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Reducing the Environmental Bootprint? Competition and Regulation in the Greening of Europe’s Defense Sector
As part of the European Union’s (EU) renewable energy and climate targets and its drive for sustainability, energy efficiency, and environmental protection, various elements of the defense sector in Europe are undertaking their own green initiatives. This is particularly important as the defense sector is one of the biggest public consumers of energy in the EU. This article asks to what extent, how, and why elements of the defense sector in Europe have engaged in greening. By examining four categories in a relevant typology of greening—ceremonial greening, holistic greening, regulatory greening, and competitive greening—this article argues that the defense sector in Europe is far from being a holistic green actor. Rather, Europe’s militaries, defense institutions, and defense firms exhibit a strong sense of self-interest in greening—embodied in defense market competition and regulation—and tend toward delegating green innovation to the market within an increasingly regulated context.
Organisation & Environment, 2014, Vol. 27, No. 3
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No TTIP-ing Point for European Defence?
Abstract
The EU-US Summit on 26 March will mark eight months since the partners decided to formally launch negotiations on a Transatlantic Trade and Investment Partnership (TTIP). The aim of the TTIP – if finalised – is to remove tariffs, align regulatory standards and open up government procurement. Born out of the need to boost economic growth on both sides of the Atlantic and to respond to the rise of emerging markets, the Partnership will add an extra €120 billion to the EU economy annually, according to estimates by the European Commission. While President Obama’s first visit to Brussels will likely be dominated by an agenda focusing on Ukraine and economic recovery, it is also worth thinking about some of the more sensitive areas involved in the TTIP discussions. One such area relates to defence industry and markets. Back in June 2013, public procurement of defence and security goods was included in the Commission’s negotiating mandate. Given the sensitive nature of defence procurement, however, both sides have, for the time being, agreed to drop a ‘defence TTIP’.
This situation is indicative of a broader negotiating environment that has seen a moratorium on including an investment chapter in the Partnership and other sectoral exclusions. Therefore, at first glance, the TTIP’s overarching aims of abolishing tariffs, enhancing the compatibility of the EU and US regulatory environment and ensuring a greater flow of goods, services and investments in the transatlantic space will not apply to the defence sector. But is this necessarily the end of the story?
EUISS Policy Brief, 2014, No. 19
Introduction
The EU-US Summit on 26 March will mark eight months since the partners decided to formally launch negotiations on a Transatlantic Trade and Investment Partnership (TTIP). The aim of the TTIP – if finalised – is to remove tariffs, align regulatory standards and open up government procurement. Born out of the need to boost eco- nomic growth on both sides of the Atlantic and to respond to the rise of emerging markets, the Partnership will add an extra €120 billion to the EU economy annually, according to estimates by the European Commission. While President Obama’s first visit to Brussels will likely be domi- nated by an agenda focusing on Ukraine and eco- nomic recovery, it is also worth thinking about some of the more sensitive areas involved in the TTIP discussions.
One such area relates to defence industry and markets. Back in June 2013, public procurement of defence and security goods was included in the Commission’s negotiating mandate. Given the sensitive nature of defence procurement, however, both sides have, for the time being, agreed to drop a ‘defence TTIP’. This situation is indicative of a broader negotiating environment that has seen a moratorium on including an investment chapter in the Partnership and other sectoral exclusions. Therefore, at first glance, the TTIP’s overarching aims of abolishing tariffs, enhancing the compatibility of the EU and US regulatory environment and ensuring a greater flow of goods, services and investments in the transatlantic space will not apply to the defence sector. But is this necessarily the end of the story?
The dual-use conundrum
In today’s defence markets it is no longer possible to speak of purely ‘defence’ goods and technologies, with dual-use goods and technologies increasingly blurring the lines between the defence and civilian sectors. In order for finished plat- forms (such as jet fighters, aircraft carriers and armoured vehicles) to function, componentry made in the civilian sector is essential. Accordingly, de- fence procurement contracts are just as likely to involve electronics firms as they are system inte- grators. The semantic confusion caused by this blurring may therefore still see, albeit indirectly, a number of defence-relevant goods and technolo- gies fall under the provisions of a future TTIP. As just one example, while it is unlikely that attack helicopters will directly fall under the provisions of the TTIP, on-board technologies sourced from the civilian sector (such as sensor equipment and landing gear) may well be included.
