NATO General (Ret.) Klaus Naumann: What European Defence Capability Requires
Anyone talking to Europeans about the need to improve European military capabilities will hear a lot of positive noises and many declarations of good will and firm intentions. But the question remains, as so often in the past, as to what extent Europe will really be able to match its words with adequate deeds. It therefore might be helpful to begin with an assessment where Europe really stands in spring 2005.
I. Where does Europe stand in early 2005?
There is a widening gap between the U.S. and Europe, both in terms of conceptual thinking and in terms of capabilities. Some, like the French Defence Minister, do not believe that a technological gap exists. They believe that Europe is capable of fielding material that might in certain niches, even be superior to American products. Europe is undoubtedly capable of developing and manufacturing high technology products, but at the same time, is clearly behind the U.S. in integrating individual elements into systems, let alone a network of systems. It is this “systems of systems” approach to force planning plus the capability to enable armed forces to conduct network-centric operations that drive the transformation of the armed forces.
The U.S. began transformation in the late nineties, at a time when the Europeans were still taking decisions to invest in legacy forces. The result is quite obvious: Politically, the U.S. is and will remain the only power that can act globally, use all the instruments of politics in crisis management and, most importantly, seems to have the political will to act—if necessary preventively—in order to keep risks at a distance from the American homeland. The American weakness is that its strategy relies too heavily on the use of military power as the instrument of first resort and that there are shortfalls in the American capabilities to sustain post-conflict stabilisation operations.
The Europeans on the other hand are not as united politically as they pretend to be. Most of them are too determined to ensure that military power is used only as the very, very last resort. This attitude occasionally drives European politicians into actions that the outside world (and in particular, determined and radical opponents in a crisis) perceives as appeasement.
Moreover, Europeans lack the capability to act across the full spectrum of crisis-management instruments. Their military capabilities fall short of their political ambitions as laid out in the EU Security Strategy. Thus, throughout this coming decade, Europe will not be capable of performing major military operations at the high-intensity level beyond a rather narrowly defined European area of interest. Certainly promising steps towards strengthening European capabilities have been taken in recent years, for instance the decision to create the EU Battle Groups. But nobody should forget that these battle groups are comprised of forces that still lack necessary equipment. Key capabilities that ensure information dominance, strategic mobility, precision engagement and sustainability outside of Europe are missing, and as a result, the interoperability with the U.S. Forces is increasingly at risk. Moreover, the longer Europe delays transformation of this kind, the wider the gap will become between the Europeans and the Americans, especially in conceptual thinking and planning.
In addition, Europe continues to spend its declining defence budgets in a way which one has to call unwise. Some European nations are wasting money by continuing to procure legacy systems. Many others spend far too much on personnel (in some countries 60% of the defence budget), leaving few resources for modernization. The maximum percentage for personnel should never exceed 45 % of the defence budget in order to allow for adequate modernisation and a capital investment share of some 30%.
As a percentage of GDP, Europeans spend 61% of U.S. military spending. In real U.S. dollars, Europe spends 41% of what America does, and in per capita terms, Europe spends 25% of what each American citizen is required to spend for defence. These are not insignificant sums. The issue therefore is not to spend more, but to spend it in a way that produces real power projection capabilities.
Looking into the years ahead, the likelihood that European governments will increase their defence budgets is low. The main reason for that is demographics. There are 450 million Europeans today, which is 157% of today’s U.S. population. This number will shrink to a little more than 300 million by the year 2050. By contrast, the U.S. population is likely to grow, outnumbering the EU by 2050 even if it includes Turkey. More alarmingly, however, is that the average age of Americans will remain at 36 years whereas the European average age will increase from today’s 37 years to a little above 50. Anybody who understands what this means politically for the European nations in terms of balancing budgets will agree with the conclusion that there is not much room for a major increase in defence expenditures. The challenge for Europe, therefore, is to either achieve more output with existing resources or identify new ways of financing national defence. One fact, however, must be changed: it is simply intolerable to spend 61% of what the Americans spend but only achieve little more than 10% of the American power projection capability.
