Thursday, September 23, 2004

Sleepwalking into disaster

Updated (2) with additional links

In the Financial Times today there is a short item noting that “Brussels” is calling for "defence market to be liberalised", a story that has been picked up by other media outlets and reproduced, offering much the same spin.

The story has, in fact, been doing the rounds for some days, and appeared in Scotland on Sunday on the 19th, this one headed "EU market law set to devastate British defence".

According to this source, "Eurocrats" were "preparing to blow a £9bn-a-year black hole in the British defence industry under controversial plans to force national governments to open up their lucrative contracts to foreign competition".

"The market for defence equipment ranging from jets and aircraft carriers to helmets, could be opened up - even to America's military industry giants - under a blueprint to be unveiled later this month by the EU's Internal Market Commissioner Frits Bolkestein."

As always, however, there is much, much more to this than meets the eye, or can be conveyed by the copy-writer's headline, and as always the detail is much more important than the fluff offered by the media.

What we are dealing with here is the Green Paper on Defence Procurement (COM(2004) 608 final), the next step in a planned sequence which was flagged up on 11 March last year in a commission communication (COM(2003) 113 final) entitled "European Defence – Industrial and Market Issues. Towards an EU Defence Equipment Policy".

This is confirmed by today's Commission press release which identifies defence procurement as one of seven initiatives announced back in March.

In keeping with the general ethos of the "Monnet Method", the commission has elected to secure greater defence (and thence political) integration through economic means, pursuing the route of integrating EU member state defence industries. Extending the remit of the procurement rules to defence forces is the one of ways chosen to achieve this.

This is openly stated in the 2003 COM, which refers to the working party on defence set up by the Convention on the future of Europe in 2002, which stressed that "the credibility of European defence policy depends on the existence and development of a European capacity and a strengthening of the industrial and technological base of the defence sector".

Today's Green Paper is, frankly, alarming. It talks about the commission's intention to "contribute to the gradual creation of a European Defence Equipment Market (EDEM) ...supporting the development of the Union's military capabilities under the European Security and Defence Policy" and is proposing to establish "an appropriate regulatory framework for the procurement of defence equipment".

The overall objective, however, is being blurred by a separate debate about the efficiency of defence procurement and the need to rationalise defence industries, in order to benefit from economies of scale and to afford the massive investments needed to find complex new defence projects.

That has been the line peddled by The Policy Exchange which in a seminar and publication under the title "The Best Kit: Why Britain's Defence Doesn't Need an all-British Defence Industry" is arguing that Britain's defence industry is "one of the last bastions of 1970s-style industrial policy" and should be taken over by foreign manufacturers, with more equipment being purchased abroad."

At the centre of the commission's initiative is the newly-formed European Defense Agency’s (EDA), which will be working with the commission to promote common, EU-wide procurement and standardisation throughout the forces of member states. If the commission gets its way, the standardisation programme will become compulsory, managed through CEN rather than through NATO.

This is very far from the "liberalisation" spin being pushed by the Financial Times and marks another step towards British forces being sucked into the maw of the EU defence policy, distancing this nation further from the United States.

Given that we are already co-operating with Galileo, and possibly with FRES the point will come when we are so far absorbed into EU system and equipment programmes that we will no longer have the technical capacity to act independently, and be so far removed from US systems that we are incapable of operating alongside US forces.

This is no longer an abstract possibility as our own Select Committee on Defence has remarked on the increasing difficulty in keeping separate joint US/UK collaborative projects from simliar European projects in which we are also engaged.

It can only be a matter of time before the US loses confidence in these arrangements - and there are signs that it is already doing so - to the extent that we are cut off entirely from developments in US military technology for fear that it will end up in the hands of our "partners" and from there in the hands of US strategic enemies. Any such development would lock us further into European "co-operation", whether we wished it or not.

Yet, all of this seems to be happening in slow motion, without anyone really understanding what is going on and without there being any conscious political decision to cast our lot in with the Europeans. To use an overworked but nevertheless apt phrase, we are sleepwalking into disaster.

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