Defence industry cooperation in the European Union
Offering an overview of cooperation in the European defence industry and the rationale behind it, this paper begins with an analysis of the EU's political initiatives, institutional setting, instruments and laws in the context of enhancing economic cooperation in the defence sector. Having looked at achievements in and challenges for Europe's defence industry, the paper goes on to examine the potential of the EU's new instrument, the European Defence Fund and the prospects of the French-German-Spanish future combat air system project, Europe's most ambitious joint defence programme. The paper ends by outlining the European Parliament's position on defence market cooperation within the Union and closes with an outlook.
Executive summary
The European Union (EU) is the world's second-largest military spender but does not have the same efficiency, operability and innovation power as the United States (US). The economic rationale would suggest that Member States should collaborate on common projects so as to lower unit costs and expenditure on research and development and build a durable EU alternative to the US defence industry. European defence industry cooperation agreements have resulted in various common projects such as the Puma helicopter and Eurocopter, the Tornado jet, the Eurofighter and the Airbus A400M transport aircraft. These agreements, however, were agreed and signed at the intergovernmental level, without European Community/EU level involvement. The primacy of national interests has, meanwhile, at times resulted in the Member States leaving joint defence industry projects.
With the dramatic changes in the security environment in Europe over recent years, the EU's common security and defence policy (CSDP) and defence technological and industrial base have gained unexpected new momentum that has translated into several political initiatives, such as the adoption of the EU Global Strategy, the inception of permanent structured cooperation (PESCO), the assignment of new tasks to the European Defence Agency, and the creation of the European Defence Fund. The EU's new impetus in security and defence matters, however, is also contested. Critics argue that it could foster the militarisation of the Union, prompting calls for greater European Parliament involvement in defence issues.
With the European Defence Fund, the EU is for the first time using the Union budget as an incentive to foster (cooperation in) military capabilities. The Fund has the potential to be a game-changer in terms of financially incentivising intra-EU cooperation on common research and capability projects, but it will have to cope with a severely restricted budget for the 2021-2027 period. It is difficult to say to what extent the new fund will be able to tackle the challenges facing the EU defence industry, for instance, national defence budget constraints, cost inflation, intellectual property rights, Brexit and disruptive technologies.
Nevertheless, the stakes are high. With the future combat air system (FCAS), Member States France, Germany and Spain have initiated and are participating in the Union's most ambitious and expensive defence industry project yet. At its core is the construction of a sixth-generation stealth fighter jet. If successful, FCAS has the potential to enable the Member States (and the EU) to compete with Russia in the air and decrease military dependence on the US. If it fails, however, future largescale joint armament projects in Europe will become difficult to achieve, and dependencies on US manufacturers will continue to grow.
The absence of a European defence union is both the result and a cause of Member States' self-limitation in common foreign and security policy. In this field, the EU sees itself not as a geopolitical superpower, but as a crisis manager responding to external conflicts and engaging in capacity-building. Yet, developing and strengthening the EU's defence capabilities and industry only makes sense if paired with clear commitments and a geopolitical dimension. In this context, the EU's forthcoming 'strategic compass' could channel the necessary direction of the force.
by European Parliamentary Research Service
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