The European Defence Agency in the Wake of the Treaty of Lisbon (ARI)

The European Defence Agency in the Wake of the Treaty of Lisbon (ARI)

Theme: The EU Treaty approved in Lisbon incorporates the European Defence Agency among the European institutions aimed at supporting the new Common Security and Defence Policy.

Summary: The European Defence Agency, created on 12 July 2004 through joint action (2004/551/CFSP) by the Council of Ministers, has now been included in the New EU Treaty approved in Lisbon as a key institution in the Common Security and Defence Policy (CSDP). Its inclusion having been projected in the failed Constitutional Treaty, the new Treaty now affords the Agency a solid legal basis and explicitly endorses its duties in the sphere of supplying the capacities, resources and equipment which the EU needs to implement this policy. The Treaty affords an unusually high degree of importance to the Agency, since it makes no reference to the other EU agencies, and recognises the weighting which this organisation has accumulated since its creation. This ARI examines the regulatory framework set forth in the Treaty of Lisbon and compares it with the practical experience of European industrial cooperation in the last few years, evaluating its impact on military capacities and on national defence industries.

Analysis: The Agency’s duties cannot be understood without taking into account the changes concerning military cooperation introduced in the new Treaty. The new text no longer refers to the progressive definition of a common defence policy, but implicitly assumes that one exists, and that it is compulsory to make available to the Union the civilian and military capacities of member states in order to comply with the agreements reached to achieve the 2010 Headline Goal. These commitments are recalled in article 28 A, the second paragraph of which defines the nature of the Agency as follows: ‘Member states shall undertake progressively to improve their military capabilities. The Agency in the field of defence capabilities development, research, acquisition and armaments (hereinafter referred to as “the European Defence Agency”) shall identify operational requirements, shall promote measures to satisfy those requirements, shall contribute to identifying and, where appropriate, implementing any measure needed to strengthen the industrial and technological base of the defence sector, shall participate in defining a European capabilities and armaments policy, and shall assist the Council in evaluating the improvement of military capabilities.’

The article implicitly recognises the deficit of capabilities among member states to meet the objectives and missions of this common policy (CSDP). This recognition is often reiterated by EU military leaders and the aim is to correct it by programming military objectives and capabilities. The new Treaty identifies the Agency as the perfect instrument to offset these deficiencies, and affords it broad powers to develop operational capabilities. So far, its role in this sphere was confined to obtaining the necessary resources and performing the necessary prior research, so it is rather surprising that it is given the role of determining the operating requirements, which should fall more within the sphere of the EU Military Staff, and this is perhaps explained by the technical complexities which are today required to obtain capability. The Agency is also assigned a prominent role in applying measures to strengthen the industrial and technological base of the sector, which currently focus on stimulating competition and fair play. Lastly, the Agency is assigned a key role in the definition of European policy on capabilities and armament, which it had been doing without formal coverage as part of the European Capability Action Plan. Furthermore, the Agency becomes an advisory body of the Council in evaluating the progress in capabilities. The overlapping of the roles of Chairman of the Agency and Deputy Chairman of the Commission affords the latter a voice in issues relating to defence procurements, which could (if one day the member states allow it to) ease the restrictions on the single market under article 296 of the Constitutional Treaty of the European Community whereby these states can protect their essential security interests in relation to the production or marketing of military material, a practice which alters the competition conditions in the single market which the Commission is supposed to protect.

Although some of these tasks were defined very broadly in the legal documentation establishing the Agency’s existence, evidently the new text is more significant. Accordingly, the Agency no longer promotes defence capabilities, but actually defines them and establishes the strategies to obtain them.

The Agency’s five main tasks are detailed in section 1 of article 28 D, which reads as follows: (a) ‘contribute to identifying the member states’ military capability objectives and evaluating observance of the capability commitments given by the member states;
(b) promote harmonisation of operational needs and adoption of effective, compatible procurement methods;
(c) propose multilateral projects to fulfil the objectives in terms of military capabilities, ensure coordination of the programmes implemented by member states and management of specific cooperation programmes;
(d) support defence technology research, and coordinate and plan joint research activities and the study of technical solutions meeting future operational needs;
(e) contribute to identifying and, if necessary, implementing any useful measure for strengthening the industrial and technological base of the defence sector and for improving the effectiveness of military expenditure.’

