The European Union and armaments : getting a bigger bang for the euro.
Date: 2003-08-30
Institutions: European Union Institute for Security Studies
Subjects: EU Member State, European arms policy, arms industry, common foreign and security policy, cooperation policy, military equipment

63-English-COVER.qxd  28/08/2003  12:10  Page 1

Chaillot Papers

August 2003

n°63

The European Union
and armaments
Getting a bigger bang for the Euro

Burkard Schmitt

QN-CHAI-063-EN-N

63-English-COVER.qxd  28/08/2003  12:10  Page 2

In January 2002 the Institute for Security Studies (ISS) beca-
me an autonomous Paris-based agency of the European
Union. Following an EU Council Joint Action of 20 July
2001,  it  is  now  an  integral  part  of  the  new  structures
that  will  support  the  further  development  of  the
CFSP/ESDP. The Institute’s core mission is to provide
analyses and recommendations that can be of use and
relevance to the formulation of the European security
and defence policy. In carrying out that mission, it also
acts  as  an  interface  between  European  experts  and 
decision-makers at all levels.

Chaillot  Papers are  monographs  on  topical  questions
written either by a member of the ISS research team or
by  outside  authors  chosen  and  commissioned  by  the
Institute. Early drafts are normally discussed at a semi-
nar or study group of experts convened by the Institute
and publication indicates that the paper is considered
by the ISS as a useful and authoritative contribution to
the debate on CFSP/ESDP. Responsibility for the views
expressed in them lies exclusively with authors. Chaillot
Papers are  also  accessible  via  the  Institute’s  Website:
www.iss-eu.org

C
h
a
i
l
l
o
t
P
a
p
e
r
s

n
°
6
3

T
h
e
E
u
r
o
p
e
a
n
U
n
i
o
n
a
n
d
a
r

m
a
m
e
n
t
s

B
u
r
k
a
r
d
S
c
h
m

i
t
t

 
 
 
 
 
 
 
 
63-EnglishText.qxd  28/08/2003  12:08  Page 1

Chaillot Papers

August 2003

n°63

The European Union and
armaments
Getting a bigger bang for the Euro

Burkard Schmitt

Institute for Security Studies
European Union 
Paris

63-EnglishText.qxd  28/08/2003  12:08  Page 2

The author

Burkard Schmitt
is a Research Fellow and Assistant Director at the EU Institute
for Security Studies.

Acknowledgements

This Chaillot Paper is, to a large extent, the fruit of interviews and discussions with
experts and officials from various agencies and services. The author would like to
thank all of them for their openness and their help. He is particularly grateful to Mr.
Walter Storz (Brussels) and Professor Michele Nones (Rome) for their invaluable
input.

Institute for Security Studies
European Union 
Paris

Director: Nicole Gnesotto

© EU Institute for Security Studies 2003. All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise without the prior permission of the EU
Institute for Security Studies.
ISSN 1017-7566
Published by the EU Institute for Security Studies and printed in Alençon (France) by
l’Alençonnaise d’Impressions. Graphic design by Claire Mabille (Paris).

63-EnglishText.qxd  28/08/2003  12:08  Page 3

Contents

n°63 August 2003

Preface Nicole Gnesotto

Introduction

1

Towards a common armaments policy?
• Difficulties and necessities
(cid:127) The EU — a framework for action?

2

What exists

(cid:127) Outside the EU framework
— WEAG/WEAO
— OCCAR
— LoI Framework Agreement
(cid:127) Within the EU framework 
— The dual-use regime
— POLARM
— The Code of Conduct
— EU Research Framework Programme
— ECAP

3

How to move ahead

(cid:127) The European Armaments, Research and Capabilities Agency

(ARCA) — a blueprint
— Capabilities
— Procurement
— Research
— Monitoring EDITB
— Management of test facilities
— Requirements for success
(cid:127) A common European Defence Equipment Market (EDEM)
— Procurement law
— Competition law
— Transfers
— Exports

5

7

9

9

14

20

20

20

24

26

29

30

32

32

34

35

37

40

41

42

44

48

49

50

54

55

56

58

58

63-EnglishText.qxd  28/08/2003  12:08  Page 4

Contents

Conclusions

Annex

(cid:127) Abbreviations

61

68

68

63-EnglishText.qxd  28/08/2003  12:08  Page 5

Preface

Nicole Gnesotto

L ike a hackneyed news item, the idea of creating a European arma-

ments agency has continually haunted the process of building Euro-
pean  defence.  Already  at  Maastricht  in  1992  it  was  included  in
annexes to the Treaty (in the form of a WEU declaration). It has now been
spelt out in full in the draft Constitutional Treaty proposed by the Conven-
tion in June 2003. Even better, at the European Council in Thessaloniki,
heads of state and government decided to accelerate the process of creating
such an agency, from 2004, independently of the results of the forthcoming
IGC. Whatever the reasons for this haste – genuine urgency or negotiating
tactic – one is bound to be satisfied with the importance now attached to the
armaments dimension of European security and defence policy.

One also notes with a certain interest two coincident developments. Top-
down, there is the decision by heads of state to give the Union ‘an overall strat-
egy in the field of foreign and security policy’ based on a common definition
of the Union’s interests and principles of action and on a common evaluation
of the threats and possible responses to them. This suggests that it was not con-
sidered possible for the CFSP and ESDP to remain at the level of ad hoc inter-
ventions, but that a quantum leap in the consistency of the Union’s external
actions had become necessary. Bottom-up, there is the decision to create ‘an
intergovernmental agency in the field of defence capabilities development,
research, acquisition and armaments’, indicating that the emphasis put on
the Union’s military capabilities since Cologne risked producing little in the
way of results if, even before looking at military instruments, the same seri-
ous attention were not paid to technological and industrial capacity.

What type of agency is therefore required and for what type of market?
Those are the two technically difficult and politically sensitive questions
addressed in this Chaillot Paper by Burkard Schmitt, assistant director and
research fellow at the Institute. Following publication of Chaillot Paper 59
in May this year, a volume containing core documents on armaments, this
essay by Burkard Schmitt on the one hand sketches the broad lines of a possi-
ble  European  armaments  market.  On  the  other  it  clarifies  the  issues
involved, the constraints, the modalities and the functions of a European
agency that will have real capabilities provided member states seriously
agree to reconcile their national constraints with the aim of greater cost-effec-
tiveness.

The traditional obstacles will of course weigh heavily in this: the power of
bureaucracies, the role of national sovereignty vis-à-vis the Commission, the

5

63-EnglishText.qxd  28/08/2003  12:08  Page 6

Preface

priority given to the transatlantic dimension or Europe, the widely differing
industrial and financial potential of member states concerning armaments,
etc. There is already a hint of these various constraints in the options for set-
ting up the future agency being unofficially discussed: will its function be
more conceptual, concerned with the exchange of information and discus-
sion of possible cooperative projects, or will it go further and have a more oper-
ational, more directive function that therefore places more constraints on
member states? Is the agency’s area of competence to be limited and based on
the needs of ESDP in the strict sense, i.e. on the capabilities identified in the
Headline Goal, or will it actually have more general competence? Will the
agency’s missions cover all dimensions of procurement – early identification
of requirements, research, development, cooperation, acquisition and struc-
ture of the market – or will it take a more selective approach? How much flex-
ibility will be needed to ensure the agency’s viability given the constraints of
unanimity at 25?

There seems little doubt that it is legitimate to pose such questions, given
member states’ national political constraints. Moreover, they have always
affected the various efforts made in the last ten years to improve armaments
cooperation (OCCAR, LoI, WEAG, etc.). The problem is precisely that these
traditional efforts at cooperation have produced very little in the way of
results. If the aim is to maintain an industrial capacity and acquire the nec-
essary military capabilities, the time has perhaps come to consider methods
that are more innovative and better suited to European convergence. Are
member states ready to make that quantum leap?

Paris, July 2003

6

63-EnglishText.qxd  28/08/2003  12:08  Page 7

Introduction

The European Union and
armaments

The proposals of the Convention on the Future of Europe and the
recent  European  Commission  Communication  on  a  Defence
Equipment Policy have revived the debate about the EU’s possible
involvement in armaments. There is indeed a chance today that a
European Agency for Armaments, Research and Capabilities will
be set up and anchored in the new EU Treaty. At the same time,
there is a growing consensus that the EU Commission should have
certain competencies in the field of security-related research, and
even the establishment of a common defence equipment market is
(again) under discussion.

There are several reasons for this new openness vis-à-vis the
EU’s involvement in armaments. First of all, the development of
ESDP has changed the political environment and prepared the
ground for the current debate. At the same time, the growing inter-
nationalisation of defence-related companies has transformed
the industrial landscape and created the need for new regulatory
frameworks. Last but not least, persisting budgetary constraints
oblige European governments to go beyond current arrangements
and to envisage more comprehensive and cost-efficient solutions. 
Up until now, the debate on armaments in the EU has remained
vague and general, and the new openness might easily dissipate
once discussions get more concrete. However, an in-depth discus-
sion of the details cannot be avoided, and there is a need to clarify
what the various proposals that are on the table could actually
mean in practice. 

The purpose of this Chaillot Paper is therefore twofold. First, it
explains the importance of armaments and its specific problems,
describes the current state of play and develops possible solutions
for the future. Such a comprehensive approach seems appropri-
ate, in particular since armaments is a highly complex field in
which neither political leaders nor the public normally take a
strong interest. However, the stakes are too high, in particular for
European taxpayers, to leave the issue exclusively to a closed circle

7

63-EnglishText.qxd  28/08/2003  12:08  Page 8

The European Union and armaments

of  procurement  experts.  A  broader  debate  on  the  reform  of
Europe’s armaments sector is therefore desirable, and this paper is
intended as a contribution to it.

The second, even more important objective of this Chaillot Paper
is to take the debate one step further and to develop a clearer idea
of how to implement the various initiatives that are currently
under  consideration.  There  is  in  fact  much  talk,  in  particular
about  an  Agency,  but  very  little  conceptual  thinking  yet.  The 
present essay attempts to start filling this gap. In this context, its
focus  is  on  the  future  Armaments,  Research  and  Capabilities
Agency, because the time schedule for its creation is more pressing
than  the  one  for  the  establishment  of  a  defence  equipment 
market. 

The paper is therefore divided into three parts. The first chap-
ter presents the background of the current debate. It illustrates
why it is so difficult to arrive at a common armaments policy,
explains  the  necessity  to  act  and  describes  the  areas  in  which
reforms are needed. It shows why the EU could be an appropriate
framework for action, and ends with an overview of the recent ini-
tiatives aimed at bringing the subject of armaments into the EU.

The second chapter presents an analysis of existing initiatives
and bodies, both inside and outside the EU framework. Such an
assessment  is  particularly  important  since  any  new  structure
should (a) draw on the experience of existing armaments coopera-
tion forums, (b) incorporate useful elements and (c) interact with
other bodies and policies related to armaments. 

The third chapter is the key element of this paper. Drawing on
an analysis of existing institutions and policies, it develops con-
crete proposals for action. It is divided into two parts. The first
presents a possible blueprint for the future Armaments, Research
and Capabilities Agency and shows how it should ideally be con-
stituted and work. The basic assumption here is that the Agency
must be strong and efficient enough to have a real impact on
Europe’s armaments sector. The second part of the chapter deals
with market issues. It presents an outline for a European Defence
Equipment Market based on Community law and gives some indi-
cation of how it could be formed.

8

63-EnglishText.qxd  28/08/2003  12:08  Page 9

Towards a common armaments
policy?

The European Union and
armaments

1

Difficulties and necessities 

Up until now, armament has traditionally been a national domain.
In Europe, the production, trade and procurement of military
goods and services have been deliberately excluded from the Euro-
pean integration process by EU member states, which have pre-
ferred to keep these activities under national control. That policy
has been legally based on Art. 296 (ex Art. 223) of the Treaty estab-
lishing the European Community (TEC), which allows member
states to derogate from treaty rules where they can demonstrate
that their essential security interests are at stake.1

National governments have traditionally defined these ‘secu-
rity interests’ very broadly in order to override the disciplines of
Community policies in the field of armaments. At the same time,
member states have refused to use the intergovernmental frame-
work of Common Foreign and Security Policy (CFSP) for arma-
ments cooperation. Some structures for doing this exist outside
the  EU,  but  member  states  have  neither  transferred  national 
sovereignty to European institutions nor developed a systematic
coordination of their national policies. There are several reasons
for this:
(cid:90) Armaments policy is mainly a function of other policies, in par-
ticular defence, security and foreign policy. As long as these poli-
cies remain mainly national, a common armaments policy is
extremely difficult to agree on: military strategies and concepts
differ, which makes harmonisation of military requirements a
thorny task; regional policies diverge, which leads to different
arms export practices; alliance concepts vary, which leads to
diverging  armaments  cooperation  schemes  and  industrial
strategies, etc. Since the CFSP and even more so its military
dimension  (ESDP)  are  comparatively  recent  and  modest
endeavours, progress in the field of armaments has been almost
inevitably slow and painful. 

1. Article 296 reads as follows:
‘1) The provisions of this Treaty
shall not preclude the application
of the following rules: a) no Mem-
ber State shall be obliged to sup-
ply information the disclosure of
which it considers contrary to the
essential interests of its security;
b) any Member State may take
such measures as it considers nec-
essary for the protection of the es-
sential  interests  of  its  security
which are connected with the pro-
duction of or the trade in arms,
munitions and war material; such
measures shall not adversely af-
fect the conditions of competition
in the common market regarding
products which are not intended
for specifically military purposes.
2. The Council may, acting unani-
mously on a proposal from the
Commission, make changes to
the list, which it drew up on April
1958, of the products to which the
provisions of paragraph 1 b) ap-
ply.’ Quoted in Burkard Schmitt,
‘European armaments coopera-
tion – Core documents’, Chaillot
Paper 59 (Paris: EU Institute for Se-
curity Studies, April 2003), p. 10.

9

63-EnglishText.qxd  28/08/2003  12:08  Page 10

1

The European Union and armaments

(cid:90) Political divergences have been – and still are – reinforced by dif-
ferent industrial interests. The bulk of the defence industries
and  their  funding  is  concentrated  in  the  United  Kingdom,
France and – to a lesser degree – Germany. These three countries,
together with Italy, Spain and Sweden, represent more than 90
per cent of Europe’s defence industrial capabilities, 85 per cent
of EU defence spending and 98 per cent of all R&D expendi-
tures. As arms producers, they inevitably have different procure-
ment and market policies than their European partners who
have no or only minor defence industrial capabilities and often
buy their military equipment in the United States. 

