Can Europe Make It?

Elusive transparency in the EU: defence industry influence in Brussels

0 false 21 18 pt 18 pt 0 0 false false false

The goals and interests of the European Union and the defence industry are increasingly converging. Why?

Markus Heinrich
2 February 2015
EADS Talarion - European drone model. Graham Tiller/Flickr. All rights reserved.

EADS Talarion - European drone model. Graham Tiller/Flickr. All rights reserved.

Despite all its positive aspects, the European Union (EU) and its decision-making processes have often been criticised, with critics referring to a 'democratic deficit.' This is compounded by unaccountable and sometimes invisible forces directly or indirectly influencing EU policy. While this applies to the lobbying activities of all industries, the defence industry deserves particular attention. Much has been written about the United States defence industry, but Europe has been largely overlooked. A common perception is that post-war Europe, and the EU in particular, is a civilian power with meagre military capacity, and that this must be mirrored by its defence-industrial base. However, this perception is erroneous.

Aligning EU and defence industry goals

According to the Stockholm International Peace Research Institute (SIPRI), 30 of the top 100 arms manufacturers are from Europe. The top 100 have combined annual global sales of 402 billion dollars, which is roughly 341 billion euro at current exchange rates. When one considers that this sum does not include European arms manufacturers outside the top 100, or the long list of suppliers of dual-purpose parts, then one can assume that the European defence industry is worth hundreds of billions annually and means very big business. Industry experts also estimate that “in the European Union, more than 700,000 people work in aerospace and defence”. According to the BBC, in the UK alone “as many as 1.2 million people rely on it for a living”

The main players of this industry therefore wield enormous economic but also political power. This power comes partly from the prevalence of partial or majority state ownership of these companies, resulting, inevitably, in overlapping interests. Examples of this include Finmeccanica which is partly owned by the Italian state, Thales, partly owned by the French state, and Airbus Group (formerly EADS) which is partly owned by the French state, German state and Spanish state. The defence industry and political forces therefore have a very close relationship, one which industry leaders continually cultivate.

This has always been the case at the national level, but the EU is increasingly becoming the focus of defence industry attention. A defence company winning or losing a major contract can mean thousands of jobs won or lost, which in an increasingly interconnected economic system not only affects the individual member state in which the company is based, but has ever more cross-border dimensions. In addition, as the EU seeks to create its own defence identity through the Common Security and Defence Policy (CSDP), it has increasingly initiated programmes to facilitate weapons manufacture, meaning that the EU’s goals and the defence sector’s goals are becoming increasingly aligned.

Lobbying in Brussels

Let's take a closer look at the activities of the defence lobby in Brussels, in particular by its representative industry groups, and the level of access it has to EU officials. This must begin with the most comprehensive defence industry association, the Aerospace and Defence Industries Association of Europe (ASD); and also analyse the implications of the CSDP for EU and defence industry collaboration through one of the main vehicles for collaboration, the European Defence Agency (EDA).

Unlike other industrial sectors, the defence industry’s clientele is almost exclusively made up of governments. Close access to politicians therefore is arguably more important than in any other industry. Contrary to popular belief, the European defence market, although smaller than that of the US, is nonetheless considerable, with the governments of the then 26-member EDA spending €189.6 billion on defence in 2012.

Naturally every industry seeks to grow its market, and since national defence spending is for the moment stagnant and the political will to reverse this does not appear to be on the horizon (although the Ukraine crisis could make a difference), it makes sense for the defence industry to seek favourable treatment from the EU. Consequently, “[a]ll the major arms companies have offices in Brussels, acting through a vast network of think-tanks, clubs and informal circles, and their industry associations are frequently consulted by EU officials.” There are official lobbying organisations and industry associations such as the ASD, and a multitude of other think tanks and forums which set up meetings and discussions between EU officials, military officers and representatives from the defence industry.

One such organisation is the Security and Defence Agenda (SDA), formerly the New Defence Agenda (NDA), which was established in 2002 by Forum Europe to “serve as a platform for discussing NATO and EU defence and security policies.” It meets to discuss matters concerning European force-projection and capabilities, Europe’s security aims and its global defence role, conflict prevention and anti-terrorism policies, the transatlantic relationship (military, political and industrial) and defence-led research and development and industrial innovation in Europe.

German Submarine at a shipyard in Kiel. Wikimedia. Some rights reserved.