Not only does the Agency now contribute to defining the member states’ military capability objectives, but it also assesses the extent to which the commitments are observed. This is a useful instrument for the Council of Ministers to ascertain the degree of observance with commitments and, in the event, warn those who fail to comply. In its capacity as a technical body for the Council, the Agency can help negotiate agreements and define capabilities, aiding those for whom this is difficult. This task is no longer solely crisis management, as it was in the past, but is open to any defence or military capability that is needed, and this is another step to extend its scope of action. Since decisions in the Agency would be approved by a qualified majority, it has a subtle but nevertheless considerable power, since it is more difficult for each nation to go it alone in this matter.

Cooperation in armament is provided for in sections B and C, which discuss the harmonisation of operational needs, a very attractive idea on paper which the Agency’s Capabilities Directorate is trying to implement, but which is highly complex in practice because of the doctrinal, operational and industrial differences between member states. As for the adoption of effective and compatible procurement methods, the Treaty appears to seek a balance between collective and national interests. The delays and additional costs in some European programmes, such as the Eurofighter, are due to the difficulty of agreeing common frameworks for procurement management in which efficiency takes precedence over rigid national considerations relating to the distribution between industries. Despite its inclusion in the Treaty, it will not be easy to impose effective procurement management methods because protectionist practices are deeply rooted in some countries. Neither will it be easy to coordinate the objectives and programmes agreed by member states, although the Treaty provides that the Agency may propose and supervise projects and that it may even directly manage specific programmes.

The Agency’s duties in research and technology, set forth in section D, broaden the duties of the now-extinct Western European Armaments Group (WEAG). This is perhaps one of the most active areas of the Agency, where some success has already been recorded, such as the agreement reached between EU defence ministers on 19 November 2007 to establish a framework for the strategy to implement joint R&D in the sphere of defence, and to commission various studies.

The Agency maintains its role in strengthening the industrial and technological base of this sector (section E). In principle, it seems that the Treaty ignores one of the key issues in the creation of the Agency, namely the creation of a competitive European armaments market, a matter on which governmental and corporate codes of conduct have been drafted and a link has been included in the EDA website publicising tenders for armaments procurement in the member states. This is an indirect and somewhat vague reference, since it is limited to talk of improving effectiveness in military expenditure, which would supposedly be underpinned by a truly competitive common market for defence equipment. The Treaty makes no greater mention of this issue, possibly because there is not yet broad consensus in this regard.

The Treaty does not deal with other key issues in which the Agency is working hard, such as ensuring supply during operational emergencies and protecting sensitive commercial or military information, perhaps because these issues are too minor to be included in a document of this kind. The text (article 28 D) also provides for some of the practices included in the Agency Joint Action document, such as building specific groups comprising member states to perform joint projects. The idea is to promote and sponsor inter-European projects of variable size and shape (because not all member states will participate in all projects) so as to facilitate obtaining the desired capabilities. A paradigmatic example of this would be the Joint Investment Programme on Force Protection, involving 20 states, including Spain, and whose budget exceeds €50 million.