(cid:90) Europe’s arms-producing countries, however, do not represent
a homogeneous group either. Due to their different historical
backgrounds and political aspirations, each of them has a very
specific interpretation of (a) the function of armaments for its
foreign, economy, industrial policies, and (b) the role govern-
ments  should  play  as  customers,  regulators,  sponsors  and
shareholders vis-à-vis defence industries. This, in turn, leads to
important divergences on defence-related trade, procurement
and industrial issues (European preference, exports, competi-
tion, access to the US market, etc.).

(cid:90) Defence industries have not always been a driving force behind
far-reaching reforms either. Even in aerospace and defence elec-
tronics, where international cooperation has been common
practice  for  several  decades,  mutual  rivalry  and  mistrust
between  national  champions  were  rather  the  rule  than  the
exception and reinforced national egoisms at the political level.
This situation improved only recently, when industrial consol-
idation crossed national borders and governments started to
behave more like ‘normal’ customers. However, sectors and
companies that are not competitive still fear the opening up of
defence markets and the loss of national protection.

The consequences of all this are well known: Europe’s armament
sector has remained fragmented into national markets, with costly
duplication in all armaments-related areas (procurement bureau-
cracies, research activities, industrial capacities and defence pro-
grammes).

Ironically, armaments cooperation has often made things even
worse. Organised traditionally on a purely intergovernmental and
ad hoc basis, cooperative projects have implied complex institu-
tional and industrial settings, creating delays and extra costs. The

10

63-EnglishText.qxd  28/08/2003  12:08  Page 11

Towards a common armaments policy?

1

juxtaposition of separate ad hoc structures for each project has
implied  considerable  overhead  costs,  whereas  potential  cost-
savings have remained unexploited due to rigid interpretation of
juste retour2 and considerations of security of supply. Cooperative
schemes have been particularly inefficient, since all the major
arms-producing countries have tried to build up and maintain
their own development and production capabilities in as many
technologically interesting fields as possible. In consequence, par-
ticipation has often varied from project to project, and the divi-
sion of labour has been defined in such a way that all participants
have been included in work on all interesting components. This, in
turn, has led to additional over-capacities and redundancies.3

Since the end of the Cold War, the costs of such fragmentation
have become unbearable. On the one hand, development costs of
complex weapon systems have increased dramatically and started
to exceed the financial means of even the big European countries.
At the same time, the restructuring of armed forces and the grow-
ing number of crisis management operations have created addi-
tional costs, reducing in particular the part of defence budgets
devoted  to  investment.  On  the  other  hand,  European  defence
expenditure was in constant decrease throughout the 1990s. The
rate of decline has slowed down since 1995, but the trend was not
reversed until recently, and then only in a few EU member states.4
‘The main reasons for this are well known, from the rigidity of fis-
cal policies to the social and demographic structure of European
societies, to the deeper-seated reluctance of governments to invest
in military capabilities in the absence of any tangible [military]
threat.’5 Neither the wars in the Balkans nor the terrorist attacks
of 11 September 2001 have changed that picture. Last but not
least, the general crisis of public finance in most European coun-
tries and the limits on government deficits set in place by the
Growth and Stability Pact make it highly unlikely that we shall
witness much of a change in the near future.

The discrepancy between flat, stagnating investment budgets
and increasing costs has had a damaging effect in two respects.
First, it has resulted in glaringly obvious gaps in Europe’s military
capabilities.  As  the  interventions  in  Kosovo  and  Afghanistan
demonstrated, European armed forces are inadequately equipped
for modern warfare. Indeed, Europe’s military shortcomings are
now  such  that  ESDP  is  in  danger  of  remaining  a  paper  tiger. 
Second, the limits on military spending are increasingly damaging

2. According to the juste retour
(fair return) principle, the industry
of  each  participating  nation
should get a work share that cor-
responds to the financial contri-
bution of its government. In its
traditional form, industrial juste
retour is calculated each year, pro-
gramme by programme. In prac-
tice,  this  method  has  greatly 
reduced  the  flexibility  of  pro-
gramme management and has of-
ten led to an inefficient distribu-
tion of work. 

3. See Joachim Rohde and Markus
Frenzel, ‘Transatlantic Gaps and
European Armaments Co-opera-
tion – Optimising European Re-
source Allocation’, in Prospects on
the  European  Defence 
Industry
(Athens: Defence Analysis Insti-
tute, 2003), p. 80.

4. In the aftermath of 9-11, some
of the most important European
defence spenders announced in-
creases in their defence spending:
In the United Kingdom, the three-
year comprehensive spending re-
view from July 2002 promised a
defence  budget 
increase  of
£3.2 bn  from  £29.33  bn  to
£32.78 bn between 2002/2003
and 2005/2006. In France, the
new Loi de Programmation militaire
for the period 2003-2008 envis-
ages in particular an increase of
the equipment budget to an aver-
age of €14.5 bn per year for the pe-
riod 2003-2008. Italy has pledged
to increase defence spending over
the next 10 years to 1.5 per cent of
its GDP. Germany, in contrast, has
announced that it is maintaining
its defence budget at €24.6 bn un-
til 2006. However, whether in-
creases that have been announced
are actually made will certainly de-
pend on overall economic results
in each country. See The Military
Balance 2002(cid:79)2003 (Oxford: Ox-
ford University Press for the IISS). 

5. Antonio Missiroli and Burkard
Schmitt, ‘More €uros for Euro-
pean  Capabilities’,  in  European
Voice, 27.6. - 3.7.2002.

11

63-EnglishText.qxd  28/08/2003  12:08  Page 12

1

The European Union and armaments

the  European  Defence  Industrial  and  Technological  Base
(EDITB). Lack of investment in research in particular is seriously
jeopardising industry’s technological ability to prepare for the
future. At the same time, European companies find it increasingly
difficult to compete with the big American defence groups, who
benefit from an enormous, well-protected domestic market and a
growing US defence budget.6

All this has put European countries under pressure to develop
a more ambitious and systematic approach towards armaments
cooperation. Throughout the 1990s there were a multitude of
multinational initiatives at different levels and with varying mem-
berships, leading to an extremely complex institutional landscape.
Most of them, in particular WEAG, WEAO, OCCAR and the LoI,
developed outside the EU framework, but the EU has also gained
some competences in areas that are at least indirectly related to
armaments (dual-use items, civil hi-tech research, arms exports,
military capability needs). 

Some of these initiatives are innovative and promising. In gen-
eral, however, results have not been satisfying. Market fragmenta-
tion and duplication persist, and the institutional setting remains
a patchwork. In some areas competences overlap, whereas others
are not covered at all. The various initiatives are not coordinated,
and there is no overall strategy, because there is no coherent arma-
ments policy.

Europe will have to develop a much more efficient approach if
it wants to equip its armed forces adequately and sustain a com-
petitive EDITB. What is needed is a coherent framework for a con-
sistent policy in several areas:
(cid:90) Defence Procurement. In the future, military operations will
normally  be  conducted  within  multinational  coalitions.  In
consequence, interoperability of European armed forces will be
key. To be economically beneficial, this should be translated
into common defence equipment programmes with common
technical characteristics and procurement schedules. What is
therefore  needed  is  a  European  procurement  system  that
allows for both more and better cooperation. This, in turn, will
only be possible if there is, finally, an efficient harmonisation of
military requirements and better programme management. In
addition, common acquisition of non-military goods could
generate considerable economies of scale. 

6.  In  2001,  the  United  States
(DoD only) spent more than twice
as much on defence as all 15 EU
members together. With an in-
crease in US defence spending of
$48 bn for FY 2003, and further in-
creases planned from $396.8 bn
in 2003 to $469.8 bn in 2007, the
transatlantic financing gap will
continue to grow over the next
years.

12

63-EnglishText.qxd  28/08/2003  12:08  Page 13

Towards a common armaments policy?

1

(cid:90) Defence Research. It is well known that Europe spends too lit-
tle on military research. Moreover, only a small proportion of
this money is spent on European cooperation. This means that
far better coordination is indispensable within the field of mil-
itary research. At the same time, the somewhat artificial dis-
tinction between civil and military research should be over-
come in order to allow full exploitation of potential synergies.
This will imply a new institutional setting and a redefinition of
competencies among the different actors in this field. 

(cid:90) Defence equipment market. The fragmentation of regulatory
frameworks governing defence-related activities at the national
level is a major cause of inefficiency. The creation of a common
European Defence Equipment Market (EDEM) with a single
set of rules and regulations would therefore be a major step for-
ward. A fully integrated EDEM would imply, inter alia, common
procurement and competition rules, simplification of intra-
European transfers, a common security of supply regime, har-
monisation  of  security  regulations  and  a  common  export
regime. This would create a homogeneous defence economic
space, allowing transnational defence companies (TDCs) to
rationalise their internal organisation in an economically effi-
cient way. At the same time, the establishment of an EDEM
would increase Europe-wide competition, encouraging those
industrial sectors that are still nationally focused to consoli-
date across national borders. On top of that, enhanced compe-
tition and streamlined regulatory frameworks would generate
considerable cost-savings.

Ideally, policies in all three areas should be shaped on the basis of a
common definition of ‘strategic’ industrial interests. Procurement
choices, research investments and market decisions can only be
consistent if there is a common understanding of the strategic
importance of the various military, technological and industrial
capabilities. The question is in which areas and at what level Euro-
pean countries want, for strategic reasons, to maintain industrial and
technological capabilities (e.g. national level for nuclear weapons
and European level for fighter aircraft), and which can simply be
left to international competition? 

Establishing a coherent framework and implementing a com-
mon policy for armaments will be enormous challenges for Euro-
pean states who, on the one hand, recognise the need for greater

13

63-EnglishText.qxd  28/08/2003  12:08  Page 14

1

The European Union and armaments

cost-effectiveness,  but,  on  the  other,  are  reluctant  to  give  up
national prerogatives. From a purely economic point of view, the
most efficient solution would be to ‘communitarise’ armaments,
i.e. to create a single defence market and replace national research
and procurement agencies by supranational organisations. Since
this is politically unacceptable to member states, the only way to
make progress is to improve the intergovernmental method, to
introduce at least some integrated elements into the procurement
cycle and to use Community instruments wherever possible. What
is sure, however, is that only a comprehensive approach, based on
a  consistent  long-term  strategy  and  making  use  of  different
instruments, will be able to cope effectively with the challenges of
budget constraints, cost increases and structural inefficiencies.

The EU – a framework for action? 

At least in theory, the EU is an appropriate framework for develop-
ing and implementing such an approach. First of all, an EU arma-
ments policy would be a natural complement to ESDP. From a
political point of view, this could help to reduce divisions between
arms-producing and non-producing countries. From a practical
point of view, the EU military bodies and a reformed European
Capabilities Action Plan (ECAP) process (see below) could play a
useful role in the early stages of the procurement cycle, by develop-
ing common concepts, doctrines and capability needs as key ele-
ments of the harmonisation of military requirements. Moreover,
the EU offers the possibility to use both first- and second-pillar
instruments. This in turn allows combining the creation of a com-
mon defence market and the establishment of a common procure-
ment system. At the same time, a cross-pillar approach would help
to develop and implement a comprehensive strategy for strategic
industries. Last but not least, the EU could negotiate with the
United States on arms trade issues and would be a much more 
powerful interlocutor than individual member states. 

Since the development of ESDP in general, and the ECAP expe-
rience in particular, there is indeed a growing consensus that at
least certain functions of armaments policy should be brought
into the EU framework. However, at the political level, important
stumbling blocks persist: the big arms-producing countries still
diverge on procurement philosophies and industrial strategies.

14

63-EnglishText.qxd  28/08/2003  12:08  Page 15

Towards a common armaments policy?

1

Moreover, security of supply, the involvement of the Commission
and relations to third parties, in particular the United States,
remain highly controversial. At the same time, non-producing
countries,  which  often  buy  American  rather  than  European
weapon systems, do not necessarily recognise the importance of a
European armaments policy. On top of that comes the growing
diversity of interests in a Union at 25, which makes the prospects
for CFSP and ESDP somewhat uncertain and might thereby shat-
ter the perspectives for an EU armaments policy.

Difficulties  can  also  come  from  institutional  stakeholders,
namely national procurement bureaucracies. On the one hand,
they are (almost) the only ones with the necessary expertise to
develop common European armaments structures. On the other,
they are not renowned for producing experts with an international
mindset who are willing to break with traditional approaches.
Moreover,  they  would  act  against  their  own  best  interests  as
administrations if they developed an ambitious concept implying
the far-reaching transfer of competencies to the European level.
Bureaucratic inertia, if not resistance, can become a real problem,
in particular since political leaders do not normally take a particu-
lar interest in armaments matters. 

Military  and  financial  arguments  will  hopefully  be  strong
enough to overcome these obstacles: no matter how CFSP and
ESDP develop, it remains a fact that future military operations
will normally be multilateral, and that standardisation of equip-
ment will become ever more important. Moreover, in Europe the
gap between rising costs and limited budgets will persist or even
worsen. This is not only a problem of severely reduced budgets,
but also of structural change: since most European armed forces
have been streamlined and downsized, national markets are in
general too small today to generate adequate economies of scale.
For most complex weapon systems, per-unit costs will simply be
too high if the production run is limited to the needs of a single
European country. National reforms will therefore not be enough
to cope with these problems. In other words, European countries
simply have no choice: even without a fully-fledged CFSP/ESDP,
they will have to dare a quantum leap in armaments cooperation if
they want to maintain a noteworthy defence industrial base and
capable  armed  forces.  However,  the  extent  to  which  the  EU
becomes the framework for this quantum leap remains to be seen.

15

63-EnglishText.qxd  28/08/2003  12:08  Page 16

1

The European Union and armaments

The outcome is still unclear, but the debate on EU involvement
in armaments is now open. Three initiatives will structure the dis-
cussion: first, the Commission’s Communication on a European
Defence Equipment Policy, adopted 11 March 2003,7 second, the
provision for the creation of an EU Agency included in the Con-
vention’s draft Treaty establishing a Constitution for Europe,8
and third, the Presidency Conclusions of the Thessaloniki sum-
mit of 19-20 June 2003.9

In its Communication, the European Commission suggests a
common armaments policy, based on both Community and CFSP
instruments. A cross-pillar approach would be possible within the
provisions  of  the  current  treaties  and  should  address  defence
equipment demand, supply, market and research. The Communi-
cation focuses on the establishment of a European defence equip-
ment market and research policy as the two areas where ‘Commu-
nity action is most likely to be able to add value’.10 In both areas,
the Commission presents proposals for action. 