German Submarine at a shipyard in Kiel. Wikimedia. Some rights reserved.

EU and defence industry moving closer

The SDA’s Secretary General Giles Merritt co-authored The Path to European Defence and urged “substantial increases in national defence budgets“ as a vital step to counteract “the dangers to the European Union economy as a whole if the defence sector shrinks any further.” Others involved were former and current high ranking political figures from across the EU. For example, Guy Verhofstadt, the forty-seventh Prime Minister of Belgium, Member of the European Parliament (MEP) who has written extensively about “The Need for a Common European Defence”; Erkki Liikanen, the Finnish Social democrat and governor of the Bank of Finland and member of the Governing Council of the European Central Bank (ECB) writing on “Industrial Aspects of a European Defence Policy”; and Phillip Busquin, MEP, member of the European Parliament’s Committee on Industry, Research and Energy and member of the European Commission writing on “Security Research in the European Union: Current Status and Strategic prospects.”

The SDA’s Board of Trustees includes former NATO Secretary General Jaap de Hoop Sheffer, and former EU High Representative for Common Security and Foreign Policy and former NATO Secretary General, Javier Solana. Others include high-ranking NATO officers, national prime ministers and foreign ministers, MEPs and members of the European Commission, judges, and Europe Development Bank governors. Among its corporate partners and members are Europe’s biggest defence contractors: BAE Systems (UK), Dassault Aviation (France), Diehl Defence (Germany), EADS (pan-Europe), Finmeccanica (Italy), Saab (Sweden) and Thales (France). These companies fund it in order to “reach a select group of policy decision makers and media opinion formers.” The SDA organised the February 2005 event “Towards an EU Strategy for Collective Security,” which was attended by, among many others, Franco Frattini, the EU Commissioner for Justice, Freedom and Security, and Günter Verheugen, the EU’s Enterprise and Industry Commissioner. This event was partly paid for by EADS.

The Kangaroo Group

Another such group in Brussels is the Kangaroo Group, which originates from the European Parliament (EP) and provides the defence industry lobby with back door access to politicians. Like the SDA it also arranges meetings, dinners and conferences which extol an increased military role for the EU. Among its corporate members are EADS, Diehl Defence, Rheinmetall and Thales. The group says it is supported by hundreds of MEPs, who write for its newsletter and speak at its conferences, round table discussions and working groups. 

It is not only dedicated lobbying organisations and clubs which promote defence contractors and lobby on their behalf. Arms companies themselves are active in Brussels, and boast many offices there. The following table lists the top 10 in Europe (not counting subsidiaries) in 2013 according to SIPRI and the amount they spend on lobbying activities:

Table 1. Top 10 European defence companies 2013 official lobbying expenses EU

NAME OF COMPANY

OFFICE IN BRUSSELS

REGISTERED LOBBYISTS

EXPENSES IN EURO

BAE Systems

Yes

1

200,000

EADS

Yes

13

500,000

Finmeccanica

Yes

6

50,000

Thales

Yes

5

300,000

Rolls-Royce

Yes

48

1,750,000

Safran

Yes

50

495,000

DCNS

Yes

3

50,000

Babcock International

No data

No data

No data

Saab

No data

3

300,000

Rheinmetall

No data

No data

No data

 

 

 

TOTAL: 3,645,000

*NOTE: Data for Saab: 2011, Data for Thales: 2014, Rest: 2013

Source: EU Transparency Register

Although the EU has the Transparency Register for lobbyists (from which this data is taken), registration is not mandatory, so the number of lobbyists and the full scale of their activities is unclear. The European Parliamentary Research Service (EPRS) quoting a 2013 academic study states that the register covers “60-75% of lobbying organisations active at EU level.” While this is somewhat vague and leaves a substantial percentage not covered by the register, a positive development is that Commission President Jean-Claude Juncker has promised to propose a mandatory system by 2016.

Nonetheless, as the figures in Table 1 show, individual arms companies spend large sums trying to influence politics in ways that favour the industry. This does not only include increased EU research and development funding or increased member state defence budgets, but also breaking down barriers by harmonising European laws regulating arms exports. To better facilitate arms exports, the defence industry “is pressing the EU and national governments to apply export policies in such a way as to make it impossible for one country to prohibit the export of parts of a weapon systems that will be exported eventually to a ‘problematic’ third country from a second EU country where assembly takes place.”

