Europe/NATO 2000: Regional Integration And Trans-Atlantic Decay

By LOREN B. THOMPSON

LOREN B. THOMPSON is chief operating officer of the Lexington Institute.

It is possible that the past 12 months have been as significant to Europe's political future and identity as any single year since 1949. In that year, with the signing in Washington, D.C., of the agreement creating the North Atlantic Treaty Organization, the nations of Western Europe firmly bound themselves to one another and made a place for the United States on the European continent. The rest, as they say, is history. But what a history!

The alliance stood together, facing down the Warsaw Pact and the Soviet Union until those entities vanished. During that time, democracy became a way of life for a quarter of a billion people. The very idea of war between the nations of the alliance became almost inconceivable. Under the NATO umbrella a European economic, political, and even social community was created and flourished.

During the past year, the nations of Europe have taken irrevocable steps that place their collective feet firmly on the path to a new future. One element of that was the creation of the European Monetary Union and the introduction of a common currency, the "euro." There has been almost nothing more significant in the evolution of European politics than the decision by 11 countries to relinquish sovereign control over their respective currencies. But there is one decision that is even more momentous. That is the decision to surrender sovereignty over a nation's security policy and defense program.

This is precisely what the nations of the European Union (EU) have done with formulation of the European Security and Defense Policy (ESDP). This process began with the Franco-British Summit at St. Malo in 1998 that concluded that the "Union must have the capability for autonomous action" in defense matters. In June 1999, at the Cologne Summit, the EU members agreed on the need to create the capability for autonomous action, backed up by credible military forces. The nations of Europe then began the process of creating a common security framework, formalizing the commitment to develop the structures and means to pursue a common approach to security and defense. In 2000, they began to give substance to that promise.

Toward Autonomous Action

EU members moved with surprising speed and determination to give substance to their vision of the ESDP. At the December 1999 European Council in Helsinki, the members defined a set of so-called "headline goals" for a rapid-reaction capability that would permit autonomous action. By the end of 2003, the EU should have the capability to deploy--on two-months' notice--the equivalent of a corps of ground forces (some 15 brigades numbering 50,000 to 60,000 men), supported by both air and naval forces. This force would possess the necessary logistical infrastructure and other supporting capabilities needed to be sustainable in the field for up to a year.

The EU also has taken a number of steps since Helsinki to create the institutions and develop the plans required to support an autonomous military capability. Three defense-oriented committees created at Helsinki--the Political and Security Committee (PSC), the Military Committee (MC), and the Military Staff (MS)--were declared operational in March 2000. These permanent structures have been tasked to support the realization of the Helsinki goals, the coordination of national-defense activities, and the conduct of initial operational planning. The PSC already has held planning meetings to consider ways of transferring the functions and institutions currently operating under the Western European Union (WEU) into the EU. Early targets for transfer include the WEU's Satellite Center and its Institute for Security Studies.

The Helsinki declaration left a number of questions unanswered. Which countries would contribute what capabilities? What mechanisms are needed to make a decision to act and to call on the forces committed by individual nations? What resources would be available to plan an EU operation? What strategic tasks should be the standard against which to design the EU rapid-reaction capability?

Europe remains divided on this latter question. Some countries and experts argue that the ESDP should restrict itself to regional peacekeeping and security problems. The European Commission asserted in its February 2000 Strategic Objectives report that the goal of the ESDP should be a Europe that "can show genuine leadership on the world stage." Clearly, the latter, more expansive, view of an ESDP would require more capable forces than would the former view.

Answers to some of these questions were addressed in November at the EU's Capabilities Commitment Conference in Brussels, convened to obtain each member state's specification of the assets it would be able to contribute to match the ESDP's military and nonmilitary capabilities. However, these forces will remain under national control and, hence, will be subject to prior calls from national decision-makers.

Dr. Javier Solana, the high representative for the EU common foreign and security policy, emphasized in a speech in Berlin in November that the EU is not in the business of collective defense nor in the business of creating a European army. "The creation of a European Security and Defense Policy," Solana said, "is aimed at strengthening, not weakening, trans-Atlantic ties." He also sought to reassure his audience that the ESDP goal is much more than the creation of a rapid-reaction force. "Military means will always be the last resort for solving a crisis," he said.

