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25 iulie 2019 - Special reports - NATO - UE

The European defence package, caught between Washington’s pressures and EU’s internal issues

Niculae Iancu | Gheorghe Tibil

After many decades of receiving hopes from Washington to strengthen Europeans’ defence profile, the promotion of the joint defence package, advanced in the last three years by Juncker’s Commission, triggered White House Administration’s critical reactions. Concern are starting to emerge from Brussels’ alleged defence isolation policy, materialized in financing new weapons systems’ research and development through the restrictive participation of only one EU member state, under the aegis of the European Defense Fund - EDF and Permanent Structured Cooperation - PESCO.

Washington’s increasing complaints

At the beginning of last year, US Ambassador to NATO, Kay Bailey Hutchison, said that "Washington does not want PESCO or EDF to be an EU protectionist vehicle." Also, Katie Wheelbarger, Defence Secretary Jim Mattis's international businesses security adviser, said that "we will support European defense initiatives as long as they will be complementary to NATO" and that "we do not want to see that EU efforts are removing military requirements or  [European] military forces from NATO.” Within last year's Munich Security Conference, NATO Secretary General, Jens Stoltenberg, said "new EU initiatives must avoid duplication with NATO." These "must not be an alternative to NATO," but " strengthen the European pillar of NATO", although "there is some doubt" in this respect.

Most likely it was not the idea of ​​a better integration of the European Union in terms of security and defence which disturbed US elites, but the amount of budgets expected to finance future EDF projects. As we have already mentioned in our analysis on European defense, EU is considering investments of 13 billion euro for the development of new military capabilities in the 2021-2027 European financial exercise. This amount will add to those EUR 590 million allocated over the last three years in the concept validation phase and it is only the funding component of common funds from a total budget of 5.5 billion euro annually, as estimated by the Commission. Moreover, if the initiative proves its viability, far greater investment in the development of future European weapons systems could emerge after 2027.

 Even if in Pentagon’s perspective, such a budget may seem really modest compared to the over $ 700 billion that US’s Department of Defence receives annually, according to some reports, even nearly a thousand billion dollars for the next fiscal year, the pragmatism of Washington's current foreign policy, following by whoever wishes to benefit from US’s security umbrella, has to pay for it principle, increases President Donald Trump's confrontational behavior in almost every security issue on the international agenda.

This is how the European common defense looks like for now, yet more of a vision than a concrete result, apparently perceived by the Trump administration as a threat to NATO's solidity. European leaders, alerted by President Trump's overwhelming messages, over the past two years, on the EU's economic and security policies as a whole, but especially on major Western capitals’ decisions on sensitive topics such as Iran's nuclear agreement or free trade treaties, have showed a greater determination than ever in shaping Union’s autonomous strategic profile on the international scene. Furthermore, a strong argument for building a European defence union is also the strong need to combat Moscow's challenging behavior at Union’s eastern border, as well as Brussels's aspiration to defend European security interests where they do not match with US’s ones. Nevertheless, despite reasons’ logic motivation, the things that are grinding the Union from the inside, such as radical populism and nationalism’s increase and the rise of some illiberal movements, increased by the many economic and social problems, but also by the propaganda and increasing influence of hostile foreign forces, are producing significant effects, contrary to the European defense integration. Therefore, the current feeling is that the EU's Global Foreign and Security Policy is risks to get trapped between the pressure of the United States to maintain its important presence on the European armaments market and domestic separatist forces promoting national interests contradictory to the common European security interests.

Dear Federica, we hope we will not get coercive measures from Washington!

Earlier this month, US Ambassador to the European Union, Gordon Sondland, submitted to Federica Mogherini, European Union’s High Representative for Foreign Affairs and Security Policy, a letter signed by Ellen Lord, Undersecretary of Defense for Procurement and Maintenance, and Andrea Thompson, Undersecretary of State for Armaments Control and International Security, concerning Washington authorities' worriment about the draft regulations and Council's decision on the general conditions of EDF and PESCO, which would hamper US stakeholders’ participation. Letter’s firm tone urgently mentions a deadline for a favorable answer, otherwise the US party reserves the right to take "similar actions."

