within the EuropeanSecurity and Defense Policy (ESDP).

    Such developments raise questions about the future shape of the European defenseindustry and the role of armaments co-operation, both within Europe and acrossthe Atlantic, in helping European governments meet their capabilities shortfalls.2

    Competing views exist. There are those in European policy circles who raise the specterof US defense industrial dominance and argue that the ESDP will count for nothingwithout an independent European defense industrial base.3 There are others who arguethe case for a transatlantic defense industry as the most effective and efficient means ofdelivering the technological capabilities Europe needs and promoting interoperabilitywithin NATO.4

    This paper seeks a middle ground by arguing that Europe will only meet its capabil-ities shortfalls through a combination of strong European efforts complemented bytransatlantic armaments co-operation. Europe needs to build Towers of Excellencein those capability areas that are critical to its NATO commitments and the implemen-tation of the ESDP. A strengthened European technological and industrial base, thispaper proposes, is also the best way to ensure that future transatlantic armaments co-operation is balanced and in European interests. There should be no doubt that

    ISSN 1475-1798 print; 1475-1801 online/05/010005-15 2005 Taylor & Francis Group Ltd 5DOI: 10.1080/1475179052000341470

    European Military Capabilities, theDefense Industry and the FutureShape of Armaments Co-operation1

    Andrew D. JamesPREST, Manchester Business School, University of Manchester, Harold Hankins Building,Oxford Road, Manchester, M13 9PL, UK

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  • European governments will need to acquire US technologies selectively. Simply put,European defense Research and Development (R & D) and procurement budgets willmake it impossible to keep pace with US technological developments across the fullrange of capabilities. But co-operation works best when partners are of comparabletechnological competence. The question, therefore, is how Europe can enhance itsdefense industrial capabilities in selected critical capability areas to give it moreleverage in transatlantic negotiations with US policy-makers and industry.

    For the last 40 years, European governments have pursued co-operative armamentsprograms both within Europe and with the US. The case for closer co-operation isstronger than ever when faced by the cost and complexity of those systems that are thekey to military transformation. Europes relatively limited spending on defenseprocurement makes it imperative that its governments seek more cost-effective pro-curement processes. Defense procurement remains overwhelmingly a national activityand current arrangements are expensive and inefficient, duplicating effort and raisingcosts. Fragmented national markets deny Europe the economies of scale necessary toreduce costs, fund R & D and ensure the effective application of technology.

    On the supply side, the European defense industry has already undergone a dramaticconsolidation, although further mergers, acquisitions and joint ventures may benecessary if industry is to address the emerging capability needs of its customers.Equally, that capability agenda requires governments to address demand-side deficien-cies. Recent political developments suggest that, at last, European governments appearserious about developing closer co-operation between themselves in the field ofarmaments. The most tangible sign of this new determination is the establishment ofthe inter-governmental European Defence Agency (EDA) by the European Councilwith the aim of developing defense capabilities, promoting and enhancing Europeanarmaments co-operation, strengthening the European defense industrial base andcreating a competitive European defense equipment market as well as promotingresearch efforts.5 Such a reform of the demand side is important and long overduebecause it holds out the possibility of procurement of more cost-effective, technologic-ally advanced and timely defense equipment.

    Ultimately, however, the pace of technological developments in the US, combinedwith constraints on European defense R & D and procurement budgets, means thatEurope will only meet its capabilities needs through a combination of European devel-opments complemented by transatlantic armaments co-operation. If transatlanticco-operation is to be successful in this new environment, the US needs to recognize thatits European allies have significant technological capabilities in some fields.6 ForNATO transformation to be effective, the US must be willing to trust its Europeanpartners by sharing the advanced technologies that are critical to transformation.Moreover, the US government will likely need to reform technology transfer and exportcontrols if it wishes allies to have comparable capabilities. These are big challenges forpolicy-makers and politicians on both sides of the Atlantic.

    6 ANDREW D. JAMES

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  • TRANSFORMATION AND THE US DEFENSE INDUSTRY

    The imbalance in European and US military capabilities has been an issue for NATOthroughout its history, but the last decade has seen mounting concerns that this gapcould grow to such an extent that US and European armed forces will find it increas-ingly difficult to operate effectively together.7 The US focus on military transformationhas only heightened these concerns. The CSIS Commission on Transatlantic Securityand Industrial Co-operation in the Twenty-First Century bluntly states the problem:

    The Bush administration has made military transformation a central defense andnational security objective and has embarked on a radical reorganization andtransformation of its military resources and capabilities at a speed and of a scopethat current European defense budget