This is an academic paper I wrote for Miami University's 1999 Transatlantic Seminar, a graduate level class held in six European capitals for which I received an "A with distinction."
The European Union was born out of a desire by its members to create a secure environment after a history of war, the last being the catalyst to integration. The lack of foreign affairs and defense cooperation over the course of this economic integration therefore seems like a paradox- political and military matters should be included in an effort to secure Europe from the atrocities of its history. However, if one looks at the length of time it actually took to establish economic union, it is understandable why the acceleration of foreign policy and defense cooperation has been very recent. After the second world war, Europe was destroyed economically, politically, and militarily. The Marshall Plan served to jump start the economies of the European countries, and this expedited the integration movement.
Creating the European Economic Community began with the integration of two vital industries of Europe- coal and steel. Jean Monnet and Robert Schumann knew that integrating these industries would lead to further integration in other industries. This is known as functional spillover. The glass has almost been emptied; most of the economic aspects of Europe have spilled out. However, one important industry has continued to remain independent of this movement toward economic union: the defense industry. This is the key to political integration. The Treaty of Rome exempted procurement from Community competence. Defense was seen as too close to the core of sovereignty on the one hand, and on the other, there was a sense that defense should be left up to NATO rather than some European body. Governments also realized that in order to have a single market for defense equipment, they would need a common arms export policy, something they were not prepared to do.
As it became increasingly difficult to finance national programs, defense spending was cut. The Cold War was taking its toll on the purses of the national governments, and cooperation in the defense industry began to seem more appealing. With national firms producing mainly for national defense markets, research, development, production investment, and other fixed costs had to be spread over a smaller number of units produced than if the output had been for the EC market as a whole, and governments were paying more for defense equipment than was necessary. Research efforts were being replicated, and governments often wasted money for the redevelopment of products which had already been worked on elsewhere in the community. Collaboration would allow states to share the costs of a program.
The number of intra-European agreements reflects the growing requisite for cooperation. From 1961-1994, these agreements swelled by 800%, with the biggest difference coming in the Gorbachev era, tripling the amount of agreements in the early eighties. A significant outgrowth of the seventies was the Ariane rocket, developed by the European Space Agency, managed by CNES, the French national space authority, and produced by eleven European companies who combined are called Arianespace. Another significant development in the seventies was Airbus, a consortium of commercial airplane manufacturers which has recently begun work on defense equipment. However, onerous global economic conditions stifled expansion of these types of cooperation during the decade, and further integration in the industry was delayed.
The eighties was a decade of increased collaboration in an attempt to off-set Cold War expenditures, but it was not until the decade of the nineties that cooperation in the defense industry took off, especially in high technology areas like space. The decade began with the merger between Matra Espace and Marconi Space Systems to form Matra-Marconi Space, the only European supplier of military satellites. That same year the Franco-German aircraft, Tiger, first took to the skies. (This was eventually followed by the Eurofighter project.) In 1992 the French aerospace company, Aerospatiale, and the German company, Deutsche Aerospace (DASA), now DaimlerChrysler Aerospace, merged their helicopter divisions to form Eurocopter, the first fully-integrated aircraft company in Europe. The first military reconnaissance satellite system developed in Europe, HELIOS I, was launched in the middle of the decade, a cooperation between Aerospatiale, CASA (Spain), Alenia (Italy), and Matra-Marconi Space. In 1998, the first production contract for the Eurofighter, a consortium of DaimlerChrysler Aerospace, Alenia, CASA, and British Aerospace, was signed.
These are some of the bigger cooperative ventures that have taken place in the past decade in the defense industry. A complicated web of consortia, mergers, and joint ventures is beginning to entangle the national governments together. What is especially interesting is that national governments must give permission for these mergers to happen, and the defense dependencies that these mergers create are a known consequence to the governments. It is obvious that something is happening to the defense industries of European nations, an integration brought about by the economic unity that forced its way into the fortress of national defense equipment production . What are the consequences of this coalescence, this pouring of cement forming a foundation for political fusion, this building of the structure that is to become one Europe, a federalist nation, one immense superstate? I sought answers to this question in the opinions of people who are at the heart of the European defense industry, those who have been around to note the augmentation of mergers and other cooperative ventures, to clear up what is happening in the smoke of the speeding car driving toward union.
To explain what is happening, one must think of a wheel, a ticking clock, or the sun, all spinning circles, creating movement, running the world. Economic concerns created the need to work together, in an effort to cut the cost of defense. This, in turn, created a sort of interdependence, the web of cooperative ventures mentioned previously, a tangling of interests tying together the most important defense equipment producers. This interdependence creates pressure to cooperate, thus putting us back at twelve o'clock where our day had commenced. What began as a rational calculation of self-interest has become one single European interest, though there was never any intention by the national governments to create that single interest.
I was on a quest, searching for evidence of the changing structures of the defense industry, an adventure to compare my hypothesis, that the defense industry was the key to defense integration, with the views of the actors who worked as pieces to the integration puzzle. Monsieur Marc Fontaine, an employee of the strategy department at Aerospatiale-Matra in Paris, pointed out that the French national government was slow to realize that national defense industries can no longer afford to stand alone, but has recently come around to the idea. He advocates specialization by country and merging by business area across Europe. This would be a significant step toward complete European integration, because specialization produces interdependence, and a specialization by country would produce a complete system of interdependence in the European defense industry. His opinion coincides with regime theory, an approach to the concept of European integration. "Interdependence theorists recognized the fragmented nature of the nation state, the importance of transnational actors (including, for example, multinational companies) and the effect on national governments of participating in international regimes."
