Research & Technology Conference

RESEARCH AND TECHNOLOGY –
AN IMPERATIVE FOR EUROPEAN DEFENCE
Brussels, 09 February 2006

Javier Solana
High Representative for the CFSP
Head of the European Defence Agency

Ladies and Gentlemen,
Dear friends,

It is a real pleasure to open this conference. It gives me a chance to share with you some reflections on the importance of European defence research and technology.

I would like to begin by putting defence research and technology, and the work of the European Defence Agency, in a broader context.

It is worth stressing that our work in these areas serves a larger purpose, which is to enhance Europe's ability to deal with a complex and uncertain security environment. Or to promote “a secure Europe in a better world”, as the European Security Strategy put it. There is a clear need and an opportunity to work for that goal. It is what our citizens demand. And it is what the rest of the world increasingly expects. So I am pleased that every day our ability to contribute to global security is increasing: from the Balkans, to the Middle East, from Indonesia to Africa and elsewhere. But, every day, I also feel the frustration of knowing how much more we could do. If only we had a bit more political will and greater means at our disposal.

The biggest change - and improvement - in recent years has been that we have become much more operational. We have more than ten operations underway as I speak. Some civilian, some military. All are proof of our comprehensive approach to tackling insecurity. But the more we do, the more we are asked to do. And for that we need the right tools to do the job.

This is where the European Defence Agency comes in. The creation of the Agency has been an enormous step forward. Its main task is to support the member states in developing the capabilities they need for modern crisis management operations. Clearly, research and technology must be at the heart of its work programme.

We all know that acquiring the right defence capability means many things. We need the right forces, the right doctrine, and the right equipment. But we also need to develop our technological base. That is why today's conference is so important.

There are two impulses behind this conference.

In the first place, it launches what should become an annual series of such meetings between the Agency and the European defence R&T community. But there is also a particular reason for today’s event.

As you know, at the Hampton Court Summit, European leaders asked me to come forward with ideas and proposals on how we can boost European defence research and technology.

The short answer, it seems to me, is that we should spend more, spend better and spend more together. I will come back to this with more details in a minute. European Defence Ministers will focus on this challenge when they meet as the EDA’s Steering Board in Innsbruck in early March. I am sure that today’s debate will provide many ideas and proposals that will help us to prepare for that meeting.

Why are we focusing so much on Research and Technology? The answer is simple: because it is the key to the transformation of our armed forces.

As we move into the 21st century, we face a radically changed strategic environment. New threats and challenges, requiring new roles and new missions of our armed forces. Today's and tomorrow's operations are vastly different from what we planned for during the Cold War. Previously the aim was to unleash the maximum possible destructive power on opposing conventional forces. Now our operations must be characterised by restraint, precision, and the need to minimise the resultant damage.

We are working under tight rules of engagement and 24-hour global scrutiny. In ambiguous circumstances, where the opponent will often be hard to identify and isolate. In everything we do, we must bring together civil and military instruments, and protect our own people as never before. This is a huge challenge. And of course technology is not all we need to transform our armed forces and the way they operate. But it will play a central role.

Technology is also fundamental for the health of our European defence industry. We can debate just how much of that technology we should generate in Europe, for reasons of autonomy, and how far we can rely on the global market. But we clearly need much of it under our own hands. And for that we need a globally competitive European defence industry. Not only as a key part of our economies. But also as a fundamental contributor to the political consensus that supports the role of defence.

But we will not sustain strong technological capabilities unless we invest in them. And there is now real concern that we are beginning to eat the seed-corn.

It was natural that after the end of the Cold War, people expected a “peace dividend”. But cutting back on Research and Technology has too often been seen as an easy option. Comparisons with the US are not always relevant. Still, we should all be concerned that the US now outspends Europe in defence Research and Development by a ratio of five to one. The budget of a single US agency, DARPA, stands at over $3 billion. This is more than the combined total of European expenditure on defence Research and Technology.

Europeans do not lack the skills or the talent for innovation. A European invented the World Wide Web; Airbus stands as an exemplar of what we can do in aerospace when we work together. And Europe is strongly placed in many areas of civil technology. Increasingly these must be “spun-in” to defence. Mobile communications is an obvious example.

But “spin-in” is no panacea. Especially not when Europe’s wider research, development and innovation efforts are also stumbling. There is widespread recognition that current levels of European investment in research and development are insufficient.

In the defence sphere, we can only meet the challenges we face if governments discuss and address them together with industry. For governments it may be a matter of strategy to remaining internationally competitive. For industry, it is a matter of survival.

