Joint Declaration of BAE Systems, EADS and Thales: Time to act!
Amsterdam/London/Paris, 28 April 2003
The 911 events, followed by the intervention in Afghanistan and recently in Iraq have demonstrated the need for Europe to enhance its defence. The industry is capable and ready to bring its experience to achieve that goal.
Governments and citizens in Europe are more and more aware of the new challenge to ensure, collectively, the Defence and Security of our continent, and to contribute appropriately to the security of the world with the United States and other nations. This ambition requires that our forces dispose of far stronger and consistent capacities, facing the new threats of today and tomorrow, supplied and supported by an efficient and sustainable industry.
In the recent years, European industry has undergone substantial restructuring with the creation of BAE Systems, EADS, and Thales as major defence players with increasingly global perspectives and offerings. The driving force behind the creation of these firms has been the need to consolidate resources, reap large economies of scale and ultimately provide integrated prime contracting capabilities; major steps have been taken, but room still exist for additional restructuring in the land and naval platform supply domains. Yet, matching institutional progress in Europe on defence and security policy has remained slow. Even if six EU countries (France, Germany, the UK, Italy, Spain, and Sweden) have already recognised the logic of harmonising some defence market rules and policies with the Letter of Intent (LoI) and four EU countries have transferred to OCCAR (Organisation Conjointe de Coopération en matière d'Armement) the management of a large number of collaborative programmes, we need to go way beyond this. These achievements do not totally match the objectives set five years ago at the occasion of a Franco-British initiative in Saint-Malo.
Thankfully, positive signs can now be spotted on the horizon. First of all, from recent military and peacekeeping operations, such as Kosovo and Afghanistan, Member States have recognised that Europe is lacking a significant number of key capabilities. Second, the European Capability Action Plan (ECAP) aimed at addressing these inadequacies has now entered its second phase with project groups focusing on enhanced capabilities and centres of excellence in areas such as: CSAR (Combat Search and Rescue), UAVs (Unmanned Aerial Vehicles) / UCAVs (Unmanned Combat Aerial Vehicles), air-to-air refuelling, operational headquarters and protection against nuclear, bacteriological, and chemical threats. Further initiatives could also be considered to improve efficiency and interoperability of Air Combat, naval and land forces, within European Nations and with the US, which are more and more demanding. Common initiatives to strengthen European capabilities in terms of strategic and tactical observation, analysis and data-fusion, which are critical capacities for Governments to manage crisis or war scenarios, is another possibility to keep and enhance the momentum already initiated. In parallel, Member States are pursuing a somewhat similar initiative in the NATO framework, through the so-called Prague Capabilities Commitment (PCC).
In both processes, the nations involved are committing themselves to establishing as common as possible operational requirements with compatible timeframes, and are looking at implementing affordable and innovative ways of procurement, such as through common programmes, pooling, role sharing, leasing or Private Finance Initiative (PFI) solutions.
It is essential to turn these processes into concrete realities. Beefing up these initiatives with corresponding budgets to fill the shortfalls is more than ever needed. For many years, defence investment in Europe has been significantly smaller than in the USA : €40B in Europe compared to $100B in the USA. Additionally, the European investment is made though different authorities, therefore scattering European efforts; initiatives have been taken to develop multi-country cooperative programmes, generally successfully; but time is coming for more co-ordinated initiatives, aligning defence investment spending in the appropriate proportion (UK and France being the appropriate model) and assuming consistent planning and specifications of future commonly decided capacities. Having in mind the long trend of research and technology effort in Defence and Security, it is imperative to gather and strengthen the European effort in this domain. Recent bilateral declarations by the French, German and British governments and the recommendations of the Convention Defence Working Group are all converging in addressing the need to create a European Armaments and Strategic Research Agency, which would build on existing structures focused on joint R&T, development and acquisition. The creation of such an Agency, led by those nations that really want to make progress here and now, would take on massive strategic importance for the future of the European defence industry, as it would provide the most integrated platform so far for initiating and developing large scale defence and security programmes across Europe on the most cohesive and cost-effective basis: a win-win solution for all parties.
The emphasis on research is extremely important. The present success of the defence industries has a large extent been founded on investment in research and technology in past years. The long-term health of the European defence industry depends critically on these investments being increased. Moreover, research is all the more important as the defence industry - increasingly a high-technology industry - enters a transformation period where greater emphasis is put on networked capability, using information superiority linked to precision attack systems. It is sobering to recognise the sheer extent or the transatlantic budgetary gap in this respect whereby overall defence R&T funding in the US exceeds that in Europe by a multiple of 8, while in the field of space military research, we are faced with a shortfall to the US by a factor of 15. Capacities of European Nations to conduct joint operations with the United States are therefore at stake. We need to address more quickly the resource and capability gap existing between both sides of the Atlantic in order to be seen as a credible player on the international stage and a reliable partner of the United States. At time of procurement, the protection of the European defence technological and industrial base should be as explicit a selection criteria as it is the case in the US with their own industry.
Backed up by consistent budgets, substantive European programmes, strong political vision and firm commitments, Europe can preserve a guaranteed security of supply for defence goods and services. This is the only way to ensure the autonomous security and defence policy that Europe requires and deserves considering its political and economical weight. This will also pave the way for a sound transatlantic dialogue between partners on a level playing field. Our Companies have numerous experiences of partnerships with their US counterparts; we are not afraid by any differentiation in terms of technical or industrial skills, but we need the determined support of our European governments to anticipate and fund the development of future capacities, for the sake of harmonious, cooperative transatlantic relations in Defence and Security.
Ultimately, the inherent capability of European technology and know-how is not in question, nor are the Continent's industrial structures. What has been lacking until now is the commitment to come up with results. Quite simply, now is the time to act enhancing our budgetary efforts, harmonising our requirements and integrating our operational forces.
Amsterdam, London, Paris, 28. April 2003
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Mike Turner
BAE Systems
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Rainer Hertrich
EADS
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Philippe Camus
EADS
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Denis Ranque
Thales
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