The EU's assurances did little to quell the often-bitter debate that took place in Britain's House of Commons. Members of the Conservative Party charged that Prime Minister Tony Blair's support of the ESDP would see Britain surrender operational control of its military forces. Blair vehemently denied the accusation.

Europe's steady progress toward an autonomous rapid-reaction capability also intensified concerns in Washington regarding the fraying of the NATO Alliance. Despite Solana's assertions that the EU "will only act when NATO as a whole is not engaged," European discussions of the ESDP goals are often partnered with criticisms of NATO's decision-making structure--the latter a code word for U.S. hegemony.

The Risk of Irrelevancy?

Many ESDP supporters see in it the means of placing the United States and Europe on an equal footing in the area of security, much as has already occurred in the areas of commerce and trade. Critics of this view argue that, rather than being an organization of "1 + 18," NATO is in danger of becoming an alliance of "1 + 1," the latter consisting of the inevitable EU caucus within NATO.

At the June 2000 European Council meeting, EU leaders approved a set of principles for consultations between NATO and the EU. According to this document, all discussions "must take place in full respect of the autonomy of EU decision-making" and must "reflect the fact that each Organization will be dealing with the other on an equal footing." Critics say this would lead almost inevitably to the breakdown of NATO's central political principle of consensus-based decision-making.

In December, U.S. Secretary of Defense William S. Cohen raised a warning flag, during his last appearance at a NATO ministerial meeting, to his European colleagues. "If NATO and the EU with its ESDP are seen as autonomous and competing institutions," Cohen said, "rather than integrated, transparent, and complementary ones, then NATO and collective security are likely to suffer--leaving North America and Europe alike to rely on uncoordinated, inefficient, and ad hoc responses to destabilizing threats." Cohen also said at the Brussels meeting that NATO would likely become irrelevant if the EU's ESDP were to compete with NATO's capabilities or with the institution itself.

Leaders from the EU's 15 member nations--meeting in Nice, France, from 7 to 9 December--apparently heeded Cohen's warning, thanks to the urging of Britain, Germany, and the Netherlands. The new ESDP force will be dependent upon NATO for its command structure and other support functions. According to Washington Post correspondent Keith B. Richburg, the ESDP will be used mainly for peacekeeping operations or other military missions in which NATO declines to get involved. Richburg, reporting from Nice, said that, by responding to U.S. concerns, the other Europeans members distanced themselves from France's desire for a European defense identity separate from NATO and not subservient to the United States.

It seems ironic that, as the process of creating an ESDP moves ahead, the future of the euro looks increasingly uncertain. By the end of October 2000 the value of the euro had fallen to approximately 80 cents to the dollar. The European Central Bank had been forced to ask the United States and Japan to intervene to prop up the new currency. On 28 September, Danish voters rejected that country's proposed entry into the EMU, making it even less likely that Great Britain would join the EMU any time in the foreseeable future. ESDP looks increasingly like the one common ground that truly unifies the EU.

The Challenge of New Requirements

NATO's operation in Kosovo was not only a spur to European demands that the ESDP be made real, but also a goad to the members of the Atlantic Alliance to close the capabilities gap between the United States and its NATO partners. To close that gap, the Allies agreed at the Washington Summit to pursue a set of measures under the heading of NATO's Defense Capabilities Initiative (DCI). NATO identified no less than 58 capabilities that need attention, with particular emphasis on five areas: mobility, sustainment, precision engagement, force survivability, and C3 (command, control, and communications).

Despite the fact that the EU possesses a military establishment larger than that of the United States (1.8 million personnel vs. 1.37 million) and spends almost as much collectively on defense as does the United States, the objectives set forth at the Washington and Helsinki Summits still represent ambitious goals. The five DCI areas of concern represent the central characteristics of any modern force, particularly one intended for rapid-reaction missions outside national boundaries--the goal for the ESDP force.