Firms and governments may view the removal of tariffs on defence-related civilian goods and technologies as a positive outcome of the TTIP negotiations. However, the removal of tariffs would mean relatively little in the face of remaining non- tariff barriers. For example, despite recent moves by the US government to ease market entry for certain third-countries, the ‘Buy America Act’, the ‘Berry Amendment’, the Committee on Foreign Investment in the US and the International Traffic in Arms Regulations (ITAR) continue to serve as barriers to defence market access.
Based on the premise of national security, the ITAR in particular makes it difficult for US exporters to trade their defence products with third-countries. Yet, under the ITAR, the US government has the power to move goods that are presently classified under the ‘munitions list’ (USML) to the ‘commer- cial list’ (CCL). This process has already begun, with the US government relaxing ITAR controls on satellite components and technologies in 2012. While the USML items would not be covered by any future TTIP as it currently stands, items under the CCL could become subject to the TTIP provisions. Moving items from the munitions list to the commercial list could thus ease US exports to the EU and other countries around the globe.
What is more, while the US could ease export restrictions on their own firms, the country could still use its non-tariff barriers to hamper market access for third-countries. This is not to say that European firms are completely barred from the US market: through a Special Security Arrangement, European firms can operate in the US – albeit under strict conditions. There are also several ex- amples of European firms breaking into the US market and making sizeable sales. For example, BAE Systems recently sold two naval gun systems worth $20 million to the US Navy and Coastguard. Despite such success stories, the TTIP in its present form will not remove existing regulatory barriers and European firms wishing to gain a foothold in the US market will continue to face familiar dif- ficulties.
The situation outlined above could potentially af- fect the more than 1,350 small and medium-sized enterprises (SMEs) that operate in the European defence sector. These SMEs trade almost exclusively in dual-use goods and technologies. While a TTIP could make it easier for European SMEs to export defence-relevant civilian goods and technologies to the US market, US firms already have a competitive advantage over their European counterparts. For example, SIPRI calculates that between 2000 and 2012, ten EU member states exported a total of $4.4 billion worth of major conventional weapons to the US, whereas the US exported $21.8 billion to twenty-six EU member states. While European SMEs are good sources of innovation, they tend to lack the critical mass needed in terms of capital investment and R&D resources to be able to compete in the US market.
TTiP-ing the balance?
The TTIP may therefore have an indirect, if important, effect on the European defence industry. While tariffs may be removed on a host of defence-related civilian goods and technologies, non-tariff barriers may still be used to impede im- ports and facilitate exports. The term ‘dual-use’ may allow for sufficient flexibility to re-label ‘defence’ goods as ‘civilian’ and move them under the TTIP umbrella. This would allow the most valuable elements of the proposed TTIP to be re- tained, whilst also using the exclusion of defence from the TTIP negotiations to use non-tariff bar- riers in a strategic manner. The consequences of this scenario are still unclear for Europe’s defence industry, and particularly for the mass of defence- relevant SMEs.
Whether or not the TTIP moves forward, and aside from the direct or indirect impact it could have on Europe’s defence markets, the debate may reveal a more germane point about the state of defence-industrial policy in the EU today. Indeed, the increasing competition from the US and other emerging markets, and the depression in defence expenditure in Europe, beg some serious ques- tions. One could begin by asking what the ‘E’ in the EDTIB (European Defence Technological and Industrial Base) actually represents.
