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The New European Defence Agency : Getting Above the Clouds

The New European Defence Agency : Getting Above the Clouds

Sources: Thales, EADS, BAE, June 24, 2004.

On June 15 2004, an open letter jointly written by the CEOs of Thales, EADS and BAE Systems was published by various European newspapers (Le Figaro, Frankfurter Allgemeine Zeitung, extracts also featuring in The Financial Times and The Independent...) calling for more means and resources for the creation of the new European Defence Agency. Here is the article in its entirety:

  • Denis Ranque, Chairman & CEO, Thales
  • Philippe Camus, Joint CEO, EADS

  • Rainer Hertrich, Joint CEO, EADS

  • Mike Turner, Chief Executive Officer BAE Systems

A year ago, in a joint declaration, we urged Member States to beef up their spending on defence research, technology and acquisition, to turn their political commitment on new defence capabilities into concrete realities, and to make better use of limited budgets through the launching of a European Defence Agency.  One year later, good progress has been made at the institutional level - an Agency is now in the making, with the opportunity to make a real difference.  But all depends on whether Member States will give their creation the resources and support it will need.  Having willed the end, they must now will the means.

Since the intention to create a European Defence Agency, under the control of Member States, was announced by European leaders at Thessaloniki in June 2003, Europe's machinery has moved at remarkable speed to develop the concept.  Its establishment is due to be approved by the European Council this week.  Its responsibilities include the development of Europe's military capabilities, the support of strategic technology research, better armaments co-operation, creation of a competitive defence equipment market, and strengthening the defence industrial technology base.  Each of these tasks is essential to European security and each is of utmost importance to the defence industry in Europe.  Creation of the Agency should be a landmark event. 

At last, and not before time, there is the opportunity to pull together demand in Europe and to bring some of the efficiencies of European scale to a sector which continues mainly to operate in a nationally fragmented environment.  This is now of urgent and vital importance both for ensuring that Europe gets the military equipment and systems that its forces need and for sustaining our defence technological and industrial capabilities.

But, faced with many institutional and practical challenges, there is a serious risk that the Agency will fall short of the  ambitions and expectations set for it. Slowness in the next stage of build-up, complexity of decision-making processes, and a lack of resources, notably for Research & Technology investment, would inhibit its full development.  There is a danger that it may not achieve in a reasonable timeframe its goals in relation to an effective European defence equipment market and competitive technological and industrial base. From industry's perspective there are four keys to unlocking rapid progress.

First, capabilities.  Taken as a whole, Europe's national defence budgets still provide disappointing levels of military output. The European Capability Action Plan (ECAP) was launched to help remedy the problem, but with only partial success to date. The Agency should  revitalise this process, setting clear targets for deciding the way forward in the different project groups and thus immediately bringing to a head decisions on  the capability shortfalls that have already been identified.

Second, research investment.  Structurally this is the link between what our forces need and industry's ability to provide it.  Unnecessary duplication of defence research expenditure in Europe has to come to an end. Other European bodies have been in the past tasked with achieving better coordination : but the Agency must do much better than this.  We need to agree upon a strategic research agenda and consolidate funds that can deliver it.  Control of a modest budget is the surest way to give the Agency the authority it needs. We urge EU governments to take the long term view of strategic research and place resources where they can deliver most combined effect.

The third key concerns the European defence equipment market.  This provides the structural link between Armed Forces' equipment needs and their economically efficient delivery. While the number of collaborative armaments programmes has increased over the years, most defence equipment is still procured nationally.  Customer fragmentation and national protectionism have denied both customers and suppliers the scale benefits that a single market area would allow.  The Agency  will need to play a role in encouraging Member States to find common solutions  to near-common requirements. But crucially it must take the lead in breaking down market barriers and instigating more transparent and open competitive practices in national procurements across the board.  This is a classic win-win opportunity : defence ministries will obtain better value in their acquisitions; and industry in Europe will have a more competitive supply base.  

The fourth key relates to the European defence industrial and technological base which provides the gel linking research to the delivery of equipment capability. Industry in Europe is under enormous competitive pressure from the United States. With US defence R&T investment running at around eight times that of Europe's fragmented total and with substantial growth in the Pentagon's vast procurement budget in a heavily protected national market, American industries are reaching new heights.  While it is not the wish of Europe's elected governments or of industry to develop a Fortress Europe, it is equally not their wish to see indigenous defence technology overtaken or dependence on foreign technologies become a necessity, especially where technology transfer terms are very restrictive.  Again, through judicious policies and a duty of care towards the industrial base in Europe, the Agency has a vital role to play.

The opportunity at the coming European Council to establish the European Defence Agency with resources to match its challenge must not be missed.  The institutional progress so far has been impressive, but it must not once again be a fig-leaf to cover the nakedness of any real efforts to improve European defence.  We call upon all EU Member States to demonstrate that this is not the case. Nationally, they can do it by addressing their defence budgets. At the European level, they can do it by making firm commitments to fully support the Agency and let it make a real difference. The Agency is on the tarmac : to succeed in its mission, it needs the fuel and the flight plan to get it through the clouds.

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Directeur de la publication : Joël-François Dumont
Comité de rédaction : Jacques de Lestapis, Hugues Dumont, François de Vries (Bruxelles), Hans-Ulrich Helfer (Suisse), Michael Hellerforth (Allemagne).
Comité militaire : VAE Guy Labouérie (†), GAA François Mermet (2S), CF Patrice Théry (Asie).