Conclusions and Policy Implications
As set out in the Final Report to the European Commission, January 2001

(I) SCENARIO ONE: Transatlantic Discord: Competing US and European Poles

4.6.1 A new threat perception, arising not from the east but from the west, emerged in Europe during the second half of the 1990s. It was not a threat to national security and independence, but to European military-industrial survival and advanced technology competitiveness. Although the east-west conflict in the form of the cold war disappeared, technological competition among western countries did not. Military-technological competition among the technologically most advanced nations, partly within Europe but primarily across the Atlantic, became a decisive factor driving European common action.

4.6.2 The American threat was created by the so-called 'last supper' in 1993, when the US Secretary of Defense told the chief executives of the biggest American military companies that half of those present were superfluous (Volkman 1998). The companies, supported by Wall Street, reacted with stunning rapidity. Within a few years there was a dramatic reduction in the number of prime producers in 10 of the 12 industry market sectors identified as important to national security. The largest reductions were in aerospace markets such as tactical missiles (from 13 to three), fixed-wing aircraft (from eight to two), expendable launch vehicles (from six to two) and satellites (from eight to five). The US defence market became practically dominated by three giant companies - Boeing, Lockheed Martin and Hughes. In November 1999 the US Deputy Defense Secretary concluded that the company consolidation in the US defence industrial base had gone about as far as it could (Defence Press Service 1999).

4.6.3 The European reaction, catalysed further by the Yugoslav crises, was an acceleration of defence-related activities, both industrial and political, in an attempt to strengthen Europe's military industry's position.

4.6.4 The first scenario assumes that these developments continue to the point where a strong European defence industrial pole is created, capable of matching that of the United States.

4.6.5 Two main forces drive the Transatlantic Discord scenario. First, the urge of European governments and defence companies to remain on the competitive playing field. Second, a need to reconfirm Europe's political and economic role in the new and unipolar world characterised by US dominance. There is a desire to define a clear defence-political identity for Europe in order to give credibility to the pan-European structures and also to mark differences from the US. The evolution of the European Union and the common European market provide a background and framework for these efforts.

4.6.6 A condition for the development of this scenario is that there is no renewing of tension between Europe and Russia, or even that there is close political and defence cooperation with Russia and Europe, and perhaps even between Russia and the US. EU-Russian military cooperation, although unlikely in the short term, would further support this scenario, enabling military postures that no longer needed to follow the US military technological or political lead but concentrated on protecting Europe from external threats and contributing to peace-keeping operations under the mandate of the United Nations. As a precondition for this scenario Russia would have to accept its economic and military limitations. Just as Europe, in our second scenario, cooperates with the US, Russia would in this scenario realise that cooperation with Europe could sustain technological capabilities basically embedded in civilian high-tech industries competing in international markets. Thus, EU-Russian cooperation in military-industrial and security fields could lead to a new self-confident European defence option.

4.6.7 Also crucial for the sustainability of this scenario would be a united European will to remain and act independent of the US, not least if one consequence of this course of action were that the US might withdraw its military presence, and perhaps also its military guarantees, from Europe. An extreme variant would be to accept the emergence of a new transatlantic order in which the NATO military alliance would no longer have a role. US domestic, mainly economic, problems and/or a neutralistic American administration would probably be needed in order to support such a decision.

4.6.8 An outcome based on competing US and European defence poles would probably be very costly for Europe since it would include facets of European superpower ambitions. Advanced European military R&D, innovation and acquisitions as well as an independent European Science and Technology Intelligence organisation (Hagelin 1999) would need to be supported. Military systems not otherwise contemplated, such as anti-ballistic missile systems, perhaps even aircraft carriers and strategic bombers, might be argued for. Satellite communication links would be a necessary ingredient in the new defence posture. In order not to remain dependent upon the US, independent and cost-effective European civilian communication infrastructures and intelligence services would be needed, resulting in a new balance between exclusively military infrastructures and intelligence and often more efficient services provided by the private sector organised in globally operating corporations.

Back to METDAC