Indeed, this is not an idea commanded solely by Aerospatiale-Matra, for Monsieur Pierre Fabre, Executive Vice-President of SNECMA, held a similar view of interdependence. He said that multinational industrial cooperation is the way to maximize efficiency. SNECMA has built a new engine for the future Airbus military transport, an allusive production considering that the Airbus program has been the most successful collaborative effort in the history of European integration. The implications are that the most successful collaborative effort is becoming involved in military production, and this will tie another knot in the web of integration.
Aerospatiale-Matra is an interesting case to examine. It is state owned, with the French government owning 48%, though it is still in the lethargic process of privatization. State ownership makes it impossible for it to merge with foreign owned companies, though joint ventures are still possible. It presents a huge obstacle in the process of integration, and had a part in the failure of the DASA-BAe merger. The French Ministry of Defense is constructing a partnership with the defense industry, an unusual mingling of government and business, though this is becoming increasingly common in the era of high technology. I spoke to the Special Assistant to the Director of the French Ministry of Defense about this relationship, and he said that the French government's reluctance to privatize its defense industry is based on two ideas. The first is that the French defense industry is a source of national pride, and such pride slows change. The second is that "France wishes Europe to adopt what France conceives as a European security policy," and control over the French defense industry gives it more control over the European defense industry.
Let me go back to the first problem. National pride, national conscience, national culture-these are and have been obstacles in the path toward all forms of integration, including economic. This is the grass roots, and has led to the subsidiarity principle, where decisions are taken at the lowest level of governance because people feel closer to the issues. Even in the area of defense, since Kosovo, have the waves of integration spilled over, as evident in the Kosovo issue being a European Parliament election issue in Germany. The French public opinion is bound to change, as well as the mind of the government.
The second problem, and more relevant to my discussion, is French control over its defense industry. As it slowly privatizes its two largest contractors, Aerospatiale-Matra and Thompson-CSF, it retains less control, and had the process been complete, Aerospatiale would have been considered in the DASA-BAE attempt to form the European Aerospace and Defense Company, which would have created nothing less than full industry integration. Just knowing that the idea existed is enough to demonstrate this want of coalescence. What we have seen, and Monsieur Fontaine mentioned this, is that the French government is resisting an ineluctable building of a structure of cooperation, and they are fighting a phenomenon that was created by the very existence of the European Community, with its free borders, institutions that gain power by the day, and now, the single currency which eliminates all economic obstacles to industry integration. As it sells off shares of its companies, the French government cools its resistance, knowing that defense integration is necessary.
All of this integration increased the need for some sort of structure to keep order to what could become a mess. The different rules on arms procurement by different countries set up barriers to facilitated production. Perhaps some part could not be produced in one country because a higher export tariff (still legal because arms production was excluded from the treaties) would raise the costs unnecessarily. Thus it seemed inevitable that a European Armaments Agency would be developed. The first step toward this agency is OCCAR, an arms procurement organization. I was able to speak to the Special Assistant at the French Ministry of Defense about this organization, and he provided me with some insight into the role of the French government in this organization.
In addition to the French view, I was able to talk with Mr. Marcus De Ville from the British Ministry of Defense Press Office on the subject. This was particularly interesting because of the anomalous view of anything European that the British hold, contrary to continental views. In November of 1998, Tony Blair called on Europe to boost its military role, a shift in its previously anti-Europe view on defense matters. Mr. De Ville had an air of British conspicuity, for the number of times that he mentioned the importance of British involvement in any European defense structure exceeded ten times; I stopped counting. This is the British attitude, but the fact that any European military structure without British participation would be virtually as ineffective as European defense is currently, has not passed by the thoughts of the other European governments. Britain has the most effective navy of any European country, and it also has the nuclear factor. Having Britain as one of the founding members of OCCAR, and the Special Assistant said this as well, is a major step toward a European Armaments Agency. Already some cooperative programs are scheduled for transferring projects to OCCAR management, including the MRAV, not only demonstrating the commitment to this new organization, but also a commitment to cooperating in areas beyond aerospace technology. The OCCAR project has been slow to take off, as many cooperative European structures have. But Henry Ford did not build his car in a day, and neither will the EU.
What is the significance of OCCAR, in addition to creating an agency to manage the ever tangling web of defense industry integration? OCCAR is a wall in the larger structure of a European Strategic Defense Identity. With industry as a building block, Europe is able to, almost forced to, look at a greater political coalescence than it would without the vital industrial linkage that has taken place, much like it did when other industries were so intrinsically linked that economic union was the only option left. In June of 1999, the European Council agreed to absorb the WEU into the EU and to create a European defense identity from that existing structure. The Maastricht Treaty on European Union stated Europe's intentions on closer cooperation on foreign and security policy areas, along with defense issues. The Amsterdam revision of that Treaty gave a greater commitment to defense cooperation and the Cologne Summit in June sealed that commitment. That summit also sent employees of the WEU into a frantic scramble for answers as to what will happen to them. Just as the other EU institutions have evolved, so will a new defense institution. Like parliament, for example, it too will gain power over time.
At any rate, one cannot discount the effect of the global environment. Large corporations are no longer national. Globalization has served as fuel to these mergers as much as Europeanization. However, this cooperation could not have taken place had not the larger institutions of the EU been in existence. Imagine trying to integrate any industry when you must stop to wait in lines to cross borders. The realist approach to European integration sometimes forgets that a convergence of national interests was not due solely to changing interests in the aftermath of the Cold War, but to an interdependence that forced those interests to change. Interdependence was warranted existence because a wave of spillover washed it ashore, leaving a pile of tangled alliances, mergers, and other ventures which have begun to include the defense industry in the web of integration. Just as these industries have been entangled, so have the theories of integration, as neo-functionalism and interdependence have merged in opposition to a joint realist-intergovernmental venture.