With the exception of France and the United Kingdom, the EU members have structured their militaries for continental defense, and lack the strategic lift, logistical support, intelligence capabilities, and communications to support a large and extended deployment. A deployable force of 50,000 to 60,000 men means an overall requirement for a force of 200,000 or more, plus additional air and naval forces. A number of EU members, notably Germany but also Spain and Italy, continue to rely heavily on conscripts, while limiting their ability to be deployed outside their homelands.

The most serious issue confronting both ESDP and DCI is unwillingness on the part of some European nations to pay the price needed to close the capabilities gap and thus provide the autonomous means necessary to perform certain critical military missions. In addition to his concerns regarding the ESDP's future direction, Cohen reminded defense ministers that some NATO allies have not been modernizing their forces or shaping them in a way that is consistent with the most likely threats. "... A number of allies are going in the opposite direction," Cohen said. "Their budgets are remaining flat, or even decreasing in real terms."

It is not that Europeans lack the technology to close the capabilities gap; they lack (or are unwilling to spend) the funds. European nations spend on average almost one-third less on defense in terms of their gross domestic products (GDPs) than does the United States. While the United States and some European states have halted their individual declines in defense spending, others, such as Germany, are continuing to cut their defense establishments.

It was reported in May that the German government plans further reductions in defense spending over the next four years of some 50 billion Deutchmarks per year. Such funds as are available are disproportionately weighted toward operations and maintenance, disadvantaging research and development (R&D), and procurement. While there is no need to spend as much as the United States does--or on the same array of high-technology systems--the EU will be unable to meet its own or NATO's goals unless the EU members substantially increase their spending on both R&D and procurement.

In the opinion of U.S. Assistant Secretary of Defense Franklin Kramer, "What it comes down to is money." He went on to note that the DCI "will fail unless some nations spend more, all spend smarter, and all stop reduction." It would seem reasonable to conclude that if the DCI fails, so, too, will the ESDP.

If ESDP and DCI are to succeed, Europe will need to spend both more wisely and, simply put, more. French Defense Minister Alain Richard proposed at the February 2000 meeting of EU defense ministers that a target of 0.7 percent of GDP be spent on defense procurement, a 60 percent increase over current procurement spending. Such increases could come through: (a) a combination of reductions in unnecessary spending that would free up funds for procurement; and (b) actual increases in defense budgets. NATO Secretary General George Robertson has urged European members of that organization to raise their defense spending from the current average of 2 percent of GDP to 3 percent.

It is unlikely that Europe will have more money to spend. Even France and the United Kingdom have proposed defense budgets that are essentially flat through the first part of this decade. Many EU nations are struggling to meet or hold on to the Maastricht criteria for membership in the EMU. At the same time, like all industrialized nations, they are facing enormous pressures to increase social and entitlement spending. The budget picture will only grow worse over the next decade as European populations continue to age. The former Chair of NATO's Military Committee, Gen. Klaus Naumann, observed in an interview in March 2000 that the ESDP goals could take 10 years to reach.

Any new money that may become available for modernization or closing the gaps will have to come from internal savings within defense budgets and from smarter procurement policies. This could be achieved, at least in part, by force reductions and restructuring. Forces geared to territorial defense probably need to be reduced in any case; and the savings achieved could be used to increase procurement and R&D. France embarked on precisely such a course in February 1996. A shift away from territorial to expeditionary forces would have the most profound effects on countries such as Germany, Italy, and Spain.

In May 2000, a commission on the future of the Bundeswehr (German Army) headed by former President Richard Weizsacker recommended a radical reduction in the size of the German Army, from 320,000 troops to 240,000, and the near elimination of conscription--all in the interest of making the German Army more relevant. The German government chose a more conservative course that requires a larger number of conscripts who are of little use in rapid-reaction scenarios--and leaves correspondingly less money for new capabilities.