If preserving and defending the EDTIB means boosting the competitiveness of Europe’s defence firms through market openness, then it must be conceded that non-EU firms may also set foot and gain ground in the European market: would these firms then be part of the EDTIB? If the EDTIB is viewed as a means to sustain high-skilled employment in the Union and to promote European capability development programmes that have a positive knock-on effect on jobs, growth and R & D investment, the answer is likely to be yes. Conversely, if ‘national’ champions (or SMEs, for that matter) move business outside the EU – for whatever reason – would these still be considered part and parcel of the EDTIB?
At any rate, the prospect of a TTIP may force Europeans to finally address long-standing de- fence market fragmentation. The July 2012 Commission Communication and the December 2013 EU Council are steps in the right direction, but the uncertain effects of – and the potential opportunities contained in – the TTIP may yet serve as a further catalyst for progress.
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An Industrious European Council on Defence?
The December 2013 Council meeting set in motion a number of important “roadmaps” for defence-industrial policy in Europe. Now the member states, the European Defence Agency and European Commission need to be aware of the potential roadblocks ahead.
Egmont Institute, 2014, No. 53
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The State of Defence in Europe: State of Emergency?
When a doctor calls for a thorough examination of the state of a patient’s health, he hopes that everything will turn out to be alright, but it really means that he fears there is a serious problem. Likewise, when Herman Van Rompuy called for the European Council of which he is the President to examine “the state of defence in Europe”,1 he was asking for more than a routine check-up. In this joint Egmont Paper, the Institute for European Studies of the Vrije Universiteit Brussel and the Egmont Institute offer their diagnosis. In the opening essay, Claudia Major and Christian Mölling cannot but conclude that “the state of defence in Europe” is nearing the state of emergency. The “bonsai armies” that they fear we will end up with are nice to look at – on the national day parade for example – but not of much use.
In addition to the diagnosis though, we also want to propose a treatment. The method of examination proposed by Van Rompuy already hints at an important part of the cure. The fact is that we never examine “the state of defence in Europe”. We assess the state of the EU’s CSDP, of NATO’s military posture, and of course of each of our national armed forces. But we never assess Europe’s military effort in its entirety. In fact, we are unable to, simply because there is no forum where we set capability targets for “defence in Europe”.
On the one hand, we pretend that it is only a specific separable (and, in the minds of many capitals, small) part of our armed forces that can be dedicated to the CSDP and the achievement of its Headline Goal, the capacity to deploy up to a corps of 60,000.2 That is of course a theoretical fiction: in reality any commitment to either the CSDP or NATO or both has an impact on our entire defence budget and our entire arsenal. A decision to invest in an air-to-air refu- elling project through the European Defence Agency for example implies that that sum cannot be spent in another capability area of importance for the CSDP or NATO or, usually, both, whereas once delivered the resulting air-to-air refu- elling capability will be available for operations in either framework. Schemes to encourage states to join capability efforts, like the EU’s Pooling & Sharing and NATO’s Smart Defence, obviously can only make the most of opportunities to generate synergies and effects of scale if all arsenals are taken into the balance in their entirety. On the other hand, the NATO Defence Planning Process (NDPP) supposedly does encompass (nearly) the whole of our forces, but it sets targets for individual nations in function of the targets of the Alliance as a whole, and does not separately define the level of ambition of NATO’s European pillar even though it becomes increasingly likely that the European Allies will have to act alone.
We are thus confronted with a curious situation. In political terms it continually is “Europe” that we refer to and expect to act. Even the US has sent a clear message to “Europe” that it should assume responsibility for the security of its own periphery and initiate the response to crises. “Europe” for Washington can mean the European Allies acting through NATO, or the EU acting through the CSDP, or an ad hoc coalition of European states. Washington really no longer cares under which “European” flag we act, as long as we act and the problem is dealt with without extensive American assets being drawn in. As Luis Simón points out in his essay, the US is ‘geared towards figuring out how to get the most “bang” out of a “low cost” and “light footprint” approach to European security’. In terms of defence planning however, “Europe” does not exist. If he succeeds, Van Rompuy is to be congratulated for bringing it into being.
