european military capabilities, the defense industry and the future shape of armaments co-operation
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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
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Defense & Security Analysis Vol. 21, No. 1, pp. 5–20, 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 NATO’s 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 Union’s 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 Excellence”in 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. Europe’s 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.
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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 budgets are in no position to match any timesoon.8
The 2001 Quadrennial Defense Review (QDR) focused on dominant military capabili-ties that would be reinforced by a transformation in doctrine and technology and ableto operate on a global basis. As Dombrowski and Ross observe:
Information superiority is to be the underpinning of “dominant maneuver”,“precision engagement”, “focused logistics”, and “full-dimensional protection”.US forces are expected to prevail over any and all military challengers by movingmore quickly, hitting harder and more precisely, and when necessary, sustainingoperations longer than potential adversaries.9
Such concepts are being supported by a slow but perceptible redirection of R & D andprocurement spending. Within the huge hike in US defense R & D spending is a newTransformational Technology Initiative focusing attention on hypersonics and spaceaccess, advanced reconnaissance and knowledge architecture, and power and energytechnologies.10 Patterns of procurement spending are also changing, albeit slowly.The cancellation of the US Army’s $1.1 billion Crusader artillery program is seen asevidence of the direct impact that transformation may have on the future shape of USdefense equipment requirements.
Within the US Department of Defense (DOD) there are those who argue that thesedevelopments require a transformation of the defense industrial base.11 They argue thatthe transformational shift to “effects-based operations” requires that the defense indus-trial base should be viewed as being composed of operational effects-based sectorsrather than simply platforms or weapons systems. At the same time, they argue, invest-ment and sourcing of transformational technologies may require the DOD to lookbeyond its traditional suppliers to commercial companies and start-ups in sectors asdiverse as robotics, information technology and biotechnology.
Indeed, since the early 1990s, the US defense industry has been shifting the focus ofits activities from platforms towards defense electronics and systems integration activi-ties. The Bush Administration’s focus on transformation has given added impetus tothat process. Defense contractors such as Boeing, Northrop Grumman, Lockheed
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Martin and General Dynamics have greatly expanded their information technologycapabilities in large part through acquisitions of small defense IT firms or the ITdivisions of larger defense firms. 12
DEVELOPMENTS IN EUROPE
While the Pentagon has pushed ahead with its transformation efforts, European gov-ernments have been more cautious. Few Europeans use the term “transformation”,preferring instead to talk about modernization, network centric warfare or networkenabled capability.13 This is more than mere semantics. Skeptical Europeans questionwhether the American way of warfare associated with transformation is necessarilyappropriate to European strategic requirements.14 The caution also reflects the realityof European defense procurement budgets. Most European countries are still trying toreorientate their militaries from their Cold War posture. European governments arestruggling to find funds for strategic air lift, C4ISR and the other equipment necessaryto support their new expeditionary war-fighting and peacekeeping missions.15 At thesame time, a few large programs like the Eurofighter are consuming a large share ofexisting modernization spending. Difficult decisions still need to be taken acrossEurope regarding force structures, the mix of platforms and enabling capabilities andthe like.16
Against this background, the UK government, for one, has made it clear that there isno realistic way that it can – or would wish to – follow the US vision of wholesale trans-formation of its forces. Instead, the UK is pursuing what it calls Network EnabledCapability. This is an incremental and selective development of the transformationalcapabilities it believes are most likely to improve the effectiveness of British armedforces in a context of coalition warfare. The situation in France is similar. Germany hasonly just begun begun to address such questions.17
STRENGTHENING THE EUROPEAN DEFENSE INDUSTRY
Industry reflects the demands of its customers. The main challenge for the Europeandefense industry has been the relatively slow pace at which its principal customers –namely European governments – have been willing and able to adopt the new transfor-mational technologies and allocate the budgets for procurement and R & D necessaryfor modernization.
Where customer requirements have emerged, European industry has already gonesome way to establishing European solutions to European capability shortfalls. In thearea of precision strike weapons, the European missile company MBDA has developedthe Storm Shadow/Scalp EG cruise missile. In C4ISR, France is deploying the Heliosseries of optical observation satellites. A European industry team offered the Stand-offSurveillance and Target Acquisition Radar (SOSTAR) as an alternative to theNorthrop Grumman J-Stars for the NATO Alliance Ground Surveillance (AGS)requirement. Similarly, Europe has programs that span the entire spectrum ofunmanned aerial vehicles (UAVs), and the French companies Sagem and DassaultAviation are collaborating to develop an unmanned combat air vehicle (UCAV).18
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Europe can more than hold its own in conventional platforms and this is reflected inEuropean technological capabilities related to strategic mobility assets. The AirbusMilitary Company A400M, for example, represents a European industrial response toNATO Europe’s strategic airlift needs.
