Governments need incentives to pool and share militaries

by Tomas Valasek

Since the financial crisis began in 2008, EU countries have cut military spending by an amount equivalent to the entire annual defence budget of Germany, Europe's third largest. While the prospects for an economic upturn are dim, the need for credible militaries remains strong – all the more so because the US is signalling that it may not lead future operations in and around Europe. The EU has been urging its member-states to seek defence savings in collaboration. EU officials frequently stress that member-states have no option other than to 'pool and share' their militaries: to make a more common use of training and support facilities, to buy equipment together and to form joint units. Unless such savings measures are taken, the defence cuts will undermine Europe’s ability to respond to future crises on its periphery and beyond.

But what makes obvious sense to experts and officials looks very different to national defence ministers. In most European countries the public care little about defence and will not hold governments responsible for how defence budgets are spent.

From a government point of view, collaboration carries real political costs because opposition politicians and journalists will accuse the ministers of undermining national sovereignty by creating interdependencies with other militaries. Collaboration often takes years to put in place and yields rewards only long after its architects have left office. Initially, it may also cost more than it saves. And defence ministers have little guarantee that any savings which their decisions generate will flow back to the defence budget; often the treasuries take the spoils. So unsurprisingly, many European defence ministers choose the politically safer route of inaction.

The EU is right to want the member-states' militaries to work together. But its approach needs to start with the recognition that defence ministers will need new incentives to do so.

Some help is already on offer. The EU, via its European Defence Agency (EDA), has recently formed a senior expert group, composed of mostly retired high-level officers. They are travelling around Europe sounding out governments on their plans to pool and share and urging them to try harder. The experts should also make it a priority to identify the obstacles to collaboration in each country, and to collect lessons on how countries have been able to overcome national reservations.

The EDA’s planned study on the financial benefits of military collaboration will also be helpful: little hard data exists on potential savings, and a credible risks and benefits analysis would give proponents of pooling and sharing an additional argument against the sceptics. So would another planned EDA study on the depth of past and probable future cuts to European defence budgets. Similar reports, such as the one recently produced by the German Stiftung Wissenschaft und Politik, make for a sobering read and implicitly help build the case for closer collaboration.

More could be done: the EU institutions could help governments identify strategies that generate maximum savings while entailing minimal losses of national sovereignty. The Netherlands and Belgium point the way: they have completely pooled the maintenance and training of crews for their navies' vessels, but they have kept the actual fleets under separate national ownership. They thus reap the financial benefits of collaboration (because they no longer duplicate schools and repair docks) while preserving the right to deploy the vessels where each government sees fit. The report by EDA's senior experts should highlight such successful collaborative strategies and the EDA should make certain that these are widely distributed. Not all defence ministers will read the experts' conclusions so perhaps follow-up visits by the experts - this time to spread lessons learned on pooling and sharing -- may be in order. And because ministers come and go, the EDA should also make sure its experts speak to the armaments and defence policy directors.

As its next step, the EDA should help defence ministers obtain assurances that savings generated through collaboration will be reinvested in defence. While each EU country has a somewhat different way to fund defence, some ideas might find universal application. For example, the French pay for defence through a five-year, legally binding budget allocation. This could be tweaked to allow the defence ministries to keep any savings generated during the life of the budget framework. In Slovakia, the government has pledged to take past reforms into account when cutting the budgets of line ministries in the future. Departments that found savings will have their budgets cut less dramatically than those that have not reformed. Other governments will want to pursue other solutions - the key point here is that defence ministers must feel that they will be able to reap the benefits of pooling and sharing; that they will see a reward for taking political risks.

Lastly, the EDA should explore whether governments can be offered direct financial incentives to pool and share. NATO has long recognised that if its member-states are to connect their militaries, they need help covering the costs directly related to building the physical links. So the alliance created a centralised pool of money, into which all allies pay and which reimburses governments for 'networking' costs, such as the upgrades that were needed at Central European airfields and ports so that they could fuel and communicate with West European aircraft and ships.

Pooling and sharing also essentially requires states to build a network, which entails initial outlays even though it saves money later on. For example, if two countries merge their military colleges, they will need to shut down some facilities and pay some of the personnel a severance fee. The prospect of such initial outlays may well discourage co-operation. So the EDA should sound out its members about the possibility of creating a 'pooling and sharing fund' to reimburse the costs that result when governments choose to enter into military collaboration. Alternatively, because most EU countries are also members of NATO, they could agree to use NATO's fund to encourage pooling and sharing. However, the fund would first have to be expanded (in recent years it has run low on money) and its mandate broadened from funding infrastructure upgrades to include other costs such as severance payments or clean-up of disused military facilities.

There may well be additional ways to entice the governments to pool and share. The EU institutions should make it their priority to identify such incentives and apply them as much as possible. Pooling and sharing may make eminent economic and military sense, but they are fraught with sensitivities and political dangers. The national governments will need all the help and encouragement they can get.

Tomas Valasek is director of foreign policy and defence