On July 24, the European Commission presented reform plans for the European defense sector. The report points out that EU countries still spend more than 75 percent of their investment for defense equipment nationally and that Europe has 16 different frigate types compared to one type in the United States. The European Commission warned that the fragmentation in the European defense industry is threatening Europe's competitiveness in defense markets and capabilities in the field since defense spending has dropped in the European Union while considerably increasing in the United States, Russia and China.
The European Commission called for standardization in the defense industry in order to facilitate equipment sharing, increase efficiency and cost-effectiveness in weapons programs, increase greater joint civil and military research and more cross-border manufacturing and procurement. These are things the EU has been trying to address for years through the European Defense Agency. The European Commission has no power to enforce its suggestions but the report is intended to fuel debate ahead of a December EU summit during which defense matters will be discussed.
The integration of the European defense industry has long been a EU goal and is part of the strategy to strengthen the union's common security and defense policy that will allow it to respond to common European threats, such as terrorist attacks or unrest in the Middle East and North Africa, that could fall outside the scope of NATO. The EU common security and defense policy was enacted with the Treaty of Lisbon in 2009. Its goal is to gradually establish a common European defense and joint EU member operations through multinational forces that EU members have formed (such as Eurofor, Eurocorps, Euromarfor or European Air Group and EU battlegroups). The Treaty of Lisbon also introduced the mutual defense clause that obliges EU member states to help others in the case of an attack. The clause takes into account that certain countries are neutral or have redundant commitments through NATO (it is therefore unclear what such aid would look like).
In 2009 all EU members, through directives on procurement and transfers of defense goods, agreed to new legislation promoting integration of the defense industry. EU members are obliged to allow for greater competition from other countries when they procure military hardware. They also agreed to simplify the transfer and licensing of defense products to facilitate cross-border deliveries and assembly.
Despite the potential gains and the general will to integrate in defense matters, implementation is still relatively weak. The 28 EU countries have strongly differing national security concerns and entrenched domestic industrial interests that make them generally hesitant to pool resources or give up technical expertise. Countries still prefer to procure their hardware nationally and want to keep investment in the country to sustain their domestic defense industries. This was highlighted in 2012 when Germany blocked the merger of two defense industry heavyweights, British BAE Systems and Franco-German EADS, because Berlin reportedly believed it would lose influence in the new company since most operations would be located in the United Kingdom and France.
Despite Europe's political and economic integration over the past five decades, defense matters are still extremely sensitive, and member states are reluctant to give up sovereignty on the issue. European countries have been at war with each other extensively and the prevalence of the nation state means that there is continuous underlying distrust even among European partners. After World War II, the creation of a pan-European military force was discussed but it never materialized because most European countries saw their defense concerns taken care of by NATO.
Effects of the European Crisis
Defense matters, of which management of the defense industry is an integral part, will remain a national prerogative and one of the last things that countries will be willing to delegate to the European Union. However, due to the European crisis there will likely be significant attempts to consolidate the defense industry. Defense budgets are projected to see further cuts across Europe and markets will continue to shrink. This creates more incentive to collaborate. However, such collaboration is unlikely to happen across the European Union, but it will likely take place regionally among countries that have similar national security concerns.
An increase in regional collaboration is noticeable between France and Germany (the Franco-German Brigade forms the base of the Eurocorps) and amongst the Nordic countries, Iceland, Denmark, Norway, Sweden and Finland. Although not all of the Nordic countries are members of the European Union or NATO, in 2009 they formed the Nordic Defence Cooperation group in order to cut defense costs through closer collaboration. Also the so-called Visegrad Group countries, Poland, Hungary, Czech Republic and Slovakia, have attempted to collaborate in ways similar to the Nordic countries.
Regarding the strength of Europe's defense industry overall, it will be important to watch how the United Kingdom, France and Germany collaborate over the coming years. They already have strong defense industry ties, but the European crisis is straining the relationship. The United Kingdom is trying to distance itself from the European Union, and France and Germany are struggling to find common ground to deal with the European crisis. Therefore it is unlikely that a push for consolidation on defense matters would lead to comprehensive integration, even if steps were taken to increase efficiency in the short term.