A Protracted Struggle

NATO and EU members are not the only nations of Europe to struggle with the problem of finding the money needed for transformation. Russia's Gen. Igor Sergeyev, the minister of defense, and Gen. Anatoly Kvashnin, the chief of the general staff, have been locked in a protracted struggle over reform of the Russian military. The former, once chief of the Strategic Rocket Forces, argued for maintaining a large and expensive strategic-force capability. The latter pressed for reductions in strategic forces in order to free up money for the modernization of conventional forces.

The continuing problems with the Russian military were underscored by the accidental sinking of the Oscar II-class cruise-missile submarine Kursk on 28 September. Russian President Vladimir Putin seems to have deliberately used the Kursk incident to support Kvashnin's proposals. In August, Putin announced a series of reform measures, including subordination of the Strategic Rocket Forces to the Air Force, and a reduction in the overall size of the Russian military to less than one million men.

The transformation of Europe's military from one that is now defensive in orientation and territorial in character, and--for some countries--conscript-centered to one fit for rapid-reaction, expeditionary, and professional campaigns will not be cheap.

In fact, it could cost a significant sum. A smaller, professional force of volunteers equipped with higher-technology systems is, as the United States has discovered, expensive. The danger is that Europe will fail in an honest effort to transform its military, and the result will be a force that is both smaller and weaker than the one it replaced. Such a situation would make Europe more, rather than less, dependent on the United States.

Fortress Europe?

The first year of the new millennium marked the beginning of what is likely to be the final phase in the restructuring of the European defense industrial base. The acquisition of Marconi Electronic Systems by British Aerospace, announced in 1999, was finalized, resulting in the creation of BAE Systems. Similarly, the merger of France's Aerospatiale Matra, Germany's Daimler Chrysler Aerospace (DASA), and Spain's CASA resulted in the creation of the European Aeronautics, Defense, and Space Company (EADS).

BAE Systems holds a dominant position in the U.K. market and, through its joint ventures--such as those with MatraBAe Dynamics, Airbus, and the Eurofighter consortium--maintains a very strong continental presence. EADS controls 100 percent of Eurocopter, 80 percent of Airbus, 27 percent of Arianespace, and some 50 percent of all European military missile work, either directly or through various partnerships and joint ventures with BAE Systems and the Italian defense firm Alenia. The result is that two European aerospace giants now confront two principal U.S. defense corporations, Lockheed Martin and Boeing, on an approximately equal footing.

Continuing this pattern of intra-European defense consolidation, electronics giant Thomson-CSF announced last January that it would acquire the British electronics firm Racal. The British firm GKN and Italy's Finmeccanica agreed to merge their helicopter activities (GKN's Westland and Finmeccanica's Agusta) into a joint venture. Along with the creation of EADS, this reduced the number of helicopter manufacturers in Europe by half.

The reaction in Washington to the most recent wave of European defense consolidations continues to be one of apprehension mixed with frustration. The U.S. Department of Defense had hoped that Marconi and DASA would be acquired by U.S. companies, creating a set of truly trans-Atlantic defense firms. Instead, the United States now faces two companies with absolute dominance in their home markets and a thirst for expansion into the American defense market. Former Deputy Secretary of Defense John Hamre noted that EADS "does have a 'Fortress Europe' look about it. These mega-mergers prevent U.S. companies from competing in the European market."

The concern about the possible creation of a "Fortress Europe" has more behind it than merely the size and technological breadth of the new European giants. In May, despite strong pressure from the Clinton administration, the U.K. Ministry of Defence (MOD) made the decision to procure the Meteor beyond-visual-range air-to-air missile to equip its Eurofighters.

The Meteor missile will be produced by a team, headed by Matra BAE Dynamics, that also includes Boeing. Competing for the order was a team headed by the U.S. missile and electronics firm, Raytheon.

In similar fashion, while announcing that it would lease four Boeing-built C-17s to provide an interim capability, the British MOD also decided to commit to purchasing some 25 A400M military transports, thereby all but ensuring that Europe would pursue a long-range transport program. Because the C-17 is well-suited to European needs and likely to cost less than the A400M, Britain's decision is hard to interpret as anything other than a "buy European" move.

