*This is a paper I will be presenting at the 2018 Transatlantic Policy Symposium. Other papers being presented at the conference can be viewed at this link.

Sam Seitz

The European Union (EU) has been buffeted by both internal and external shocks, and it increasingly faces security challenges from the Russian Federation, terrorist groups, and, relatedly, large-scale immigration flows from the Middle East and North Africa. After years of failing to meaningfully improve defense and security cooperation among member states, Brussels has finally activated the Permanent Structured Cooperation (PESCO) provision of the Lisbon Treaty. Although PESCO remains relatively untested, and previous attempts at European defense collaboration suggest a pessimistic future, it is possible that PESCO could herald the beginning of a more efficient and capable European military establishment. And while fanciful notions of a “European Military” remain unrealistic, PESCO does create the potential for the development of more capable and relevant European militaries. To ensure that PESCO remains useful and effective, policymakers must learn from previous attempts at defense coordination and integration within Europe and simultaneously ensure strict compliance among participating states while, at the same time, recognizing the disparate interests and concerns of participating member states. By focusing on developing a basket of capabilities that benefits both the EU and its constituent member states’ militaries, PESCO can help promote a flexible and capable group of European militaries that will improve EU security, permit greater EU strategic autonomy, and enhance European contributions to NATO.

The Difficulty of pre-PESCO European Defense Cooperation

Since the 1992 Maastricht Treaty, the European Union has sought to expand and deepen cooperation and integration among its constituent member states. This effort has been focused primarily in the economic and regulatory realm, with the adoption of the Euro and post-Lisbon Treaty legal consolidation representing important steps toward unionwide integration. Defense cooperation, however, has received less attention from the European Union, and attempts to better integrate defense policy have been largely unsuccessful. For example, the Common Security and Defense Policy is frequently considered to be a paper tiger that is overly focused on tactical operations at the expense of grander strategic cooperation. Other efforts at deeper defense integration have been equally disappointing, with the torturous journey behind the creation of a European Military Headquarters being a case in point.[1] This aversion to deeper military integration among EU states has also negatively impacted efficient defense modernization and procurement. For example, whereas the United States operates only 27 major weapons systems, EU member states operate 154, suggesting that there is significant redundancy and waste in European defense procurement.[2] According to the European Commission’s 2016 European Defence Action Plan, “Around 80% of defence procurement is run on a purely national basis, leading to a costly duplication of military capabilities. The lack of cooperation between Member States in the field of defence and security is estimated to cost annually between EUR 25 billion and EUR 100 billion.”[3] As German Foreign Minister Sigmar Gabriel recently lamented, the EU spends 50% of what the U.S. does on defense and is only 15% as efficient.[4]

Yet, despite the clear gains possible from closer collaboration around defense R&D and procurement, major EU member states have, until recently, been reticent to more closely integrate their acquisition programs. In 2008, for example, only 11 of Europe’s 41 defense acquisition programs were collaborative.[5] And, paradoxically, the tighter budget environment of the following years saw no new collaborative projects. Instead, countries chose to forgo cutting-edge technology for dated, “off the shelf” designs that were cheaper but also represented little improvement in quality.[6] The central problem during these years was a protectionist fear that prioritized domestic defense industries over efficiency and EU-wide defense capabilities. Bastian Giegerich and Alexander Nicoll describe the situation:

Countries had found it difficult to agree on precise requirements…This, as well as cumbersome national funding processes, resulted in delays, withdrawals and programme cancellations. There was a tendency, in spite of the collaborative nature of projects, to produce what were in fact national versions of the equipment in question, considerably reducing the economies of scale that could be achieved. The principle of juste retour (fair return) also limited cost-effectiveness because it meant that work had to be allotted to each country’s industry based on the proportion of the production that its government planned to buy, rather than on the efficiency of particular companies.[7]

However, the recent commitment to pursue greater collaboration on research and procurement via PESCO suggests that progress in the domain of European defense cooperation might finally be at hand.