As to research, the Commission suggests identifying a ‘Euro-
pean agenda for advanced research relating to global security and
the most appropriate ways of tackling it jointly. To prepare for the
implementation of this advanced research agenda, the Commis-
sion [will] launch a preparatory [action] . . . to implement some
specific aspects that would be particularly useful in carrying out
Petersberg tasks.’11

Concerning a defence equipment market, and the politically
‘hot’ issues in particular, the Commission is cautious enough not
to propose solutions, but only to announce further analysis and
reflection. 
(cid:90) Procurement law. The EC will issue an Interpretative Commu-
nication by the end of 2003 on the implications of recent court
judgements,  especially  with  regard  to  the  definition  of  the
scope of Article 296. In parallel, it will work on a Green Paper,
which might be issued in 2004 as a basis for discussion with
stakeholders. 

(cid:90) Intra-Community transfer. In 2003, the EC will launch a study
on the impact of Community-level legislative initiatives, and,
depending on its results, at the end of 2004 start elaborating
the appropriate legal instrument. 

(cid:90) Competition. The EC will continue its reflection on the appli-
cation of competition rules in the defence sector, taking due

7. Reproduced 
in  Burkard
Schmitt, op. cit. in note 1, pp. 162-
80.

8. http://european-convention.
eu.int/doc_register.asp?lang=EN
&Content=DOC.

9. http://ue.eu.int/newsroom/
makeFrame.asp?MAX=&BID=76
&DID=76279&LANG=2&File=/
pressData/en/ec/76279.pdf&Pic
ture=0.

10.  Commission  Communica-
tion, p. 168.

11. Ibid., p. 176.

16

63-EnglishText.qxd  28/08/2003  12:08  Page 17

Towards a common armaments policy?

1

account of the specificities of this field and the provisions of
Article 296 TEC. 

(cid:90) Dual-use items. The EC will, in the relevant Council working
bodies,  raise  the  issue  of  the  Commission’s  involvement  in
export controls regimes. 

Published in the run-up to the next Intergovernmental Conference
(IGC), this Communication represents a strong political signal to
member states that the Commission is ready to contribute with its
expertise on industrial and market issues to a possible EU defence
equipment policy. At the same time, the various initiatives define a
‘road map’ for further discussions on the establishment of a com-
mon defence market. 

The second relevant document is the Convention’s draft Treaty
establishing a Constitution for Europe. According to Article I-
40.3 of the draft Treaty, ‘a European Armaments, Research and
Military Capabilities Agency shall be established to identify oper-
ational  requirements,  to  promote  measures  to  satisfy  those
requirements, to contribute to identifying and, where appropri-
ate, implementing any measure needed to strengthen the indus-
trial and technological base of the defence sector, to participate in
defining a European capabilities and armaments policy, and to
assist the Council of Ministers in evaluating the improvement of
military capabilities.’12

Article III-207 specifies that the Agency, ‘subject to the author-

ity of the Council of Ministers, shall have as its task to: 
(cid:90) contribute to identifying the Member States military capability
objectives and evaluating observance of the capability commit-
ments given by the Member States; 

(cid:90) promote harmonisation of operational needs and adoption of

effective, compatible procurement methods; 

(cid:90) propose multilateral projects to fulfil the objectives in terms of
military capabilities, ensure coordination of the programmes
implemented by the Member States and management of spe-
cific cooperation programmes; 

(cid:90) support defence technology research, and coordinate and plan
joint research activities and the study of technical solutions
meeting future operational needs; 

(cid:90) contribute to identifying and, if necessary, implementing any
useful measure for strengthening the industrial and technolog-
ical base of the defence sector and for improving the effective-
ness of military expenditure.

12.  http://european-conven-
tion.eu.int/docs/Treaty/cv00820
-re01.en03.pdf (27 June 2003)
Part I-40.3.

17

63-EnglishText.qxd  28/08/2003  12:08  Page 18

1

The European Union and armaments

[According to the draft Treaty,] the Agency shall be open to all
Member States wishing to be part of it. The Council of Ministers,
acting by qualified majority, shall adopt a European decision defin-
ing the Agency’s statute, seat and operational rules. That decision
should take into account of [sic] the level of effective participation
in the Agency’s activities. Specific groups shall be set up within the
Agency, bringing together Member States engaged in joint proj-
ects. The Agency shall carry out its tasks in liaison with the Com-
mission where necessary.’13

If approved by the IGC, this article would become part of the
new EU Treaty, which is planned to enter into force in 2007/2008.
However, this schedule was confused when the European Council
of Thessaloniki decided at the end of June 2003 to task ‘the appro-
priate bodies of the Council to undertake the necessary actions
towards creating, in the course of 2004 [emphasis added], an inter-
governmental agency in the field of defence capabilities develop-
ment, research, acquisition and armaments. This agency, which
shall be subject to the Council’s authority and open to participa-
tion by all Member States, will aim at developing defence capabili-
ties in the field of crisis management, promoting and enhancing
European armaments cooperation, strengthening the European
defence industrial and technological base and creating a competi-
tive European defence equipment market, as well as promoting, in
liaison with the Community’s research activities where appropri-
ate,  research  aimed  at  leadership  in  strategic  technologies  for
future defence and security capabilities, thereby strengthening
Europe’s industrial potential in this domain.’14

This means that one of the provisions of the new EU Treaty
would be implemented even before it is ratified and entered into
force. This approach seems legally and politically somewhat dubi-
ous, but it shows that member states are apparently determined to
obtain concrete results as soon as possible.

However, for the time being there is still no clear concept of the
future  Agency.  The  Constitution’s  draft  Treaty  and  the  Presi-
dency’s Conclusions give a broad definition of its missions, but
they do not say anything about the organisation and functioning
of the Agency.15

Ambiguity might be helpful in launching the project, but it
also entails political risks. The devil is in the detail, and it will prob-
ably  be  difficult  to  agree  at  25  on  the  Agency’s  statutes.  The

13.  http://european-conven-
tion.eu.int/docs/Treaty/cv00848
.en03.pdf (9 July 2003) revised
part III of the draft.

14. Presidency Conclusions, Thes-
saloniki summit 20 and 21 June
2003, para. 65, p. 19, available at
http://ue.eu.int/newsroom/mak
eFrame/asp?MAX=&BID=76&DI
D=76279&LANG=2&File=/press-
Data/en/ec/76279.pdf&Pic-
ture=0.

15. The various contributions that
were made in the course of the
Convention’s  discussions  re-
mained vague as well. Key contri-
butions are: Joint proposals by
Dominique Villepin and Joschka
Fischer,  Prague,  21  November
2002,  reproduced  in  Jean-Yves
Haine, ‘From Laeken to Copen-
hagen – European defence: core
documents,  Chaillot  Paper  57
(Paris: EU Institute for Security
Studies, February 2003), pp. 214-
8;  Final  report  of  the  Defence
Working Group, Brussels, 16 De-
cember 2002, ibid., pp. 249-63;
The Franco-British Declaration
on Strengthening European Co-
operation  in  Security  and  De-
fence,  Le  Touquet,  4  February
2003, available at http://www.el-
ysee.fr/actus/dep/2003/province
/ 0 2 - f r g b - t o u q u e t / a n g d e f
secu.htm. It is worth noting, how-
ever, that these contributions dif-
fer greatly as to the scope and na-
ture of the Agency.

18

63-EnglishText.qxd  28/08/2003  12:08  Page 19

Towards a common armaments policy?

1

moment of truth will come, and it is high time to develop a clearer
idea of the Agency, its institutional linkages, structures and rules.
According to the different contributions made to the Conven-
tion, the Agency should be based on the experience of existing 
bodies and incorporate at least some of them. This makes sense in
order to avoid the risk of reinventing the wheel and/or merely
adding additional layers to an already complex institutional land-
scape. The first step towards a clearer concept, therefore, is an
assessment of what already exists and the lessons to be learnt, and
identification  of  elements  that  could  be  used  for  any  new 
structure.

19

63-EnglishText.qxd  28/08/2003  12:08  Page 20

The European Union and
armaments

What exists

2

Outside the EU framework

WEAG/WEAO
The Western European Armaments Group (WEAG) is the tradi-
tional forum for armaments cooperation in Europe. Its origins
date back to 1976, when the defence ministers of European NATO
countries (except Iceland) established a first forum for armaments
cooperation,  the  Independent  European  Programme  Group
(IEPG). In December 1992, IEPG functions were transferred to
WEU, and WEAG was created. Since then, the number of WEAG
member states has increased from 13 to 19, and includes non-
NATO EU members. The general objectives of the WEAG are: more
efficient use of resources, in particular through better harmonisa-
tion of requirements; opening up of national defence markets to
cross-border competition; strengthening of the European defence
technological and industrial base; and cooperation in research and
development. According to the WEAG’s principles, all member
countries are entitled to participate fully and with the same rights
and  responsibilities  in  any  European  armaments  cooperation
activity. To avoid duplication, however, there should be a single
European forum for armaments cooperation.16

Within the WEAG framework, ministers of defence meet once
a year, National Armaments Directors (NADs) every six months.
Between these meetings, continuity is provided by a staff group
consisting of the Permanent Representatives of the NADs in Brus-
sels. WEAG’s work is organised in three panels. 
(cid:90) The objective of Panel I is to promote cooperative equipment
programmes. It compares WEAG nations’ armaments replace-
ment schedules, which are collated and presented in an annual
document.  Where  cooperation  is  considered  possible,  sub-
groups involving the collaborating nations can be established in
order to harmonise requirements through the development of
Feasibility  Studies  and  European  Staff  Requirements.  To 

16. For a general overview, see
http://www.weu.int/weag/in-
dex.html. For a more detailed dis-
cussion, see Andrew D. James, The
Current State of European Cooperation
in the Field of Armaments (Rome: Ce-
MISS (Military Centre for Strate-
gic Studies), 2003).

20

63-EnglishText.qxd  28/08/2003  12:08  Page 21

What exists

2

conduct  the  development  and  production  phases,  a  project
group can follow up the work of the subgroups. 

(cid:90) The mission of Panel II is to strengthen cooperation in defence
research  and  technology  (R&T).  To  achieve  this  objective,
WEAG has organised its R&T activities around 13 so-called
CEPAs (Common European Priority Areas). Not all CEPAs are
equally active; the success of a CEPA depends in fact to a large
extent on the enthusiasm of members and the quality of its
chairman.  WEAG’s  main  instrument  for  R&T  has  been  the
European  Cooperation  for  the  Long  Term  in  Defence
(EUCLID) Programme, involving industry and research insti-
tutes.17 Under  EUCLID  rules,  projects  must  be  notified  to
Panel II for formal approval. However, the Panel has almost no
power to influence the choices made by its members on the
establishment of projects. In May 2001, WEAG defence minis-
ters signed another MOU, called EUROPA.18 EUROPA is a gen-
eral umbrella allowing participants to develop certain rules on
their own, with greater flexibility in particular for Intellectual
Property Rights (IPRs).

(cid:90) Panel III deals with basic aspects of a common defence eco-
nomic policy and armaments cooperation procedures. Panel III
has developed a set of principles for WEAG-wide armaments
activities, laid down in the Coherent Policy Document (CPD),
which was approved by defence ministers in 1990 and updated
in 1999. The CPD explicitly states that, during a transition
period, application of the juste retour principle and support for
countries with developing defence industries (DDIs) are two
important  aspects  of  the  creation  of  a  European  Defence
Equipment Market (EDEM). To foster cross-border competi-
tion and industrial cooperation, focal points for procurement
issues have been established in all WEAG countries. Each focal
point publishes its country’s defence procurement needs in
national bulletins, which are available WEAG-wide to inform
industry  and  procurement  authorities  on  future  national
defence requirements.19

In 1993 WEAG established an Ad Hoc Study Group (AHSG) to
review the possibilities of creating a European Armaments Agency
(EAA). In the absence of the necessary political, legal and economic
conditions,  the  group  did  not  recommend  creation  of  a  fully-
fledged EAA at that time. However, based on the work of the AHSG,
in  1996  WEAG  defence  ministers  established  the  Western 

17. Spontaneous proposals from
industrial consortia can be taken
into  consideration  through  a
mechanism called EUROFINDER.
A  third  programme,  THALES,
aims at facilitating cooperation
between government research es-
tablishments.

18. ‘European Understandings
for Research Organisation, Pro-
grammes and Activities’, repro-
duced in Burkard Schmitt, op. cit.
in note 1, pp. 95-107.

19.  For  an  analysis  of  WEAG
Panel III see Sandra Mezzadri,
‘L’ouverture des marchés de la
défense : enjeux et modalités’, Oc-
casional Paper 12 (Paris : Institute
for Security Studies of WEU, Feb-
ruary 2000), pp. 10-14.

21

63-EnglishText.qxd  28/08/2003  12:08  Page 22

2

The European Union and armaments

European Armaments Organisation (WEAO). As a subsidiary body
of WEU, the WEAO shares the latter’s international legal personal-
ity and can therefore offer a legal framework for armaments coop-
eration. 20

Although the WEAO Charter provides for a broad range of
potential activities,21 WEAO has operated only as a Research Cell,
providing member states with a variety of services in the field of
military research and technology: Some are common services pro-
vided to all members, including administrative support to the
WEAO Board of Directors and WEAG Panel II, while others con-
cern specific groups of countries undertaking cooperative R&T
projects  (contractual  assistance  in  the  preparation  of  project
arrangements, letting contracts).

After  the  establishment  of  WEAO,  discussions  on  a  fully-
fledged Armaments Agency continued. Following the ministerial
meeting in Erfurt in November 1997, a so-called ‘Masterplan’ was
worked out, defining the necessary steps on the path to an EAA. A
Group of National Experts (GNE) was established in order to
develop the rules and regulations, as well as the structure for the
EAA, so as to allow ministers to decide in 2001 about implementa-
tion of the Agency. In the following years, proposals covering the
functions of the EAA, the principles and policies governing these
functions,  a  generic  structure  and  organisation  charts  for  the
build-up and fully-fledged phases of the EAA with additional sup-
porting  documents  were  drafted,  discussed  and  presented  to
WEAG NADs. 