There are economic as well as military factors at play here. The development ofstrong capabilities in these technologies is seen by European industry as vital to sustainthe European defense industrial base and retain Europe’s established defense exportmarkets. European companies are also keen to gain a substantial share in what theybelieve will be significant growth markets for C4ISR, UAVs and so forth, both inEurope and elsewhere. Like their US counterparts, the leading European defense con-tractors are responding to the new transformational agenda, albeit in a way that reflectsthe realities of European defense budgets and the demands of their customers. BAESystems has sought to develop a strategy to address key programs in the US, the UKand the rest of the world by building on capabilities in BAE North America (not leastin the areas of Electronic Warfare and Information Dominance) and focusing across theorganization to exploit technological capabilities and market opportunities.19 Thales isreorientating its communications business group to focus on network-centric warfareand to capitalize on its strong position in the defense electronics business and its placeas the largest European supplier of defense communication systems.20 EADS is seekingto focus on growth areas of the global defense market such as UAVs, C4ISR andavionics.21
Ultimately, however, the European defense industry is hamstrung by the nature ofthe European defense market. National procurement requirements differ, making itdifficult for companies to plan for the long term through industry restructuring,alliance building and R & D investment. Industry figures in Europe have repeatedlywarned that Europe’s defense technological position relative to the US is at risk offurther erosion without significant increases in European defense spending forresearch, development and for the procurement of advanced weapons systems.22
ENHANCING EUROPEAN ARMAMENTS CO-OPERATION
A key challenge for Europe therefore is to develop more effective models for enhancedarmaments co-operation: identifying common requirements, promoting R & T co-operation, and improving program management. The UK government’s DefenceIndustrial Policy has emphasized how the development of Network Enabled Capabilitywill amplify the need for international co-operation at defense industry level, in orderto make best use of scarce skilled resources and to meet the need to network withcoalition partners.23 The French government has expressed its desire to increase itsco-operative R & D effort and has argued that across a range of transformational tech-nology areas from space to C4ISR there is a strong case for European solutions.24
Historically, collaborative equipment programs among European nations haveproved highly problematic. Programs have all too often been based on strict juste retourwork-share agreements to satisfy national governments’ needs to deliver local jobs inexchange for spending taxpayers’ money on defense. At the same time, programs havefrequently been dogged by problems because they have often been established after
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national equipment requirements have become relatively firm – leaving the collabora-tive program to try to deliver a common solution to often-conflicting nationalrequirements. The consequence has been a high failure rate among such programs andcost over-runs for those that have survived. Two examples provide sobering remindersof much that shackles Europe. The A400M military transport aircraft was the subjectof tortuous political wrangling, and getting the program under way was hugely difficultdespite a consensus among European governments about the importance of improvingtheir collective airlift capability. The European Technology Acquisition Program(ETAP) that was established to lay the foundations for future European combat airsystems has been dogged by political disputes over the focus of the program and aUK–French dispute over stealth technology.
Nonetheless, European governments are seeking to make progress, and to observersof European armaments co-operation recent political developments have been nothingshort of remarkable. In 2003, the Anglo–French Le Touquet Declaration, the draftConstitutional Treaty produced by the Convention on the Future of Europe and theconclusions of the Thessalonki European Council were seen by many commentators asmarking the emergence of a new political dynamic to the process that seemed incon-ceivable only a few years before.25 The establishment of the European Defence Agencyin July 2004 represents a potentially important step towards closer demand-side co-operation between European governments.