PESCO’s Path to the Present

PESCO’s origins can be traced back to the early 2000s, as the initial concept was devised by the European Commission’s 2002 defense working group led by Michel Barnier. Barnier and his team recommended a flexible approach that allowed member states to opt in based on their capabilities and political preferences. In other words, they advocated a kind of “defense Eurozone.” The working group also suggested that a European Armaments and Strategic Research Agency be created to better focus and coordinate defense research among EU member states.[8] These recommendations were incorporated into the 2003 Draft Constitution, and they eventually led to the creation of the European Defense Agency (EDA) and the introduction of language calling for “structured cooperation” on defense. While this created a clearer conceptualization of how European defense cooperation should occur, early policy discussions ignored several important questions. There was never any specification of the minimal capability threshold or the details of cost-sharing, for example, even as there existed a belief that participation should be limited to “higher capability states.” The language of the 2004 Constitutional Treaty rectified some of these issues by specifying certain prerequisites for participation – fulfilling operational requirements, investing in defense equipment, and collaborating on programs through the EDA – but most of these requirements remained unquantified.[9]

The 2009 Lisbon Treaty codified many of these objectives, but there was still very little progress due to European states’ preoccupation with the European sovereign debt crisis and preference for bilateral defense cooperation over multilateral PESCO initiatives. Moreover, the underspecified requirements for participation led to conflict among member states – particularly France and Germany – who had different visions and priorities. Germany sought to create a more inclusive framework in an effort to strengthen solidarity and cooperation throughout the EU. France, by contrast, favored a far more exclusive grouping, permitting only the most capable and committed member states to participate. To put it another way, Germany favored using PESCO as a political initiative to shore up solidarity among EU member states while France viewed it as a strategic initiative to meaningfully enhance member states’ military capabilities. This impasse persisted despite proliferating strategic challenges such as Russian revanchism and aggression in Ukraine, the increasing threat posed by Islamic terrorist groups, and uncertainty over the United States’ strategic priorities. However, more recent shocks including Brexit and the election of Donald Trump, coupled with the election of the vociferously pro-EU Emmanuel Macron to the French presidency, seem to have created a greater impetus for reform.

This newfound momentum began largely as rhetorical support from major European leaders such as François Hollande, Angela Merkel, and Matteo Renzi with calls for greater defense cooperation. Immediately after the Brexit referendum, for example, the three leaders issued a statement in which they pledged to increase European defense capabilities by focusing on industry and the ability of European powers to conduct joint operations.[10] Then, Germany and France issued a joint paper in September 2016 that declared their governments’ support for an inclusive PESCO based on clear guidelines and benchmarks. This ultimately led to the European Council agreeing to establish an inclusive PESCO seeking to develop capabilities for the most demanding missions. The Council also called on member states to compile a list of specifications and commitments within a three-month window.[11] In November of 2017, most of the EU member states signed on to the proposal, with Ireland and Portugal formally joining the defense pact on December 7, 2017. Currently, only Malta, Denmark, and the United Kingdom have refused to join PESCO, suggesting that the agreement enjoys broad support and, therefore, has the potential to significantly shape European defense efforts over the coming years.[12]

PESCO’s Provisions

Given how contentious previous efforts at deeper European defense cooperation have been, there was, unsurprisingly, continued skepticism that negotiations would yield much of value. However, negotiators were able to strike an agreement that largely succeeds in bridging the gap between the French and German perspectives. This was achieved by designing PESCO as a tool for enabling long-term progress in European defense: Participation is open to every EU member state, but there is an expectation that all states will continue to work toward the more ambitious targets favored by the French. This compromise was created to allay fears of an avant-garde group of elite military powers leaving other EU countries behind while, at the same time, encouraging countries throughout the continent to eventually spend 2% of GDP on defense and direct at least 20% of defense funding on modernization and R&D programs.[13] Beyond encouraging greater national contributions to European defense, PESCO hopes to improve interoperability, streamline procurement to minimize waste and redundancy, and increase the competitiveness of the European defense industry.[14]

In terms of governance, PESCO utilizes a two-layer structure. The individual projects conducted through PESCO will be managed and directed by participating member states. This more decentralized approach ensures flexibility and a high degree of autonomy among participating states. However, the process will be overseen by the European Council, which will monitor the overall direction of PESCO and ensure that participating member states are fulfilling their commitments.[15] Beyond evaluating the success of participating states’ acquisition projects, the Council will also evaluate contributions to operational goals, including the availability of forces for use in an EU Battlegroup, support for CSDP operations, and participation in formations such as EUROCORPS or EUROGENDFOR.[16] PESCO will also benefit from other European defense institutions including the EDA and European External Action Service, which will likely assist in shaping capability acquisition and operational coordination respectively.

