EDTA members response to new EC defence industry policy

posted 12 Oct 2013, 08:56 by Jan Wind   [ updated 31 Oct 2013, 14:19 ]
On 24 July 2013 the European Commission publicised a "Communication on the European Defence and Security Sector".  
The members of the EDTA welcome the interest of the Commission for the European defence technology industrial base (EDTIB), and for the intention to foster and invest in R&T and possibly capability development. 

Individual members of the EDTA associations have responded to this publication from a technological and engineering perspective. 
The most relevant comments to the Communication are as follows:

1. Reference to paragraph 1.1. Introduction
Encourage private investors to compensate for shrinking development budgets
On several spots in the Communication shrinking government budgets are mentioned. European R&D is down to 1/7th of US spending and most of the R&D budgets are spent nationally (1.1 and 1.2). Apparently foreign investors are interested in spending their money in the sector to such extend that it may affect the European autonomy (2.3 and 8).If European defence R&D is attractive for foreign investors it could probably also be attractive for European private investors. The Commission should develop a strategy to enhance attractiveness for European private investors to invest in defence technology and capability development.

2. Reference to paragraph 1.1. Introduction
Improve "branding" of defence in general and defence technologies in particular
The Commission, EDA and the Member States need to work hard on improvement of the "branding" of defence and defence technology in the European society. Anything related to defence currently has a bad flavour. Many Europeans and European organisations do not want to be involved in this industry sector. This attitude is hardly comprehensible since many civil applications are based on military technology.

3. Reference to paragraph 3.1. Standardisation
Develop more effective standardisation mechanism
It does not seem very efficient to develop a European standardisation mechanism for defence purposes. This would lead to duplication with the a long standing and effective NATO procedure for multinational standardisation in defence called "STANAG". It is more effective to develop a mechanism where STANAGs can be adopted by the European Community.

4. Reference to paragraph 3.4. SMEs
Promote regional networking using defence related communities of interest
Currently SMEs play only a marginal role in defence technology development. Only second tier involvement is of any relevance within the nations. More particularly not in R&T and capability development. The paragraph on SMEs indicates an intention to enhance involvement of SMEs cross border as supplier to prime contractors. The actions however are mainly targeted nationally and regionally. COSME (the EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises) and EEN (the Enterprise Europe Network of the European Commission) are too broad mechanisms to target the highly specialised market of defence technology. In EEN defence related technology is not even mentioned as one of the industry categories.
To promote regional networking between SMEs it would be more effective to utilise the existing associations of industry and engineers and their respective national member organisations: 
- The Aerospace and Defence Association of Europe (www.asd-europe.eu)
- The Federation of European Defence Technology Associations (www.fedta.eu)

5. Reference to paragraph 3.4. SMEs
European Investment funds should be allowed to work with defence industry
It is very hard for SMEs to attract funding while defence budgets are shrinking continuously in almost every European nation. Funding by investment banks and regular banks as is regular in other industries is almost absent in the sector. The EU owned European Investment Bank (EIB), the European bank of Reconstruction and Development (EBRD) and the European Investment Fund (EIF) are not even allowed to invest in defence technology. This is contradictory to the CSDP and causes regular banks and investors to consider defence technology and capabilities as ethical risk. As a minimum the ban on defence technology should be lifted for the EU owned European investment banks.

. Reference to paragraph 4. Exploiting Dual Use potential
Process based R&D in EU does not match with result oriented R&D in the defence sector
The defence industry executes R&D with a focus on direct result with applications in the field. Non-military R&D funded by EU or national governments has broader goals and is focused on the process with tighter project tolerances and longer duration times. These two methods do not match. Linking defence related R&D to Horizon 2020 or EU FP7 will reduce the effectiveness & efficiency R&D for defence applications. When intending to utilise EU funding for defence application the two methodologies must be bridged.

7. Reference to paragraph 6.2. Satellite Communications
ESA should be involved in satellite communication plans
The European Space Agency ESA has a vast knowledge and assets in the area of satellite Communication and other space related technologies. Currently the charter of ESA does not allow the organisation to perform any defence related activities. Could the Council task the Commission to draft a proposal to take away this limitation where it concerns satellite communications and earth observation?

8. Reference to paragraph 8.1. Competitiveness on third markets
Access to third markets is also still hampered by a variety of national regulations
In addition to offset related support to improve export from the European defence industry to third markets it is necessary to align the national weapons export regulations of each EU member state in relation with the considered export country. Not only in formal EU regulations but also in practical execution of these rules by the member states for variety of export packages (transfer of technology, offsets, training, etc.). This is particularly painful for landlocked nations who need a variety of transit licences for their export. If the EC stimulates export to third markets the EC should also strive for harmonisation of the practice of export regulations. Otherwise the unbalance on the internal market will increase. 

9. Reference to paragraph 9.2. A call to Member States
Harmonisation of military requirements is not the solution
A call to harmonise military requirements is often a call for severe delay and major inefficiencies in the corresponding programmes. The NH90 programme is an example where much time and very much money has been spent on the various requirements to be fulfilled. As long as 28 sovereign states exist in Europe a call for identical requirements is hard to fulfil. This is also mentioned in paragraph 1.2 of the Communication. And rightly so: the Bulgarian Navy is not the same as the German or the Royal Navy.
As a consequence there is also a need to foster cooperation on subsystem and module level. This has proven to be very effective and would enable a wider use throughout the variety of armed forces in Europe. 

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Disclaimer:
These remarks have been compiled from comments by individual members of EDTA associations and do not necessarily reflect the official position of a specific member or associated association.