Ultimately, of course, the defence industry is there to meet the future needs of our armed forces, and not vice-versa. But in a world of ever-accelerating technological change, our military establishments cannot decide what they may want unless industry tells them what they could provide. So it is good to see so many companies represented here today – and to have Tom Enders, the current President of ASD, up here on the platform.

So how can we bring about a step-change in our defence R&T efforts?

I am convinced we must do three things:

First, spend more. I know this is difficult in a world of tight national finances. But it is an imperative nonetheless. Where defence budgets as such cannot be increased, we must work on redeploying funds within those budgets. Manpower costs currently account for more than 50% of European defence spending. But do we really need more than two million men and women in uniform in Europe? Much of our defence infrastructure is duplicative - between countries and between governments and industry. So let us find savings from rationalisation, to increase the proportion of money spent on investment.
Second, we must spend better, so that we get more output per euro spent. Above all, this requires a focus on key technologies of the future. Concretely, this means finding more flexible ways of doing business, particularly at the intergovernmental level. It also means looking at how we can embed new technologies quickly in existing platforms. And it involves matching the ever-shortening cycle times of the civilian world. We should also look at ways how we can harness the ingenuity of companies and universities that are not traditionally seen as part of the defence industry. The same goes for small and medium-sized firms which are often the source of innovation.
Third, and perhaps most important, we must spend more together. This is a fundamental issue and the main raison d’être of the Agency.
Last year, there was an excellent report from the Center for Strategic and International Studies. It reminded us that integrating Europe’s defence efforts should no longer be seen as an interesting idea. It is an absolute necessity. Industry has urged that the proportion of R&T expenditure in Europe which is spent collaboratively should increase from the current level of less than 5% to 20%.

I am convinced that they are right – and we must now, urgently, decide how best to achieve this aim. Some argue that it can be done by increasing the pace and scale of ad-hoc collaborations – the traditional approach, but done better. Others argue that this leaves cooperation at the mercy of different national budget cycles, and diverging national priorities. They stress that the necessary step-change will only come about if some funding is pooled, readily available for joint R&T endeavours. Following this logic, there are arguments for a substantial R&T budget for the Agency.

This would certainly be one way. But there could be others. A joint European Defence R&T Fund, for example, managed within the Agency but controlled directly by its contributors.

Personally, I think the principle of a joint fund matters more than the mechanism. And what matters even more is that we address the issue with urgency, and decide our way ahead.

Let me make one final point. It is clear that the traditional boundaries between defence and the wider world of research and technology are disappearing.

Technologies that the Commission will be promoting under its new programme for European Security Research may be indistinguishable from those we need for more conventional “defence” purposes. We are already working with the Commission on software-defined radio, the next revolution in communications technology. As the respective agendas of EDA and the Commission’s Security Research Programme take shape, we must work hand-in-hand to maximise synergies. I know Günter Verheugen shares that ambition.

Ladies and Gentlemen, let me close.

In European defence we have made enormous progress in a short period of time. But to respond to growing demands and expectations we need more usable defence capability. And for that we need a step change in defence R & T.

I wish you a productive and successful conference. And I look forward to hearing your views and suggestions on how we can, collectively, continue the success story of European defence and improve the contribution that defence R & T can make.

Thank you very much.

Günter Verheugen -
Vice President, European Commission

Mr Chairman,
Dear Colleagues,
Ladies and Gentlemen,

For the first time the European Commission, the European Defence Agency, industry and representatives from the Member States are meeting to discuss together a joint approach to security research. Some years ago this would not have been possible.

I am happy to be invited to give an opening statement today, and I would like to thank the European Defence Agency for having taken this initiative.
Why does security rank so high on the European political agenda today? And why, at Hampton Court, did heads of State and Government underline the importance of research and express the need for increased spending and more co-operation in this area?

Europe is mostly known for its economic and social policies and identity, but Europe is also increasingly developing a security identity.

The roots of this development can be found in the shocking security incidents that have occurred over the last few years notably in New York, Madrid, and London.

The citizens of the European Union have a growing awareness of threats to their lives, their wealth, and their common values. Threats are global, so the solutions cannot only come from the Member States. Security solutions are expected on the national, European, and global levels.

Our American friends have a very clear-cut political approach to security. For them, the notion of “homeland security” covers a wide range of areas and activities. The boundaries between “Internal” and “external” security are blurred under this single notion.

For the European Union, the situation is more complex.