Defining Europe
A call to look at “the state of defence in Europe” thus implicitly is a call to define a level of ambition for “Europe”, against which the existing capabilities can be assessed, shortfalls identified, and priority objectives defined. As the High Representative, Catherine Ashton, states at the outset of her Final Report Preparing the December 2013 European Council on Security and Defence, this ‘warrant[s] a strategic debate among Heads of State and Government. Such a debate at the top level must set priorities’.3 Put differently, the key political ques- tion that the European Council needs to address, before it can address any mili- tary-technical question, is for which types of contingencies in which parts of the world “Europe”, as a matter of priority, commits to assume responsibility, and which capabilities it commits to that end. On the basis of the answer to that question all other dimensions of the European Council’s broad defence agenda can be tackled – absent that answer, Europe’s defence effort will still be left hanging in the air. It is often said for example that “Europe” needs its own strategic enablers, such as air-to-air refuelling and ISTAR. But to be able to do what? Air-policing in the Baltic? Air-to-ground campaigns in the Mediterranean? Or even further afield? And at which scale? Without an answer to such questions, it is impossible to design a sensible capability mix and decide on priority capability projects.
Yet, who is “Europe”? Who can define the level of ambition that serves as polit- ical guidance for operations undertaken and capabilities developed by Euro- peans through both NATO and the CSDP? Again, we are facing the same problem that there is today no institutionalised venue where Europeans can take decisions about their posture in NATO and the CSDP simultaneously – it is always either/or. Under these circumstances, the European Council is the best option. It is of course an EU body, but they are our Heads of State and Govern- ment, meeting in an intergovernmental setting, adopting not binding law but political declarations, and that by unanimity. Surely they, if anybody, have the legitimacy to declare that they will consider the political guidance which they agree upon to guide their governments’ positions in both NATO and the CSDP?
Politically, “Europe” can either mean each and every European state, or an ad hoc coalition of some of these states, or, when they make foreign and security policy together (which alas they do not do systematically enough), the EU. In political terms, “Europe” neither means the CSDP nor NATO: these are instru- ments, at the service of the makers of foreign and security policy. Instruments, moreover, both of which “Europe” is more likely to use in the near future than the US, in view of the “pivot” of its strategic focus to Asia. If Washington no longer takes the lead in setting strategy towards Europe’s neighbourhood, the only alternative actor is Europeans collectively, i.e. the EU (for individually, no European state can defend all of its interests all of the time). The European Council thus really is the best placed to address “the state of defence in Europe”.
This does not in any way prejudice how, in a real-life contingency, “Europe” will undertake action: using NATO, the CSDP, other EU instruments, the UN, ad hoc coalitions or a combination thereof. Indeed, if action entails larger-scale combat operations, “Europe” will need the NATO command & control struc- ture, which is its main asset. According to Jamie Shea, ‘NATO’s choice, there- fore, will be to focus on high-end operations built essentially around a conventional military core structure and organised through an integrated command system’. The best way to make sure that all instruments are put to use in an integrated way, from the planning of any type of action to the post-action and long-term involvement, is to politically put any intervention under the aegis of the EU, even when acting under national or NATO command in the case of military involvement. The fact is that in almost every scenario, the European Commission and the EEAS will either from the start or eventually have to take charge of the political, economic and social dimension, regardless of how we address the military dimension – better to integrate all from the beginning thereunder the political aegis of the Union. Furthermore, that flag still is much less controversial whereas there always are countries and regions in which it is advised not to operate under specific national flags or the NATO-label.
Egmont Institute, 2013, No. 62 (edited with Sven Biscop)
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The ‘TTIP-ing Point’: How the Transatlantic Trade and Investment Partnership Could Impact European Defence
The European Union and the United States are on the verge of agreeing to a transatlantic free trade agreement. The proposed Transatlantic Trade and Investment Partnership is aimed at boosting EU and US economic growth, but the negotiating partners have not excluded the defence sector from negotiations. Europe is at a tipping point regarding the rationale for its defence-industrial integration efforts. Any TTIP extending to the defence sector will raise questions about the nature of the European Defence Technological and Industrial Base, and, crucially, how it impacts the North Atlantic Treaty Organisation and the Common Security and Defence Policy.