At their meeting in Rome on 16 May 2002, ministers formally
endorsed the concept of an evolutionary process, envisaging the
establishment of an EAA as soon as all appropriate conditions had
been met and political consensus reached. Any remaining work
should continue under the direction of the NADs. In reality, how-
ever, this was the end of the project. The GNE was dissolved, and
national governments showed no interest in the recommenda-
tions made in the Masterplan. There was apparently no longer any
political will to establish the EAA within the framework of WEAG.
The inglorious end of the Masterplan is indicative of WEAG’s
weakness and declining relevance. Since its creation, it has suf-
fered  from  a  lack  of  both  interest  and  political  support  from
national  authorities.  Consequently,  WEAG  has  never  become
more than a forum for discussion. Consensus-based decision-
making has allowed only for agreements on the basis of the lowest

20.  For  an  overview,  see
http://www.weu.int/weao/site/fr
ameset.htm.

21. According to Article 6 of the
WEAO  Charter,  ‘the  aim  of
WEAO is to assist in promoting
and enhancing European arma-
ments co-operation, strengthen-
ing the European defence technol-
ogy base and creating a European
defence equipment market.’ In or-
der  to  carry  out  this  aim,  ‘the
WEAO  may  undertake,  in  the
name of the WEU and on behalf of
one or more participants, the fol-
lowing functions: a) defence re-
search and technology activities;
b) procurement of defence equip-
ment, c) studies, d) management
of assets and facilities, e) other
functions necessary to carry out
the aim of the Organisation”(Arti-
cle 7). See Burkard Schmitt, op.
cit. in note 1, p. 12.

22

63-EnglishText.qxd  28/08/2003  12:08  Page 23

What exists

2

common denominator. The principle that all WEAG members
should be entitled to participate with the same rights and respon-
sibilities in any armaments cooperation forum has pushed the
main  arms-producing  countries  into  setting  up  other  institu-
tional arrangements that allow for greater flexibility and exclu-
siveness (thereby undermining another WEAG principle, stipulat-
ing  that  there  should  be  a  single  European  armaments
cooperation forum and no duplication in this field). 

Panel I has suffered from weak structures and low-level partici-
pation; Panel II, and WEAO in particular, have had at least limited
success, but the Research Cell has remained de facto a pure con-
tracting agency, and the contracts it has let represent only 2.5 per
cent of European military R&T spending. Panel III has been para-
lysed by continuing divergences on key issues such as juste retour
and the legally non-binding nature of its documents, which leaves
application of the CPD in particular to the political will of mem-
ber states. 

In short, WEAG has addressed the right issues but has lacked
the means and structures to find satisfactory solutions. Since the
transfer  of  WEU’s  main  functions  to  the  European  Union,
WEAG’s political relevance has diminished even further. WEAG
might continue to exist as a forum for dialogue between EU and
non-EU states. However, its functions should be transferred to
other, more efficient frameworks inside the EU.22

What  will  become  important,  in  contrast,  is  the  EUROPA
Memorandum of Understanding (MOU), signed by WEAG minis-
ters in May 2001. EUROPA provides that any two or more signato-
ries can propose the creation of a European Research Grouping
(ERG) to carry out either a number of individual R&T projects or
a single major programme. Membership of ERGs is variable –
depending on who is interested in joining the Grouping, and on
who agrees on the content of the ERG arrangement in which the
particular rules for that ERG are set out.23 The first ERG was
launched in late 2001, with 14 members. It contains all provisions
necessary for the conduct of individual R&T projects. Compared
with previous MOUs governing R&T cooperation, ERG No. 1 
provides for greater flexibility: two or more ERG members can
agree to take part in projects without having to seek permission
from the whole group (‘closed projects’); there is no automatic
juste retour, as work-share and/or cost-share are to be decided on a
case-by-case basis; participants in a project can choose who is to let

22. During their twentieth meet-
ing on 20/21 March 2003, WEAG
NADs themselves accepted the
necessity to reconsider the future
of WEAG and WEAO, and de-
cided to prepare the ground for a
possible transfer of competence
to the EU.

23. These rules cover the usual
necessary subjects in the area of
R&T cooperation, such as con-
tracting, finance, security and in-
tellectual property rights.

23

63-EnglishText.qxd  28/08/2003  12:08  Page 24

2

The European Union and armaments

contracts for them, and there is no need to submit outline descrip-
tions of projects to WEAG Panel II for approval. Since these provi-
sions meet the expectations in particular of the main arms-pro-
ducing countries, MOU EUROPA and ERG No. 1 will certainly
become  the  main  instruments  for  the  management  of  future
European R&T projects.24

OCCAR
In November 1996, France, Germany, Italy and the United King-
dom signed an MOU on the creation of the Organisation for Joint
Armaments Cooperation, OCCAR. Since there was no agreement
to establish OCCAR as a subsidiary body of WEU or to include it in
the EU, the organisation attained its legal status only after the rati-
fication of its convention, a process that took more than two years
(from the signing of the OCCAR Convention in September 1998
until its ratification in Italy in December 2000).

Like  WEAO,  legally  OCCAR  has  the  potential  to  become  a
fully-fledged armaments agency. According to Article 8 of the
Convention, OCCAR could cover a whole range of activities.25
However, up until now, OCCAR has been purely a management
agency, aiming at greater efficiency in the management of collab-
orative defence equipment programmes. To achieve this objective,
its working methods and procedures are based on a number of
innovative principles, in particular transnational project teams,
simplified approval processes and a more flexible calculation of
industrial juste retour, replacing the strict application of ‘cost-share
equals  work-share’  on  a  project-by-project  basis  by  a  multi-
year/multi-programme balance.

OCCAR’s main decision-making body is the Board of Supervi-
sors (BoS). According to the OCCAR convention, the BoS consists
of the ministers of defence or their delegates. De facto, however, it
normally meets (2 or 3 times a year) at a level below NADs. The BoS
has delegated some of its functions to other committees (Future
Tasks and Policy, Finance, Security and Programme Committees).
The Executive Administration (EA) consists of the central office
(undertaking corporate processes such as support and human
resources, development of new management tools and acquisi-
tion  of  new  programmes)  and  various  programme  divisions
(doing the core business such as programme management, sys-
tems specifications, contracts and finance).

24. The first Technical Arrange-
ment (TA) setting up a coopera-
tive project under ERG No. 1 was
signed  by  Italy  and  the  United
Kingdom in March 2002. Both the
EUROPA MOU and ERG No. 1 are
reproduced in Burkard Schmitt,
op. cit. in note 1, pp. 95-125.

25. Article 8 of the OCCAR Con-
vention stipulates that it ‘shall ful-
fil the following tasks and such
other functions that the Member
States may assign to it: a) man-
agement of current and future co-
operative  programmes,  which
may include configuration con-
trol and in-service support, as well
as research activities; b) the man-
agement of those national pro-
grammes of Member States that
are assigned to it; c) preparation
of technical specifications for the
development and procurement of
jointly defined equipment; d) co-
ordination of planning and joint
research activities as well as, in co-
operation with appropriate mili-
tary staffs, studies of technical so-
lutions to meet future operational
requirements; e) coordination of
national decisions concerning the
common  industrial  base  and
common technologies; f) coordi-
nation  of  both  capital  invest-
ments and the use of test facili-
ties.’ Quoted in Burkard Schmitt,
ibid., p. 47.

24

63-EnglishText.qxd  28/08/2003  12:08  Page 25

What exists

2

Until 2000, OCCAR was mainly occupied with the definition
of its own rules and procedures. Several long-standing Franco-
German projects like HOT, Roland and Milan served as pilot proj-
ects for framing the new regulatory framework. Now that OCCAR
has become fully operational, its main challenge is to demonstrate
effectiveness and efficiency in its core business, i.e. the manage-
ment of cooperative projects. Its most important programmes
today are the Tiger attack helicopter (FR/GE), the Future Surface-
to-Air missile Family (FSAF) (FR/IT) and the A400M transport
aircraft  (B/E/FR/GE/T/UK).  Including  the  A400M,  in  2003
OCCAR’s 200 staff are managing a budget estimated at €1 billion.
The  A400M  is  of  particular  importance  for  OCCAR,  not  only
because of its sheer size but also because it is a test case for the
involvement of non-OCCAR members. 

So far, member states have decided almost spontaneously and
without  clearly  defined  criteria  which  programmes  should  be
managed by OCCAR. This ‘method’ is understandable, since there
is  no  European  body  upstream  of  the  procurement  cycle  that
could prepare the ground for OCCAR in a more systematic way.
However, it is a particularly unsatisfying practice, because OCCAR
needs more new projects if it is to exploit its potential fully. In fact,
all previous and current OCCAR projects have been organised
under traditional intergovernmental agreements. Consequently,
the work-share has already been defined and (at least prime) con-
tractors selected. Even on these programmes, management by
OCCAR helps to reduce overhead costs, but to apply its own prin-
ciples fully and work on the basis of global juste retour, OCCAR
would need several new programmes to start almost in parallel.26
OCCAR is open to other European countries, subject to their
actual  involvement  in  a  substantive  collaborative  programme
managed by OCCAR and acceptance of OCCAR’s principles, reg-
ulations  and  procedures.  Thanks  to  its  participation  in  the
A400M programme, in late May 2003 Belgium became the fifth
OCCAR member, and holds five voting rights in the BoS (as com-
pared with 10 voting rights for each of the founding members).27
Spain,  which  also  participates  in  the  A400M  programme,  is
another candidate for OCCAR membership. However, existing
member states refuse to accept the Spanish demand for eight vot-
ing rights in the BoS unless Madrid joins another major European
project (Tiger). Following domestic problems, the Netherlands has

26.  See  Joachim  Rohde  and
Markus  Frenzel,  ‘Transatlantic
Gaps and European Armaments
Cooperation’, op. cit. in note 3,
p. 92.

27. OCCAR’s BoS adopts impor-
tant decisions (admission of new
member states, rules and regula-
tions, organisation of OCCAR EA
and appointment of the Director)
by reinforced qualified majority.
This means that a decision cannot
be taken if there are ten opposing
voting  rights.  Since  the  voting
rights of founding members are
equal to 10, each of them has a
veto right de facto. See OCCAR
Convention, Annex IV, in Burkard
Schmitt, op. cit. in note 1, p. 59.

25

63-EnglishText.qxd  28/08/2003  12:08  Page 26

2

The European Union and armaments

withdrawn its candidature; Sweden has expressed serious interest
but lacks a programme that could open the door to OCCAR.

LoI Framework Agreement
In July 1998, defence ministers of the six major arms-producing
countries in Europe signed a Letter of Intent (LoI), aimed at facili-
tating cross-border restructuring of defence industries. The ensu-
ing consultation process among the participants led, in July 2000,
to the signing of the so-called Framework Agreement, a legally
binding international treaty covering six areas: security of supply,
export procedures, security of information, research and technol-
ogy, treatment of technical information and harmonisation of mil-
itary requirements.28 In five out of these six areas, Implementing
Arrangements were then drafted to specify in detail how the sys-
tem should work.29
(cid:90) In the area of security of supply, participants accept the fact that
transnational restructuring implies possible abandonment of
national industrial capabilities and mutual dependence. To deal
with these challenges, they undertake not to hinder the supply
of defence articles and services produced on their territory to the
other LoI partners, and to provide them eventually from their
own stocks. Moreover, LoI governments will establish an infor-
mation exchange system on industrial restructuring. This sys-
tem will be based on national codes of practice with industry:
companies signing the code undertake to consult their respec-
tive governments before any change of ownership or scope of
activity. These governments should then inform all LoI partners
who have been customers of the company concerned during the
previous three years. Moreover, industry is supposed to sign
national codes of conduct containing commitments to accept
national priority and reallocation systems for production in the
event of a crisis. The Implementing Arrangement lays down
common  principles  for  these  priority  systems,  but  each  LoI
country is free to specify the modalities. 

(cid:90) For exports, the main innovation of the Framework Agreement
is  the  Global  Project  Licence  (GPL),  aimed  at  streamlining
export procedures for cooperative programmes. If a GPL is
granted for a given programme, be it industrial or governmen-
tal, the system itself, its subsystems and components can move
freely within the territory of the six partners. As for exports to

28. Reproduced in ibid., pp. 68-
94.

29. Security of Information is the
only area where there is no Imple-
menting Arrangement, because
the provisions of the Framework
Agreement are sufficiently de-
tailed.

26

63-EnglishText.qxd  28/08/2003  12:08  Page 27

What exists

2

non-LoI countries, states involved in the programme deter-
mine by consensus so-called permitted export destinations.
The latter are established following industrial proposals and
are modifiable in case of significant changes in the political sit-
uation in an export destination. 

(cid:90) In the area of security of information, the LoI partners have
agreed on general provisions that should be incorporated in
future MOUs to be signed on international programmes. They
have worked out common principles, requirements and proce-
dures for visits to industrial facilities and government estab-
lishments, as well as for the transmission of classified informa-
tion.  Last  but  not  least,  they  have  developed  a  common
understanding of how to deal with national security clearance
and agreed on a consultation process in cases where non-LoI
nationals need access to classified information.

(cid:90) In the field of military research and technology, the LoI partners
have agreed on the creation of a system for exchange of infor-
mation, covering R&T strategies and policies, as well as current
and  planned  defence-related  R&T  programmes.  Moreover,
they have decided to develop a code of conduct to coordinate
their relationships with transnational defence companies. A
Group of Research Directors has been set up for this kind of
‘top-down’ management of R&T cooperation. As for the run-
ning of specific projects, the partners have agreed to make use
of the EUROPA MOU and ERG No. 1 as the preferred instru-
ments.

(cid:90) As for the treatment of technical information, provisions of the
Framework Agreement aim at developing common standards
for  dealing  with  Intellectual  Property  Rights  (IPRs).  Since
European countries have different rules for ownership of tech-
nical information (company-owned or state-owned), IPRs can
pose a problem for the creation of a transnational defence com-
pany. According to the Implementing Arrangement, the owner-
ship of IPRs should in general be held by companies, with gov-
ernments keeping some prerogatives in particular on transfers
of IPRs and the payment of loyalties. 

(cid:90) Regarding the harmonisation of military requirements, the LoI
nations  have  established  a  new  methodology,  based  on  the
commitment to inform each other fully about their respective
national planning: the six partners have agreed to set up a mas-
ter  data  base  with  a  complete  list  of  their  future  capability

27

63-EnglishText.qxd  28/08/2003  12:08  Page 28

2

The European Union and armaments

needs. A common board will then try to identify common needs
and possible common solutions to those needs. If there is agree-
ment, a cooperative requirement team will be set up to define a
common staff target.