European nations also are using the power that comes from coordinating their procurements to jump-start the newly integrated European defense industry. At the 2000 Farnborough Air Show, a consortium consisting of Belgium, France, Germany, the United Kingdom, Italy, Spain, Turkey, and Luxembourg announced that it plans to acquire a total of 225 A400M airlifters from the Airbus Military Company. Earlier in the year, France, Germany, Italy, and the Netherlands agreed to acquire some 366 tactical transport and naval helicopters from NH Industries, a consortium of Eurocopter, Agusta, and Stork/Fokker.

European allies also continue, however, to demonstrate a strong interest in participating in U.S. advanced-technology projects, such as the Joint Strike Fighter (JSF). The United States has invited the United Kingdom, Belgium, Netherlands, Italy, Norway, and Turkey to be paying members of the EMD (engineering-and-manufacturing development) phase of the JSF program.

More important than the efforts to pool their resources, the nations of Europe are beginning the process of coordinating their procurement and export policies. The defense ministers of France, Germany, Italy, Spain, Sweden, and the United Kingdom signed a historic framework agreement at Farnborough that sets out specific areas for procurement and defense-industrial reform. Among other provisions of the agreement, the six nations pledged to establish a single global license among themselves for defense exports.

Going one step further, several European governments have proposed making direct payments into each other's national procurement programs. The Dutch and German defense ministries have agreed that the former will make direct payments to the latter to support Germany's acquisition of the A400M; Still to be decided, though, is what demands the Dutch can make on German airlift assets.

The Dutch Ministry of Defense also is in discussions with its counterparts in Belgium and Luxembourg to explore the possibility of those two countries supporting Dutch naval programs. The obvious advantage of such action would be the savings on management and overhead costs associated with national participation in joint projects.

In June, concerns about the rise of a "Fortress Europe" mentality and a desire to support NATO's DCI led the U.S. Department of Defense to propose a significant shift in U.S. export-control policies. The new Defense Trade Security Initiative proposed by DOD seeks to simplify the export-control process for major U.S. allies. Its 17 points cover reforms in major program authorization, export licensing, and information exchanges. Most significantly, the initiative proposes exemptions to current arms-trafficking licensing procedures for allied governments that meet U.S. export control criteria.

Filling the Capabilities Void

The focus of acquisition activities across Europe in 2000 was on filling weaknesses in capability. In particular, this meant substantial investments in mobility, precision operations, and advanced naval forces. The decisions to proceed with the procurement of the A400M transport aircraft and the NH90 utility helicopter reflect the desire of the nations participating to substantially improve their mobility and sustainment capabilities.

One area in which the European members of NATO allies showed a serious dearth of capability during the Kosovo operation was in precision engagement--particularly all-weather, day-night, and standoff systems. Correcting the problem is a high priority for the European members. The United Kingdom intends to upgrade its tactical-engagement capabilities by deploying the air-launched Brimstone anti-armor weapon. For the standoff mission, the United Kingdom will deploy the Matra BAe Dynamics Storm Shadow, a development of the French Apache. These systems will be de-ployed on Royal Air Force (RAF) and Royal Navy (RN) aircraft and will be compatible with both the Typhoon Eurofighter and the JSF. The United Kingdom also will procure the Tomahawk Land-Attack Missile to equip its 10 attack submarines.

France also is upgrading its precision-strike capabilities--with advanced versions of the Apache and introduction of the SCALP cruise missile, intended to be deployed on advanced Mirage and Rafale aircraft. The French and British systems are likely candidates for purchase by most European air forces.

European defense planners also recognize that, whether or not their forces are operating as part of a NATO force, they will require enhanced surveillance and intelligence capabilities. The United Kingdom now plans to deploy the Airborne Stand-Off Radar (ASTOR) ground-surveillance system as well as reconnaissance pods for strike aircraft and a variety of unmanned aerial vehicles (UAVs). ASTOR will be much less capable than the U.S. Joint Surveillance and Target Attack Radar System--in which Britain had an opportunity to participate--but will provide at least some capacity for tracking moving ground targets.

