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

(II) SCENARIO TWO: Transatlantic Harmony

4.7.1 Undoubtedly, there is still political, economic and technological importance attached to nationally independent military production. However, it may be argued that in most, if not all, countries with an indigenous military industrial base, national independence has not existed in advanced military innovation, R&D, production and acquisitions during peacetime. National production of the technolo­gically most advanced equipment is possible only with the assistance of different forms of international research and development co-operation and/or trade of skills, technologies and products. In the future, international projects are likely to define much if not all of the advanced military production or acquisitions to be considered affordable in Europe. Thus, military-relevant technology innovation will not be national but international.

4.7.2 Our second scenario assumes a happy union between European and transatlantic cooperation, in which Europe and the US make up two pillars of the same military (and military-industrial) system. Like the first scenario, however, it rests upon the same general foundation of successful European political and industrial responses to the American challenge as well as realisation of EU ambitions. The second scenario, therefore, also implies a willingness on the part of European governments to increase their military expenditures, although transatlantic cooperation may support rationalisations and cost savings.

4.7.3 But there is one decisive difference, namely that the US believes European representatives when they assure them that there is no risk of independent European ambitions, so that the US then supports the creation of a strong European defence industrial base. Hence, as a reaction to European industrial consolidations and acquisitions, the basis for transatlantic cooperation actually improves. Part of the US support may be based on the need for an increased ratio between equipment and men in Europe as a result of NATO enlargement, and an increasing EU role in NATO power projection operations.

4.7.4 A further stimulus for this scenario could emerge from a deterioration of the European security situation, mainly in EU-Russian and US-Russian relations, with re-emerging cold war-type military rationales for NATO. One example might be Russian non-compliance with US-EU views on international arms and technology controls. Another example could be a US and perhaps also a European Theatre Missile Defence system that, in the Russian view, is partly aimed at Russia. Russian opposition could create support for faster NATO enlargement to include Finland and Sweden and result in revitalised transatlantic military including industrial ties. A destabilising, costly and counter-productive European arms race could follow.

4.7.5 On this scenario, the US administration would reduce its technology transfer restrictions in parallel with reducing the force of the Buy American Act and other constraints against American acquisition of European equipment. It would also alter the its historical unwillingness to share its most advanced technology even in NATO projects. Moving toward this alternative for both first, second and third tier suppliers is important for achieving the highest forms of European and transatlantic co-operation. Examples of steps and decisions that could illustrate this are the April 1999 DCI initiative, the Joint Strike Fighter (JSF), the US willingness to share BVRAAM missile technology, the proposals by the Defense Science Board's Task Force on Globalization and Security (Arms Sales Monitor, No. 42, Jan. 2000, p. 1), recently changed US licensing legislation, and the February 2000 Declaration of Principles between the defence ministries in the US and UK (DoD Briefing 8 February 2000).

4.7.6 Although there may be many rationales for closer transatlantic cooperation in the future (Barry & Kay 2000; Adams 2000), the buzz words in this scenario would be trade liberalisation and technology sharing, involving the whole spectrum from R&D to production and acquisition in defence as well as dual-use technologies and products. Because of the great imbalance in transatlantic defence trade, the US would not only open up its military market, but also accept spin-offs and spin-ons in American military and civilian programs in an attempt to narrow the technology gap and support increased military trade and co-operation with Europe. The future of defence spinoffs, however, may remain a controversial issue.

4.7.7 Closer and more efficient transatlantic co-operation is likely to develop in steps, starting with industrial teaming and partnerships. Over time, this would create a political, military and industrial climate that, in turn, would support ambitions on both sides of the Atlantic to achieve transatlantic mergers. Transatlantic company mergers would strengthen NATO, improve interoperability, diminish trade protectionism, maintain competition, and bring Europe into the new so called Revolution in Military Affairs (RMA). Constructive co-operation in this field would support common require­ments and NATO standardisation increasingly around European equipment.

4.7.8 However, although mergers would reflect the highest industrial form of transatlantic co-operation, they are not absolutely necessary for this scenario. The most important factor is the reduction of transatlantic political and military animo­sities and tension and to establish constructive US support of EU technology, defence and security ambitions. Integrated transatlantic project teams sharing as well as developing skills and technologies - perhaps following competitive R&D on each side of the Atlantic - would be one alternative. The negative result from 'the second supper' in 1999, when representatives from both sides of the Atlantic met to discuss possible transatlantic mega-deals, is therefore not necessarily critical. The UK in particular could, if it can manage its transatlantic and European balancing act, be the major European bridgehead for this transatlantic military-industrial bridge.

4.7.9 The experiences of the Kosovo war highlighted the rift between the US and European nations. For this scenario it became a cross-road in transatlantic cooperation. It elevated the European debate about integration of military capacities to an action-oriented level and contributed to eventually breaking the stalemate of extending the process of European integration to cover military affairs. Over time, developments could involve a transatlantic-wide restructuring of military and dual-use R&D and production. Certain types of equipment or technologies for the transatlantic area as a whole may be developed and produced in Europe, while others are developed and produced in the US. This means taking advantage of comparative advantages in the US and European nations.

4.7.10 This would have implications for the focus of technology innovation in Europe and the US in that it would support the creation of asymmetric but coordinated NATO or US-EU military technology innovation. That would demand hand-in-hand transatlantic cooperation, in reality basically a common military industrial base as a means to make military technology, spending and acquisitions more effective.

4.7.11 However, the analysis of the Kosovo consequences in the history books of the future may conclude that what followed was not a harmonious transatlantic relationship. Rather, US pressure upon European weapon acquisitions strengthened. The US defence establishment began to market not only military equipment but also a future military doctrine in Europe. What had hitherto been regarded as distinctly European security concerns became obscured and, even manipulated, by vested American interests.

Back to METDAC