The Treaty also assigns the Agency a significant role in matters relating to permanent structured cooperation, a modality of cooperation involving member states which seek to integrate their defence capabilities. According to the fourth Protocol of the Treaty which deals with this kind of cooperation, states wishing to participate therein must ‘proceed more intensively’ to develop their defence (military) capabilities, in a clear reference to the scant effort and sluggish pace at which the EU is availing itself of capabilities, by developing their national contribution, their involvement in multinational forces to achieve this capability when it stretches beyond national borders, such as strategic transport, for example, and becoming involved in European equipment programmes. Once again, the Agency takes a central role as member states are asked to cooperate with it in obtaining the military capabilities envisaged, for example in the 2010 Headline Goal (still very much a skeletal agreement for implementing the CSDP and considered by many as insufficient for certain crisis situations). There are also plans to harmonise defence expenditure among member states participating in this kind of more advanced cooperation, laying special emphasis on the sphere of investment in equipment by European nations so as to reduce the gaps between them, a surprising proposal considering that military capability is a combination of human and material (equipment) resources. This harmonisation should be based on a fair and balanced contribution by nations to military capabilities in accordance with their overall cost, not on the investment in equipment which will depend on the kind of capability which is being sought. The only explanation for the emphasis on this issue is the current imbalance in defence budgets where expenses tend to be concentrated in personnel and operations, and only limited funds are spent on upgrading material and on logistics. We will see whether in the medium term the EU and its member states translate these commitments into figures.

As part of the permanent structured cooperation, the Agency may harmonise the requirements for equipment requiring military cooperation, pooling resources in certain areas, seeking national specialisations where there would be greater interdependence and where not all countries would have capabilities in all areas, and integrating formation and logistics to obtain scale economies similar to those of the US. In relation to the joint operations as part of permanent structured cooperation, the Agency must foster availability, interoperability, flexibility and the capacity to deploy its forces, defining common objectives concerning the projection of forces. This task extends beyond investment because, for example, availability depends more on good maintenance of equipment and better training for forces, and interoperability also depends on harmonising doctrine and procedures.

Since some states involved in EU permanent structured cooperation also cooperate under the NATO umbrella, the Protocol highlights the need to cooperate and implement joint programmes to obtain the equipment and systems which present deficiencies in capabilities within the EU, without prejudice to NATO commitments. In this regard, there is a dialogue and flow of information regarding NATO and EU commitments on capabilities, although they seek different objectives, to avoid overlapping and duplication. Finally, the Protocol (article 3) develops the Agency’s task in assessment of the progress in capabilities but it is not clear what the mechanism will be for adequately informing the European Parliament in regard to this progress, since theoretically the Agency is not accountable to the Parliament for its actions and its work.

The Impact of the European Defence Agency
As for the Armed Forces, in the new context of European defence, it seems clear that national defence capabilities will be increasingly dependent upon the contribution of countries to the missions and objectives of the CSDP. As we have seen, the new Treaty reserves a key role for the Agency in the development of these capabilities, which is a reflection of countries’ desire to cooperate more often and more closely in this sphere, especially those participating in permanent structured cooperation. It is the states themselves who will ultimately have to decide which role they wish to play in this policy and which contributions they wish to make. And it will be the societies of member states, via their democratically elected representatives, which decide, based on the technical advice and support of the Armed Forces, which role makes them feel most comfortable and where they can contribute most value, proposing capabilities and undertaking to make them available in the established periods, thus helping to better defend the interests of Europe and to guarantee the security of its citizens.

Through talks with the Agency, the representatives of the member states’ Armed Forces, in line with instructions from their governments, must say which are the capabilities they wish to handle, their characteristics, how to achieve them and how they plan to coordinate with other states for this purpose. They will need highly professional teams with excellent knowledge and sound negotiating and communication skills in order to perform this work and take on the desired role. In this process it is likely that current capabilities will be identified which no longer make sense, because they are covered by other nations, while inadequacies will emerge in other areas in relation to the commitments made, and the new capabilities will be identified which in the future must become available based on the possible developments in scenarios and missions. All of this will contribute to a slow but significant transformation of the Armed Forces of the EU.

As for the defence industry, the voluntary agreement among European nations for creating the Agency and assigning it the aforementioned duties will be increasingly important in member states’ procurement policies and programmes. The Agency will become the source of specification of the operating needs and will finance the first stages of many joint EU weapons programmes with a budget which may well increase. In this connection, there may be a movement of funds to the EU in detriment of national investment in this area unless domestic defence budgets grow. It is interesting that in 2008 the Agency has seen its budget increased from €22 million to around €32 million, which implies almost 50% growth.