In Washington's view, US officials’ concerns would be justified by the possible resources scaling, which are, however, already insufficiently allocated by European allies to support a joint effort for providing a transatlantic security within NATO. At the same time, "independent EU defense initiatives" such as EDF and PESCO would depart from the commitments made by the Europeans in the NATO-EU cooperation declarations, from 2016 and 2018, and "could duplicate non-interoperable military systems, resources misappropriation, already so inappropriate for defence, and unnecessary competition between NATO and EU".

US Administration's discontent is related to the conditions considered to have too many restrictive participation conditions for projects developed under EDF and PESCOs’ aegis of "unrelated third countries", as they are referred to in Union's states outside the European Economic Area. In other words, the big US arms manufacturers want to raise funds from EU’s budget for the development of future European defense technology and products and threatens with "retaliation measures" unless the elimination of  their access restrictions, which they consider "poison pills" ".

Letter’s content is full of technical data, with concrete examples of articles and paragraphs of European regulations that should be amended in order to allow "old transatlantic partners" join them. Washington considers them unacceptable for US companies interested in establishing permanent representations within the European Union and, in particular, Union's exclusive intellectual property right over the EDF projects’ results. This latter’s relevance aspect must also be seen given Trump administration’s extremely active policies to protect the intellectual property of American entities, which have led, for example, to what the international press calls "the new cold war between US and China" or "American-Chinese economic war". Supporting these demands call on the dangers of damaging the "European and North American joint industrial base’s robustness" and of "European technological competitiveness" in defence.

As for PESCO, the US government calls for the abolition of all Member States’ obligation agreement for an unrelated third country’s participation. The obstacle seems insurmountable as long as it touches the very essence of Union's principles, which would hardly be waived, especially on such a delicate issue for major European arms manufacturers, such as facilitating access to US competing firms to European projects.

Finally, Washington administration's request concludes by saying that the EDF and PESCO regulations "are a dramatic rebound after three decades of integration of the transatlantic defense sector." Continuing the cooperation between the EU and "old NATO allies that are not members of the EU is vital". Moreover, "discouraging third countries’ participation to reduce their dependence on non-EU sources will only lead to the scattering the already small resources and limiting interoperability, precisely those dangers the EU would want to avoid."

The European answer, between assuming autonomy and the realism need

In the answer from European officials, Brussels rejects the requests made by US’s authorities, adding that the EU "remains fully committed to working with the US as a key partner in security and defense issues." European officials are assuming that Washington is misunderstanding their plans, insisting that they are developing a close co-operation with NATO, to ensure that European projects are in line with Alliance’s priorities.

American letter’s tone and content has raised a sensible state of irritation in Brussels, referring both to how Washington's "requests" were formulated, and to the general attitude of Trump’s administration towards developments in Union’s defence field and the Union in general. Consequently, the letter is not signed by Mogherini, but by Deputy Secretary-General of EU External Action Service, Pedro Serrano, and by Timo Pesonen, Director-General for Internal Market and Industry of the European Commission.

The four-page missive states that the EU wants to “clear up misunderstandings”, and stresses that “both, EDF and PESCO are not meant to compete with NATO, as feared by the US side” but are rather aimed at strengthening EU member states investments in the bloc’s common defence, and enable them to “fulfill their obligations to NATO.” It is argued that European defense investment result, the so-called future military capabilities, will not be held by the Union, but by the respective Member States, with the possibility of using it both in the EU context and as an ally. Furthermore, European Capability Development Plan (CDP) priorities to be funded through EDF or developed through cooperation between Member States under the aegis of PESCO, are following NATO’s Defense Planning Process, with the clear objective of avoiding duplication and complementarity and interoperability with the North Atlantic Alliance.

Other Brussels response  insist on the much more open nature of European defense equipment’s market, compared to US's more protectionist approach, resulting in a significant disequilibrium of the balance, disfavoring the Europeans. To that end, Mogherini pointed out that "the Union is and will remain open to American companies producing military technique and equipment." She insisted that there is no "Buy European Act" in EU, and recalled that "about 81% of the European Union's international arms contracts today go to US companies." Federica Mogherini's statement refers to the "Buy American Act," which since 1933 has forced the US government to favor US military technology companies when purchasing military equipment. As result, in 2016, the total US military technology imports from EU Member States accounted for less than 2% of the US defense budget, while acquisitions of US origin accounted for 10% of the combined military budget of EU Member States.