The Aerospace and Defence Industries Association of Europe    

The ASD is the most comprehensive arms industry lobby group and was formed in 2004 when EDIG, AECMA and EUROSPACE, which were older industry associations, combined. According to the ASD it has “27 member associations in 20 countries. In 2013 over 3000 aeronautics, space and defence companies in these countries employed more than 777,000 people and generated a turnover of €197.3 billion.” Its presidents, such as former BAE Systems CEO Mike Turner and former Finmeccanica CEO Pier Francesco Guarguaglini, regularly visit senior officials in Brussels pressing for "coherent European policies."

The ASD’s mission is to encourage governments to spend more on defence related research and technology development and to promote and enhance economic ties between the United States and Europe. Although more of an aerospace association, it also has other subordinate associations such as the European Land Defence Industry Group (ELDIG). Founded in 2004 at the Paris Eurosatory arms fair, ELDIG seeks to improve the land-defence industrial base in Europe, in other words, the technology and facilities for the manufacture of weapon systems for ground war. The ASD warns that “European industry could lose its competitive position, especially in relation to the US, if no significant steps are taken to increase government spending on development and acquisition of new weapon systems.” 

Its Aerospace Policy Manifesto “Flying Towards Europe’s Future” makes it clear how important the European aerospace industry has been in helping Europe achieve “technological excellence and global leadership.” It goes on to say:

"However, today European aerospace stands at a crossroads. Europe must choose between making the necessary efforts in research and development to maintain the leadership of its aerospace sector, or to stand still, taking success for granted, and being exposed to rising competition from emerging aerospace powers."

The ASD therefore can be considered a vehicle for European arms companies to promote the industry in order to encourage policies to increase spending in the sector in order to maintain and increase the quality of Europe’s warfare technology, especially aerospace - in other words, to maintain and increase Europe’s position in the global arms race. The EU is becoming increasingly alert to such endeavours as it seeks a CSDP.

The Common Security and Defence Policy

What drives the relationship between EU policy-makers and the defence industry is the belief that in order for the EU to have a common foreign policy, it must first have a CSDP. An operational CSDP “needs a strong European defence technological and industrial base.” This is also the frequently emphasised objective of defence industry lobbyists in Brussels, who try to guide and shape EU policy towards a CSDP. The economic implications of a CSDP are obvious. Europe’s “transition from a traditional defence force to the newly required expeditionary armies, able to intervene outside EU territories, has to be accompanied by a massive build-up of arms.” 

European armed forces, although still technologically superior to most others, have fallen far behind the undisputed global military juggernaut of the United States. This capabilities gap has led to so-called “inoperability” within NATO, where most European militaries can no longer keep up with the US Army’s technological capabilities. This has been recognised, and programmes aimed at addressing this gap have been initiated, such as NATO’s Berlin Plus, and the EU’s European Capability Action Plan (ECAP). Hurdles impeding this are Europe’s general anti-militarism (unlike the US), and the European electorate’s aversion to rising defence budgets at the expense of social programmes such as healthcare, education and social welfare.

Gaining independence from the US

The desire to be independent of the US in terms of the defence-industrial base (the thinking behind MBDA/Eurofighter) and military capabilities is the essence of the CSDP. In order to modernise and equip European armies for more effective force-projection and “out of theatre” interventions, ECAP prioritises military transport aircraft, helicopters and global surveillance systems. Other priorities include in-air refuelling systems, long range missile technology, naval vessels, maintenance services. A build up of these platforms would naturally benefit the companies which manufacture them. Long range military transport aircraft (Airbus Group), Helicopters (Airbus Group/Agusta Westland - Finmeccanica), global surveillance systems such as satellites and Unmanned Aerial Vehicles (UAVs) (EADS, Thales, Alenia Space, Finmeccanica, BAE Systems, Rheinmetall, Safran, etc), in-air refuelling systems (Cobham), long-range missiles (MBDA, Diehl, Saab), naval vessels (BAE Systems, DCNS, Luerssen, ThyssenKrupp Marine Systems), maintenance services (Babcock International, BAE Systems) to name just a few.

