One of your recent analyses of defence spending and productivity in Europe found that up to 30% of annual European defence investment could be saved through pooling of procurement. Could you think of a better argument for deeper defence cooperation?
The best argument for deeper defence cooperation and joint procurement is not the money it would save - though those are important - but the political and military benefits it would bring: greater integration based on standardized requirements and equipment, a higher level of interoperability, expanded capabilities, and greater – and more stable – weapon system availability. In short, Europe would be more effective from an output perspective. All of these gains would strengthen Europe's defence capability, which would be a strong signal in itself.
The economic argument is secondary. It's clear that we could get more out of the existing system without spending even one more euro. Tackling these potential savings – which would indeed amount to 30% of spending – would free up resources to build additional capabilities and increase operability.
There are also additional productivity gains possible after the joint purchase of capabilities, for instance in maintenance and other functions. Do you have estimates of how much could be saved there by doing these things together?
The savings logic that applies to procurement also holds true for maintenance and all other lifecycle costs. Massive potential exists to reallocate resources to new capabilities, because 30-60% of a weapon system's lifecycle costs are due to maintenance. Globally, defense maintenance represents a roughly USD 200 billion market. In order to reduce maintenance cost the sequence is important. First are joint requirements among multiple European armed forces for a particular weapon system – leading to the procurement of identical products – as a prerequisite to realizing lifecycle costs savings. Without identical products, real maintenance cooperation just can’t happen on a broader scale. Therefore one needs to also be realistic about the timing of such benefits.
Overall the focus should shift a bit more from input – or how much we pay – to output – what we get for our money. Cost-effective maintenance is necessary, but from an objective point of view, ensuring the availability of major weapon platforms or getting them operational at all are much bigger challenges at the moment for almost any nation. Reducing complexity by having fewer systems with an inherently better learning curve would help, as would more sharing of best practices among nations.
New approaches and tools for managing availability are essential, too. These can include incentive structures in industry contracts: Do suppliers get paid for spare parts, or the actual availability of weapon systems? Users and the industry also need to apply more sophisticated analysis methods, like predictive maintenance, to optimize maintenance schedules.
Despite the potential in productivity gains and cost-savings, member states still remain reluctant to engage in joint procurement, often for sovereignty’ reasons. How can this discrepancy be overcome?
In a world where a unilateral mission is an exception and joint European efforts are the "new normal," the question of whether joint procurement will impact nation states' sovereignty is the wrong one to ask. From the perspective of a German and European citizen, the biggest loss of "sovereignty" is the loss of capabilities that has occurred in the last several decades. Increasing our capabilities and the availability of our weapon systems thus needs to be a priority, and joint procurement and management are essential to do so.
The questions we need to ask concern industrial policy and the appropriate share of work for national industries. Where do we focus industrial capacities in Europe, where are national monopolies necessary, and which areas should be opened up for European competition? How can we structure a European defence industry that serves best our European needs? These are the questions that Europe's member states need to answer.
Looking forward, the discussion comes down to whether a single nation has the funding and expertise to develop the next weapon platforms on its own. Given the growing complexity of defence products and the industrial consolidation that has already taken place, the answer will increasingly be “no.”