II. Where should Europe go and what should Europe do?
Europe must develop a limited capability to act in defence of European security interests. This should be done either together with the U.S. or independently, in cases in which the United States is either not capable of taking on additional tasks due to other commitments or is unwilling to join a European action.
Such a capability would serve two strategic objectives simultaneously:
1. It would allow Europe to implement its Security Strategy as agreed by the Heads of States and Governments of the EU.
2. It would enhance European influence on U.S. decision making since European assets would likely be those that the U.S. do not dispose of in sufficient quantity. This means that the assets should be selected and developed in way which ensures a limited autonomous European intervention capability on the one hand and which focuses on those areas for which the U.S. depends upon allied support on the other.
Force planning following such a line would produce European armed forces which tie European capabilities to American global projection capability. Thus Europe could benefit from American global capabilities and the U.S. would enhance the sustainability of its military.
But force planning which is limited to intervention does not suffice. Europe must focus as well on tackling new threats to its security stemming from terrorism and organized crime. This requires linking defence and homeland security in ways so far not foreseen in EU countries. The instrument that will enable nations to do so is one which the nations need to have for their military forces anyway: information management that produces information dominance.
Ways and Means
At present, the defence efforts of most European nations will remain insufficient to allow for speedy and comprehensive transformation of the European armed forces. Europe must therefore concentrate on the capabilities which really matter such as C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) and it must reinforce national efforts by agreeing to closer cooperation which must, to some extent, pursue a division of labour. One possible scheme for such a division of labour could be:
- France, the United Kingdom and Germany develop division-sized intervention forces. These forces would be capable of covering the full spectrum of expeditionary warfare from high-intensity conflict to post-intervention stabilisation. They should be provided with some national C4ISR, tailored to supplement NATO owned and operated core capabilities such as AGS as well as the full range of effective engagement assets and the necessary (but focused) logistics.
- Spain and Italy could jointly develop together a similar bi-national force. Alternatively, they could make force contributions available for the three lead nations in, exchange for participation in command arrangements.
- Turkey and Poland, both of which will need to remain prepared for unexpected, undesirable developments east of their territories, must to some extent remain focused on territorial defence for the foreseeable future. They will thus not be able to concentrate fully on expeditionary warfare. These nations could therefore become force providers for the three lead nations as well as major contributors to post-conflict stabilisation efforts.
- The remaining European countries should concentrate on certain more specialised roles, possibly following the pattern established by the Centres of Excellence.
Such a division of labour would require, first and foremost, full C4ISR interoperability both in NATO and the EU. At a time in which the boundaries between defence and homeland security are diminishing, this would include interoperability between the armed forces and other security forces such as police, border control and customs as well. This division of labour would, secondly, require European strategic sea and air lift capabilities. Thirdly, it would require much closer cooperation between the European industrial companies and, perhaps most importantly, clear coordination of research and development activities.
Especially with respect to industrial and R&D policy, tasks should be shouldered by the European Defence Agency (EDA). There should be no delay in taking on the R&D issue, prioritizing it as the most urgent step to enhance European defence output. It could be achieved best if nations were prepared to transfer responsibility for coordinated European security and defence R&D efforts in to the EDA. Additionally, the EDA must be provided with the funds necessary to support these objectives. These funds could be reallocated from monies which are at present allocated to the often overlapping and duplicating national R&D programmes.
The industrial contribution
Such an approach to European defence would transform the role of industry as well. There is no European company which could offer solutions in all areas. Yet unfortunately too much overlap still exists between companies, while too much competition between Europeans. In a situation in which governments can no longer fund (or tolerate) competing developments, combined with a shifting focus from manned platform procurement to modernisation and upgrading of platforms and from manned to unmanned or robot systems, Industry should begin to assess its own role and position.
European corporations must therefore understand that transformation means focusing upon three functional areas:
- Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR)
- Effective engagement
- Focused logistics.