A moment’s reflection on the history of European armaments co-operation,however, reminds us that we have been down this road before. The character ofEuropean armaments co-operation has been determined by the desire of national gov-ernments to protect national sovereignty and control over armaments issues, combinedwith the unbridgeable gap between the interests of large and small European countries.Those European countries with large defense industrial bases have favored inter-governmental coalitions of the willing such as OCCAR and the Framework Agreementas a means of achieving some progress on armaments co-operation issues. Turning thegrand political statements of support for the European Defence Agency into realprogress may prove to be far from straightforward. Indeed, the history of Europeanarmaments co-operation has been one of often torturous negotiations over the minutiaeof implementation that have had the effect of eroding the dynamic created by high-levelpolitical initiatives.26
At the same time, European policy-makers must make sure that this latest round ofinstitution-building does not lead them to lose sight of the bigger picture. The Agencyshould not be seen as an end in itself. Success will be measured not by the establishmentof the institution (we have had plenty of those in the last three decades) but by the dif-ference that it makes to European capabilities in support of the ESDP. In this regard,the Agency can be regarded as a necessary but not a sufficient condition for progresstowards meeting European aspirations. The political will to address the capabilitiesissue expressed in the ECAP process and now in the Agency is encouraging. Ultimately,however, the Agency will only deliver results if it is supported by the will to increaseEuropean defense procurement spending to a level that ensures that European militaryforces can meet the political aspirations of the ESDP and NATO transformation.
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THE CHALLENGE OF TRANSATLANTIC ARMAMENTS CO-OPERATION
However, the pace of technological developments in the United States, combined withconstraints on European defense R & D and procurement budgets, means that Europeis only likely to meet its capabilities needs through a combination of European devel-opments complemented by transatlantic armaments co-operation.
A report by the Assembly of the Western European Union in 2000 observed that thegap in military research spending between the US and Europe meant not only that atechnological gap existed but that it would probably widen still further.27 General KlausNaumann, the former Chairman of NATO’s Military Committee, has argued that evenif there were niches in which the Europeans had the lead, they were at least five yearsbehind the US in the crucial area of C4I.28
The scale of these challenges has prompted some US commentators to questionwhether autonomous European development and acquisition efforts are necessarily themost effective means of utilizing scarce European defense spending. In this argument,European governments are not seen as seriously addressing the transatlantic capabili-ties gap nor is the European defense industrial base seen as capable of delivering neededcapabilities. The naysayers concede that, selectively, the Europeans may have someexcellent defense and information technologies; but overall they are lagging and will falleven further behind as US industry responds to the demands of the DOD’s transfor-mational agenda. European collaborative efforts to catch up with the US, the argumentcontinues, lead to a duplication of development efforts and are more costly than buyingoff-the-shelf from US suppliers. The Meteor air-to-air missile, A400M and Galileoprograms have been singled out for particular US criticism.29
There are situations where European governments will seek to acquire US technolo-gies in this way. Such arrangements have a long history dating back to the F-16 programand earlier. In the 1980s, the UK and France both decided to acquire the Boeing E3AWACS (Airborne Warning and Control System) in recognition of the fact that it wasneither technologically feasible nor cost-effective to seek to develop a similar capabil-ity.30 In 1995, and for similar reasons, France ordered the E2-C Hawkeye airborne earlywarning/command and control aircraft for the French Navy. More recently, the UKgovernment has made clear its view that the technologies that underpin network-centric warfare “will inevitably be led by the US” and that the UK needs to be selectiveabout the technologies it develops nationally or on a European basis.31
However, the acquisition of US technology is always likely to be an option of lastresort. European governments are wary of the operational constraints that can emergefrom US technology controls, and even America’s closest European allies areconcerned about the need to retain an independent capability while ensuringcoherence with US developments.32 Some European policy-makers believe that it iscrucially important to the development of ESDP that Europe establishes a strong andcompetitive defense industrial and technological base. In this view, autonomous crisis-management operations are feasible only if Europeans succeed in narrowing thetechnological gap that exists between European countries and the US, and Europemust do so either through its own efforts or as an equal partner in transatlantic
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co-operative programs.33 At the same time, initiatives that oblige European govern-ments to buy US technology are unlikely to gain much credence in the current climateof weak electoral support for defense spending in Europe.
Europeans have also become increasingly skeptical about transatlantic armamentsco-operation. Past experience can color attitudes and perceptions, and the Europeanexperience of transatlantic co-operation has not always been good. Put bluntly, manyEuropeans regard the US as an unreliable partner prone to withdraw from programs,impose unacceptable technology transfer and arms export controls and unwilling torecognize European technological capabilities.
