On June 7, the European Commission proposed two initiatives to nudge EU member states toward more defense cooperation and thus reduce waste in defense research and procurement in Europe. That is a laudable aim, but for it to be effective, European governments must respond by committing significantly more to defense collaboration.
As things stand, most EU countries buy most weapons from national suppliers. They also tend to spend the vast majority of their research money within national borders. This is a good way to shield indigenous industry from competition but a wasteful way to build armed forces. With few economies of scale, European countries, which collectively spend about half of what the United States does on defense, can deploy only about 3 percent of their armed forces in battle at any time.
The problem was recognized long ago, and in 2011, EU countries vowed to “pool and share” military purchases to increase efficiencies, to little avail. Faced with the choice of awarding part or all of a defense contract to a foreign bidder or favoring domestic industry, EU governments invariably chose to protect jobs at home.
The European Commission is now offering them two kinds of financial incentives to reconsider. One scheme, launching in 2017, offers direct grants to groups of at least eight countries that choose to pursue research and development of new military technology together. A separate new pool of money will be available from 2019 to co-finance the development and purchase of promising new weapons systems currently in the prototype phase—this time, if at least three countries do so jointly.
The hope is that governments will find the cash offer tempting enough to abandon their protectionist stance. Whether this will actually happen is another matter. Despite headlines of €5.5 billion ($6.2 billion), the actual amounts committed are much smaller. The total sum of money set aside for research grants this year is €25 million ($28 million), a small fraction of the cumulative €8.8 billion ($9.9 billion) that EU countries spent on defense research and development in 2014 (the most recent data available). The amounts allocated to develop and buy promising prototypes are more substantial: €500 million ($563 million) for both 2019 and 2020. But compared with total EU spending on defense investment—€34 billion ($38 billion) in 2014—the money is relatively modest.
The European Commission says this is just a start, and the grants to develop and buy new technology should quadruple after 2020. Funds for joint defense research should jump an eye-watering 20 times the same year. But that is more of a wish than a certainty. EU spending is set for seven years at a time, and the current funding period expires in 2020. Nothing has been agreed on for the years beyond. There will be less money available after the UK leaves the EU. And defense funds will compete in the budget with other new priorities such as the commission’s investment fund to create jobs in the EU.
There is a risk that unless EU countries commit substantially more to fund defense collaboration, governments will not change their current ways. That would be a pity. The commission is right to focus on positive inducements to get member states to collaborate. It has previously tried suing governments for not awarding defense contracts in open tenders, which they should do in theory but routinely avoid by claiming an exemption for national security. The commission often suspects abuse but has rarely been able to prove it.
Financial incentives could prove more effective than threats of lawsuits, assuming they account for a significant portion of the overall cost of the system being procured. With EU cash on the metaphorical table, defense and finance ministers will have a powerful new reason to eschew the less efficient national procurement route and face down their prime ministers, who tend to worry more about jobs than defense capabilities.
Because the commission’s announcement comes less than two weeks after the ill-tempered May 25 NATO meeting, at which U.S. President Donald Trump seemed to question whether the United States should defend Europe, the proposals will be seen as evidence of Europe going it alone. They are no such thing. The ideas were first previewed in September 2016, before the U.S. presidential election, and mooted by a group of experts earlier still, in 2015. Europe’s wasteful procurement problem precedes Trump and would have needed to be addressed even if Democratic candidate Hillary Clinton had won the election.
However, the ideas have acquired a new urgency now that the U.S. president has questioned the commitment to allies’ defense. Part of Europe’s response must be a renewed effort to strengthen its military forces. The idea is, in the first instance, to avoid giving Trump a pretext to break with the alliance, but also to better position Europe to cope with threats alone, should efforts to keep the United States engaged fail.
This will need to be a multipronged approach. As I have argued before, European countries should negotiate access to NATO-operated assets such as drones even for operations in which the United States is not engaged. More defense money will be required to buy cargo planes, helicopters, refueling tankers, and other assets that are chronically needed. But that money must also be spent wisely, including through more collaboration. The commission has identified the right problem; EU states, however, may need to commit more resources to make a real difference.