It is of secondary importance within these three functional areas whether delivery platforms are land-, air- or sea-based. Furthermore, in most cases platforms will not need to be replaced within the next ten to fifteen years. Rather, the capabilities which transform platforms (such as vehicles, aircraft or vessels) into weapons systems. Industry must therefore become systems suppliers and system integrators. Along with the European Armed Forces, companies should adopt the “systems of systems” planning approach. Along with the EU Nations’ governments, industry should assess what this may mean for the next phase of industrial consolidation, which should aim at improving European competitiveness and at enhancing the opportunities for European companies. Such a result of the next phase of European industrial consolidation would at the same time open new roads towards a better and more balanced transatlantic industrial cooperation.
III. How to match aspirations and capabilities.*
European efforts to match these ambitious goals by acquiring adequate capabilities will be constrained by two limitations: personnel and finances.
As mentioned earlier, demographics will increasingly constrain defence budgets. Numbers of young, well qualified and highly mobile young people will decrease, making it increasingly difficult to recruit young Europeans for military service at reasonable cost. On the other hand, any increase in manpower cost will diminish the capital investment share of the defence budget. The demand for less manpower-intensive equipment and for unmanned or robot systems will therefore grow, and with it the necessity to invest more in equipment modernisation. Moreover, transformation requires upfront investment now.
The traditional way out of this vicious circle of growing personnel cost and increasing modernisation demands is to finance modern equipment through increasing debts. This way, however, is no longer open to the nations participating in the European Monetary Union. These states entered obligations such as to adhere to the Maastricht Stability Criteria which means inter alia to observe the three percent limit on national debts.
The way out, proposed by some at the end of the nineties, was called “Private Public Partnerships” which called for outsourcing of non-combat activities and for leased materiel provided to the armed forces by private companies.
Sure, it is too early to balance the net results but three aspects deserve attention. The role of the so-called contractors in armed conflicts other than war raises legal as well as command and control questions, for which so far no satisfactory answer had been found. Moreover, the overall net cost for such services under the conditions of insurgency and terrorist attacks might be higher than those generated by military forces. Furthermore, traditional leasing of materiel accounts for national debts under the Maastricht stability regime and it does not offer more advantageous interest rates than borrowing.
The only promising way out is therefore a truly new and innovative scheme of financing public investments through defreezing of assets and infrastructure.
Defreezing means that an asset such as an academy or an airfield would be sold, but not entirely. The state retains some ownership but transfers a predetermined share of its property rights to a private owner who will be responsible for operating and maintaining the facility for a given period of years. The private entrepreneur will in return pay an amount which the state can use to buy new equipment or launch other modernisation initiatives.
This truly innovative solution for modern financing, developed by the Munich-based General Capital Group, seems to be the only feasible way out of the planning dilemma most European nations are confronted with. If pursued properly, it could be the “magic silver bullet” which European force planners will need should they ever wish to modernise their armed forces and to close the widening transatlantic interoperability gap. More than anything else it is the capabilities which determine the degree of influence the Europeans might have on common European-American decisions in future crisis management. This proposal is therefore of utmost political importance. It offers a chance to match European aspirations with deeds.
Moreover, its applicability is not limited to the armed forces. It could be used for the financing of the many unresolved modernisation issues. For instance, in the public domain for hospitals, financing schools, even the overdue procurement of a digital communications system which most of the police forces in Europe urgently need.
It is obvious what Europe needs to do. The ambitions and communiqués full of declarations of intent must be matched by deeds. This is the way to win influence and respect in Washington. It is a formidable challenge but it is both achievable and feasible if Europe can find the courage to work together and to enter the uncharted terrain of truly defreezing its tremendous wealth in assets. It is a paradox: most European nations are tremendously asset-rich but they still have no money. The described proposal appears to be a way of modernising and transforming without increasing national debts.
As the uncertainty and instability surrounding both Europe and North America rises, time should not be wasted. Europe can act and Europe must act. Europe must not be deterred by bureaucrats who pretend that the rules and regulations that served us so well in the past must govern the future as well. Europe must have the courage to enter unknown terrain in order to be once again what it has been throughout most of modern history: the cradle of innovation and modernisation.
* The deliberations on financing are based on discussions with the Munich based General Capital Group and models of financing developed by the group.