The EU finally opens up the European defence market By Clara Marina O’Donnell ★ For decades Europeans have been fighting side by side within NATO, the UN, and more recently the EU. Yet European governments have maintained a broadly national approach when purchasing their military equipment. The fragmentation of European defence markets has not only proved unnecessarily expensive but also hampered the ability of European militaries to work together on international missions. ★ The EU has agreed a series of reforms aimed at increasing competition in European defence procurement, and at allowing defence goods to move more freely within the EU. As a result, the defence industry should become more competitive and deliver equipment more cheaply. ★ The impact of these reforms will depend on how much member-states are willing to use the new tools at their disposal, and to what extent the European Commission is willing to challenge noncompliance by EU governments. ★ Over the next few years, EU governments will have to ensure that their efforts to liberalise the defence market do not provoke an unintentional fall in research and development in the defence sector. They must ensure that the European Defence Agency and the European Commission’s simultaneous efforts to increase competition do not create confusion. And they should encourage the US to reform its export controls to EU member-states. Over recent decades, European countries have increasingly sought to act together in foreign policy and defence. Within NATO, and more recently within the EU, governments have developed a shared analysis of global threats, and they have committed themselves to responding to those threats together. European soldiers and policemen have been deployed side-by-side in numerous missions under the auspices of the EU, NATO and the UN in places ranging from the Balkans to Congo and Afghanistan. Several smaller European countries no longer envisage undertaking military operations outside a multinational framework. Yet until now European governments have usually continued buying their defence equipment on their own and from their own national suppliers. As a result European defence markets continue to be organised broadly along national lines. The regulatory frameworks for defence procurement accross the EU have long ceased to be appropriate for
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today’s world. They are unnecessarily costly and hamper multinational military operations. Each EU member-state has its own complex regulations governing procurement and exports of defence goods, and most defence procurement is not open to foreign or domestic competition. As a result, defence firms have not been able to benefit from the economies of scale that larger markets would provide. The fragmentation of the market has also led to wasteful duplication. Altogether, EU countries currently have 89 different weapons programmes, while the US, whose defence budget is more than twice the size of the EU’s defence budgets combined, has only 27. Europe’s defence companies – which operate increasingly across borders – have struggled with the complicated and diverging national requirements for exports. For example, many member-states require individual authorisations for each defence-related
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