Call for defence shake-up

Date: 21/01/1999

By Rory Watson

MEPS will stress the need for Europe's fragmented armaments industry to restructure itself when they examine a report on the Union's future defence capabilities next week.

With the German EU presidency committed to pushing ahead with efforts to build a European defence identity, there is a growing recognition that this must be matched by the creation of a European arms policy with a competitive technological and industrial base.

“There is great political impetus behind this and things are moving very fast. It is clear a European defence identity needs a European defence industry. Unless we change, we cannot compete or cooperate with the United States,” said UK Socialist MEP Gary Titley, whose report on defence-related industries will be examined by the European Parliament at its plenary session in Brussels next week.

Political impetus is also coming from the pressure to strengthen Europe's identity within the NATO military alliance.

The handicaps which European firms face when competing against their US counterparts are summed up in a few telling statistics. The combined defence budget of EU member states is €94.5 billion and there are 43 defence-related companies. The US spends more than double that amount, €212 billion, and the sector is concentrated in just 14 companies.

At the same time, Europe is buying an increasing amount of defence equipment from the US. In 1985, the EU's imports of military goods manufactured in America were valued at four times its exports of similar products to the US. This had risen to five times higher by 1990 and to six by 1995.

As part of the strategy to develop a European arms policy, MEPs are expected to support Titley's call for the single market to be extended to defence equipment.

MEPs will also press for better coordination of the various arms cooperation bodies and common arms programmes which are now appearing in Europe and will request that the EU be given observer status on them.

Titley believes that the joint organisation for armaments cooperation which Germany, France, Italy and the UK established in 1996 - which is able to draw up contracts directly with the industry - could eventually form the basis of the European arms agency referred to in the Maastricht Treaty.

During next week's debate, the Parliament is likely to make a late attempt to reprieve the KONVER programme, which is due to be phased out at the end of the year. One of the special schemes financed from the EU's regional fund, it has helped the defence industry restructure by encouraging firms working on redundant military projects to diversify.

The debate follows a week in which British Aerospace confirmed it was in “advanced discussions” over the €6-billion purchase of GEC's Marconi defence-electronics unit. Marconi has been in the sights of BAe and French company Thomson-CSF for weeks.