European Defense: Save, Cut And Sustain


European Defense: Save Money, Cut Forces, Sustain Afghan Commitments (for now)

(Credit: The Hudson Institute)
(Credit: The Hudson Institute)

By Dr. Richard Weitz

11/28/2010 – The 1998 St. Malo Declaration between Britain and France, which inaugurated the European Security and Defense Policy, declared that: “The Union must have the capacity for autonomous action, backed up by credible military forces, the means to decide to use them and a readiness to do so, in order to respond to international crises.” The declaration further called for “strengthened armed forces that can react rapidly to the new risks, and which are supported by a strong and competitive European defense industry and technology.”

Despite the passage of more than a decade since this declaration was issued by the two EU members with the largest defense budgets, the EU has made little progress in developing a collective military capacity. The EU Lisbon Treaty, which came into force last year, has concrete provisions allowing EU members to collaborate more in the military field, but much additional European defense industrial cooperation has yet to occur.

A study of European defense spending recently released by the Center for Strategic and International Studies (CSIS) found two divergent trends that both result from declines in the size of European armed forces occurring more rapidly than cuts in European defense spending .

From 2001 to 2009, aggregate European defense spending fell from €251 billion to €218 billion (a negative compound decline of 1.8 percent annually, measured in constant euros). Over the same period, aggregate spending per soldier increased in constant terms, from €73,000 to €91,000 (a compound yearly growth rate of 2.8 percent).

These same broad trends can be found in the narrower defense spending categories. For example, European military research and development (R&D) spending in Europe fell from 12.3 billion euros in 2001 to 10.3 billion euros in 2008, but R&D per active duty member rose somewhat from 6,700 euros in 2001 to 7,2000 euros in 2008. Operations and maintenance fell the least during the 2001-2009 period, largely because of the need to sustain the missions in Afghanistan, the Balkans, and elsewhere during this decade.


Together, these trends mean that Europe has fewer troops—total active duty military personnel in the 37 countries studied fell from 3.5 million in 2001 to about 2.3 million in 2009—and other aggregate military capabilities. But the remaining military personnel are on average probably becoming potentially more effective. Although risks arise from having smaller numbers of troops and equipment, these trends do create opportunities—further facilitated by favorable changes in EU defense procurement regulation—for greater defense specialization on select military acquisitions by country, as well as enhanced collective capability if countries focus their remaining resources on developing smaller, more expeditionary-capable forces.

Total active duty military personnel in the 37 [European] countries studied fell from 3.5 million in 2001 to about 2.3 million in 2009. But the remaining military personnel are on average probably becoming potentially more effective.


In response to these declining defense budgets, on February 23, 2010, U.S. Defense Secretary Robert Gates warned that European governments’ failure to meet their minimum defense spending obligations was creating “funding and capability shortfalls [that] make it difficult to operate and fight together to confront shared threats.” The May 2010 Group of Experts report further cautioned that the transatlantic capabilities gap “could undermine Alliance cohesion” because only the United States and perhaps a few major European powers will have many transformed forces capable of conducting sustained foreign combat missions.

Optimists hope that the downward pressure on military spending will force European governments to take long-needed measures to reduce procurement duplication and pursue greater military specialization and interoperability. EU and NATO leaders have cited the cost pressure as giving them an opportunity as well as an imperative to secure more military value for defense spending through such measures as reducing unwanted defense duplication, reallocating resources based on collective rather than national priorities, encouraging more national military specialization on niche capabilities, as well as pursuing more collaborative research, development and procurement based on common funding mechanisms.

Pessimists point to enduring obstacles to enhanced European defense industrial coherence, and wonder if progress will come soon, or prove sufficiently widespread, to have much of an impact on their military capabilities. Industrial policy concerns typically exert much more influence on NATO or EU spending than national security considerations.

For this reason, proposals to extend NATO- or EU-wide defense procurement have never made much progress. NATO defense investment continues to be diluted across an excessive number of projects, with the most important military powers seeking to sustain national aviation and shipbuilding sectors despite the resulting duplication, inefficiencies, and insufficient economies of scale. Even in European countries with large aggregate defence budgets such as Germany and Turkey, spending is not optimized to NATO’s expanding international security obligations since money flows predominately to manpower and maintenance rather than researching, developing or procuring new weapons systems.

European nationalists and strategists recognize that continuing present policies risks leading the EU into strategic irrelevance. At the September 2010 informal meeting of EU defense ministers in Ghent, French Defense Minister Hervé Morin warned his colleagues that Europeans needed to pool their defense capabilities more effectively or Europe risked “gradually becoming a protectorate – 50 years from now we’ll become a pawn in the balance between the new powers and we’ll be under a joint dominion of China and America.”