There have been some success stories. The long-term multi-national Sea Sparrowand Evolved Sea Sparrow Missile (ESSM) program shows how joint co-operativeprograms can enable commonality and economic participation.34 The Joint TacticalInformation & Distribution System (JTIDS) program has enhanced interoperabilitybetween NATO combat aircraft. However, the decade-long political and industrialbattle over the NATO AGS is a sobering reminder of the challenge of transatlantic co-operation.35 The history of the Medium Extended Air Defense System (MEADS)program highlights the sensitivity of technology transfer issues in transatlantic indus-trial relationships as well as the often limited political commitment to these kinds ofgovernment-to-government collaborative programs on the part of the US Congress.36
The Joint Strike Fighter – for many a model for the future of transatlantic armamentsco-operation – has struggled to overcome the challenges of US arms export and tech-nology transfer regulations.37
Significantly, there is virtually no meaningful European participation in any ofthe key US transformation programs – from UAVs to military space to informationdominance – or in the other areas that are relevant to closing the capability gap orenhancing interoperability. Current transatlantic co-operative efforts are, by and large,not related to coalition force improvements in interoperability or capability, but under-taken for reasons of affordability (JSF) or geopolitics (missile defense).38
PROMOTING TRANSATLANTIC CO-OPERATION
Given the discord and rancor that has characterized the transatlantic relationship inrecent years it may seem somewhat perverse to talk about the potential role of trans-atlantic armaments co-operation in closing the capabilities gap. Nevertheless,transformation-orientated co-operative armaments programs (or European participa-tion in ongoing US programs) could well help to do so if there was a renewed politicalwill to make them work. Equally, deep and balanced transatlantic links between defenseresearch agencies in the US and Europe could help so long as they go beyond thecurrent exchange of information to incorporate joint projects.39 It has been observedthat to facilitate such common programs requires agreement on operational require-ments, and new and more efficient ways of managing projects collaboratively. NATOmembers would also need to co-ordinate acquisition purchases to achieve economies ofscale. Such co-operation would need to recognize the technological capabilities ofEuropean partners as well as the political imperative for balanced co-operative arrange-ments, and could only be built on a willingness to draw on component technologies
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from participating nations in a fair manner. This would mean paying more attention tooperational requirements, willingness to invest, capabilities, and efficiency thannational origin and offset arrangements.40
Another way in which the US and European governments could promote transat-lantic co-operation is through support for transatlantic defense industrial linkages andjoint ventures.41 European defense companies are already pursuing industrial relation-ships with US companies as a means of accessing US technology. Of course, furtherindustrial linkages will only emerge if they make commercial sense to European defensecontractors who are increasingly privatized companies. Thus, programs like NATOAGS have a potentially critical role in providing a focus for transatlantic teaming, notleast because new technologies and opportunities for change can be created bynurturing multiple partnerships among prime contractors.42 Policy-makers have oftenbeen ambiguous in their attitudes towards transatlantic industrial relationships. Thus,governments on both sides of the Atlantic need to sustain and enhance the climate fortransatlantic teaming, joint ventures and M & A through periodic affirmation that suchforms of transatlantic industrial co-operation are seen as desirable.
There has been some progress. One notable transatlantic defense industrial devel-opment is the strategic alliance between EADS and Northrop Grumman. The twocompanies signed a Memorandum of Understanding in 2001 under which they agreedto explore opportunities in ground surveillance and a number of other areas of defenseelectronics, such as aerial targets and decoys, airborne electronic attack and fire controlradar. The first product of this relationship was an agreement to offer a “Europeanversion” of a weather and navigation radar, developed by Northrop Grumman, for theAirbus A400M.43 A further development has been the agreement to develop aEurohawk variant of Northrop Grumman’s Global Hawk UAV for marketing inEurope. The most substantial part of the two companies’ common activities is their col-laboration on NATO AGS. Equally noteworthy is the joint venture between Thales andRaytheon that has combined the capabilities of the two companies in the area of airdefense command and control centers, air defense radars and battlefield air surveil-lance in North America.
More significant still, from the point of view of transatlantic defense industrial rela-tionships, have been the acquisitions undertaken by BAE Systems in the US. Theseacquisitions have given BAE Systems a leading position in the growing US market andthey also present the opportunity for BAE Systems to gain access to US R & Dprograms and technology. A key element of BAE Systems strategy for C4ISR is to buildon its North American capabilities in electronic warfare and information dominanceand leverage them into UK and rest of the world programs. Nevertheless, BAE Systemsmust contend with the constraints imposed by US export and technology transfer reg-ulations as it tries to create a true multinational business organization, and these areundoubtedly limiting its ability to utilize US technology in European programs.