Added to this would be the contracts for the full spectrum of military equipment, from small arms to ammunition, armoured vehicles to C4ISTAR (Command, Control, Communication, Computers, Intelligence, Surveillance, Target Acquisition and Reconnaissance), a mouth-watering prospect for Europe’s defence contractors. The economic implications of the arms build-up on which a CSDP rests and the benefit for the arms industry is clear. According to Malte Leuhmann from Corporate Europe Observatory:

"If member states open up national arms markets or even pool procurement, more units of each weapon can be sold at once, increasing the profitability of weapons projects considerably. With this in mind, the arms industry lobby is active in discussions on the future direction for the European Security and Defence Policy."

These efforts have proved fruitful as the EU has created a range of initiatives and organisations to implement and support the CSDP. These include the European External Action Service (EEAS), the European Union Military Staff, EU Battle Groups and an agency to help achieve more European collaborative weapons projects, the European Defence Agency.

The European Defence Agency

The EDA was formed on 12 July 2004, and is a product of the European Security Strategy (ESS) adopted by the European Council in Brussels on 12-13 December 2003. The ESS identified five key threats to Europe: terrorism, proliferation of Weapons of Mass Destruction (WMD), regional conflicts, state failure and organised crime. To counter such threats, it was deemed necessary to create the EDA. The EDA’s Steering Board is made up of the participating member states' defence ministers and a representative from the Commission who does not having voting rights. According to the EDA, its goal is to provide support (at EU and individual member state level) as the EU seeks to improve its military capabilities for the European Security and Defence Policy (ESDP). To achieve this goal, the EDA is active in “promoting the European defence sector’s technological and industrial base and defence equipment market, and, more specifically, fostering European defence-relevant Research and Technology (R and T).” 

Airbus A310 with refueling system. Wikimedia/pjs2005. Some rights reserved.

Airbus A310 with refueling system. Wikimedia/pjs2005. Some rights reserved.

An example of how a specific defence firm benefits from the EDA’s activities is the EDA project Air-to-Air Refuelling (AAR). The EDA posits that AAR capability is a force multiplier allowing more effective deployment of forces, but warns that Europe faces critical capability shortfalls, harming operations in Mali, Libya and Kosovo. To better prepare European militaries for unconventional wars, the EDA "has been working on 4 pillars. Short term Gap Filling, Optimisation of Existing Assets and Organisations, Strategic Tanker Capability and A400M.”The A400M is the new military transport and Air-to-Air refuelling tanker manufactured by the Airbus Group, formerly EADS.

Crucially, the defence industry was also involved in preparatory work for the European Convention tasked with drafting the EU Constitution. According to Frank Slijper from the Transnational Institute, the working group on defence asked 13 experts for their advice. These included two industry experts from Europe’s two biggest defence contractors, one from BAE Systems and one from EADS, and the president of the European Defence Industries Group (EDIG), which is now the ASD. These representatives provided suggestions regarding the role of defence matters within the future EU Constitution.

The details of their input have not been released, but a look at the text of the EU Constitution, specifically Article I-41 and Article III-311, shows defence sector friendly terminology. Article I-41 “Specific provisions relating to the Common Security and Defence Policy” states that the EDA shall “contribute to identifying and, where appropriate, implementing any measure needed to strengthen the industrial and technological base of the defence sector.” Article III-311 (e) states that the EDA shall “support defence technology research, and coordinate and plan joint research activities and the study of technical solutions meeting future operational needs.”

Hence, unsurprisingly, the EDA, has been met with great approval by the European defence industry. Leaders in the industry do not want Europe to become a “vassal state to the United States and be forced to buy products without access to the technology behind them,” and are hoping instead for a so called “Airbus effect”, meaning the successful cooperation of the military and civilian aerospace divisions of EADS which is seen as a shining example for further European defence industry integration. The EDA is the first arms agency which has been set up by the EU, and, as the text of the EU constitution and its own description demonstrates, is envisaged as a platform for increased funding for, and further integration of, the European defence sector.

EU defence funding

As the competences of the EU have increased over time, it has slowly involved itself with issues that were once purely national affairs. Defence issues are a notable example of this. This is reflected not only in the role of the EDA,  the EU’s Defence and Security Procurement Directive aimed at facilitating an EU defence equipment market, or EU military missions abroad under the CSDP, but also defence technology programmes funded directly by the EU. For example, “EU defence firms have received hundreds of millions in EU research grants for work on drones, despite rules against funding of military projects.” According to a 2014 report by Statewatch, “at least 315 million euro of EU research funding has been awarded to drone-based projects, many of which are subsidising Europe’s largest defence and security companies.” Such subsidies seem to present a “blank cheque” for Europe’s defence sector.