It is the historical development of the European Union that established three different pillars of political decision making for different strands of “security”. We also find disperse responsibilities both on the European level as well as the Member States level.
Thus the framework of security policies is very delicate.

Nevertheless one has to realise that in real life, operations of the civil security sector and the military sector resemble each other – and increasingly so. Thus the current split of research domains appears sometimes artificial, especially when viewed at the technology level. However, the policy missions are different.

There are several examples which make clear the dual or multiple use character of security technologies both in the civil and defence domain (like vehicles used for border control or the protection of infrastructures; or interoperability of secure communication systems). We have to join our forces.

Both the Commission and EDA are currently working on long-term strategic research agendas for “their” security research domains. They bring together the end-users who define the strategic requirements, and the industrial community, who will be required to meet those requirements. The agendas need to define clear research and investment priorities.

In research, we need innovative approaches, we need to avoid harmful research gaps and unnecessary duplication. What we need is co-ordination between the security research agendas.

We also need a permanent dialogue between the demand and the supply side to shape this strategy and to make it operational. We need a dynamic balance between “pull” and “push”. For the Commission, advice on this, and other issues, is the task of the European Security Research Advisory Board, which was established in order to guide the structure, content and priorities the future security research programme.

I am pleased to say that on the European level interaction between the Commission and the European Defence Agency works in an excellent way by involving EDA staff in Commission working parties as well as vice versa.

We will have two long-term security research agendas, but they will be related to each other.

This will give more research value for the money.

Apart from European level security research, a lot of research work of high relevance for the security domain is performed on the national level – with resulting overlaps and fragmentation.

The Commission will make every effort to overcome this fragmentation. We need to co-ordinate not only between the civil and the defence-related security research domains but also between the national and the European level. No appropriate mechanism exists to undertake such co-ordination and this must be jointly developed over the coming months.

Why? Because we need more co-ordination and more money for research.

Civil Community security research in the future 7th Framework Programme will receive a significant budget allocation. Nevertheless, the Commission will by no means be in a position to cover all research needs with that budget. European security research will have to focus on issues of clear European added value compared to security research carried out in the Member States. The Community is not the “26th Member State”.

An example for a security research mission area of clear European added value is the external border of the Union. After abolishing our internal borders, securing one particular part of the external borders of the Union is no longer the concern of one Member State alone, it is the concern and responsibility of all European citizens together. Hence it is the responsibility of the Community to invest into its protection. Promoting the required research into a border security mission area is the logical consequence.
Another example may be the Trans European Networks (TEN), a joint European infrastructure which needs to be protected. Here again the Community has a responsibility.
A new European security and defence policy is taking shape. It needs instruments. It needs an industrial network. And it needs a strong and competitive technology basis.

Technology and research are not targets per se. They are instruments which serve political objectives. Technology itself cannot guarantee security but security without the support of technology is impossible.

Europe is at the dawn of establishing its own security identity and security culture. No Member State will have to abandon part of its sovereign rights, but all Member States will have to contribute to building this European security culture together.

While working on it, we must respect human rights and ethical values, which are part of our European heritage, identity and common values.

We in the Commission are confident that our efforts will encourage others in pursuit of a more secure Europe in a more secure world.
Being myself a member of the Steering Board of EDA, I intend to work hand in hand with the Agency on this great endeavour.

Tom Enders
President of ASD and CEO, EADS

1. Introduction

Good morning, Ladies and Gentlemen:

It is good to be here with you this morning to discuss what we can do together for Europe, its security and its technological capabilities. Surely today’s conference is a milestone for everybody working for the success of the European Defence Transformation.

An effort that has started with the creation of the European Defence Agency. During 2005, the agency has successfully established itself. The approval for the “Voluntary Regime for Defence Procurement” is a first success. A good, though not in and by itself sufficient reform initiative.

EDA now is trying to make 2006 the year of the “paradigm shift” in Defence R&T. An initiative I think we all should fully support. It is high time we get something done in this field.

Because unfortunately, and if we are straightforward about it, the objectives that were spelled out in the Agency Charta are so far largely dead letters.

Let us remind ourselves what the Agency’s shareholders desire to achieve through EDA: Namely the enhancement of the effectiveness of European Defence Research and Technology (R&T), in particular by:

Promoting research aimed at fulfilling future defence and security capability requirements, strengthening Europe's industrial and technological potential in this domain;
promoting more effectively targeted joint defence R&T
coordinating and planning joint research activities;
catalysing defence R&T through studies and projects;
managing defence R&T contracts;
working in liaison with the Commission to maximise synergy between defence and civil or security related research programmes.
I emphasize: these are dead letters still today, by-and-large. However, we all know very well: Europe must change the way it invests in future military capabilities. We must achieve significant gains in “investment productivity”.