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A RENEWED US COMMITMENT TO TRANSATLANTICARMAMENTS CO-OPERATION
Creating the conditions for transatlantic armaments co-operation places responsibili-ties on both Europe and the US. Europe needs to take the capabilities gap seriously andensure that it reallocates scarce defense budgets to address NATO capabilities require-ments. The US government needs to play its part in the modernization of NATOEurope’s capabilities, not least by offering technology and joint programs to supportEuropean transformation and enabling this process through changes to US export andtechnology transfer regulations. The current state of transatlantic political relationsdoes not give much room for optimism.
The reform of US export and technology transfer controls is critical. Time andagain, US export controls and technology transfer regulations have hampered trans-atlantic armaments co-operation and have driven Europeans to find alternativeEurope-only solutions to their armaments requirements. In autumn 2002, the StateDepartment began a review of policy guiding conventional arms transfers in a movethat it was hoped by many would help facilitate transatlantic armaments and industrialco-operation.44 The review under the National Security Policy Directive on DefenseTrade Export Policy and National Security (NSPD-19) was the latest effort to reformthe US export control system, with the Bush Administration continuing reform effortsbegun by the Clinton Administration. These reflected concern in the US governmentthat the US process for licensing the export of military-related components and systemswas overly complex and slow, and increasingly incompatible with the growing trendtowards multinational collaboration in the defense industry. Equally, there has alsobeen recognition within successive Administrations that the way that US defense tech-nology controls operate has meant that US security interests are being achieved at ahigh cost in terms of damaged political influence and goodwill among NATO allies aswell as undermining NATO transformation efforts.45
However, in the face of Congressional opposition, the Bush Administration withdrewits reform proposals in 2004 and in doing so only reinforced European skepticism aboutUS commitment to transatlantic co-operation in this field. A series of initiatives begununder the Clinton Administration had made slow progress and generated considerablefrustration for the countries involved. The US–UK “Declaration of Principles”, signedin February 2000, sought to provide a bilateral model for the management of trans-atlantic relationships covering the harmonization of military requirements, exportprocedures, information and technology-related security as well as joint researchprograms. The US Defense Trade Security Initiative (DTSI), announced in May 2000,promised a series of actions, including streamlined program and project licenses, areview of the US Munitions List, and an offer to negotiate International Traffic in ArmsRegulation (ITAR) exemption arrangements with Australia and the UK. The frustra-tions of those involved were such that the UK Minister for Defense Procurement, LordBach, was moved to complain publicly about the slow progress, describing many ofthe US-imposed constraints on Anglo–American defense–industrial relations as“absurd”.46 The climate has hardly been helped by repeated Congressional efforts tostrengthen “Buy American” provisions related to US defense procurement.
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Such matters are critical because, for NATO transformation to be effective, theUnited States must be willing to trust its European partners by sharing advanced tech-nology. If the US wishes its allies to have comparable capabilities then it needs to offertechnology to support European transformation and promote common, joint programsto strengthen the NATO defense technological and industrial base.47 The Co-operativeEngagement Capability (CEC) is a good illustration of the difficulties. The US hasagreed to release this advanced naval air defense system to the UK but, given itspotential to enhance interoperability, extending CEC across the whole of NATO wouldseem to be a highly desirable step. US unwillingness to share such technology is illus-trative of US thinking. CEC gives the US a quantum leap in its ability to achieve “fullspectrum dominance” in any theater of war, and the Pentagon is reluctant to see itproliferate elsewhere. On the one hand, it clearly represents the strongest emergenttechnology around for removing barriers to full transatlantic interoperability in navalair warfare. Yet, on the other, it is regarded by the US as too sensitive, too great a leapforward, to be given an unequivocal export release even to close NATO allies. 48
CONCLUSION
This paper has argued that there is a pressing need to broaden and deepen armamentsco-operation, both within Europe and across the Atlantic, if NATO’s transformationagenda is to deliver. Europe needs to build “Towers of Excellence” in those capabilityareas that are critical to its NATO commitments and the implementation of the ESDP.A strengthened European technological and industrial base is also the most likely wayof strengthening transatlantic armaments co-operation. By enhancing its defenseindustrial capabilities, Europe is more likely to be taken seriously in Washington policycircles. Ultimately, European governments will need to selectively acquire US tech-nologies because European defense R & D and procurement budgets will make itimpossible to keep pace with US technological developments across the full range ofcapabilities. However, stronger European defense technological capabilities will giveEurope more leverage at the negotiating table and is the best way to ensure that futuretransatlantic armaments co-operation is balanced and in European interests.