France, supported by Germany, is making heavy investments in space-based surveillance systems, including an improved Helios II surveillance satellite and a future advanced synthetic-aperture radar system. France also is investing heavily in unmanned aerial vehicles, and in October announced the development of a stealthy combat UAV. The alliance's European members also are facing the need to replace their aging space-based communications infrastructures.

The principal developments in the European naval arena in 2000 centered on the continued acquisition of capabilities to permit improved support for rapid-reaction missions. The United Kingdom and France both want to upgrade their naval air capabilities. France is pursuing enhancements to the aircraft complement of its new nuclear-powered aircraft carrier, Charles de Gaulle, which entered service in September. The Charles de Gaulle is being equipped with an advanced E-2C Hawkeye early warning aircraft built by Northrop-Grumman.

France is expected to make a decision in 2001 on the procurement of a sister ship for the Charles De Gaulle. Acting on the recommendations of its 1997 Strategic Review, the United Kingdom is in the midst of the carrier concept studies, and plans to build two new carriers to replace the three aging Invincible-class carriers currently serving with the Royal Navy.

Many European nations have been involved in the acquisition of new surface combatants specifically designed to meet emerging requirements for littoral operations, including anti-air and land-attack missions. The United Kingdom is continuing with its Type 45 destroyer program. France and Italy remain committed to the Horizon frigate program. All three nations still intend to equip their ships with the Principal Anti-Air Missile System (PAAMS), a cooperative-development program that also involves the Netherlands. France is also procuring La Fayette-class frigates. Germany has decided to continue production of its F-124 Saxony air-defense frigates, but will review the program to build some 15 F-130 corvettes. Spain still plans to build at least four F-100 anti-air warfare frigates.

The future of Europe's submarine force appears to be stable. Britain has contracted for three (of five planned) Astute-class hunter-killer submarines. Germany has decided to acquire the first four of what had been a planned buy of eight Type 212 diesel submarines. Italy also may acquire the Type 212. Only the British submarines will have a land-attack capability.

For the rest of Europe, the goal in 2000 has been selective improvements designed either to replace antiquated systems or to increase national capabilities to perform longer-duration operations in complex operational environments. Some nations, such as Turkey, have announced ambitious modernization plans involving the acquisition of armored vehicles, helicopters, ships, and aircraft. Others, such as the Benelux countries and NATO's new members, plan only to selectively modernize critical force elements.

Trans-Atlantic Tensions

If 2000 marked a watershed in the development of European security, it also may have marked the beginning of a serious downturn in trans-Atlantic security relations. Although Washington officially welcomes Europe's ef-forts to become more self-sufficient and independent in security matters, circumstances may well intervene to sour the trans-Atlantic relationship.

One issue that has already sparked conflict across the ocean is the U.S. interest in deploying a National Missile Defense (NMD) system. France's President Chirac was a very vocal critic of the Clinton administration's plan to deploy an initial NMD by 2005. Britain's Prime Minister Blair also expressed reservations about the U.S. plan. Because a U.S. NMD deployment would depend in part on upgrading early warning radars in the United Kingdom and Greenland, the opinion of U.S. European allies carries additional weight. The current NMD development schedule virtually guarantees that the deployment issue will arise again in the next two or three years--sooner, if threats emerge at an accelerated pace.

The other issue that could seriously harm the trans-Atlantic linkage is a worsening of industrial relations. Each side already perceives the other as building barriers to protect its home markets while demanding access to the other's. The coordination of European procurement activities and/or the creation of a European procurement agency could cause political problems across the Atlantic if such moves were perceived as an effort to freeze U.S. companies out of European markets. The Pentagon's October 2000 decision to approve the sale of Lockheed Martin's electronic-warfare business to BAE Systems seemed to signal U.S. openness to tran-Atlantic defense integration. However, it is possible that the transaction would not have been permitted if BAE's home country were any European nation other than the uniquely trusted United Kingdom. The potential for continued tensions over defense trade and market access therefore is quite high.