CHRISTINA MACKENZIE / PARIS
As accusations of a siege mentality fly across the Atlantic, is there any way to transform the atmosphere of mutual distrust?
Tell a European in the defence or aerospace sector of the fears in the USA that a "Fortress Europe" has emerged and you are met with either incredulity or hints that one is in need of a long holiday.
The notion of a "Fortress Europe", a "one-way street" or a "shaky transatlantic bridge", all describing the same phenomenon, is not just centred on defence trade, it is about a much more fundamental issue - Europe's role in global affairs and the growing view among Europe's leaders that it must now take up the mantle of second superpower to maintain some kind of global balance against an increasingly unilateralist USA.
"I totally reject the notion of a Fortress Europe, as do 90% of people in Europe," says Jean-Marc Thomas, chief technical officer and senior vice-president of EADS. "This view of a Fortress Europe is the world turned upside down, and is the result of strong lobbying in the USA - a clever way of increasing their protectionism," he says, adding: "The USA is the real fortress and when things don't go their way, they change the rules."
This view is echoed by Chris Patten, the EU's external affairs commissioner. Speaking to French daily Le Monde, he noted the USA's "refusal to take part in the International Criminal Court, refusal of treaties and agreements on anti-personnel mines, the control of the small-calibre weapons trade, the control of biological arms, [and] the Kyoto protocol on the environment," and cited recent US-imposed steel quotas.
Patten added that if a multilateralist approach to global affairs is to prevail, then Europe must fill the gap between what it says and what it does, and must make its weight felt more openly in its relations with the USA. "If you look at what we spend on defence, it's not great, except for France and Great Britain. We must obviously do more."
The problem, as Thomas sees it, is that the USA "is one country, one organisation, while we in the European Union are 15 nations. Granted we have managed to set up the Common Agricultural Policy, the euro and the European Space Agency - but in the aerospace industry there is no particular harmonisation. There is the four-nation OCCAR procurement agency, the six-nation LoI [Letter of Intent], but these all have to follow the rule of the lowest common denominator," he says. OCCAR handles programmes such as the French/German Eurocopter Tiger and French/Italian/UK MBDA Aster, while the LoI - between France, Germany, Italy, Spain, Sweden and the UK - governs defence export controls.
Thomas says US companies take advantage of the fact that Europe is not a single entity but a collection of different national defence budgets and customers who do not always have the same agenda. He points out the USA has not tried to sell the Joint Strike Fighter to Europe as a bloc but country by country - first the UK, then the Netherlands, Norway and Italy - undermining Europe's efforts at developing its own fifth-generation combat aircraft.
EADS calculates European exports to the USA account for 1% of US defence procurement, while US exports to Europe account for 20%. "The USA calls this fair. Europeans call it unbalanced," Thomas says. And according to EADS documents it is not just a transatlantic imbalance, but a global one: US arms exports between 1995 and 1999 totalled $54 billion, against $15 billion for Russia, $12 billion for France, $8 billion for the UK and $6 billion for Germany.
"It is almost impossible to sell a weapons system to the USA if it is not American," Thomas says, adding that what BAE Systems has managed to achieve in terms of its North American presence "continental Europeans cannot" because language and history weigh heavy. "Even if we set up a joint venture, the US company has to own more than 50%, and so puts the European company in a position of dependency. Meanwhile, US companies can set up as a national company in Europe," Thomas adds, pointing out that World Trade Organisation rules only apply to the civilian sector. US aerospace giant Boeing has set up an R&D centre in Spain, for example, operating as a European company competing for European research funds.
The ratio between US and European defence spending was about 2:1 three years ago; it is now 3:1 and moving to 4:1. Or as one defence industry observer puts it: "The USA spends $1 billion a day on defence. This means that in 37 days they have spent Great Britain's annual military budget, in 25 days that of France." And yet these are among the European countries which spend the highest proportion of their gross domestic product on defence: 2.3% for the UK and 1.9% for France.
With this scenario, many in the defence sector are voicing fears the gap will grow not only in trade, but also in capacity. "The difference is increasing," Thomas warns, "making it very difficult for European companies to be competitive." Taking defence satellites as an example, he says: "In the past five to 10 years, Europe has launched one defence satellite against 20-25 for the USA. Scientific satellites fare no better, with one for Europe against three to five for the USA."
He says the only way Europe can begin to hold is own is by further rationalisation among aerospace and defence companies. "This will then rationalise our research and development spending." R&D spending is the cost of developing a product up to and including a prototype, while research and technology (R&T) spending is the cost of developing the technology alone, there is no product involved. In Europe R&T spending is about 10% of the R&D budget.
In March, 28 European countries sent parliamentarians to Madrid to attend a debate with chief executives and other senior officials from Europe's defence industries on ways to halt Europe's widening capacity gap with the USA, and to plead for more state funds for R&D.
Charles Edlestenne, chairman of Dassault Aviation, told them: "European industry spends twice as much as our US counterparts on self-financed R&D," while Philippe Camus, chairman of France's aerospace and defence industry association GIFAS, said: "Industry is aware of which areas need our attention, such as stealth and satellites. But there isn't the money. We can't do much more than we are already doing".
And Edlestenne said: "The major industrial groups cannot increase the percentage of budget spent on R&D because we are all quoted on the stock markets and our share-holders want high dividends." The only answer, he says, is "the state must raise its stake in R&D spending."
Hans Bühler, president of the Western European Union parliamentary assembly, said the USA spends $26,000 per soldier on R&D, while Europe spends only $4,000. "We must not allow this gap to get bigger," he said, and called on fellow parliamentarians "to strengthen our budgetary efforts".
Fernando Diez Moreno, Spain's secretary of state for defence, suggested R&D budgets in Europe need to be harmonised to avoid duplication, while Giorgio Zappa, president of Italy's Alenia Aeronautica, said that initiatives such as the European Technology Acquisition Programme "could represent a flexible and practical way - and a reference method - to go a step forward in the convergence of European technologies".
Manfred Bischoff, former president of DASA, said in an interview published by the French financial daily Les Echos in January last year that: "We do not want a Fortress Europe, but it is important to have European technology which matches that of the USA. Transatlantic mergers on a grand scale would be ideal because they would save a lot of money. Unfortunately, today, this is unthinkable. Americans do not have qualms about selling their defence materials to Europe, but refuse to allow our products access to their market, with a very few exceptions." Eighteen months on, things have not changed.
Even Norman Ray, president of Raytheon International Europe, says: "Europe needs to increase its investment levels in defence." And although nations "must be confident that their policies and practices for the sharing or transfer of technology or intellectual property protect national security interests", he says the USA should permit "more technology to be shared with friends and allies more easily".
Ray also calls on "governments on both sides of the Atlantic to think seriously about how they can create an environment, which fosters and rewards transatlantic mergers, acquisition, or ventures".
But for the time being, as Bischoff says: "[Americans] do not allow Europeans to have access to their technologies, which makes any technological and industrial cooperation on an equal basis impossible. This is why it is important to have strong co-operation in Europe. I do not think it is in the interest of the USA to do everything by itself in the medium and long term."
Thomas says a strong Europe is better for the USA than a weak one. "We must be clear, transparent and fair in order to be a strong partner for the USA, and it is in their interest to have a strong Europe rather than one made up of lots of small countries."
Source: Flight International