Former French defense minister Hervé Morin has long been pressing EU governments to make defense a more important priority, telling one interviewer a few years ago that having a common defense policy was at least as important to the EU as having a common currency.  At Ghent, Hervé Morin argued that, without sufficient military capability, Europe could not exert significant influence in the world. Yet, notwithstanding their defense cuts, he maintained that European governments could enhance their overall military capabilities by deepening their defense cooperation. He proposed that all 27 EU states compile a list of their military capabilities and indicate which should be shared and which should remain under the control of the individual nation states.

Former French defense minister Hervé Morin has long been pressing EU governments to make defense a more important priority, telling one interviewer a few years ago that having a common defense policy was at least as important to the EU as having a common currency.

European Defence Agency EDA Facts and Figures 2008 (Credit: Defence Agency EDA Facts and Figures 2008

Asked about Hervé Morin’s remarks, the head of the liberal grouping in the European Parliament, Guy Verhofstadt, even thought the imperative to cut military budgets had now perhaps created the necessary incentives to take the ultimate step of creating a common European army: there are two million soldiers in Europe, but only 300,000 in the US, and I think that the American army is more efficient that the European forces. So that’s a good reason to start this.”

Seeking to make this position more credible, Verhofstadt noted that the EU would simply be replicating the progress it had made in the diplomatic realm in the related area of defense: “We have now a diplomatic service, which is very important, but we also need the other instrument – a common European defense, a common European army.”

Few expect the EU to seek a common European army, but whether the Union can achieve even the more limited proposals to pool defense assets and significantly expand their collective defense procurement efforts is questionable. At present, European defense spending is misallocated for meeting governments’ self-described global security requirements. Funds go overwhelmingly toward paying for personnel and operations and not on developing or buying weapons.

According to the CSIS study, in 2009, more than half of European defense spending went to military personnel, while only one-fifth of defense budgets paid for equipment.  These distributions will not soon change due to the rigidity of many military pay structures. Furthermore, most European militaries still devote most spending for capabilities related to territorial defense rather than for meeting global challenges through expeditionary forces. Of the two million European active duty forces, only 3-5% of them are readily deployable and sustainable at strategic distances from Europe in complex contingencies such as on stabilization or counter-piracy or peacekeeping missions. These deployments address emerging threats that directly affect Europeans’ interests if not necessarily their national frontiers.

NATO needs dynamic and flexible forces to address these threats rather than legacy forces that suck up funds but provide relatively little defense capability. At present, only British and French forces are able to join their U.S. counterparts as equals in the initial phase of a war such as the two invasions of Iraq in 1990 and 2003.

The other European powers now generally lack sufficient advanced weapons systems required to support out-of-area missions against a regional power like Iran—and these are precisely the procurement projects likely to be degraded by the recent wave of budget cuts. At the aggregate level, only 5 (Albania, Britain, France, Greece and the United States) out of 28 NATO members in 2009 met alliance requirements to spend two percent or more of national GDP on defense. Bulgaria and Turkey fell below that threshold after meeting it in 2008.

Without major changes in these conditions, Americans could become even more annoyed at perceived European free-riding. The defense cuts could also increase tensions among European countries since some, such as Britain and France, spend much more on defense than others with roughly equivalent economies and populations, such as Germany and Italy. In fact, there is a five-to-one ratio between the highest and lowest European country in terms of spending on military R&D.

There is a five-to-one ratio between the highest and lowest European country in terms of spending on military R&D.

NATO says it will manage further defense spending cuts “through continuing transformation, comprehensive reforms, setting clear priorities, identifying savings where possible, strengthening and modernizing financial governance, and providing the necessary resources.” Yet, the anticipated priorities of the new Strategic Concept—dealing with global threats through improved power projection, cyber warfare, and counter terrorist abilities—are those most likely degraded by the planned cuts.

Hopes to improve these figures through a further rationalization of defense spending will depend on overcoming some long-standing barriers in this area. NATO and EU members’ defense practices sometimes appear more responsive to industrial policy considerations than collective or even national military needs.

The low level of investment is spread over too many projects as each major country wants to support its own shipbuilding and aviation industries, resulting in excess duplication and inefficiency in the European defense industries.

European leaders have proposed reducing duplication of military investment across NATO and EU member states by promoting further cooperation between the two organizations. But collaborating on defense procurement has proven surprisingly difficult in the past and nothing new has occurred to suggest things will prove any easier now.

Turkey constrains NATO collaboration with Cyprus while Cyprus limits Turkey’s engagement with the EU; the mutual vetoes restrict broader institutional collaboration. European governments pledge the same forces to both organizations while hoping they do not receive simultaneous requests for the same assets.

The NATO governments will probably avoid another transatlantic blowup soon over the issue because, even while cutting defense spending overall, most European governments have sought to sustain their combat presence in Afghanistan to address the evident priority concern of the Obama administration. For example, French former minister of defense Morin said that, while his ministry would cut spending by some €3 billion through 2013, France would maintain its Afghan operation at current levels. Similarly, the Italian government has issued plans to cut back on military hardware, such as by buying fewer Eurofighters, but conduct its own surge in Afghanistan, to 4,000 soldiers by the end of this year.