How should US policy-makers respond to efforts aimed at strengthening Europeandefense industrial and technological capabilities? All too often Europeans feel that theyface a “damned-if-you-do–damned-if-you-don’t” problem. US politicians and policy-makers have always been keen to criticize Europeans for not doing enough or spendingenough. However, when Europeans try to remedy these shortcomings and seeksolutions to European capability shortfalls, they are often criticized for “duplicating”efforts and “wasting” money (the Meteor missile, A400M transport aircraft andGalileo are but three prominent examples). There seems little point in the US contin-uing to push the idea that the only solution is for Europe to “buy American”. Such anidea will always be a non-starter on strategic, political and economic grounds. Instead,US policy-makers need to find ways of encouraging transatlantic solutions to transfor-mational capability requirements. Joint programs in transformational technology areasneed to be established and they must be supported by reform of US technology transferand arms export regulations. All too often, transatlantic programs like MEADS have
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been stymied on the US side by a combination of technology transfer blockages,hostility within the military services and limited Congressional support. The experi-ence of transatlantic programs has led too many Europeans to conclude that the US isan unreliable partner and has driven them to find alternative Europe-only solutions totheir armaments requirements.
Efforts have been made at reform and they need to be encouraged. Nevertheless,Europeans remain uncertain about US commitment to transatlantic armamentsco-operation. They perceive Congress to be hostile to transatlantic co-operation andwonder whether reform has the wholehearted commitment of the Bush Administra-tion. They sense a view in some Washington circles that the US has rather little to gainfrom transatlantic armaments co-operation because the drive towards transformation,along with increasing US R & D and procurement spending, has given the US analready unassailable technological lead. This leaves us to ponder what European gov-ernments and industry should do if the US continues to be an unreliable partner intransatlantic co-operation. The answer will differ between countries. There is littledoubt that the UK government and industry has a preferential position in the eyes ofthe US and will continue to do its best to strengthen transatlantic armaments co-operation. Italy is likely to do the same. The situation in some other leading Europeancountries is less positive and the momentum for European preference is growing.
Should the US care about transatlantic armaments co-operation? If the US is seriousabout NATO and its transformation, then the answer has to be “Yes”. Abandoningtransatlantic armaments co-operation, either by commission or omission, will leaveboth the US and Europe worse off. The benefits for the US remain clear. Transatlanticarmaments co-operation is a powerful tool to promote interoperability. The US doesnot have a monopoly in advanced technology, and Europe has important capabilitiesthat can be of benefit to US programs. Within NATO, a combination of strongEuropean efforts complemented by transatlantic armaments co-operation can helptackle the worst of the capabilities gaps. The need for such efforts is increasinglypressing.
Equally, without new initiatives, Europe’s capability shortfalls will make increasinglymeaningless its political and military aspirations both within NATO and the ESDP.Within NATO, the capabilities gap is likely to lead to an ever-greater divergence ofdoctrines between NATO Europe and the US, making coalition warfare increasinglydifficult if not impossible for all but a few European militaries. Within the EuropeanUnion, the consequence could well be the emergence of an equally divisive capabilitiesgap between those European countries that have invested in transformational andnetwork centric capabilities (in particular the UK and France) and the rest.
NOTES1. This is an abridged, revised and updated version of a chapter in Daniel S. Hamilton (ed.),
Transatlantic Transformations: Equipping NATO for the 21st Century, Center for TransatlanticRelations: Johns Hopkins University, Washington DC, 2004.
2. See, for instance “Defence and Security in an Uncertain World”, keynote speech by NATOSecretary General, Lord Robertson to Forum Europe, Brussels, 17 May 2002, and TheFuture of the Transatlantic Defense Community, Final Report of the CSIS Commission on
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Transatlantic Security and Industrial Co-operation in the Twenty-First Century, Center forStrategic and International Studies, Washington DC, 2003.