Although drafted in a diplomatic and relatively more reluctant language than the American letter, EU’s response does not have any significant concessions for Washington on either of the two directions, PESCO and EDF. This can be seen as a hint that EU will upkeep serious restrictions on third-countries access to PESCO and the involvement of these countries’ companies in consortia constituting EDF's development projects.   

This trend has been clear in recent months, in Union's rather difficult steps to define and tighten rules for non-EU countries such as the US, Norway or the post-Brexit UK to be able to join future defense projects EU. Accordingly with EDF’s’ regulation, deeply negotiated in previous months, foreign investors’ defense companies, based in the EU, may join the fund, only if they are not owned by an entity "posing a threat to EU security." It is also possible for entities from third countries, for example, from the United States, to benefit from funds, only if they participate in consortia with EU actors and meet the criteria for protecting EU’s security interests, supply chain’s security and the maintenance of intellectual property rights in the Union.

What can we expect?

The official letters exchange between the two sides of the Atlantic on defense initiatives sensitive issues on the EU agenda does not look well for the transatlantic relations, NATO's credibility and, in particular, Eastern flank states seen as the "new Europe". Since taking office, President Trump has repeatedly launched attacks on European allies, calling for increased defense spending to ensure a fair responsibility distribution for their own security. Many analyzes made by major strategic think-tanks point out the danger that could emerge in the absence of a greater responsibility for European funding in joint defense, as the United States could withdraw its unconditional support for European security or even take into account the withdrawal from. Although such scenarios have so far been more speculative than US policy-specific landmarks, the premiere allocation by Brussels of significant EU funding for European military capabilities research and development, along with PESCO’s operationalization, appears to complicate transatlantic relations a lot.

It is not the first time Washington reacts like that in terms of censoring EU’s action in ​​security and defence fields. The conditions set out in Washington, two decades ago, for the development of PESA, as outlined by Secretary of State, Madeleine Albright, synthesized in 3D, can be mentioned: "PESA cannot diminish NATO's role, nor duplicate NATO capabilities or discriminate NATO members that do not belong to EU.” But this time, developments towards EU's strategic autonomy in defence are in a much more advanced stage. In addition, Brexit pulls out of the game the British censorship. Hence the firmness of the message across the ocean.

At the same time, we can hardly imagine that EU’s main state actors would abandon the conditions for restricting third-party access to the "crown pearls" of the current community defence package - PESCO and EDF. EDF’s central objectives are precisely the increasing competitiveness of the European defense industry in the increasingly global fierce competition and the contribution to achieving the strategic autonomy of EU. Full open access by third parties to the fund would be contrary to both objectives, without considering the impossibility of justifying, before the European taxpayer, the financing of large non-EU companies in the EU budget.

As an immediate effect, we expect some increasing pressure from Brussels's on states circumspect on EU’s defense developments to support these initiatives. If some support for US's objections to the potential participation of third States in PESCO can be justified and supported in order to maintain this possibility, the modification of EDF’s Regulation to completely eliminate restrictions on the participation of non-EU actors in future consortia is quite hard to imagine.

The transition to the maturity stage of the new European common defense instruments will be carried out under the auspices of the forthcoming European Commission, which will be formed after the European Parliamentary elections, at the end of this week. The increasing Euroscepticism waves and the many internal problems that the Union faces seem to pass the foreign policy and security issues to the next level. However, Paris and Berlin’s determination to give a new impetus to the idea of ​​a union of defense, including the launch of the new European army idea in the public space, can ensure the continuation of the consolidation of European security’s common space. However, Washington's recent response confirms, once again, the need for a better communication in terms of EU's strategic autonomy vision, not only of allies’ one, who there would be no credible European security without, but also of the European citizens, who must firstly understand, and then to support the major projects of Brussels’ elite.

Translated by Andreea Soare