It was only in July 2003 that the last LoI country – Italy – ratified the
Framework Agreement, and Implementing Arrangements will not
be signed before the end of 2003.30 Only then will the Framework
Agreement be fully operational. It is therefore too early to say today
how the LoI system will work in practice. 

It is certain, however, that the LoI process will not lead to a per-
manent institutional structure. The Executive Committee, which
meets four times a year at a level well below National Armaments
Directors (except Sweden, whose NAD does attend), will be main-
tained  (a)  to  monitor  the  implementation  of  the  Framework
Agreement by national authorities and (b) to develop the system
further. The possibility of a ‘phase 2’ of the LoI process is under
consideration but no decision has been taken yet. In the mean-
time, the subcommittees on security of supply and treatment of
technical information are continuing to discuss certain specific
items.31 Those for R&T and harmonisation of military require-
ments are replaced by new mechanisms, and the one on export
procedures will probably continue to meet regularly to monitor
the actual use of GPLs. 

Since its beginning, the LoI process has been caught between
pressure to produce concrete results rapidly and a reluctance to
engage in more thorough reform. Consequently, its approach has
been rather limited, trying to make national rules and procedures
compatible with each other rather than setting up a new regula-
tory framework. Rules and procedures have not been standard-
ised, nor policies harmonised. This self-imposed limitation has
led to solutions that are often too complex, vague or not suffi-
ciently binding. 

Moreover, the LoI process has evolved under the authority of
Ministries of Defence (MOD); other relevant ministries have been
involved only through national staffing. This approach is too nar-
row to cover all the necessary technological, financial and eco-
nomic aspects of strategic industries. A comprehensive solution
would have to embrace trade, industrial, internal market and com-
petition issues that come at least in part under the authority of
European community policies.

30.  Signing  the  various  docu-
is  a  time-consuming
ments 
process, because each of the five
Implementing Arrangements has
been translated into the six LoI
languages, and each of these 30
documents has now to be signed
by all six LoI partners. Moreover,
each Implementing Arrangement
is signed by a different national
authority (National Armaments
Directors, Research Directors, ex-
port control authorities, etc.). Fi-
nally, all documents will be de-
posited in the Untied Kingdom as
the  depository  country  of  the
Framework Agreement.

31. The Sub-Committee on Secu-
rity  of  Supply  is  currently  dis-
cussing offset waivers and their
impact on market access; the Sub-
Committee on Treatment of Tech-
nical Information is working on
the harmonisation of contractual
terms and conditions, and a spe-
cific ad hoc Working Group has
been set up to consider export
promotion measures. 

28

63-EnglishText.qxd  28/08/2003  12:08  Page 29

What exists

2

Finally,  the  intergovernmental  method  has  proven  to  be
extremely time-consuming and cumbersome. The fact that it will
have taken more than three years to accomplish the ratification
process and make the Framework Agreement operational is a case
in point. Lacking high-level political supervision, technical dis-
cussions have dragged on at the working level. These problems
may well continue even when the system is operational: some pro-
visions leave plenty of room for interpretation, while others need
strong political will to make the agreed mechanisms work. In the
absence of continued high-level political input and monitoring, it
remains  doubtful  whether  national  defence  and  procurement
bureaucracies will be able to put life into the Framework Agree-
ment’s provisions. 

All this does not mean that the LoI process is a failure. On the
contrary, the learning effects alone will be highly beneficial in tak-
ing things forward. However, the Framework Agreement and its
various Implementing Arrangements can only be the beginning of
the process. They do not set up a defence equipment market, but
they will serve as benchmarks for more comprehensive solutions.
The LoI system needs to be developed, and the method in particu-
lar  needs  to  be  improved:  intergovernmental  rule-setting  has
clearly shown its limits, and the mechanisms set up for coopera-
tion on R&T and harmonisation of military requirements might
be too weak to produce the necessary results. Moreover, coordina-
tion with other European bodies and political supervision will be
indispensable. 

Within the EU framework

All the above-mentioned initiatives have been taken outside the EU
framework.  As  we  have  seen,  member  states  have  deliberately
excluded armaments from the European integration process, refer-
ring to Art. 296 TEC. In its role as regulator of the single market, the
European  Commission  has  repeatedly  expressed  a  desire  to
become more closely involved with European armaments matters.
Since  1996,  it  has  launched  several  Communications  on
defence–related  industries.  The  second  Communication,  pub-
lished in November 1997, called for the creation of an integrated
European defence market, based on a proposed CFSP Common

29

63-EnglishText.qxd  28/08/2003  12:08  Page 30

2

The European Union and armaments

Position and an Action Plan, using a combination of legislative and
non-legislative instruments under the first and second pillars.32
However, this initiative has not led to any substantial progress: the
draft Common Position has not been adopted by the Council,
since member states have disagreed on both the substance and the
desirability of a common armaments policy. The Action Plan has
been dormant since 1999, and only in the areas of customs duties
and standardisation has some progress been achieved.33

However, in spite of the reluctance of many member states,
there are certain armaments-related issues where the EU has devel-
oped at least a limited competence.

The dual-use regime
The question of export controls on dual-use goods was first raised
in the context of the completion of the European internal market
(1992). In order to allow dual-use goods to move as freely between
member states as they do within each of them, the EU Council
established, on 19 December 1994, a common control regime for
dual-use exports to third countries. Based on a Council Regulation
and a Council Decision,34 the regime was a cross-pillar approach
aimed at coping with the responsibility dilemma concerning the
specificity of dual-use goods. As part of trade policy, restrictions
on exports of dual-use goods fall within the competence of the
Community by virtue of Article 133 (formerly 113) TEC. There-
fore, control procedures and mechanisms were outlined in Regu-
lation  (EC)  3381/94,  which  became  part  of  Community  law.
Council Decision 94/942/CFSP, in contrast, was adopted under
Article J.3 of the Maastricht Treaty (now Article 14 of the TEU)
concerning joint action in matters covered by the CFSP. Both texts
were closely entwined by numerous cross-references and formed
an ‘integrated system’. The Community Regulation outlined how
the regime would work, whereas all lists of permitted destinations
and controlled items were annexed to the Council Decision under
CFSP rules. Whereas the Commission was charged with the proce-
dural aspects of the system, it was the Council’s (and therefore the
member states’) responsibility to establish, monitor and update
the lists. Since the latter are obviously the heart of the control
regime, the Regulation alone would have had no substance and

32.  ‘Implementing  European
strategy on defence-related indus-
tries’,  European  Commission
(97)  583,  Brussels
Com 
at:
Available 
12.11.1997. 
http://europa.eu.int/comm/en-
terprise/defence/defence_docs/d
ef_comm.htm

to 

33. As for standardisation, the
Commission has launched a Eu-
ropean  ‘Defence  Standardisa-
tion Handbook’, containing ref-
erences 
standards  and
commonly used terms to support
defence procurement contracts
as well as guidelines on the opti-
mum  selection  of  such  stan-
dards. The Handbook has been
developed with the assistance of
the  European  Committee  for
standardization (CEN) and par-
ticipation of MODs and industry.
It should be ready in its initial
form by the end of 2003 and in a
first operational version around
the end of 2004. As for customs
duties, a council regulation on
the  basis  of  Art.  26  TEC  was
adopted  in  January  2003  sus-
pending import duties on certain
weapons  and  military  equip-
ment.  See  Council  Regulation
(EC) 150/2003, published in the
Official Journal of the European Com-
munities, L25, 20 January 2003,
p. 1.

34  .Council  Regulation  (EC)
3381/94 and Council Decision
94/942/CFSP, published in the
Official Journal of the European Com-
munities,  L  367,  31  December
1994, pp. 1-7 and 8-163.

30

63-EnglishText.qxd  28/08/2003  12:08  Page 31

What exists

2

made no sense. The member states’ prerogatives were based on the
assumption that all decisions concerning the lists were strategic
and/or political in nature and, therefore, outside the Commis-
sion’s competence. 

For  legal  and  practical  reasons,  the  integrated  system  was
replaced in July 2000 by a new control regime35 based solely on
Article 133. The new Council Regulation (EC) 1334/2000 includes
all annexes and is effective without any cross-references to the cor-
responding Council Decision 2000/402/CFSP. This means that
both principles and lists come under the Commission’s compe-
tence. The Commission now has the exclusive right of initiative,
and all Council decisions are taken by qualified majority (instead
of unanimity). However, since the list of controlled items is a com-
pilation  of  lists  defined  by  international  non-proliferation
regimes  (Wassenaar,  MTCR,  Nuclear  Suppliers’  Group)  where
member states – and not the Commission – are represented, the
former have preserved a dominant position.36

Apart from that, the updated regime has established a new con-
sultation mechanism on undercutting that will certainly improve
cooperation between EU countries. Under the previous regime, a
member state could easily grant an export licence for an item for
which the authorities of another member state had refused autho-
risation. Under the new Regulation, such undercutting can pro-
voke considerable peer pressure. Member states now have to (a)
inform each other on denials of export licenses; (b) consult with
each other on their intention to undercut; and (c) explain their
decision to do so. This provision is a (highly) upgraded version of
the consultation mechanism of the Code of Conduct for arms
transfers (see below). It remains to be seen whether the new con-
sultation mechanism can compensate for the main problem of the
control regime – the absence of a common export policy. Today,
the regime constitutes nothing more than a common framework
for  different  national  policies.  Member  states  recognise  each
other’s export licences but they do not necessarily agree with each
other’s export policies. Moreover, the common guidelines remain
so vague that there is a risk of inconsistent interpretation and
application of the provisions by national authorities.37

35.  Council  Regulation  (EC)
1334/2000 and Council Decision
2000/402/CFSP, published in the
Official Journal of the European Com-
munities, L 159, 30 June 2000, pp.
1-218. Since then, five amend-
ments to the Regulation have been
endorsed by the Council (in De-
cember  2000,  twice  in  March
2001, in May 2002 and in Febru-
ary 2003). The latest change of the
Regulation (149/2003) was pub-
lished in the Official Journal of the EU
number L 30. Regulation 149/
2003  contains  all  the  consoli-
dated changes made in Annexes I,
II and IV since adoption of the
Regulation.

36. Burkard Schmitt, ‘A common
European export policy for de-
fence and dual-use items?’, Occa-
sional Paper 25 (Paris: Institute for
Security  Studies  of  WEU,  May
2001). pp. 8-9.

37. At the Community level, a co-
ordinating group, composed by
national licensing officials and
customs officers and chaired by
the Commission, regularly dis-
cusses the practical application of
the regulation. The group focuses
on resolving practical problems
and developing common inter-
pretations of certain provisions of
the Regulation.

31

63-EnglishText.qxd  28/08/2003  12:08  Page 32

2

The European Union and armaments

POLARM
Within the EU Council, the ad hoc European Armaments Policy
Council Working Group (POLARM) is the only formal forum for
discussion on armaments. POLARM was set up in 1995 and works
directly  to  the  Committee  of  Permanent  Representatives
(COREPER). It is made up of foreign ministry representatives, usu-
ally accompanied by experts from MODs. POLARM is supposed to
meet three times during any one presidency, but its actual activity
depends very much on the particular interest of each presidency.

Its initial mandate was (a) to analyse the report of an informal
EU/WEU-WEAG group of experts which in 1994-95 studied the
options of a European armaments policy, (b) to identify the points
in the report which merit further examination, (c) to make recom-
mendations for further action within the EU and (d) to put for-
ward, as appropriate, a list of specific measures without prejudice
to the Commission’s competence under the TEU. On this basis,
the Group has examined many different topics related to EDITB
and EDEM, but its overall results have been meagre due to a lack of
interest and consensus among member states. 

Under the Greek Presidency (January-June 2003), POLARM
developed a new dynamic. Within a few months, the group agreed
on three draft resolutions that have been adopted by the Council
on  (a)  standardisation,  (b)  restructuring  challenges  in  the  EU
armaments sector and (c) security of supply. This was the first time
since its creation that POLARM was able to reach agreement on
such draft documents. The resolutions contain no concrete com-
mitments and lack substance, but the very fact that they were
adopted illustrates a greater willingness to deal with armaments
within the EU. 38

Under the Greek Presidency, POLARM also started to discuss a
‘EU Cooperation Programme for Advanced Research and Tech-
nology’ (E.P.A.SE.RE.TE). However, following its Communica-
tion of 11 March 2003, the Commission has been charged with
including the long-term research part of E.P.A.SE.RE.TE in its
own preparatory action.39 POLARM, in turn, is supposed to con-
tinue discussions on military research. 

The Code of Conduct
The  European  Union  Code  of  Conduct  on  Arms  Exports  was
adopted on 8 June 1998 by the General Affairs Council as a Council

38. POLARM also drafted a Com-
mon Position on intra-Commu-
nity transfers, which has not been
adopted yet. The Commission in
particular considers transfers as a
first-pillar issue and would there-
fore prefer an EC regulation rather
a CFSP instrument. However, the
text may be adopted under the
Italian presidency (second half of
2003). 

39. E.P.A.SE.RE.TE contains pro-
posals for rules governing strate-
gic R&T activities that are very sim-
ilar  to  those  of  the  EUROPA
MOU. The Commission, in turn,
has accepted them for the man-
agement of its preparatory action.

32

63-EnglishText.qxd  28/08/2003  12:08  Page 33

What exists

2

Declaration in the framework of the CFSP. 40 The Code of Conduct
is a politically but not legally binding instrument, and does not
involve the European Commission (normally in charge of trade
issues). The overall objective of the Code is to achieve greater trans-
parency in arms transactions and to lead to a growing convergence
of national export policies. To achieve this objective, it sets eight
criteria that serve as minimum standards for the management and
control of conventional arms exports by member states to third
countries.41 Moreover, it establishes an information exchange and
consultation mechanism between EU member states. In 2001, a
common list of military goods subject to the Code was agreed to
serve as a guideline; member states are, however, free to use their
own lists.

The first part of the code contains guidelines that set out a
number of circumstances in which licences should be refused; the
second part gives operative provisions that contain a mechanism
for consultation on undercutting and an annual review process. 
Consultations on the Code’s implementation and operation
take place in COARM, the Council’s Working Group on arms
exports. COARM was set up as an ad hoc group when the Maas-
tricht Treaty entered into force. It is made up of foreign ministry
representatives  from  member  states,  usually  accompanied  by
defence ministry experts. The group is answerable to COREPER
and meets six times a year. 42 So far, COARM has submitted four
annual reports to the Council. 