3. This view has been expressed in a series of policy documents from the European Commis-sion and associated groups. For example, STAR 21: Strategic Aerospace Review for the 21stCentury, European Advisory Group on Aerospace, European Commission, Brussels, July2002; European Defence – Industrial and Market Issues – Towards an EU Defence EquipmentPolicy, COM (2003) 113 final, European Commission, Brussels, March 2003; Research for aSecure Europe, Report of the Group of Personalities in the Field of Security Research,European Commission, Brussels, 2004.
4. The most recent statement of this position is contained in The Future of the TransatlanticDefense Community, op. cit., but the argument is a long-standing one. See, for instance,Gordon Adams et al., Europe’s Defence Industry: A Transatlantic Future?, Centre for EuropeanReform: London, 1999; John Deutch, Arnold Kanter and Brent Scowcroft, “SavingNATO’s Foundations”, Foreign Affairs, November/December 1999, pp. 54–67; JeffreyBecker, “The Future of Atlantic Defense Procurement”, Defense Analysis, Vol. 16 No. 1,2000, pp. 9–32.
5. See “Council Joint Action 2004/551/CFSP of 12 July 2004 on the establishment of theEuropean Defence Agency”, Official Journal of the European Union, L 245/17, 17 July 2004.
6. Gordon Adams, Guy Ben-Ari, John Logsdon and Ray Williamson, Bridging the Gap:European C4ISR Capabilities and Transatlantic Interoperability, George Washington Univer-sity: Washinton DC, October 2004, available at: http://www.ndu.edu/ctnsp/C4ISR%20Gap_5.pdf
7. For two competing views on the transatlantic capabilities gap see: David C. Gompert,Richard L. Kugler and Martin C. Libicki, Mind the Gap: Promoting a Transatlantic Revolutionin Military Affairs, National Defense University Press: Washington DC, 1999, and Robert P.Grant, The RMA – Europe Can Keep In Step, Occasional Papers 15, Western European UnionInstitute for Security Studies: Paris, June 2000.
8. The Future of the Transatlantic Defense Community, op. cit., p. 3.9. Peter J. Dombrowski and Andrew L. Ross, “Transforming the Navy: Punching a Feather
Bed?”, Naval War College Review, Vol. LVI No. 3, Summer 2003, pp. 108–109.10. Andrew D. James, US Defence R & D Spending: An Analysis of the Impacts, Rapporteur’s
report for the European Union Research Advisory Board (EURAB) Working Group ERAScope and Vision, PREST, University of Manchester, January 2004 available athttp://les.man.ac.uk/PREST/Publications/eurab.htm
11. Transforming the Defense Industrial Base: A Roadmap, Office of the Deputy Under-Secretaryof Defense (Industrial Policy), Department of Defense, Washington DC, February 2003, athttp://www.acq.osd.mil/ip
12. For a discussion of how US defense industry consolidation since “The Last Supper” hascaused a gradual shift from platforms towards electronics, see Andrew D. James, “DefenceIndustry Consolidation and Post-Merger Management: Lessons from the United States”,International Journal of Aerospace Management, Vol. 1 No. 3, 2001. For an excellent analysisof the defense industrial implications of US transformation see Peter. J. Dombrowski,Eugene Gholz and Andrew L. Ross, “Selling Military Transformation: The DefenseIndustry and Innovation”, Orbis, Summer 2002.
13. For a discussion, see the contributions of Daniel Hamilton, Hans Binnendijk, RichardKugler and Rob de Wijk in Daniel S. Hamilton (ed.), op. cit.
14. Yves Boyer, “The Consequences of US and NATO Transformation for the EuropeanUnion: A European View”, in Daniel S. Hamilton (ed.), op. cit.
15. The acronym C4ISR stands for Command, Control, Computers, Communications (C4),Intelligence, Surveillance, and Reconnaissance (ISR).
16. Andrew D. James, Delivering Network Enabled Capability: Industrial, Procurement & PolicyChallenges for the UK, FIND User Report, FOI: Stockholm, 2004.
