Europe today faces a defence crisis. Threats such as terrorism, a resurgent Russia or a nuclear-armed Iran are well known, but the arguably more urgent issue facing its political, military and industrial leaders is the more mundane, but all-pervasive, matter of cash.
From borderline-insolvent Greece to military heavy-hitters France and the UK, European defence budgets are under threat as governments wrestle with the immediate and long-term implications of the financial crisis and recession. The impact on Europe's individual and collective defence posture is being magnified by the fact that the USA, so long the willing provider of a costly security umbrella, is itself under budgetary pressure and likely to draw down its commitment to European defence. Thus, how European nations individually and jointly respond to their changed circumstances will have profound implications for their security for years to come.
As Tomas Valasek, director of foreign policy and defence at London-based think-tank the Centre for European Reform, puts it in a recent paper, Surviving Austerity: The case for a new approach to EU military collaboration, a "wave of budgetary austerity" is eroding European nations' defences, and their armed forces "will lose important skills and capabilities unless they can find ways to save money through collaboration". Critically, says Valasek, European Union leaders must encourage various groups of compatible member states to work together in what he calls military "islands of co-operation".
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Modern, for sure - but stretched thin in Libya
The problem may have been exacerbated by the current financial crisis, but its roots go back decades. Throughout the Cold War and even into the past decade, the USA often complained that Europe did not spend enough on its own defence, but in practice was content to be the dominant partner, taking the leadership role that its cash outlay bought it.
But as Valasek notes, this has changed and the USA now expects allies to take more responsibility for their own region, as is clearly evident in Libya, where European forces are having to carry the burden of sustaining operations after an initial surge by the Americans.
But Europe is ill-equipped to cope with an operation such as Libya. Valasek notes that while European nations invariably fight together today, they build their armed forces individually. The wastefulness of this approach is evident when considering that the 27 EU nations have 500,000 more people in uniform than the USA does, but can field only a fraction of what the USA can on "expeditionary" operations.
The key reason for this, says Valasek, is that Europe's armed forces, funded and managed by each individual country, do not enjoy the economies of scale the USA has. With the USA no longer willing or able to provide such a huge defensive presence in Europe, that situation is no longer tenable.
Hence Europe's budgetary crisis poses a real military problem. Valasek says European armed forces need an expensive overhaul. Having been content to sit under the cover of their US protectors for decades, they have not been driven to find efficiencies in procurement, nor have they been driven to truly modernise their hardware. Much of Europe's capability is wrapped up in heavy Cold War-era weaponry that is costly to maintain and useless without expensive electronic upgrades.
FREEZING OR CUTTING
As Valasek details, almost every European nation is freezing or cutting its defence budget (see chart). Unless they work together, they will never be able to pay for the armed forces they want or need.
The best example of collaboration now is the Anglo-French accord of 2010. Among the principles agreed in this so-called "entente frugale" is the development of forces trained to fight together and the building and operation of joint facilities where feasible. Both countries are to ensure, for example, that aircraft can operate off each other's carriers and are looking to pool spare parts and servicing resources for types including the Airbus Military A400M transport.
The UK government's current consultation paper on defence spending, Equipment, Support and Technology for UK Defence and Security, clearly spells out three principles behind its proposed approach to equipping the armed forces: UK forces "must have the capabilities they require to protect the UK and its interests", "in an increasingly global world, we will draw from wherever we can the scientific and technology developments needed to provide capability edge", and "these capability and technology requirements are subject to affordability and the means of fulfilling them must demonstrate value for money".
Moreover, for the UK government, its "default position is to seek to fulfil the UK's defence and security requirements through open competition in the global market".
This emphasis on cost-effective procurement is to be expected and, as the paper goes on to note, buying urgently needed equipment for use in Afghanistan from global suppliers was a quick and effective approach to supporting armed forces in the field. However, it goes on, the use of foreign suppliers must be balanced with the need to maintain "freedom of action... to conduct combat operations at a time and place of our choosing. This freedom is the essence of national sovereignty".
The devil, as ever, is in the detail, and this last point is perhaps the fulcrum of debate on the issue. The positions spelled out in this paper could reasonably be adopted by any sovereign nation and pose a question that all of them need to answer based on their own objectives and needs, and financial and diplomatic constraints: how much of a domestic defence industry must be maintained?
As one industry source puts it, buying off-the-shelf equipment from foreign suppliers may save money but there is a risk that the government will fall into the trap of failing to maintain the operational sovereignty it values. That is, without the domestic capability to maintain equipment, and when necessary prepare it for specific missions through modifications, a nation loses the ability to act independently.
Rees Ward, chief executive of the UK's ADS defence and security industry trade group, describes as a "stark dilemma" the implications of letting the UK's domestic industrial capability decline in favour of spending available funds to import commercial off-the-shelf equipment.
"The government needs to be realistic about the security of supply implications of reliance on other nations for defence and security science and technology," he says. "State-of-the-art technology may increasingly be generated in countries which will not want to share it with the UK, or not on acceptable terms.
"There are no shortcuts to obtaining a world- class technological and industrial base for defence and security. Capabilities once lost are rarely recoverable, and risks taken with this base will almost certainly translate into military and security risk before too long."
The dilemma extends beyond Europe. As PricewaterhouseCoopers observes in its aerospace and defence industry 2010 review, once the Lockheed Martin F-35 programme concludes, no combat aircraft will be in development for the first time in the history of aviation.
Policy makers, says the report, "need to invest in retention of specialised expertise so that critical knowledge and skills are not lost as one generation of workers retires and the next takes its place".