July 11, 2013
TTIP: A Ray of Hope for European Defense?
By Leo Michel
The latest evidence came on June 26, when British defense minister Philip Hammond announced that, as part of the Treasuryâs package of 11.5 billion pounds in spending cuts in the 2015-16 budget, his ministry would realize âefficiency savingsâ 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 âwill have no impact on military manpower or equipment.â 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 2008âa figure equivalent to the combined Polish, Dutch, and Spanish military budgets.
So itâs encouraging that some European defense officials are paying attention to developments outside their normal comfort zoneâspecifically, the US-EU negotiations on the Transatlantic Trade and Investment Partnership (TTIP), which formally opened in Washington on July 8.
According to a March 2013 report by the UK Centre for Economic Research, âan 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).â This means that if the 28 EU members simply were to keep their current average rate of defense spendingâroughly 1.5 percent of GDPâthe 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: âA billion here, a billion there, pretty soon youâre talking about real money.â
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 defenseâthe United Kingdom, France, Poland, and a few othersâthis would be a net plus for transatlantic burden sharing. Moreover, a TTIP that helps to ease the EUâs growth and unemployment problems will have long-term benefits for Europeâs important non-military contributions to regional and global security.
Itâs premature, however, to uncork the champagne. European protectionist impulses are not limited to the âaudiovisual servicesâ (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 âwe and other (EU) member states are determined to keep everything to do with defense out of the (TTIP) negotiations.â
French President Francois Hollande was less explicit in a May 24 speech on his governmentâs recent White Book on Defense and National Security, noting that âour ambition is to promote European champions for a European defense industrial base,â or EDIB. But the White Book, itself, suggests that additional âtoolsâ may be necessary to âreinforce the protection of sensitive European activities (bearing upon) defense and security.â A senior French national security official recently suggested a âbuy Europeanâ requirement mirroring the US âbuy Americanâ act and other domestic preference statutes.
Still, other European officialsâfrom 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, itâs not clear that thereâs a consensus in France on how to proceed. Having recently confirmed plans to acquire two MQ-9 Reaper surveillance âdronesâ from the United States by the end of 2013âwith an option to purchase up to 14 moreâFrench defense officials presumably want to avoid risking second thoughts in Congress, which must approve the transfer. Talk of new EU âprotectionâ 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 âconcrete progressâ on: priorities for future investment and equipment procurement; âstrengthening (the EDIB), so that it remains competitive and innovativeâ; and the âpreparation and availability of (military) forces.â
Hopefully, before the summit, EU defense ministers will reach a consensus that the strategic benefits of an âambitious and comprehensiveâ 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 canât 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.