17. For a discussion of these national responses see Andrew D. James, “The Defense Industry
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and Transformation: A European Perspective”, in Daniel S. Hamilton (ed.), op. cit.18. John Brosky, “French Flying Fast to Win Share in UCAV Market”, Defense News, 29 April–
5 May 2002, p. 8.19. BAE Systems presentation by John Weston, Chief Executive at the CSFB/Aviation Week
Aerospace Finance Conference, New York, 15 May 2001, downloaded 24 April 2003 fromhttp//:www.production.investis.com/baesystems/bae_irpresentations/ csfbwebcast/2.pdf
20. Gopal Ratnam and Amy Svitak, “How Europe Can Close the Gap”, Defense News, 5–11August 2002, pp.1-4.
21. Andrew D. James, op. cit.22. “Hertrich: Europe’s Defense Technology Future at Risk Absent More Funding”, Defense
Daily International, 15 February 2002.23. Defence Industrial Policy, Paper No.5, Ministry of Defence Policy Papers, Ministry of
Defence: London, October 2002.24. Guy Teissier, Rapport fait au nom de la Commission de la Défense Nationale et des Forces Armées
sur le project de loi (no.187) relative a la programmation militaire pour les années 2003 a 2008,Assemblée Nationale, Paris, 25 November 2002.
25. Andrew D. James, “European Armaments Co-operation – Lessons for a Future EuropeanArmaments Agency”, The International Spectator, 4, 2003.
26. Ibid.27. Assembly of Western European Union, The Gap in Defence Research and Technology between
Europe and the United States, report submitted on behalf of the Technological and AerospaceCommittee, Forty-Sixth Session, Paris, 6 December 2000.
28. Ibid.29. David C. Gompert et al., op. cit.30. The UK had attempted to do so with its Nimrod AEW program but that was eventually
cancelled due to technological difficulties and massive cost overruns.31. “Supporting Essay Three, The Impact of Technology”, Strategic Defence Review, Ministry of
Defence: London, July 1998.32. Thus, one of the challenges that UK policy-makers are seeking to grapple with is how to
achieve interoperability without being obliged to buy US equipment with all the technologytransfer and operational challenges that it entails. For a discussion of this point, see: AndrewD. James, op. cit.
33. The Gap in Defence Research and Technology Between Europe and the United States, op.cit.34. Trans-Atlantic Defence Industrial Co-operation, report by the NATO Industrial Advisory
Group to the Conference of National Armaments Directors, Brussels, Spring 2002.35. Douglas Barrie and Michael A. Taverna, “Prague Summit Could Provide Springboard for
NATO AGS”, Aviation Week & Space Technology, Vol. 157 No. 2, 8 July 2002, p. 31.36. Andrew D. James, “The Prospects for the Future”, in Burkhard Schmitt (ed.), Between Co-
operation and Competition: The Transatlantic Relationship, Chaillot Paper 44, WesternEuropean Union Institute for Security Studies: Paris, 2001.
37. David Mulholland, “UK and US Export-Control Disarray Worsening”, Jane’s DefenceWeekly, 26 November 2003, pp. 24–25.
38. Jeffery P. Bialos, “Thoughts Before Yet Another NATO Summit – Will Prague ‘Visions’ ofCoalition Warfighting Capabilities Translate into Armaments Realities?”, Mimeo, The JohnsHopkins SAIS Center for Transatlantic Relations: Washington DC, September 2002.
39. The Gap in Defence Research and Technology Between Europe and the United States, op.cit.40. The Future of the Transatlantic Defense Community, op.cit.41. Robert Hunter, George Joulwan and C. Richard Nelson, New Capabilities: Transforming
NATO Forces, The Atlantic Council of the United States: Washington DC, September 2002.42. Robbin Laird, “Industry Transformation: Company Efforts Can Help Reshape Military”,
Defense News, 6–12 May 2002, p. 13.43. John D. Morrocco, “EADS, Northrop Grumman broaden co-operative links”, Aviation
Week & Space Technology, 12 June 2000, pp. 35–36.
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44. Jason Sherman, “Reviewing US Export Rules”, Defense News, 22–28 July 2002, p. 8.45. “Status of US Interagency Review of US Export Licensing and Technology Transfer
Policy”, speech by Lincoln P. Bloomfield, Jr, Assistant Secretary for Political-MilitaryAffairs, US Department of State, to a conference on “Transatlantic Defense Industrial Co-operation: Challenges and Prospects”, co-sponsored by NATO and the TransatlanticCenter of the German Marshall Fund of the United States, Brussels, 18 July 2003.
46. “ITAR Waivering UK Government Presses U.S. Administration to Move Ahead on DefenseReform”, Aviation Week & Space Technology, 12 May 2003, p. 28.
47. Jeffrey P. Bialos, op. cit.48. Nick Cook, “Network-centric Warfare: The New Face of C4I”, Interavia, February 2001,
pp. 37–40.
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