What the economic crisis will mean for European defence

by Tomas Valasek

There are mounting indications that defence budgets across Europe, not very high in the first place, could fall further because of the economic crisis. This will have a three-fold impact on European militaries and missions. Some governments will be tempted to cut operations – but if done haphazardly, this risks leaving parts of the world exposed to insecurity. Multinational weapons programmes may suffer a disproportionate share of the budget cuts. And while all defence ministries will have to rationalise (and most already have) governments will need to decide whether it is worth keeping the rumps of their national militaries. Many should form joint units with neighbours instead.

There are two strong reasons to believe that defence budgets will fall dramatically. First, all European governments will see their public debts rise over the next few years. Some – like that of Latvia – are beginning to have serious trouble raising funds. Even the more sturdy economies, like the UK, have been warned by rating agencies to bring their debt under control or risk losing their gold-plated credit rating. Most European governments will have to increase taxes and cut spending in order to rebalance the books. Second, those cuts will hit defence harder than other parts of the budget. This is because many forms of government spending – like the cost of paying interest on public debt – cannot be reduced by decree. Some non-mandatory expenditures like healthcare tend to be politically explosive: no government wants to be seen to be taking risks with people’s health. So defence budgets are an obvious target for ax-wielding finance ministers. George Osborne, the UK shadow chancellor of the exchequer, warned recently that he would cut defence spending if the Conservatives won the election (which they are widely expected to do this year or next).

The looming military budget cuts will have many salutary effects. Defence establishments, with their resistance to civilian oversight and emphasis on continuity, tend to get bloated in times of relative plenty. It often takes a crisis to force meaningful reforms. France – which suffered a defence budget meltdown in 2007, even before the economic crisis unfolded in full – at last shut many of its African bases, a legacy of its colonial years. Slovakia recently cut the number of military commands from eight to three – a long overdue step that will reduce unnecessary overheads. Other European militaries, too, will come out of the crisis with more sensible structures and budgets.

But the economic crisis presents several serious risks to European defences. The easiest portion of the defence budget to cut is the part that pays for operations. Withdrawing soldiers from faraway places plays well at home (it removes young men and women from harm’s way) and is politically easier than restructuring the militaries (no one is laid off). But European governments should resist the urge to pull back their soldiers indiscriminately; this could cause conflicts to re-flare and leave vulnerable people at risk. Instead, they should stop sending overlapping missions to the same trouble spots. Because international institutions compete to fly their flag in missions abroad, it is not unusual for western governments to have multiple operations in the same place. For example, three different forces are currently fighting piracy off the coast of Somalia. That is a wasteful use of taxpayer money. The EU, NATO, and the US should roll their Somalia operations into one or two.

The budgetary crisis will force many defence ministries to cancel planned weapon buys. Their instinct will be to cut multinational programmes and protect those purchases that generate jobs at home. That could be a mistake. While much of the needed equipment can be made nationally, the truly complex systems are so expensive that defence ministries can only afford them if they share the development costs with other countries. As defence budgets shrink, such multinational approaches will only become more important. Granted, many of the collaborative programmes to date have been a disaster. The seven-nation plan to develop a new generation of military transport aircraft, the A400M, is the most glaring example. The airplane cannot fly because the engines, made by a four-nation European consortium, lack the proper certification; the plane is also said to be too heavy.

But the answer lies not in abandoning collaborative programmes. Instead, European governments need to rethink their approach to collaboration. The trouble with the A400M is not that the plane’s manufacture, EADS, lacks technical expertise (it builds one of the finest civilian aircraft in existence, the Airbus) but that participating governments have been more concerned with securing production jobs than with obtaining a good product. In return for investing in the aircraft, they have demanded that a commensurate number of production jobs to go to their country. As a result, bits of the aircraft are being built in different countries, and not necessarily in the ones most qualified to do the job. In case of the A400M, EADS executives say they wanted a US company to build the engine, but were told by participating governments to keep the jobs in Europe. European governments should accept that it makes more sense to order the needed parts from the plant with the most relevant technical expertise, no matter where it is located. The governments also need to be more ready to buy off-the-shelf components, rather than try to generate jobs by manufacturing parts from scratch.

Cuts in personnel and equipment risk turning some European militaries into ‘showcase’ forces: incapable of deploying abroad and thus irrelevant to most EU and NATO operations. It makes little sense, for example, for most European militaries to maintain supersonic air forces without access to air-to-air refueling; or to have infantry without the support units needed to feed and re-supply the soldiers in faraway places. As an excellent new study commissioned by the Nordic governments concluded, “the size of certain units may fall below a critical limit… and small and medium-sized countries [could] lose their ability to maintain a credible defence. The result could be a Europe where only countries like France, Russia, the UK and Germany have their own modern defence forces.”

There are two ways to avoid such outcome while cutting budgets. Some of the key equipment that makes modern warfare possible – like planes providing air-to-ground surveillance or military transport – needs to be jointly owned. NATO owns a common fleet of aircraft that co-ordinate air traffic, and the alliance plans to buy transport airplanes for its members to use. This allows militaries of the smaller and poorer European states that cannot afford such specialist equipment to take part in complex operations in distant places.

But joint ownership of critical resources alone may not save enough money. The time has come for European governments to consider abandoning parts of their national forces and infrastructure, and to form joint units with neighbours. It is becoming increasingly hard to justify why the 25 European members of NATO should maintain 25 separate air forces with own commands and bases, when between them they could only find a handful of much-needed helicopters for Afghanistan (most did not have any, and those who did, did not want to send them). Modern militaries do virtually all their fighting abroad, and in coalition with others. If they lack the money to equip and deploy their soldiers overseas, they need to consider radical cost-saving measures. More governments should do as Belgium, Holland and Luxembourg do (they merged parts of their air forces) or emulate the Nordic countries (which are thinking of forming joint amphibious forces).

Such ‘pooling’ is not a new idea; it has been talked about on and off for nearly a decade, but to little effect. Most European governments have found it too difficult to part with the cherished symbol of national sovereignty that is a proper army or an air force. They have held on to them as symbols even though the practical value of some military services in Europe is negligible. The US has stopped asking Europe for more forces for Afghanistan, partly because politicians do not want to send forces into harm’s way but also because few have any useful forces to deploy. The economic crisis may at last force more countries to pool their militaries. This would enable them to take part in NATO and EU operations whilst saving money. If so, the crisis will have turned out to be a blessing in disguise.

Tomas Valasek is director of foreign policy and defence at the Centre for European Reform.