The Code of Conduct has been ‘both welcomed as an impor-
tant step towards a common European approach to arms exports
and criticised for its numerous loopholes and shortcomings’.43 It
is often criticised for being politically, but not legally, binding
which leaves its actual application to the sole discretion of its
members. Moreover, vague formulations and compromises based
on the lowest common denominator leave plenty of room to inter-
pret the Code according to member states’ interests. Beyond that,
the Code’s consultation obligations have been considered as too
weak. If one EU country wants to take up a licence that has been
denied by another, it needs to notify and consult only with the
member state that first issued the denial. Many EU governments
would have liked to see, as a minimum, multilateral notifications
of an intention to undercut in order to increase peer pressure and
move more rapidly towards a common approach.44

40.  ‘European  Union  Code  of
Conduct  on  Arms  Exports’,
adopted on 8 June 1998. Repro-
duced in Burkard Schmitt, op. cit.
in note 1, pp. 29-44.

41. The Code’s eight export crite-
ria are based on those defined by
the European Councils in Luxem-
bourg (29 June 1991) and Lisbon
(26-27  June  1992).  These  in-
clude: (1) Respect for the inter-
national  commitments  of  EU
members, in particular the sanc-
tions decreed by the UN, the EC,
and  non-proliferation  agree-
ments; (2) The respect of human
rights in the country of final des-
tination; (3) The internal situa-
tion in the country of final desti-
nation,  as  a  function  of  the
existence of tensions or armed
conflicts; (4) Preservation of re-
gional peace, security and stabil-
ity; (5) The national security of
the member states, as well as that
of friendly and allied countries;
(6) The behaviour of the buyer
country with regard to the inter-
national community, as regards
in particular to its attitude to ter-
rorism, the nature of its alliances,
and respect for international law;
(7) The existence of a risk that the
equipment will be diverted within
the buyer country or re-exported
under undesirable conditions;
(8) The compatibility of the arms
exports with the technical and
economic capacity of the recipi-
ent country. Ibid.

42. See http://projects.sipri.se/
expcon/euframe/coarm.htm#an
chor1193390. 

43. See Burkard Schmitt, op.cit. in
note 36, p. 12.

44. Ibid, p. 13. Beyond that, the
Code is criticised for not tackling
all the relevant problems. Licens-
ing of production abroad, for ex-
ample, has not been addressed.
Nor are constraints on the activi-
ties of international arms broker-
ing  agents  included.  Several 
member  states  have  controls 
on  brokering,  others  not.  See
http://www.fas.org/asmp/ cam-
paigns/code/EUcodereport4.pdf
.

33

63-EnglishText.qxd  28/08/2003  12:08  Page 34

2

The European Union and armaments

Nevertheless, in spite of all its shortcomings, the Code of Con-
duct represents the most comprehensive agreement to date in
terms of multilateral efforts to specify how human rights, regional
security and development concerns should be addressed within
the export licensing process. Regular consultation, joint assess-
ment and progressive work on common definitions help to foster
a common understanding of the agreed principles. The more con-
sultation extends beyond specific cases of undercutting and into
broader political issues (like the assessment of specific regions),
the better the chances of reaching a common export doctrine.
However,  this  will  depend  mainly  on  the  broader  movement
towards a true CFSP. 

EU Research Framework Programme
The Framework Programme is the EU’s main instrument for civil
research  funding.  Programmes  are  proposed  by  the  European
Commission and adopted by the Council and the European Parlia-
ment  following  a  co-decision  procedure.  The  Framework  Pro-
gramme typically covers a period of four years and has been imple-
mented since 1984. The Sixth Framework Programme (FP6) was
decided at the European summit in Lisbon in March 2000 and has
been operational since September 2002. Its objective is to establish
the ‘European Research Area’, i.e. an internal market for science
and technology. Compared with its predecessors, FP6 has been re-
defined and streamlined. Designed to create ‘Networks of Excel-
lence’ and ‘Integrated Projects’, it concentrates on fewer priorities
and promotes research activities that have a lasting, ‘structuring’
impact.45

Through the Framework Programme, the EU has become an
important sponsor of strategic industries. Overall Community
participation in FP6 is €17,500 million, which represents 5.4 per
cent of all public (non-military) research spending in Europe. For
aeronautics and space, one out of seven thematic priority areas of
FP6,€1,075 million are allocated.46 The aim of activities carried
out in this area is to strengthen the scientific and technological
bases  of  the  European  Aerospace  industry,  by  channelling  its
research efforts towards priority themes. 

The  Framework  Programme  funds  only  civilian  projects.47
However, many aerospace companies have both civil and defence
activities, and public R&D funding that helps them to remain

45.  See  www.europa.eu.int/
comm/research/fp6/index_en.
html.

see 

46. For more details on these pri-
orities and their respective budget
allocations 
Decision
No. 1513/2002/ EC of the Euro-
pean Parliament and of the Coun-
cil of 27 June 2002, published in
the Official Journal on 29 August
2002. http://europa.eu.int/eur-
lex/pri/en/oj/dat/2002/l_232/l_
23220020829en00010033.pdf.

47. According to the Commission,
objectives  of  the  Community
aeronautical research and devel-
opment activities are to: (a) in-
crease the competitiveness of the
European industry with regard to
civil aircraft, engines and equip-
ment; (b) reduce the environmen-
tal impact of aviation, by reducing
fuel consumption, CO2, NOX and
other  chemical  pollutants  and
noise pollution; (c) increase air-
craft safety in the context of the
substantial rise in air traffic; (d) in-
crease the capacity and safety of
the air transport system, in sup-
port of a ‘Single European Sky’ (air
traffic control and management
systems). Community space activ-
ities address: (a) research on satel-
lite-based information systems
and  services  relevant  for  the
Galileo satellite navigation proj-
ect;  (b)  research  on  satellite-
based  systems  relevant  for  the
global monitoring for environ-
ment and security (GMES) plat-
form,  taking  into  account  the
needs of users; (c) advanced re-
search needed to integrate the
space and Earth segments in the
field  of  communications.  See
work programme 2002-06, The-
matic priority 1.4., ‘Aeronautics
and Space’, http://www.cordis.
lu/fp6/aerospace.htm.

34

63-EnglishText.qxd  28/08/2003  12:08  Page 35

What exists

2

competitive in civil markets is all the more important for them, as
defence budgets continue to be flat. Moreover, dual-use technolo-
gies have gradually been included in the Framework Programmes.
GMES, secure telecommunication and safety of IT networks, for
example, are all civil but security-related research programmes.
They might well lead to applications that are of military interest,
in particular in the IT and electronics sector, where military com-
ponents and systems are increasingly developed on the basis of
civil technologies.

At the declaratory level, the link between military and civil
research and the need to adapt the EU’s research activities accord-
ingly are increasingly accepted. In its Presidency Conclusion of 20-
21  March  2003,  for  example,  the  European  Council  explicitly
recognised ‘the role that defence and security related R&D could
play in promoting leading-edge technologies and thereby stimu-
late innovation and competitiveness’, and invited ‘the Council to
analyse the role of defence R&D procurement in the context of the
overall R&D activities in the Union, including the possible cre-
ation by the Council of an inter-governmental defence capabilities
development and acquisition agency.’48 E.P.A.SE.RE.TE and the
Commission’s preparatory action point in the same direction.

ECAP 
At the Helsinki European Council in December 1999, EU Member
States set themselves the headline goal of being able, by 2003, to
deploy within 60 days and sustain for at least one year forces up to
corps level (60,000 men). One year later, at the Capabilities Com-
mitment Conference in Brussels, they committed themselves, on a
voluntary basis, to making national contributions to these EU
rapid reaction capabilities. The comparative analysis of both the
‘Helsinki Headline Goal Catalogue’ (specifying the operational
requirements for the Petersberg Tasks) and the ‘Force Catalogue’
(setting out national commitments) revealed considerable short-
falls in national capability commitments. Among the 38 capability
shortfalls identified in the so-called ‘Helsinki Progress Catalogue’,
21 were evaluated as ‘significant’.

At the Laeken European summit in December 2001, the EU
Council  decided  to  launch  the  ‘European  Capabilities  Action
Plan’  (ECAP)  to  address  these  shortfalls.  From  March  2002
onwards,  19  panels  of  national  experts  developed  possible 

48. See Presidency Conclusion of
the Brussels European Council of
20/21 March 2003, available at:
http://ue.eu.int/newsroom/mak
eFrame.asp?MAX=&BID=76&DI
D=75136&LANG=1&File=/press-
Data/en/ec/75136.pdf&Pic-
ture=0.

35

63-EnglishText.qxd  28/08/2003  12:08  Page 36

2

The European Union and armaments

solutions. These panels met independently and were composed of
at  least  one  lead  nation  per  panel,  active  participants  and
observers. The work of the panels was coordinated by the ‘Head-
line Goal Task Force’, which drew upon the support of the EU mil-
itary staff (EUMS). Panels presented their final report 1 March
2003. 

The shortfalls identified vary widely in importance, nature,
operational implications and the possible ways to rectify them.
One category can be addressed if member states revise their con-
tributions and offer capabilities they already have but which, for
various reasons, have not been put forward before. 

A second category, however, consists of shortfalls for which
capabilities do not exist in national inventories and which can
only be rectified if member states acquire the required capability.
Some of these shortfalls can be temporarily addressed by short-
term solutions such as leasing or upgrading. For a number of
shortfalls, including some related to strategic capabilities, a long-
term solution would require large-scale procurement projects.
Some of these projects are already under way, others not. 

During the first phase, neither national planners nor procure-
ment specialists were involved in the panel’s work, leaving some-
what unclear if and how ECAP would actually lead to the develop-
ment  of  the  required  new  capabilities.  However,  following  an
evaluation by the EUMC, at the Capability Conference on 19 May
2003 member states established ten project groups ‘focused on
the  implementation  of  concrete  projects,  including  solutions
through acquisition or other solutions such as leasing, multi-
nationalisation and considering possibilities for role specialisa-
tion’.49

ECAP is generally considered a promising approach for tack-
ling capability shortfalls.50 It has, however, several weak points:
first, it remains voluntary and lacks credibility as long as commit-
ments are not underpinned with the necessary funding. Second,
ECAP lacks leadership. Member states are free to participate and
to take on commitments, and the EUMS apparently has had diffi-
culties to follow, let alone coordinate, the work of the various pan-
els. Last but not least, ECAP remains a purely ad hoc exercise, lim-
ited both in time (focusing only on current shortfalls) and scope
(dealing only with shortfalls in commitments to the Headline
Goal Force).

49. See Council of the European
Union, ‘Declaration on EU mili-
tary capabilities’, 19 May 2003, p.
4. The 10 project groups are: air-
to-air refuelling, combat search
and rescue, headquarters, NBC
protection,  special  operations
forces, theatre ballistic missile de-
fence, unmanned aerial vehicles,
strategic airlift, space-based as-
sets, interoperability issues and
working procedures for evacua-
tion  and  humanitarian  opera-
tions.

50. See General Affairs and Exter-
nal Relations Council, meeting of
defence ministers, Brussels, 19
November 2002, reproduced in
Jean-Yves Haine, ‘From Laeken to
Copenhagen. European defence:
core documents’, Chaillot Paper 57
(Paris: EU Institute for Security
Studies, February 2003), pp. 147-
55.

36

63-EnglishText.qxd  28/08/2003  12:09  Page 37

How to move ahead

The European Union and
armaments

All these initiatives, institutions and policies have developed with-
out coordination. Membership partly overlaps, but there are nei-
ther institutional linkages nor a common strategy. The various
areas of armaments are not systematically covered and important
gaps persist. 
(cid:90) WEAG, and in particular Panel II, has developed certain method-
ologies  and  legal  instruments  that  will  be  useful  for  future
arrangements.  In  general,  however,  WEAG’s  relative  failure
shows that the traditional intergovernmental method cannot
cope with today’s challenges. Even in R&T, cooperation has suf-
fered from a lack of support from member states, and, more pre-
cisely, from the Research Cell’s limited staff and restricted man-
date  (to  administrative  and  contractual  support).  A  general
lesson to be learned from WEAG’s experience is therefore that an
organisation  for  armaments  cooperation  needs  sufficient
resources, a strong mandate, high-level representation, work-
able  decision-making  processes  and,  if  possible,  permanent
bodies if it is to be efficient. Moreover, commitments on the
opening of defence markets will only work if they are legally
binding.

(cid:90) OCCAR is potentially a very useful tool, but it lacks new pro-
grammes to fully apply its own principles. Moreover, it needs
greater autonomy vis-à-vis member states. Political guidance is
indispensable, but OCCAR should not be kept on a leash by
national procurement agencies, which consider OCCAR also as
a potential rival.

(cid:90) The LoI Framework Agreement is only an intermediate step on
the way towards a homogeneous defence economic space. In
the end, only a supranational body will be able to counterbal-
ance  national  egoisms  and  establish  a  single  set  of  rules.
Another general lesson to be learned from the LoI process is
that close and permanent political supervision is needed to

3

37

63-EnglishText.qxd  28/08/2003  12:09  Page 38

3

The European Union and armaments

ensure that reforms do not get stuck at the working level. Last
but not least, the mechanisms that are foreseen for harmonisa-
tion of military requirements and R&T are hardly innovative. It
is difficult to see why they should perform better than other tra-
ditional intergovernmental forums have done in the past.
(cid:90) The dual-use regime as such is not relevant to this paper, but its
underlying philosophy, i.e. free intra-community circulation of
items based on mutual recognition of export decisions to third
countries,  could  inspire  future  arms  transfer  and  export
arrangements. As for the Code of Conduct, its consultation
mechanisms  could  certainly  be  improved,  but  a  common
export policy is still a long way off. However, more efficient
export procedures should be envisaged in particular for coop-
erative projects.

(cid:90) POLARM has a modest record. As a typical intergovernmental
body, it depends completely on the political will of national
governments. As a result, it has been paralysed for many years
by the traditional divergences between member states on arma-
ments. However, its importance might increase in the future, in
particular as a forum for discussion between member states
and the Commission on the various Communication initia-
tives. 

(cid:90) The EU Framework Programme is a very positive instrument
for  fostering  research  and  support  strategic  industries.  It
already  covers  some  dual-use  activities,  but  security-related
research should be explicitly included. This means, in turn, that
there must be a coordinated strategy between the Commission
and the future Agency. 