Although the rules for the EU’s Framework Programme for Research and Innovation, "Horizon 2020," prohibit funding military projects, the concept of dual-use technologies that have both civilian and military applications allows the funding of drone research. If European defence companies receive funding to develop technology for civilian drones, they benefit as they can then also incorporate this into their military drone programmes:

Some of the EU-funded projects – such as Talos (transportable autonomous patrol for land border surveillance), Perseus (the protection of European seas and borders through the intelligent use of surveillance) and Seabilla (sea border surveillance) – are currently being worked on by EU defence firms Dassault Aviation and Thales .

Investing in drones

It is without doubt that drones, able to patrol for extended periods of time, engage time-sensitive targets and airborne sensors, are the future of military airpower and so will no doubt represent a significant portion of Europe’s military aerospace industry in the decades to come. Recognising this,“the overall EU budget for security research has tripled from 1.4 billion euro under the previous budget period, to 3.8 billion in 2014-2020.” Facing strong competition from US and Israeli defence firms, the EU is hoping that investing in drones will create jobs and generate profits in Europe’s defence and aerospace sector - an outcome the defence industry is surely not opposed to.

Discussions at the EU level on increased funding to improve EU military research is not an entirely new phenomenon. For example, in 2003 during the Greek presidency of the EU, Greek finance minister Nikos Christodoulakis called for an end to the policy of EU research funds being strictly limited to civilian projects. “A spokesperson for EU Research Commissioner Phillipe Busquin welcomed the Minister’s comments, and said that the Commission looks forward to further debate on the issue by member States and the European Council.” 

Again economic reasons are cited, with emphasis on competitiveness and commercial payoff. “A well cited example is that of the US, where high defence research spending continues to have a visible impact on the national economy” according to CORDIS, the European Commission’s Community Research and Development Information Service. As can be seen, traction for EU involvement in defence projects has steadily grown. How much of the impetus for this is coming from the EU’s political and economic goals and how much is coming from the defence industry lobby is impossible to tell. What can be shown is that the defence lobby is active in Brussels and that there is an increasing trend of defence industry friendly initiatives coming from the EU.

Conclusions

It must be said that the defence industry is not unique in its lobbying endeavours, and corporate influence on policy-makers is an issue that involves many other sectors of the economy. Many industry associations lobby government, at national and EU level. Many other sectors of the manufacturing industry also employ vast amounts of people, increase cross-border cooperation, generate high technology and have knock-on effects further down the supply chain. An example of this is the European automotive industry which is also very integrated and highly competitive on the global market. One must therefore be careful not to single out the arms industry or tar it all with the same brush, as it is simply a component of a much larger symbiotic system of state and industry. It must also be said that security is a basic need, and this article does not intend to argue against Europe having indigenous defence capability per se.

In the contemporary political landscape, notably with the persistent unemployment caused by the financial crisis, the lost economic activity caused by the sanctions between the EU and Russia over the Ukraine crisis, and calls within NATO to spend more on defence, it is probable that the defence sector will get more and more attention and support at EU level. The European Union and the defence industry are becoming ever closer partners, communicating through a wide network of clubs, associations, organisations, government departments and other official and unofficial avenues of dialogue, aimed at securing economic benefit for industry, and the defence-political goals of the EU.

This can be seen in three ways depending on the reader’s political persuasion. A natural progression where European integration inevitably also leads down the path of common foreign policy and military integration; a worrying trend of corporate-fuelled militarism driven by partially invisible and unaccountable forces; or a combination of both.

Expose the ‘dark money’ bankrolling our politics

US Christian ‘fundamentalists’, some linked to Donald Trump and Steve Bannon, have poured at least $50m of ‘dark money’ into Europe over the past decade – boosting the far right.

That's just the tip of the iceberg: we've got many more leads to chase down. Find out more and support our work here.

Get weekly updates on Europe A thoughtful weekly email of economic, political, social and cultural developments from the storm-tossed continent. Join the conversation: get our weekly email

Comments

We encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.
Audio available Bookmark Check Language Close Comments Download Facebook Link Email Newsletter Newsletter Play Print Share Twitter Youtube Search Instagram