The International Spectator, Vol. 48, No. 3
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More Competitive, More Efficient? The 2013 European Commission Defence Communication
The European Commission has now released its 2013 Communication on defence-industrial policy. But does the latest set of policy ideas offer European defence-industrial cooperation any new impetus? This Brief argues that while the majority of the Commission’s initiatives are not new, some much needed ideas have made their way into the latest Communication.
Egmont Institute, 2013, No. 49
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Realist Thought and Humanitarian Intervention
This article seeks to test the assumption that realism is completely hostile to the ethical and political notions of humanitarian intervention. The popular understanding of realism states that the national interest and international order will always trump the moral impulse to assist those suffering gross human-rights abuses at the hands of their government. The article makes the argument that this understanding of realism emerged from a particular period of history and under the pens of specific individuals reacting to these conditions. By affording a much deeper historical scope to the term ‘realism’, this article shows how realism cannot be damned uniformly by those writing and thinking about humanitarian intervention in the present period, and the role it holds in contemporary debates on humanitarian intervention.
The International History Review, 2013, Vol. 35, No. 4
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The Common Security and Defence Policy and IR Theory
Since its inception over a decade ago, the European Union’s (EU) Common Security and Defence Policy (CSDP) has seen the deployment of over 25 missions to various locations in the EU’s near and wider neighbourhood. Working under an EU banner and policy mechanisms, a number of member states have cooperated in theatres of action on civil-military tasks ranging from peacekeeping to border patrol. While CSDP has emerged as an important component of EU foreign policy, however, it is not just about mission deployment because it has also encouraged cooperation between member states on military capability development and defence-industrial programmes (Fiott, 2012; Fiott 2013). While the CSDP does not account for all military policy in the EU – the individual member states (specifically France and the United Kingdom) have their own policies and there is also NATO – it is a test-bed for the member states’ military cooperation. When one looks at the Policy through the prism of IR theory some interesting points also arise.
e-International Relations, 2013
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Europe and the Rest of the World
There were a number of leitmotifs by which to identify the European Union’s activities in 2012. The first of these was the eurozone crisis. A second theme was the change (or not) of key personnel: the election of François Hollande in France, the re-election of American President Barack Obama in October, the generational change of leadership in China and the return of Vladimir Putin as Russian president. Third was the United States’ ‘pivot’ away from two wars in Iraq and Afghanistan towards the Pacific region. The fourth leitmotif related to the deepened crises in the Sahel, North Africa and the Middle East. Finally, there were the activities of the European External Action Service (EEAS) and the development of the High Representative/Vice-President (HR/VP) position held by Baroness Catherine Ashton. Against this background, the EU in 2012 displayed an observable if uneven consolidation of its international identity, while the EEAS itself produced a range of muted but generally organized responses,
Journal of Common Market Studies, 2013, Vol. 51, No. S1
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Improving CSDP Planning and Capability Development: Could there be a ‘Frontex Formula’?
The newly agreed operational rules for Frontex allows the Agency to, among other things, buy or lease its own equipment for missions and/or to do so in co-ownership with the Member States and to request national seconded staff for its operations. The new rules are a major step forward in further developing Frontex’s resources. Yet this progress has not been matched, despite the Lisbon treaty’s protocol on Permanent Structured Cooperation, and in light of the defence budget cuts being made in many European Union (EU) Member States, when it comes to the Common Security and Defence Policy (CSDP). This article asks why, given that each policy area is ultimately aimed at the defence and security of the EU, are the innovations that have been agreed for Frontex not equally applicable to CSDP? Why have Member States increased cooperation under Frontex without equivalent or similar progress under the CSDP? This article aims to shed light on the differences and similarities of the two policy domains in order to see if a ‘Frontex formula’ could be applicable to the CSDP.
European Foreign Affairs Review, 2013, Vol. 18, No. 1
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Daniel Fiott 