(cid:90) The ECAP process has been an important first step towards a
common attempt to tackle capability needs. However, its scope
is too limited and its working methods (regular meetings of
national experts) follow the traditional intergovernmental pat-
terns. The process should be strengthened, institutionalised,
based on permanent groups and linked to procurement and
research. 

The challenge now is to use the existing useful elements, improve
and complement them, and integrate them into a coherent struc-
ture. The problem is, again, the complexity of the armaments sec-
tor. The creation of an Agency is mainly an institutional challenge,
whereas the establishment of a defence equipment market involves

38

63-EnglishText.qxd  28/08/2003  12:09  Page 39

How to move ahead

3

framing new regulations and represents most of all a juridical task.
Moreover, the role of the various actors is different. The Commis-
sion will play a major role in the development of a defence equip-
ment market, whereas the creation of the Agency will be an exclu-
sive decision by member states (even though the Commission will
have an indirect role in defining the Agency’s research activities).

The multitude of actors involved does not make it any easier to
establish a coherent framework. Within each member state, vari-
ous administrative branches are in charge of armaments, but these
often  have  difficulties  reaching  common  national  positions.
These difficulties multiplied by 25 amount to a serious risk that
too many cooks may spoil the broth. On top of that, several formal
and informal bodies are involved at the EU level (COREPER, PSC,
POLARM, several Commission DGs, EUMC, Informal Advisory
Group of EU defence ministers, EU NADs, etc.), which almost
inevitably implies inter-institutional rivalry and frictions.

As for market issues, the various initiatives announced by the
Commission will set the agenda for discussions that will certainly
take several years. The work of the Agency, in contrast, will now
rapidly become substantial. The Presidency Conclusions of Thes-
saloniki set a clear deadline that will drive the process – even if the
deadline is in contradiction with the schedule for the new EU
Treaty. End of July 2003, COREPER agreed on the necessity to
establish an ad hoc working group to implement the Presidency
Conclusions and to lay the groundwork for the Agency. Whether
this group will be able to ensure that the project does not (again)
become  a  victim  of  national  egoism  and  bureaucratic  inertia
remains to be seen. However, the fact that COREPER will be in
charge of ensuring the coherence of the project is a positive sign,
because it takes into account the cross-pillar nature of many arma-
ments-related issues. 

There are of course different models for such an Agency: it
could be a small central office coordinating existing bodies, a
loose network of different agencies, or its scope could be limited to
filling certain gaps in the procurement cycle. However, the Agency
should by no means become ‘just’ another armaments institution
added to the existing ones. Its creation must be an occasion to
rearrange  the  current  setting,  leading  to  a  coherent  workflow
throughout the procurement cycle. 

39

63-EnglishText.qxd  28/08/2003  12:09  Page 40

3

The European Union and armaments

The following model suggests how the Agency should – from
the author’s point of view – ideally work. Drawing lessons from the
failure of WEAG’s work on the EAA, the emphasis is on processes
and competencies rather than technical procedures.

The European Armaments, Research and Capabilities
Agency (ARCA) – a blueprint

Cooperation in the broader sense of the word will be the core activ-
ity of any future European Armaments, Research and Capabilities
Agency  (ARCA).  In  this  context,  its  main  objective  should  be
twofold: first, it must ensure that the capability needs of Europe’s
armed forces are met, wherever possible, through European coop-
eration in order to foster standardisation of military equipment
and generate economies of scale. Second, it must enhance the effi-
ciency of cooperation in order to exploit potential cost savings
effectively. To achieve this objective, the ARCA should: 
(cid:90) cover all relevant procurement phases from the definition of

capability needs to in-service support; 

(cid:90) ensure in particular the interaction between harmonisation of

military requirements and research; 

(cid:90) avoid unnecessary duplication and integrate existing tools if

appropriate; 

(cid:90) work closely with other relevant bodies; 
(cid:90) go beyond the traditional intergovernmental method; 
(cid:90) have high-level political supervision and support. 
As shown earlier, OCCAR is potentially a useful tool for the man-
agement of cooperative programmes. What is missing is a system-
atic approach towards the harmonisation of capability needs and
military research. In consequence, the future ARCA should (a) fill
this gap and (b) use OCCAR as its instrument to cover the subse-
quent  phases  of  the  procurement  cycle.  To  do  this,  the  ARCA
should have three functional divisions: capabilities, procurement
and research. Given the range of its missions, it should also have
units for the monitoring of industrial capabilities and the manage-
ment of European test facilities. 

40

63-EnglishText.qxd  28/08/2003  12:09  Page 41

How to move ahead

3

Capabilities 
In order to foster armaments cooperation, the ARCA must, first of
all, obtain exhaustive information about European force planning
from relevant military bodies. As long as there is no central Euro-
pean planning system for all member states, input must come from
national and EU military planning staffs. Since capability needs for
the EU Rapid Reaction Force are merely a subset of national needs,
information on national planning is key in identifying as many
occasions for European cooperation as possible. Both the EUMS
and national authorities should therefore inform the ARCA regu-
larly and with as much detail as possible about their planning for
the future (with the only exception of highly sensitive capabilities
for which member states exclude international cooperation). 

EU and national needs should be categorised in core capability
areas. Both military planners and the ARCA should work with the
same set of categories. The latter must be general enough to rec-
oncile diverging doctrinal preferences. The categories defined by
the LoI subcommittee on harmonisation of military requirements
could be used for this purpose: (1) Command, Control, Commu-
nications and Information, (2) Intelligence, Surveillance, Target
Acquisition and Reconnaissance, (3) Deployability/Mobility, (4)
Effective Engagement, (5) Protection/Survivability, (6) Sustain-
ability/Logistics, (7) General Support. 

To be as efficient as possible, the ARCA should have ‘Capability
Groups’ to follow each of these categories. In contrast to the ECAP
panels, these ‘Capability Groups’ should not only work on current
shortfalls, but monitor capabilities over a long period (up to 20
years, depending on the capability). Their main task should be to
analyse at what moment in time and in which area a new need will
arise,  and  which  technological  possibilities  will  exist  at  that
moment  to  meet  the  respective  shortfalls.  Such  a,  long-term,
approach  is  the  only  effective  was  to  harmonise  replacement
schedules and military requirements. If future national shortfalls
had an impact on the EU Rapid Reaction Force, the ‘Capability
Groups’ should also evaluate whether the capabilities in question
can be provided by other EU nations and, if so, for what period. 

These ‘Capability Groups’ should have a permanent core of

41

63-EnglishText.qxd  28/08/2003  12:09  Page 42

3

The European Union and armaments

military and procurement experts (the latter could also come from
industry), recruited directly by the Director of the ARCA. This per-
manent  staff  would  organise  regular  meetings  with  national
experts to get input and advice from member states. In a first step,
‘Capability Groups’ would act as a clearing-house, verifying and
evaluating national planning from a common European perspec-
tive. At this stage, the objective would be to avoid as early as possi-
ble unnecessary duplication and foster specialisation. In a second
stage, the Groups should compare the revised national planning
and identify (a) if several member states list the same capability
needs, and (b) which capability gaps are not mentioned by any
member states. 

‘Capability Groups’ would then report these findings to the
Director of the ARCA. To make sure that these findings have an
impact,  the  latter  should  be  able  to  present  them  directly  to
defence ministers (in an annual ‘Capabilities’ report, for example).
Within a given time, ministers would then have to report back to
the Director how they intend to deal with the identified shortfalls.
If  two  or  more  ministers  stated  their  interest  in  working
together on one of the identified capability gaps, the ‘Capability
Groups’ would start to explore future technological options to
meet  those  needs.  To  achieve  this  objective,  the  ‘Capability
Groups’ would cooperate closely with the Agency’s research divi-
sion and industry. If necessary, they would launch feasibilities
studies, which should be financed through an autonomous ARCA
research budget (see the ARCA research activities below). 

Procurement
To ensure continuity, the ARCA should also be in charge of the sub-
sequent phases. If, after the first technological evaluation, two or
more member states wished to continue to work on a given short-
fall, the ARCA would either launch a capability-related research
programme or set up a permanent ‘Project Group’. The decision
would depend on the time horizon of the capability need and the
maturity of the technology available. Capability-related research
programmes would aim at deepening the technological know-how
in  defence-related  fields  of  research,  whereas  ‘Project  Groups’
would  translate  defined  capability  needs  into  procurement 
projects. 

More precisely, the objective of a ‘Project Group’ would be to

42

63-EnglishText.qxd  28/08/2003  12:09  Page 43

How to move ahead

3

identify  the  most  cost-efficient  technological  solution  for  the
identified capability need. The Group would evaluate technologi-
cal options, identify the required industrial capabilities, make a
cost analysis and formulate a staff requirement.

Members of ‘Project Groups’ should be military and procure-
ment experts, detached (or seconded) from participating nations.
However, they should report to the Director of the ARCA and
work under his authority. The Director would, in turn, be respon-
sible for progress made in the ‘Project Group’. He would help to
settle possible disagreements between the experts, if necessary
through intervention in national capitals.

Once the most cost-effective solution(s) had been defined, the
‘Project Group’ would present its findings to the Director of the
ARCA, who would then report to the ministers of the participat-
ing nations.

However, cost-effectiveness might not always be enough to
convince national stakeholders (both institutional and indus-
trial) of the virtues of a common project. Therefore, a mechanism
that generates peer pressure should be invented to counterbalance
possible resistance from national defence establishments. If the
minister of one participating country refuses the solution pro-
posed by the ARCA, he should be obliged to justify his decision vis-
à-vis his colleagues from the other participating nations, his head
of government and his national minister of finance. 

Once ministers of participating nations have agreed on the
proposal of the ARCA ‘Project Group’, the project would be passed
over to OCCAR for management of the development and produc-
tion phases. Contracts would be let according to OCCAR’s current
principles  and  rules.  OCCAR  would  manage  ARCA  projects
throughout their life cycle (but could also, as it does today, out-
source in-service support and maintenance, if appropriate). 

This scheme applies to cooperative projects only. However, the
ARCA could also manage national projects, if, for example, a sin-
gle nation decides, in response to the analysis by the ARCA ‘Capa-
bility Group’, to tackle a specific shortfall. The possibility to give
national procurement projects to the ARCA should be of particu-
lar interest to smaller and/or new EU member states, who will nor-
mally have small investment budgets and few ‘big’ procurement
projects. For them, the ARCA could be a cost-effective alternative
to standing procurement agencies. This, in turn, could help to

43

63-EnglishText.qxd  28/08/2003  12:09  Page 44

3

The European Union and armaments

reduce or avoid duplication of (costly) administrative structures. 
This means, however, that the ARCA should also have a man-
date for off-the-shelf procurement, in particular for non-produc-
ing countries. Harmonisation of capability needs makes sense
even if it does not lead to the development of a new project. If sev-
eral buyer countries pooled their orders via the ARCA, they would
multiply their purchasing power and get better value for money. In
this case, the ARCA would have to set up special ‘Project Groups’
whose objective would be to come to an agreement on the system
to be acquired. 

The ARCA’s off-the-shelf function could also cover non-mili-
tary goods. Armed forces spend millions of euros each year on all
sorts of commercial items, ranging from coffee cups and glasses
via pencils and paper to chairs, desks, etc. Pooling these purchases
at the EU level would increase the negotiation power vis-à-vis sup-
pliers  and  could  generate  enormous  cost  savings  through
economies of scale. 

Research
Military research and technology is probably the most difficult
area for cooperation: First, in Europe, very few countries have sig-
nificant military R&T activities, and national sensitivities are par-
ticularly strong in this area. Second, technology is the key to indus-
try’s competitiveness; defence companies are therefore reluctant to
share their research findings with potential competitors. Third,
military R&T is difficult to define. Advanced (or pure) research
normally takes a bottom-up approach: it is not driven by a specific
demand, and its objective is technological innovation per se. As a
result, it is normally too early say at this stage whether research will
lead to a practical application at all, and, if so, whether this applica-
tion will then be military, commercial or both. Capability-related
research, in contrast, follows a top-down approach. It is driven by a
more or less clearly defined need of the armed forces and oriented
towards a specific end. If, finally, research is already project-related,
it can often be considered as ‘Phase 0’ of the development phase.
The logic underpinning these three categories of research is cer-
tainly  different  –  in  practice,  however,  the  distinction  between
them is often blurred, which makes it difficult to define responsi-
bilities and sources of funding.51

Moreover, the future institutional setting in this area is partic-

51. See David Versailles, Valérie
Mérindol and Patrice Cardot, La
Recherche et la Technologie, Enjeux de
Puissance  (Paris:  Economica,
2003).

44

63-EnglishText.qxd  28/08/2003  12:09  Page 45

How to move ahead

3

ularly difficult to foresee since the Commission is currently work-
ing  on  a  preparatory  action  on  security  and  defence-related
research ‘to implement some specific aspects that would be partic-
ularly useful in carrying out Petersberg Tasks’. The preparatory
action  should  prepare  the  implementation  of  the  so-called
‘Agenda  for  advanced  research  relating  to  global  security’.  It
should not take longer than three years and is supposed to acquire
‘experience  for  evaluating  the  conditions  and  arrangements
needed for effective cooperation between national research pro-
grammes’.52 One can safely assume that this preparatory action
will have an impact on the future organisation of security- and
defence-related research in Europe. It also confirms that advanced
research should and will become a joint effort by member states
and the Commission. 

In spite of these uncertainties, the ARCA should have a specific
division for military research, mainly because of the link between
technology, research, development and acquisition. More specifi-
cally, the ARCA’s research division should finance and manage
capability-related research up to the level of demonstrators. Pro-
duct  development,  in  contrast,  should  stay  with  OCCAR.
Advanced research follows its own logic and should therefore be
managed by a separate body (but in coordination with the ARCA
and the Commission). Such a division of labour would corre-
spond to the above-mentioned specificities of R&T. 53

In comparison with procurement programmes, R&T projects
are more numerous, smaller (in financial terms) and very different
in nature. R&T activities therefore need to be governed by specific,
very flexible rules and procedures. ARCA must therefore at least be
allowed to use the MOU EUROPA and ERG No. 1 as legal instru-
ments for its R&T projects.