And the timing for this initiative could not be more appropriate, just as the European Union is preparing its civil research programme for the next 7 years.

At the same time and not surprisingly, there are strong, entrenched ways of “business as usual”. Entrenched ways of protecting perceived “national interests”.

You all know them – so I just briefly spell out a few examples:

Almost intuitive 296-type behaviour: if an issue concerns defence it is by definition not a community subject. 17 years after the Berlin wall was dismantled another one has to come down in the European interest.
Of course this will not happen, unless and until all Member States recognize the benefits that can be harvested by implementing a well-measured degree of mutual dependence.
Little helpful also is the wide disparity of means attributed to defence investments across all Member States. It stands to reason that a disparity of effort does not foster the willingness to find cooperative arrangements.
Furthermore, the EU today takes a much too cautious approach in harvesting the benefits of “dual technologies”
And last but not least a lack of recognition that setting defence policies (be they R&T, industrial or commercial) has to be done in a holistic manner throughout Europe. Doing a little bit on the European level and the rest 25 times in an isolated national environment is a fig leaf (for change) that is too small to hide our deficiencies.

Those are ways of thinking and acting that have to be overcome for the sake of achieving a common purpose. All in all as you can see, we are still confronting a major challenge. Yet we must be well aware: Failure will be fatal for Europe’s political ambitions and our industrial competitiveness. Therefore failure is not an option.

2. Vision

Which then are the pillars of the much-needed paradigm shift regarding defence R&T in Europe? I consider three issues to be of overriding importance:

Establishing the necessary Policy Foundations
Creating the Instruments for Implementation
Setting Targets and monitoring their achievement

As for the policy tools, despite ESDP, we are still lacking the policy foundations to provide the yardstick by which the efforts undertaken can be measured. What is it that I am aiming for?

First, the worthy top-level goals of the European Defence & Security Policy have to be translated into more concrete requirements. Only such concrete requirements can serve as drivers for action in the different fields. The role of technology as a provider of superior security & defence related capabilities, i.e. as a means to fulfil the political requirements, has to be clearly expressed. Then R&T becomes a relevant ingredient of ESDP.

Second, we need to generate a “holistic” space for R&T in Europe. This means we need to map our expenditures and capabilities at EU-level and at national level in a transparent and comprehensive fashion.

Third, once the analytical part is done, a comprehensive Strategic Research Agenda has to be developed. This agenda should be based on a sound principle of European subsidiarity and spell out in a transparent way who takes responsibility for which part of the recommended R&T activities. Such an Agenda needs to be linked to clearly defined and expressed operational needs.

Fourth, a coherent funding plan drawing from all relevant sources has to underpin the Strategic Research Agenda; it has to be embedded in legislation at EU and national level and it has to be enforceable!

Fifth, a thorough determination of the required key technologies, through which Europe will ensure its strategic autonomy of action, must be achieved rapidly. Identification of existing means and capacities will then determine short to medium term needs as well as long term capability requirements.

Sixth, Defence and Security Research have to be clearly identified and recognized as drivers of the “Lisbon objectives”at the same level as other technological domains.

While applications may be specific, technology is by-and-large generic. We should, I think, be as mature as our competitors on the world stage and stop “segregating” “dual-use” research (and we may have to find a better expression) as if it were a different domain.

So much for the policies. Now, policies have to be accompanied by the right instruments for implementation.

Let me offer you a few observations on four instruments I consider as especially important if we want to realize our vision.

We need an EU-level Defence Science & Technology Board
We need an EU-wide network of Technology experts
We need a technology “incubator” to generate breakthrough approaches
And we need an EU-wide network of commonly recognized Centres of Excellence
The Defence Science & Technology Board should have the task to set the right objectives for EU defence technology research.

It would be a group of high level, competent stakeholders, inspired by both ACARE that has been successfully setting the Strategic Agenda for European Research in civil aeronautics, and by the US Defence Science Board that has been playing such a major role in US technology policy.

The network of European Technology Experts exists today; I am referring to EDA’s CapTech Network. We might just need to adjust its effectiveness a little in order to provide the focused support necessary especially for the implementation of some short-term research objectives.

As for the Technology Incubator the EU should consider institutionalizing an instrument to foster research in this area. A European derivative of the US DARPA could be such an instrument.

