Supply Side
A Single European Defence Force – Likely Procurement Issues (part 2)

We started yesterday looking at the idea that the formation of a single European Defence Force is at least on the cards. (See this article in the Telegraph). If that led to a more co-ordinated approach to military procurement as well, what barriers and issues might such a move face? Yesterday we considered some issues that really are fairly general across all major collaborative procurement initiatives, but would certainly apply strongly in a military scenario.

But there are some other points that are much more specific to the defence sector. The first relates to national preferences and national industries. Any politician who depends on their national or indeed local electorate is going to be very worried about the risk that jobs might disappear from their area, region or country because of a European approach to buying. Imagine the announcement that a factory in your constituency has to close down because it is not the UK (or French, or German) army buying those products any longer, it is the European army and they have chosen a supplier in Italy.

Because of this, even when there has been international collaboration up to now, such as for the Eurofighter project, there tends to be a highly political sharing out of work around the participating countries to try and keep everyone happy. But that brings issues in itself. Perhaps the UK gains more work in certain areas; but it still loses it in others, and that still brings political issues arising from the “losers”.

The sharing of work also cuts across one of the business case positives for collaboration. If there are leverage and economies of scale to be exploited by buying in a more aggregated manner, those may well be compromised by this sharing of work. If the factory in Italy really is the best in Europe at making widgets, we should buy them from that supplier, not share out the work so that widgets are still made in six countries. Indeed, this sharing could lead to higher prices than if every country just pursued its own path.

The other big issue under this heading is the need to preserve national capability in certain areas. Would a major country ever contemplate giving up its last submarine construction and maintenance capability, or its final factory making tanks? Would countries be prepared to believe that they will never need that again at a national level, and that the European alliances will stand the test of time so they can always rely on the facilities of their neighbours?

There is also another very interesting issue around secrecy and international relationships. The USA is the global leader in arms technology, and its defence industry operates under rules known as the International Trade in Arms Regulations, (ITAR), that define what is and is not allowable. So ITAR allows US industry and military to share its technology with some very close allies, but even the UK, as a “most favoured nation” for the US in terms of defence assistance and technology, is not always allowed to see or access all the details of the equipment supplied, and is certainly not permitted to sell on or transfer knowledge to other countries.

But the US is most unlikely to grant the same access to a single European force, because frankly it does not trust every member state in the EU to the extent it trusts the UK. That may be down to physical location, history, and just aspects like the maturity of the security precautions that would be taken to protect the American secrets. So there is a danger that the European Force could end up with less advanced weapons and technology than the leading countries currently enjoy, which would be good news for our enemies, and less good for citizens.

Coming back to the basic principles of collaboration, increasing the number of parties increases the complexity of the process in an exponential manner; getting four parties to work together is more than twice as difficult as getting two to work together! So collaboration between something like 28 countries looks like quite a task. That in itself must bring these ideas into question, even without the sensitive national and security considerations.

Now none of this means that there could not be more defence co-operation across the EU and there may be some limited areas where an international approach to those activities including relevant procurement might be beneficial. But it appears that the issues around true EU-wide military operational or procurement centralisation are very considerable; I strongly suspect that is not going to happen, in my lifetime anyway!