The complexity of the capability procurement programmes makes them fall increasingly within the scope of the EU. It is therefore more than likely that the Agency will be present one way or another in the programmes which require renewal of fleets and stocks of land, naval, air or space platforms, weapons systems, and command, control, communications, intelligence and surveillance systems in around 2015. This means that the industries working in these sectors must be alert for the Agency’s initiatives if they wish to maintain their possibilities of participating in joint development projects. The desire that all industries from all nations benefit from these developments will make the formation of consortia and industrial agreements a pre-requisite for being present in future developments. But the role of companies is not going to be defined beforehand, rather, their future involvement will hinge on their level of competence and their ability to occupy significant positions in these consortia. Those companies which do not show dynamism, agility and initiative in the formation of these consortia will find it more difficult to successfully pursue their business lines in defence. The Spanish industry has the problem that, despite having major design, development and production capabilities, its companies’ ability to spearhead these programmes is limited due to their lack of size, technology and resources as compared with the main EU partners. It will be a challenge indeed to find those areas and niches in the value chain in which Spanish companies can offer higher value than their competitors and thereby benefit from the funds which the Agency will earmark for improving the EU’s military capabilities –a challenge which will no doubt be justly rewarded in terms of business volume and markets–.

Conclusions: The Treaty approved in Lisbon and in the process of ratification by member states has consolidated the European Defence Agency as a key instrument for obtaining the Union’s defence resources and capabilities. The Agency is another link in the EU’s increasingly strong will to achieve integration in security and defence and to implement a common policy in this sphere. It is evident that the problems in defence capabilities in the EU will not be solved solely through a Treaty which is only able to establish a framework for action. Harmonising investments in defence resources among the different nations will still be a difficult process in which some countries, whose foreign policy ambitions are greater, will be more interested and will grant greater priority. It will be difficult, as it always has been in the history of European industrial cooperation in defence, to reconcile the objectives and resources of military powers such as France, the UK and Germany with those of medium-sized powers and, especially, EU member states which do not have military capabilities or do not consider them to be a priority. It will not be easy to achieve a consensus between member states in this matter because the efforts in defence depend on deep-rooted national, social and cultural traditions, and strategic cultures vary. Furthermore, the Agency will have to tackle the issue of the gap between Europe’s military capabilities and those of the US, since the different levels of investment in procurements and in research and development will continue to widen the gap, unless Europe changes its stance in this regard.

Neither is the Agency likely to be able to easily solve the problems of market fragmentation, because in many cases the member states will continue to try to operate outside the single market in a more or less covert manner, implementing regulations which hamper foreign tenders, which include article 296 of the Constitutional Treaty. And the Agency will not be able to guarantee the efficiency of joint programmes, but it will be able to underwrite the steps made in that direction. The mutual defence and solidarity clause in the new Treaty depicts a new scenario in which interest in questions concerning autonomy in obtaining the means to guarantee security make room for other relevant issues such as competition and efficiency. In the new context, the classic industrial compensation will play a less prominent role in favour of other cooperation methods where industrial excellence takes on a more central role with a reasonable territorial distribution of the industrial solution chosen to obtain the desired military capability.

Although the measures to reform the defence market have so far had limited impact and the Chief Executive of the Agency himself admitted in his recent farewell address that there is considerable apathy in the European defence industry, it is obvious that the Treaty offers new possibilities. As the common security and defence policy acquires more weighting, the inertia is likely to fade, especially in permanent structured cooperation. The Agency will lead to better capabilities and specialisation by the Armed Forces to fulfil their European missions and strengthen the industry’s capacity, as well as meeting internal demand with better equipment and systems which, ultimately, will enable it to attain more international competence in this area. The Amendments to the Treaty and the Agency will help develop the military objectives and instruments which Europe needs as a global player, but we will have to wait and see how this new framework performs in practice to gauge its impact on the construction of the Common Defence and Security Policy.

Carlos Martí Sempere
Professor at IUGGM and consultant for Isdefe