Importantly, while PESCO’s ultimate aim is to improve interoperability among EU states operationally and reduce waste in procurement efforts, none of the capabilities developed through PESCO will be exclusively designated for EU-related activities. Any new technologies or capabilities developed through PESCO will, therefore, be available for use not only in an EU Battlegroup but also in NATO operations or independent military action by the countries that funded and developed them. This is advantageous in that it mitigates fears among countries like Poland that EU defense integration projects might encroach on their sovereignty or undermine NATO cohesion. It also helps reassure defense ministries afraid of losing control over their militaries. In other words, PESCO offers to boost aggregate European defense capabilities and improve the ability of EU member states to cooperate on joint military operations without threatening the sovereignty of participating countries. Already, initial projects have been agreed upon, with Germany working to establish a European Medical Command and the announcement of 17 new project proposals by the EDA.[17]

Keeping PESCO Productive

Despite PESCO’s promising start, it remains to be seen whether PESCO will contribute meaningful improvements to European defense or simply add yet another layer of bureaucracy that contributes little to EU capabilities. Therefore, it is important that policymakers remain active in supporting and refining PESCO activities.

Importantly, the European Commission must be diligent in calling out states that fail to meet requirements and commitments. To date, the EU has done little to police member states’ defense activities. For example, the EU published a directive in 2009 requiring member states to make defense tenders and contracts publicly available in an effort to increase transparency and decrease the influence of protectionist tendencies in procurement decisions. However, this has been largely ignored by member states, who only published information on low-end procurement and repair and maintenance expenses. Instead of taking legal action, the EU has responded by merely sending a letter to non-compliant states as a “reminder” of their obligations, an action that unsurprisingly has done little to increase compliance.[18] If PESCO is to be effective, the European Commission must be willing to enforce standards. Otherwise, French fears that PESCO will turn into little more than a symbolic effort might become reality. One reform that could improve enforcement would be to make it easier for the Commission to expel non-compliant states. Currently, a qualified majority is required to remove a state from PESCO.[19] Requiring only a simple majority would make it easier to enforce compliance, incentivizing states to uphold their commitments.

Beyond ensuring that states comply with PESCO requirements, the European Commission should also seek to influence the kinds of research and procurement undertaken through PESCO. Of course, many of the specific decisions within PESCO are determined by member states, but certain strategies could be used to encourage decisions that benefit the entire EU. Specifically, it should be mandatory that all countries in PESCO participate in the EDA’s Coordinated Annual Review on Defence (CARD) program. This voluntary initiative is designed to facilitate the alignment of defense plans and capabilities by identifying shared needs, and forcing participation in this program would help “Europeanize” PESCO procurement objectives.

The Commission should also further leverage the recently established European Defense Fund (EDF) to incentivize collaborative projects. Currently, the Commission has pledged to increase contributions for jointly-developed capability projects by 20%, and it has offered to contribute a further 10% if these projects are conducted through PESCO.[20] This is a good start, but it could be further improved by, for example, basing more generous contributions on projects’ relevance to CARD findings or the number of participating countries. This would further incentivize joint-technology development among many countries, helping to reduce capability duplication and create a more integrated European defense environment.

In order to allay fears among NATO policymakers that PESCO will serve to supplant the role of the transatlantic alliance in European defense, coordination between the EU and NATO is vital. One area of cooperation that should be explored is the linking of PESCO to NATO’s Framework Nation Concept (FNC). The FNC seeks to promote greater specialization among European NATO members by coordinating which countries specialize in which capabilities. While this initiative has been somewhat controversial given European countries’ fears of losing their strategic autonomy, the reality is that most of these countries already need the support of military partners to execute complex military operations.[21] By formally linking PESCO to the FNC through consultative processes, the EU could contribute to NATO capabilities while also establishing an effective pan-European defense community.[22] This initiative would also have the salutary effect of offering a visible European commitment to the strengthening of NATO forces and operational readiness, potentially ameliorating American concerns and placating U.S. President Donald Trump, a frequent critic of European NATO states’ militaries.

Finally, the UK should be offered all the same opportunities for participation as EU member states. PESCO already permits participation from non-EU states if they offer “substantial added value,” but it severely constrains these states’ ability to choose projects and receive EU funding. While Brussels’ desire to impose severe costs on Britain for leaving the European Union is compelling in most cases, it is less persuasive with regard to defense. Britain is one of the few countries in Europe to actually spend 2% of GDP on defense, and it has one of the largest European defense budgets in absolute terms.[23] Britain also maintains an impressive, if deteriorating, array of capabilities and has the largest number of deployable troops of any country in Europe. It is also a NATO member with strong bilateral defense relationships with EU member states like France. Finally, the UK has a well-developed defense industrial base that would be able to meaningfully contribute to the development of new European capabilities. Therefore, PESCO membership, and all the benefits and advantages that accompany it, should be offered to the UK irrespective of the ultimate direction of Brexit.[24]

