Transnational Armaments Development Without the Horror

Last week, Airbus CEO Tom Enders spoke in our Captains of Industry series on “The State of European Defense”. Russian misbehavior to the east notwithstanding, it’s a challenging market. Particularly challenging has been trying to manage multinational development projects like those of the NH90 helicopter and the A400M airlifter. After the experience of the latter “horror,” Enders said that he made a firm resolution:

     I am determined, at least for my company, not to ever again walk into such a program, and rather to resist [that kind of] contracting and say, ‘no, we’re not going there.’ That hardly ever works. Industry has a lot of egg on the face, we’re losing lots of money, and that should not happen again.

Frankly, the problems of transnational armaments development have been recognized for years. As far back as 2004, RUSI Defence Systems summed it up with an invited series of essays on the question “International Collaboration: Why Bother?” As I recounted in an essay in May 2013, plenty of past research has shown that multinational development programs generally do not perform remarkably well in cost or schedule.

That may be why, prior to 1968, bilateral programs were a more popular approach across NATO. Two-party developments do not always have the scale needed for a Joint Strike Fighter, but they more often produce valuable products closer to budget and schedule. As I wrote in February about the new Anglo-French entente très cordiale, one extra customer is easier to manage than a dozen, and bilateral products are better than multilateral hopes.

But what Enders seeks is different yet—an industrial regime where

     In general, industry should have much more say in how we do the [multinational] project. The requirements are defined by the military, but the authority for execution should be much more on the industrial side. So far all we have reached at best is sort of a half-half situation, and that almost always ends in disappointment.

Enders’ idea almost describes an even earlier approach in the alliance. As Marc DeVore described in his article “The Arms Collaboration Dilemma” (Security Studies, 2011), this period lasted from about 1953 through 1962. In this first round, NATO’s Military Committee promulgated four ‘NATO Basic Military Requirements’ (NBMRs) for new aircraft: one each for a light bomber, a submarine-hunter, a vertical or short take-off and landing (V/STOL) fighter, and a V/STOL transport. NATO’s Armaments Committee translated these rough requirements into more detailed specifications, and solicited actual prototypes from industry. NATO’s Advisory Group for Aeronautical Development then conducted flight tests and picked winners.

At that point, individual member states could decide whether to buy into the program. But in the words of NATO Secretary-General Hastings Ismay, by tackling weapons development across borders, the new alliance was forging “an entirely new field of co-operation between sovereign countries.” Just two of the NBMRs turned into actual programs, and in these, domestic economic interests still reigned. West Germany bought Fiat’s G.91 strike aircraft, and West Germany, the Netherlands, and Belgium bought Breguet’s Atlantique patrol plane. The rest of the prospective buyers defected to their own national programs.

At the time, the alliance essentially was aiming for an open market within its walled garden—just one without the overbearing supervision of individual governments. But is this worth another try? The impulse for the juste retour may persist, but today, smaller budgets and bigger integration problems will make some national attempts simply impossible. The companies which already have the scale to build large-scale systems may then pick their own partners, mostly without consequence. They will, of course, remain conscious of local interest in local content, just as American military contractors take care of constituencies in multiple states. With his efforts to secure Enders may have positioned his company for that kind of future. In comments to European newspaper reporters last July, he insisted that

     We have normal corporate governance, where no shareholder has veto rights over management. Governments have no say in our strategy, absolutely not. We have informed governments, not consulted them, about our plans for restructuring and rebranding.

Perhaps it was ironic how French President Hollande asserted, in a speech last May at the École de Guerre, that “industrial alliances must be agreed upon on a European scale.” Perhaps they will be—just with the details actually arranged by industry.

James Hasik is a senior fellow at the Brent Scowcroft Center on International Security.