July 11, 2013
It’s been two years since then defense secretary Robert Gates, noting that the US share of NATO defense spending had risen from 50 to 75 percent since the end of the Cold War, sent this blunt message to Europe: “(I)f current trends in the decline of European defense capabilities are not halted and reversed, future US political leaders…may not consider the return on America’s investment in NATO worth the cost.” Yet austerity continues to gnaw away at many European defense budgets.

The latest evidence came on June 26, when British defense minister Philip Hammond announced that, as part of the Treasury’s package of 11.5 billion pounds in spending cuts in the 2015-16 budget, his ministry would realize “efficiency savings” equivalent to about 1 billion pounds (1.49 billion dollars.) Those savings, he promised, would come from a combination of administrative and procurement reforms, and “will have no impact on military manpower or equipment.” Nonetheless, the United Kingdom, which already is implementing force and budget cuts under its 2010 Strategic Defence and Security Review, has now joined France in essentially freezing nominal defense spending over the next 2-3 years. Hence, real reductions will occur, due to inflation, in the two countries that together account for 41 percent of total defense expenditures by European allies.

Meanwhile, Italy, the Netherlands, and Spain are reportedly considering new cuts in their already low defense spending. And Poland may slow its planned modernization programs. European Union President Herman Von Rompuy has warned that, if current trends persist, by 2017 overall EU defense spending will have dropped by 12 percent since the start of the crisis in 2008—a figure equivalent to the combined Polish, Dutch, and Spanish military budgets.

So it’s encouraging that some European defense officials are paying attention to developments outside their normal comfort zone—specifically, the US-EU negotiations on the Transatlantic Trade and Investment Partnership (TTIP), which formally opened in Washington on July 8.

Here’s why.

According to a March 2013 report by the UK Centre for Economic Research, “an ambitious and comprehensive transatlantic trade and investment agreement could bring significant economic gains as a whole for the EU (119 billion Euros a year) and United States (95 billion Euros a year).” This means that if the 28 EU members simply were to keep their current average rate of defense spending—roughly 1.5 percent of GDP—the projected TTIP boost could produce an extra $2-2.5 billion annually, or $20-25 billion over a decade, for military capabilities. As the late Senator Everett Dirksen reputedly quipped: “A billion here, a billion there, pretty soon you’re talking about real money.”

True, any GDP and defense spending bumps would not be distributed equally across Europe. But assuming more resources were to become available in the countries most likely to use part of them for defense—the United Kingdom, France, Poland, and a few others—this would be a net plus for transatlantic burden sharing. Moreover, a TTIP that helps to ease the EU’s growth and unemployment problems will have long-term benefits for Europe’s important non-military contributions to regional and global security.

It’s premature, however, to uncork the champagne. European protectionist impulses are not limited to the “audiovisual services” (essentially films and television programming), which a French-led effort successfully excluded from the initial negotiating mandate for TTIP approved by EU member states on June 14. Indeed, French Foreign Trade Minister Nicole Bricq warned in April that “we and other (EU) member states are determined to keep everything to do with defense out of the (TTIP) negotiations.”

French President Francois Hollande was less explicit in a May 24 speech on his government’s recent White Book on Defense and National Security, noting that “our ambition is to promote European champions for a European defense industrial base,” or EDIB. But the White Book, itself, suggests that additional “tools” may be necessary to “reinforce the protection of sensitive European activities (bearing upon) defense and security.” A senior French national security official recently suggested a “buy European” requirement mirroring the US “buy American” act and other domestic preference statutes.

Still, other European officials—from both larger and smaller states, including non-NATO Allies such as Sweden--are pushing back. Those with little or no domestic defense industry to protect may see cost as well as political advantages to buying American or other non-European defense goods. Others hope the TTIP will knock down various U.S. legal and administrative obstacles to more balanced transatlantic defense industrial trade and technology partnerships.

Indeed, it’s not clear that there’s a consensus in France on how to proceed. Having recently confirmed plans to acquire two MQ-9 Reaper surveillance “drones” from the United States by the end of 2013—with an option to purchase up to 14 more—French defense officials presumably want to avoid risking second thoughts in Congress, which must approve the transfer. Talk of new EU “protection” for the EDIB, with its implied anti-US spin, would do just that. It also would put at risk prospects for closer UK-French defense industrial cooperation under their Lancaster House treaties of November 2010.

Just how the battle lines over defense trade will be drawn in Europe should become clearer over the next few months. Von Rompuy has put defense at the top of the agenda for the EU heads of state and government meeting in December, and called for “concrete progress” on: priorities for future investment and equipment procurement; “strengthening (the EDIB), so that it remains competitive and innovative”; and the “preparation and availability of (military) forces.”

Hopefully, before the summit, EU defense ministers will reach a consensus that the strategic benefits of an “ambitious and comprehensive” TTIP would far outweigh any potential downsides to some of their defense-related companies. In the interim, and given recent tensions in transatlantic relations (related, in part, to allegations by Edward Snowden), some high-level reassurances that Washington shares this perspective on the TTIP certainly can’t hurt.

Leo Michel is distinguished research fellow at the Institute for National Strategic Studies, National Defense University, and an Atlantic Council member. These are his personal views.

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