Conclusion

To paraphrase Jean-Claude Juncker, the sleeping beauty of the Lisbon Treaty is finally stirring.[25] After years of little progress and largely symbolic actions, the possibility of substantial progress on European defense collaboration is once more present. Past failures suggest that PESCO should be viewed with skepticism. However, the combination of growing challenges and renewed impetus for reform might just be enough to generate a serious transformation in European defense. By ensuring diligence among participating member states, leveraging pre-existing defense institutions like the EDA and EDF, and remaining open to collaboration with the UK, Europe could finally begin to develop military capabilities commensurate with its economic and political heft.

__________________________

Notes:

[1] Luis Simón, “Neorealism, Security Cooperation, and Europe’s Relative Gains Dilemma,” Security Studies 26, no. 2 (2017), 201-210.

[2] Elisabeth Braw, “NATO’s Enormous Arms Clutter,” Foreign Affairs, March 1, 2017.

[3] “European Defence Action Plan: Towards a European Defence Fund,” European Commission, November 30, 2016.

[4] “Can PESCO Provide a New European Identity?” Deutsche Welle, 11-13-17. http://www.dw.com/en/can-pesco-provide-a-new-european-identity/a-41362789.

[5] Bastian Giegerich and Alexander Nicoll, “The Struggle for Value in European Defence,” Survival 54, no. 1 (2012), 69.

[6] Ibid., 70.

[7] Ibid., 68-69.

[8] Daniel Fiott, Antonio Missiroli, and Thierry Tardy, “Permanent Structured Cooperation: What’s in a name?” in Chaillot Papers no. 142 (November 2017), 16.

[9] Ibid., 17.

[10] François Hollande, Angela Merkel, and Matteo Renzi, “Europa, ‘non si perda tempo,
ora si volta pagina’ Dichiarazione congiunta di Renzi, Merkel e Hollande, Partito Democratico, June 27, 2016. https://www.partitodemocratico.it/esteri/non-si-perda-tempo-ora-si-volta-paginadichiarazione-comune-renzi-merkel-hollande/.

[11] Nicole Koenig and Maire Walter-Franke, “France and Germany: Spearheading a European Security and Defence Union?” in Jacques Delors Institut Berlin Policy Paper no. 202 (July 2017), 12.

[12] “Twenty-five EU states sign PESCO defense pact,” Deutsche Welle, December 11, 2017. http://www.dw.com/en/twenty-five-eu-states-sign-pesco-defense-pact/a-41741828.

[13] Sophia Besch, “PESCO: Paper tiger, paper tanks?” Centre for European Reform Bulletin no. 117 (December 2017), 1.

[14] “Permanent Structured Cooperation (PESCO) – Factsheet,” European External Action Service, November 16, 2017. https://eeas.europa.eu/headquarters/headQuarters-homepage/34226/permanent-structured-cooperation-pesco-factsheet_en.

[15] PESCO Factsheet.

[16] Fiott, Missiroli, and Tardy, 32.

[17] Jacopo Barigazzi, “EU unveils military pact projects,” Politico, December 11, 2017. https://www.politico.eu/article/macron-eu-to-unveil-military-pact-projects/.

[18] Sophia Besch, “Security of supply in EU defence: Friends in need?” Centre for European Reform, August 17, 2016. http://www.cer.eu/sites/default/files/insight_sb_17.8.16.pdf.

[19] Besch, “PESCO: Paper tiger, paper tanks?”, 1.

[20] Fiott, Missiroli, and Tardy, 47.

[21] Claudia Major and Christian Mölling, “The Framework Nations Concept,” German Institute for International and Security Affairs, December 2014, 2-3. https://www.swp-berlin.org/en/publication/the-framework-nations-concept/.

[22] Niklas Helwig, “New Tasks for EU-NATO Cooperation,” German Institute for International and Security Affairs, January 2018, 4. https://www.swp-berlin.org/en/publication/new-tasks-for-eu-nato-cooperation/.

[23] Data is from the Stockholm International Peace Research Institute (SIPRI), “Military Expenditure Database” (Stockholm: SIPRI, 2016). http://www.sipri.org/research/armaments/milex.

[24] Sophia Besch, “Playing defence,” Centre for European Reform Bulletin no. 113 (April/May 2017).

[25] “European Commission welcomes first operational steps towards a European Defence Union,” European Commission, December 11, 2017. http://europa.eu/rapid/press-release_IP-17-5205_en.htm.

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