The newly created European Defense Agency is positioning itself
to play a pivotal role in guiding European Union countries towards
a common military equipment market.
But the Union, which has hit a barren period in cooperative programs,
has a massive task ahead, despite the European Commission’s
efforts, asserted several of the continent’s defense officials.
The European Commission is the political institution that governs
the EU. Its four main roles are to propose legislation, to administer
and implement policies, to enforce laws and to negotiate international
agreements, mainly those relating to trade and cooperation.
Each member state, however, manages its own defense budget. This
fragmentation poses a “major problem for all member states
with defense industries,” stated a defense procurement policy
paper published last year by the Commission of the European Communities.
The paper explored options for the creation of a common European
defense equipment market, or EDEM.
Following budgetary reductions and the restructuring of armed forces,
even wealthy nations, such as the United Kingdom, Germany and France
no longer can afford the high cost of the research and development
for new weapon systems. Ultimately, this predicament affects the
competitiveness of the European defense industry, noted the commission.
Creating the EDEM will require an extensive review of procurement
policies. At press time, a four-month consultation phase—in
which stakeholders had a chance to comment on the commission’s
idea for more coherent regulations—was reaching its end.
At the core of the debate is an article allowing European states
to diverge from the common market in the interest of national and
“essential security interests.” Most defense contracts
are grounded in national procurement laws. Not only are laws complex,
but they also differ from country to country, said Burkard Schmitt,
with the Paris-based EU Institute of Security Studies. The result
is a “complex regulatory framework that lacks transparency,
is highly inefficient and hinders fair intra-European competition,”
he wrote in an editorial.
Manufacturing and selling in a national market is no longer sustainable
in a global economy, Nick Witney, EDA chief executive, said on the
website Euractiv, a portal dedicated to EU affairs. “The demand
side needs to increasingly come together on the continental scale
for the supply side to respond to that demand in a continental-scale
market,” he added.
The United Kingdom, a strong supporter of the EDA, champions the
creation of a coherent European market. At the same time, it wants
the option of buying U.S. or other equipment. To do so, the country
would have to keep its market reasonably open, said U.K. officials.
The United Kingdom considers the creation of EDEM a matter of priority.
A policy paper published by the U.K. Ministry of Defense urges a
pragmatic approach to a common market based on a voluntary code
of conduct. This form of internal governance would stimulate cross-border
competition and trade, said U.K. officials.
The creation of a common European defense market, meanwhile, would
affect military transactions and exchanges between the United States
and Europe, analysts stressed.
“When Europeans buy in a collective way … our people
will compete,” said Frank Cevasco, an international defense
industry analyst based in Fairfax, Va.
When the Pentagon issues solicitations for a certain program, it
is hard for a European company to win the prime contractor spot,
he explained. “The same would happen to U.S. companies in
Europe,” he added. “Our side is not particularly pure,
and we have written the book on protectionism.”
One-sidedness could be damaging to U.S. contractors, and it is
“naïve” to think that Europe always is going to
buy from the United States, Cevasco said. The U.S. government is
going to have the greatest influence determining whether Europe
will go “protectionist.” The magnitude of trade is driven
by the presence or absence of reciprocal access, he added.
If Europe moves forward with a common defense procurement agency,
the U.S. State Department, which is responsible for issuing export
licenses for military items sold to foreign customers, will have
to adjust its practices to be able to deal with a multinational
entity rather than just with a single country.
While Europe has had armament cooperation, its attempts have been
sporadic, said critics. Failure to respond to the Balkan crisis
of the 1990s prompted the creation of the European Security and
Defense Policy, or ESDP.
Its objectives are to strengthen European contributions to NATO
by enabling national forces to assume a larger share of the European
security burden in cases when NATO is not engaged. ESDP also is
meant to make military forces more rapidly deployable and sustainable,
and enable the European Union to oversee crisis management operations.
This political-military impetus led five European countries to
join the United Kingdom in its efforts to develop the Meteor air-to-air
missile. Similarly, Belgium and Spain joined France in the Hélios
II military observation satellite program, conducted in close coordination
with Germany and Italy, which are acquiring similar capabilities.
In addition, the much-delayed military cargo plane program, the
Airbus A400M, took off two years ago, with an order of 180 aircraft
worth $20.6 billion. The program is handled by the Organisation
Conjointe de Coopération en matière d’Armement,
Also known as the European Joint Organization for Armaments Cooperation,
OCCAR became a legal entity in 2001. It is acting as a multi-national
agent on collaborative projects for its member countries.
The State Department has yet to come up with a policy for how to
deal with OCCAR-managed programs, which has upset U.S. contractors
seeking to compete for A400M work, for example.
Progress made by the ESDP has helped revive the process of consolidating
European industry. The six leading European arms manufacturing countries—France,
the United Kingdom, Germany, Italy, Spain and Sweden—now are
trying to implement the provisions of the framework agreement known
as the letter of intent. The goal is to simplify transnational transactions,
while ensuring governments retain some form of control.
These six nations have “85 to 90 percent of the defense-oriented
research and development investment, and manufacturing capacity
in Europe,” Cevasco said. “They are trying to lower
barriers among themselves” to operate like a single entity.
Currently, because each country has its own set of export controls,
cooperating efficiently is hard to do, he pointed out.
In Cevasco’s opinion, the letter of intent runs in parallel
to the efforts of the EDA, and “will complicate things. They
want to do things more among themselves rather than delegate to
the EDA … They have institutions that work in parallel, but
their goals are common, and they are coming to it from different
It is not clear which entity will end up managing common defense
procurement programs. EDA, whose role is solely advisory and has
no procuring power, recommended that OCCAR manage programs, but
OCCAR oversight so far is limited only to programs funded by its
members—France, Germany, Italy, the United Kingdom, Belgium
and Spain, which is expected to join shortly. The EDA would have
to figure out how to handle projects that involve other EU members
outside of OCCAR.
“OCCAR could be and might be brought into later on, and they
would have the requirements people, the folks that would deal with
research and development and the procurement authority,” said
OCCAR has been managing, besides the A400M, the German-French Tiger
helicopter program, the French-Italian surface-to-air anti missile
system family, and the French-German Roland, radar-guided surface-to-air
Apart from a new Franco-Italian frigate program, nothing else is
forthcoming. This problem figures into one EDA’s chief goals:
to identify common capability gaps.
The agency said it will fund technology demonstration work in areas
viewed as critical to future military operations, such as long-endurance
unmanned aerial vehicles. In advanced European jet pilot training,
the agency will assume leadership in a current effort involving
11 countries to develop a common European system.
In the area of command, control and communications, EDA is working
to find solutions to operational shortfalls and developing interoperability
standards. The agency also is looking at ways to save money by eliminating
duplicate or redundant facilities.
Armored fighting vehicles are on the list as well. EDA also will
consider developing an common “electronic marketplace”
where buyers and sellers can exchange information.
The agency also plans to investigate the potential value of a naval
defense technological and industrial base, maritime surveillance,
air-to-air refueling and chemical, biological, radiological and
But these efforts are in their early stages. Observers said they
are cautiously optimistic.