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Europe must close technical gap

Europe must close technical gap

John Hamre

Last year NATO went to war and demonstrated what few thought was possible. Bound by a 50-year commitment to the shared values of democracy, the alliance held together in the face of enormous centrifugal forces. Many decades of attention to interoperability have paid off. NATO has proved the sceptics wrong and fought together effectively.

While Operation 'Noble Anvil' was a success, it highlighted significant disparities in technical capability between the USA and our NATO allies. This gap in technical capabilities has been a continual focus of countless bilateral meetings during my tenure as Deputy Secretary of Defense. We have discussed it, worried over it, and committed ourselves to close the gap. But the technical gulf only seems to widen. Why? What can be done about it?

I believe there are three primary causes. First and foremost, European defence budgets continue to shrink. The fall of the Berlin Wall, welcome as it was, led European governments to cut defence budgets sharply. We witnessed the same trends in the USA until last year when President Bill Clinton proposed, for the first time in 14 years, a five-year defence programme with real spending increases. But the facts are clear. Where the USA spends $283 billion annually on defence, our NATO allies together spend only $188 billion (in 1999 US currency terms).

A comparison of amounts spent on research and development (R&D) highlights an even greater disparity. In Fiscal Year 1999 the USA spent $37 billion on R&D, while NATO countries collectively spent $4 billion. Worse yet, Europe's R&D budgets are spread between some 78 companies. Clearly too much of Europe's limited R&D funds are spent on duplicated overheads.

Second, Europe's defence industry has been slow to consolidate, resulting in a large portion of investment going to redundant company overheads. The mergers announced last year will help eliminate unproductive spending provided that the new companies can ruthlessly eliminate excess capacity. We know how hard this effort has been and continues to be in the USA, and the task is likely to be more difficult in a yet-to-be-unified Europe with rigid labour and social structures. More worrisome is that most of the public discussion about consolidation invariably sets the issue in the context of further reductions in defence spending, not greater output from the same level of inputs. Third, the USA's continuing conservative approach to technology co-operation has substantially impeded transatlantic technical co-operation, imposing irritating constraints on our best allies, and fuelling the arguments of our competitors that the USA is an unreliable industrial partner for defence goods. NATO members are continually trying to maintain coherence within the alliance. The centrifugal political forces will always be with us, making it essential that we find ways for industrial co-operation to become an adhesive rather than a wedge.

Much has been said (and much have I said) about a 'Fortress Europe' and a 'Fortress America'. While this is a problem for the USA, it could be a disaster for Europe. The USA will have sufficiently large defence budgets to maintain a full-spectrum defence industry, although we will have continuing difficulty maintaining competitive sources in all sectors of our defence industry. Europe, by contrast, is spending too little to sustain a full-spectrum defence industry, and too little on R&D to keep that industry on a par with US competitors. If European defence budgets, and especially R&D budgets, do not grow and savings from consolidation lag, the European defence industry will survive only by protecting its market from more technically advanced US equipment. If this happens, the technology gap will widen. The solutions are difficult, but obvious. Rather than build a 'Fortress Europe' and a 'Fortress America', we need to find ways to drop the drawbridges and open the castle doors to co-operation. Three steps are essential.

First, the USA needs to update its approach to technology security and export control. The current approach does not adequately protect our technology from malevolent actors around the world. Working with our colleagues in the Department of State, we have outlined a series of steps that will enhance security and significantly ease the burdens on industry if implemented as planned.

Second, greater transatlantic co-operation will come only when the USA and our NATO allies share the wider security burden. Since our companies and manufacturing processes are increasingly transcontinental, we need shared security structures with other governments to avoid excessive licensing requirements. It was for this reason that Secretary of Defense William Cohen and UK Secretary of State for Defence Geoffrey Hoon signed a Declaration of Principles. If successful, I believe it is possible to remove much of the licensing burden for transactions between our two countries, as long as our two governments enforce a shared security perimeter, as is the case between the USA and Canada.

Third, we need to foster joint projects between the USA and our European allies. Too often, previous joint efforts were politically motivated and usually failed because they were not adequately rooted in warfighting requirements or business logic. Our European allies need to improve their process for harmonising requirements and we need to remove barriers to industrial partnering.But a blunt message offered in the spirit of co-operation is in order. Most US companies are highly sceptical about transatlantic co-operation because they see it purely as a vehicle for European companies to gain market access in the USA. Market access is a two-way street, and European fear of and insulation from superior US technology will fuel an equally counterproductive protectionism here in the USA.The problems seem insurmountable, but the stakes merit our full effort. We have a responsibility to future generations to strengthen this alliance by encouraging co-operation among our respective industrial establishments.

Dr John Hamre is US Deputy Secretary of Defense

Posted: 29 March 2000
Source: Jane's Defence Weekly
Also Online: Jane's Defence Weekly

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