Let us not forget DARPA has a USD 2bn budget for such upstream research. As of today, we cannot credibly claim to match such amounts – but we have to get going! Last but not least, Europe has to eventually start to rationalize its technological capabilities, avoid duplication and concentrate its resources on those research capabilities that are essential to sustain key technologies.

I therefore suggest that discussion on the core network of Centres of Excellence around those key technologies begin immediately. Why should Members States not compete for locations of Centres of Excellence and obtain approval based on the attractiveness of conditions offered, like existing capabilities, future funding support, etc.?

Probably each capability will necessitate its own technology support network throughout a number of Member States. Still, we should apply a clear lead nation principle here.

Lastly, visions will stay just that if there are no targets set to turn them into reality.

Therefore, as in the civil research domain, spending commitments must be the foundation for the Strategic Defence Research Agenda.
Taking into account the level of subsidiarity in defence R&T spending, those targets must cover national and EU-level research spending in a coherent way.

A couple of principles that come to (my) mind are the following:

a.much effectiveness can be gained by investing in cooperation with other Member States; thus the majority of national spending in defence R&T should eventually be cooperative – way above the target of 20% cooperative spending we are discussing today.

In substance, all R&T investments into domains that are commonly recognized as belonging to areas of “European deficits” should be cooperative; if for various reasons one Nation decides to invest in these domains on a national level, they must be opened for cooperative approaches at a later stage.

Let me recall for our benefit what was said when EDA was created: Europe needs to spend more on defence and spend better; if it continues to be difficult to spend more, spending better is the only alternative!

And spending cooperatively on defence research is the only way to spend better in the absence of common spending.

Another strong reason to do more jointly resides in the fact that, as you know, Research & Technology has been kept outside of the Voluntary Regime. The potential therefore exists that the present “national approach” to R&T creates a distortionary effect on the Regime’s operation, since there will not a “level playing field” in defence procurement without more coordination and cooperation in R&T.
b.As in other research areas (like aeronautics, space), common funding through a joint instrument is the most efficient way to ensure a future for European defence technological capabilities.

The instrument to do this exists today, we know it all and I only have to refer you back to what the Agency Charta says about allowing ad-hoc/opt-in projects. Now EDA must get the means to assume its role in defence R&T.

Here and there we hear that EDA should not be given budgets to invest in R&T because it does not have the credibility and capability to make the best use of public money.

I fear, I do not understand the logic of this argument: the Member States as shareholders of EDA are in total control: if they do not transfer the adequate management capabilities together with the budgets and the responsibilities, EDA will forever stay an (almost) empty shell (like all its predecessors on the European scene) – now who’s credibility is at stake?

And since in my view this does simply not make sense, I propose in a first step to create a common EDA Research budget of say €50 million as soon as national budget procedures allow, but certainly not later as 2007.

3. Solutions

How then can we start bridging the gulf that separates present day conditions from the vision laid out before? Modifying policies and agreeing them at the European level inevitably will take time. Time that we basically do not have. In order to advance in the short-term, EDA must get (back) on track with “promoting more effectively targeted joint defence R&T, drawing on the experience of relevant elements of the WEAG and the WEAO” as the Joint Actions predicates.

This is urgent and if it has to be done with only a streamlined CapTech process, so be it. We have recently seen interesting proposals being put on the table by the L.o.I. Research Directors; they should quickly be put into action.

Moreover, we see the need for a top-level group. Let me call it “Group of Personalities Defence & Security” with a reference to the approach that has been used previously for the European Security Research Programme.

This group should be a “policy-level” precursor to the “Defence Science & Technology Board” that I suggested previously and should comprise decision makers from national governments, EU-level institutions and industry.

Among its tasks should be the identification of short & medium term drivers for joint investments in defence research and top-level drivers for long-term R&T investments, among which should figure

Investigating and establishing the relationship between technologies and threats (external/internal)
Potential contributions of alternative and innovative funding instruments applicable to government-funded research
A thorough analysis of and relevant proposals for an evolution of the institutional framework and structures under which defence research is conducted.

This “GoP Defence & Security” could render its conclusions at the end of 2006 with initial implementation starting soon thereafter.

Ladies and Gentlemen:

At the beginning, I said: this conference will be a milestone towards a more efficient, more flourishing European defence R&T landscape.
Can we achieve a breakthrough? That will very much be up to you. The issues that you will be debating have a direct bearing on realizing our vision.

Let me now wish you a very successful conference day. And as always: a fruitful and –why not – controversial debate of those issues will advance the European “State of the Art”.