Towards a more competitive and efficient defence and security sector

The notification of the Commission which was released in July regarding the idea of strengthening the industrial and technological base of the European defence (EDTIB) has finally rekindled the inter-institutional debate, focusing on the weakening of the European defence market.

This weakening is basically the result of the combination of two different trends. The first one is the shaping of the defence industrial base according to national sovereignty.  Although the idea of a common policy to sustain and defend the EDITB had been raised several times over the years, in many Member States a different logic has prevailed, based on the assumption that the defence-related industrial base and the independence from exports are essential to a nation’s sovereignty. Concretely, this trend has led to the adoption of a series of legal barriers along national borders aiming at discouraging the acquisition of key strategic activities on the part of foreign investors, but at the same time posing serious barriers to the exploitation of economies of scale for European operators.

While this idea made some sense until the mid-twentieth century, the advent of the second trend – globalization – has radically changed this scenario: initially with the first sub-contracts, then with the birth of huge joint ventures as Finmeccanica, BAE Systems, and EADS, the structure of the DTIB was reshaped under a pyramidal scheme of large enterprises and specialised subcontractors.

These dynamics, together with the reduction of the European demand, pushed European industries to look for new markets beyond the EU borders, provoking an increase in the export of expertise and, paradoxically, exposing even more the security of supplies to external dependencies: indeed, subcontracts awarded to foreign contractors caused the European technological leadership to tarnish and might have caused social industrial and social fallout, given that this sector employs around one million and a half of direct and indirect workers and it has an annual turnover of one hundred billion euro.

Actually, although with some decrease, investments are far from disappearing: the 28 Member States in 2012 have collectively spent more than China, Russia and Japan altogether. The key to the problem is elsewhere, namely in the absence of a clear strategy, aiming at reshaping the broad and varied range of military assets by reducing the costly and unnecessary overlaps and filling the current gaps – such as C4ISTAR capabilities (command, control, computers, communications, surveillance, target acquisition and reconnaissance), air-to-air refuelling , helicopters.

Of course, the EU did not just sat down, arms folded, without taking any action, but the institutions themselves recognized that the steps taken so far are insufficient to turn on a dime towards a greater political cooperation upstream of the production process and towards a more concrete rationalization of investments. The Parliament pointed MSs as the main culprits. There were many explicit references made by MEPs on the two Directives adopted in 2009, concerning the simplification of the procedures and conditions for transfers of products in the European defence market (2009/43/EC) and the procedures of subcontractors in the field of security and defence (2009/81/C). These two Directives were recognized to be useful tools that were supposed to simplify the activities at the boarders in the sector, but their effect was downsized due to some persistent uncertainties in the application of the art.346 TFEU (ex-art.296). The clause – allowing Member States to derogate from internal Market rules when dealing with the essential interests of their security – resulted in a heterogeneous application of the article in the various Member States, with major distortive effects on the market.

The “concrete and responsible” use of art.346 TFUE is indeed a focal point of the Commission’s strategy, yet it remains a necessary but not sufficient element to overcome the current obstacles to the development of the full potential of EDITB. Commissioner Tajani has also highlighted the permeability of industrial civil and military sectors and their synergy that, in the light of the collapse of investment in R&D, can make a real difference by the unleashing of spin-off and spill-over effects of dual use technologies – particularly regarding SATCOMs and high resolution satellite technologies. Hybrid civil-military standards and a common approach to certifications are considered as an efficient way to reduce lifecycle costs (production, maintenance and staff training training).

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L' Autore - Enrico Iacovizzi

Responsabile Difesa europea e NATO - Laureato in Scienze Internazionali e Diplomatiche presso la Facoltà Roberto Ruffilli di Forlì con una tesi sull’evoluzione delle relazioni esterne dell’UE e sul suo ruolo come potenza civile globale, vivo e lavoro a Bruxelles. Appassionato di politica internazionale ed in particolare dell'evoluzione politica ed istituzionale della difesa comune europea.

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