Defence procurement: Seven European countries sign contract for the A400M military transport aircraft, May 2003

After years of delay, seven European countries signed a €20 billion contract to develop and produce a new military transport aircraft, known as the A400M, on 27 May 2003, launching one of Europe's most ambitious military projects.

The deal, signed by OCCAR - the European arms procurement agency - on behalf of Belgium, France, Germany, Spain, Turkey, and United Kingdom, will enable Europe to deploy its own troops and heavy equipment quickly to conflict zones around the world, rather than relying on American military capabilities. The lack of European capabilities in military transport has been exposed repeatedly since the first Gulf War in 1991 and more recently in the Kosovo conflict and operations in Afghanistan. The development of the A400M is seen as one way of filling the capabilities gap and it will play an important role in the EU's new, 60,000 strong rapid reaction force, which is seen as the cornerstone of EU attempts to build a common defence policy.

The deal had been delayed several times because of wrangling over the funding of the project and both Italy and Portugal pulled out of the programme. The final breakthrough came earlier in May when the German government approved the necessary funds for the project.

Coming at a time when some European governments have been criticised for making large cuts in their defence spending, the seven-nation project is expected to highlight the benefits of defence collaboration, giving more impetus to similar projects in the future. The role of OCCAR, established in 1996 by France, Germany, Italy and the United Kingdom with the aim of harmonising national defence requirements and thereby making better use of defence budgets, may also be strengthened.

Europe's defence industry, which faces stiff competition from its US counterparts, will also benefit since the company contracted to develop and produce the aircraft, Airbus Military, is Europe- based. The Franco-German company (EADS), which has an 80% stake in Airbus, said that the contract would double the value of its defence orders whilst creating about 40,000 jobs. The UK company, BAE Systems, holds the remaining 20% in Airbus.

The United States have been particularly critical about the project, partly because they have sought to promote their own military aircraft and partly because they believe Europe's defence budgets would be better spent elsewhere. They are also concerned that it will be several years before the A400M is operational and therefore able to plug Europe's military airlift capabilities gap.

The first aircraft are due to be delivered to France and Turkey in 2009, followed by the UK and Germany in 2010. 180 aircraft have been ordered thus far: Germany with 60, France 50, Spain 27, the UK 25, Turkey 10, Belgium seven and Luxembourg one. EADS is also confident of securing more orders in the future with Norway, Sweden, Australia and Canada amongst its prospective customers.

Links:
OCCAR:
	Homepage
	27.05.03:	Press Release: Signature of the A400M contract
	A400M Programme
European Sources Online: Financial Times:
	27.05.03:	Military airbus deal ends years of wrangling
	28.05.03:	EADS defence contracts boost orders to 40 billion euros
BBC News Online:
	27.05.03:	Airbus clinches aircraft deal
Airbus Military:
	Homepage
	A400M Programme: Seven-nation commitment
European Aeronautic Defence and Space Company:
	Homepage
	27.05.03:	EADS launches A400M programme
	Military transport aircraft: A400M

Helen Bower

Compiled: Wednesday, 28 May 2003

Seven European countries signed a contract on 27 May 2003 to develop and produce a new military transport aircraft, known as the A400M.