A  close  link  between  R&T  and  harmonisation  of  military
requirements is essential. There must therefore be permanent and
intensive cooperation between the ARCA’s research division and
its  ‘Capability  Groups’.  The  former  would  provide  technical
expertise, evaluate research findings and let contracts on behalf of
the latter, both for preliminary studies and (more costly and com-
plex)  capability-related  research  programmes.  These  pro-
grammes, launched as follow-ups to the analysis of ‘Capability
Groups’, should have as their goal the creation of demonstrators.
The  findings  of  these  capability-related  research  programmes
would then serve ‘Capability Groups’ as the basis for further work

52. See Commission Communi-
cation, reproduced in op. cit. in
note 1, p. 176.

53. Cooperation on advanced re-
search means mainly exchange of
information, whereas the work on
demonstrators can (already) be
divided into more or less inde-
pendent packages. This makes it
easier for companies to ‘control’
the sharing of their research find-
ings and thus facilitates industrial
cooperation. Advanced research
is more suitable for broad partici-
pation and widespread dissemi-
nation of findings than project- or
capability-related research, be-
cause its potential commercial
applications are of interest to all
member states. Moreover, long-
term  innovation  often  comes
from small companies and labo-
ratories that are not necessarily lo-
cated in the LoI countries.

45

63-EnglishText.qxd  28/08/2003  12:09  Page 46

3

The European Union and armaments

on the respective capability shortfall. 

All research activities initiated by ‘Capability Groups’ (prelimi-
nary studies and capability-related research programmes) should
be financed through an autonomous ARCA research budget.54
Ideally, this budget should be co-funded by member states (calcu-
lated on a GDP basis), the European Union (CFSP or research
budget line) and, possibly, industry.55 The idea here is to match
every national euro by an EU euro in order to create an incentive to
earmark more national R&T funds for the ARCA.56

Such a funding mechanism implies that all member states
would  have  access  to  the  research  findings.  However,  this  is
unlikely to lead to new duplication if the ARCA is free to select the
contractors for its research projects. In fact, only a few companies
are able to built demonstrators, and IPR arrangements can ensure
that most of the generated technological know-how would stay
within the company in charge. This implies, in turn, that indus-
tries located in LoI countries would probably benefit most from
the common funding. This seems politically acceptable: first, it
would be an important incentive for LoI countries to let the ARCA
manage their R&T programmes rather than set up ad hoc arrange-
ments. Second, such subsidising must be seen in the general con-
text of EU solidarity: non-LoI countries often receive considerable
EU  subsidies  in  other  areas.  Their  contribution  to  a  common
research fund seems therefore justified even if it does not imply a
guaranteed industrial or technological return on investment, in
particular since it would be relatively modest (calculated on a GDP
basis) and serve a common objective (strengthening ESDP in gen-
eral, EDITB and military capabilities in particular).

The closer a project comes to the actual procurement phase,
the more reluctant member states and industry will be to share
findings with non-participating partners. At the same time, the
latter will probably refuse to pay for a project in which they are not
involved. As a result, research activities of ‘Project Groups’ should
be  funded  exclusively  by  participating  nations,  and  the  latter
should not be obliged to disseminate results. The ARCA research
division could nevertheless let research contracts on behalf of
‘Project Groups’.

The ARCA’s research staff should consist of permanent agents,
recruited from the WEAO Research Cell, the European Commis-
sion, industry and laboratories. If the Research Cell were trans-
formed into the ARCA’s research division, its missions, which are

54. At the early stage of the pro-
curement  cycle,  only  small
amounts of money are needed for
feasibility studies, demonstrators,
etc.  Having  an  autonomous
budget for these needs would ac-
celerate cooperative projects con-
siderably. 

55. Industrial participation in mil-
itary research funding is a contro-
versial issue that merits further ex-
ploration. In the United States,
military research is purely govern-
ment-funded. European govern-
ments, in contrast, often demand
that their industries participate in
research costs in order to share the
financial risk. Later on, this re-
search share is then reimbursed as
part of the production costs. In
practice, this can greatly reduce
the flexibility of a programme: The
more companies participate fi-
nancially in research activities, the
more they depend on the actual
production of the system. At the
same time, defence industries are
strategic industries, and govern-
ments therefore do not want to
damage them financially. This can
lead to an automatism whereby a
certain number of a given weapon
system ‘has’ to be produced to
compensate industry for its re-
search  investment.  In  a  sector
where procurement cycles are ex-
tremely long and industrial, tech-
nological and military realities
evolve (quickly), such a loss of flex-
ibility can entail important finan-
cial risks at the later stage of a pro-
gramme. A possible compromise
could be to limit industrial co-
funding of research to projects
where production is at least prob-
able. This is normally the case for
short- to medium-term projects
and/or when a project is nearing
the industrialisation phase. How-
ever, customers like ARCA can
only bear the financial risk alone if
they have the capacity and the
know-how for a precise definition
and a thorough evaluation of re-
search projects. 

56.  François  Heisbourg,  Jean-
François Daguzan, Martin Lund-
mark and Hélène Masson, ‘The
European Defence Industrial Base
and ESDP’, in Prospects on the Euro-
pean Defence Industry (Athens: De-
fence Analysis Institute, 2003),
p. 57.

46

63-EnglishText.qxd  28/08/2003  12:09  Page 47

How to move ahead

3

currently limited to administrative and contractual support to
WEAG member states, would have to be redefined (to allow in par-
ticular  for  technical  assistance  to  ARCA  ‘Capability  Groups’).
Instead of incorporating the Research Cell as an organisation into
the new structure, it would probably be more advisable only to
transfer its personnel.

The ARCA should also have a scientific board, consisting of
national research directors and representatives of the Commis-
sion. The board should exchange information about R&T strate-
gies, harmonise national R&T plans, and stay in permanent and
close dialogue with industry. Moreover, the board would decide by
Qualified Majority Vote which studies and capability-related pro-
grammes proposed by the ARCA Director should be commonly
funded.  However,  ARCA’s  research  division  and  the  Director
would then be free to select the companies to which research con-
tracts would be awarded. The board would supervise the work of
the ARCA research staff, but not intervene in the operational busi-
ness.

The Group of Research Directors (GRD) established under the
LoI Implementing Arrangement should be incorporated into the
ARCA’s scientific board. However the GRD must have the right to
form subcommittees, operating as ‘closed shops’. Restricted sub-
committees can also be established for monitoring the activities of
‘Project  Groups’.  The  board  would  develop  a  strategy  for  the
ARCA’s own research activities and coordinate them with those of
other relevant bodies.

The ARCA’s scientific board should in particular provide tech-
nical expertise to the Commission for the part of the Framework
Programme related to security. As to the latter, the Commission
should formulate explicit guidelines for evaluators of research
proposals, ‘stating formally that the dual-use potential of a proj-
ect cannot count against it’. Even better would be to define ‘spe-
cific horizontal actions . . . to encourage the application to civil
goals of technological capabilities developed in military contexts’,
and to include in the Framework Programme ‘specific actions
funding research in key dual-use technology fields’.57

On top of that, it would make sense to complete the ARCA – as
the EU’s agency for defence research – by a specific European
Strategic  Research  Agency  (ESRA).  POLARM  has  already 
discussed the creation of such an Agency within the framework of
E.P.A.SE.RE.TE, and the Commission’s preparatory action might

57. Jordi Molas-Gallart, ‘Coping
with Dual-Use. A Challenge for
European Research Policy’, Journal
of Common Market Studies, vol. 40,
no. 1, pp. 155-65, here p. 162.

47

63-EnglishText.qxd  28/08/2003  12:09  Page 48

3

The European Union and armaments

well  come  to  the  same  conclusion.  Following  the  American
DARPA model, this ESRA should focus on technological innova-
tion at the earliest stages of the research process, where projects
inevitably run a high risk of failure. The activities of this ESRA
could be driven by military and security considerations, but its
missions would explicitly include cross-fertilisation between the
military and civil sectors and dual-use applications. Such an ESRA
should thus be managed and funded jointly by the Commission
and member states.

Monitoring EDITB
There is a close link between military capabilities, research, devel-
opment and acquisition, on the one hand, and the Defence Indus-
trial and Technology Base on the other. First, industry’s technolog-
ical capabilities determine the options for tackling future military
shortfalls and are therefore key factors when taking procurement
and research decisions. Second, research and procurement choices
shape the EDITB, because it is the customer’s investment decision
that determines which capabilities industry develops (or aban-
dons). Given the long procurement- and life-cycles of defence sys-
tems,  this  also  means  that  long-term  planning  for  the  use  of
research and production facilities is crucial if the loss of industrial
and technological capabilities is to be avoided. 

Governments  normally  have  an  overview  of  their  national
assets, but it would make sense to complement the information
defence ministers get from their national services with European
expertise. The more ‘European’ the industry becomes, the more
important it will be to get a global picture of the European indus-
trial landscape as a whole. Monitoring the EDITB would therefore
be highly desirable.

In  its  Communication  of  March  2003,  the  Commission
declared its intention to launch such a monitoring activity, and
the Council has adopted a resolution supporting this initiative.58
However, this task should probably be attributed to the ARCA.
First, ARCA itself needs a sound knowledge of industrial and tech-
nological assets to present possible solutions for future capability
needs. Second, ARCA can only act as an ‘intelligent’ customer and
manage its research projects efficiently if it has the expertise to
define and evaluate projects, which in turn requires knowledge of
industrial capabilities. Third, its own core activities – analysis of

58.  See  op.  cit.  in  note  48,
para. 35. 

48

63-EnglishText.qxd  28/08/2003  12:09  Page 49

How to move ahead

3

military  capabilities,  financing  of  defence  research  and  pro-
gramme management (through OCCAR) – will make it much 
easier for ARCA than for the Commission to collect information
on the EDITB. Last but not least, ARCA will – hopefully – have a
direct link to defence ministers and therefore be well placed to
help them develop a truly European defence industrial strategy. 

For all these reasons, ARCA should dispose of its own unit to
monitor the EDITB. This unit should draw on information from
ARCA’s functional divisions, companies, and the LoI’s informa-
tion  exchange  system  for  security  of  supply.    It  should  follow
closely the development of Europe’s industrial and technological
capabilities, identifying current overcapacities, alerting impend-
ing undercapacities and analysing corporate trends (in particular
changes in ownership and investments from outside the EU). The
unit’s finding should be included in the ARCA’s annual capability
report that the Director presents to ministers. At the same time,
the ARCA’s monitoring unit should establish a close link with the
Commission’s relevant DGs (a) to receive data on defence compa-
nies’ civil activities, and (b) to give information about the restruc-
turing of defence industries (which might have an impact on com-
petition  and/or  imply  accompanying  social  and  regional
Community measures). In time, the link between the ARCA and
the Commission should be developed into a joint Monitoring
Task  Force.  The  more  the  Commission  becomes  involved  in
defence market and research issues, the more it will make sense to
develop such a body that would monitor the complete range of
aspects of defence economy in support of a truly comprehensive
strategy for strategic industries.

Management of test facilities
Test and evaluation form a vital part of the development of military
systems, and the major arms-producing countries in particular
have built up a broad spectrum of test facilities. There is thus con-
siderable duplication of assets in Europe. If EU members agreed to
use facilities jointly this could generate important cost-savings.

As early as 1992 WEAG created a Sub-Group on Test Facilities
(SGTF) as a subgroup of Panel II. The SGTF is tasked to analyse
the actual use of European test facilities and make recommenda-
tions for their better utilisation. It has compiled a directory of test
centres in WEAG countries and developed a database of informa-

49

63-EnglishText.qxd  28/08/2003  12:09  Page 50

3

The European Union and armaments

tion on these facilities. Moreover, all WEAG members have signed
an MOU that acts as an umbrella for the reciprocal use of test 
facilities.59 However, there is neither a common strategy for the
future  nor  a  concept  to  reduce  existing  redundancies  across
national borders.

ARCA should therefore take over this function from the SGTF
and develop a more ambitious approach. It should, first of all,
define a strategy for rationalisation, including concrete proposals
for reciprocal and joint utilisation of existing facilities, common
investments and the coordinated reduction of duplication. Since
such  a  strategy  would  not  be  implemented  overnight,  ARCA
should also monitor the actual utilisation of facilities in EU mem-
ber states and include its findings and recommendations in its
annual capability report. At the same time, ARCA should be able
to decide autonomously which facilities it wants to use for its own
tests and evaluations. ARCA could then use the projects managed
by its divisions to influence the utilisation of test capacities and
contribute to the rationalisation of this area. In future, test and
evaluation  facilities  should  become  common  assets  managed
directly by the ARCA.

Requirements for success
In the model suggested, the Director of the ARCA would be in a par-
ticularly strong position. He would orchestrate the work of the var-
ious actors and take care that the system as a whole worked prop-
erly. At the same time, the Director would be in charge of contacts
with  other  relevant  bodies,  namely  the  EUMS/EUMC,  the  EU
Council, the Commission and national authorities. 

Vis-à-vis member states, he would act as a genuine European
advocate of cooperation in general and ARCA projects in particu-
lar. This role is particularly important, since the ARCA will have to
operate in an intergovernmental environment. Even with a strong
mandate and flexible rules, its success will depend on the willing-
ness of member states to give the necessary input and to follow-up
to the ARCA’s proposals and initiatives. 

To achieve this objective, the Director of the ARCA must have
direct access to the highest political level. His interlocutors should
therefore be defence ministers. They should establish an EU arma-
ments council, acting as the ARCA’s supervisory board, to assure
high-level political guidance and control. To make the relation-

59.  See  http://www.weu.int/
weao/site/frameset.htm. The ac-
tive use of these instruments varies
greatly  among  WEAG  member
states. Since its signature in 1998,
the MOU has been used 16 times
as  a  basis  for  bilateral  test
arrangements,  with  France  far
ahead of all other partners (12
times). Information provided for
the Directory and Database also
differs greatly both in quantitative
and qualitative terms.

50

63-EnglishText.qxd  28/08/2003  12:09  Page 51

How to move ahead

3

ship between the ARCA and its supervisory board as fruitful as
possible, the Director of the ARCA should also be a politician
(rather than a civil servant), ideally a former defence minister who
can talk on equal terms with current ministers. 

This in turn means that the Director would not be a ‘real’ expert
on armaments. He should therefore be supported by executive
directors who have the necessary professional experience in their
respective field. Selected by the Director, they would head the
functional divisions (capabilities, procurement and research) and
be responsible for the operational business. 

Many functions contained in this scheme already exist in other
forums, and the various services of the ARCA would certainly draw
on methodologies previously used by others. However, the model
proposed offers some important innovations. The operational
strength of this ARCA would be that it could (a) work in a long-
term perspective, (b) draw on both national and EU force planning,
(c)  have  permanent groups  and  (d)  establish  an  effective  link
between planning, procurement and research. 

All  four  elements  are  key  to  successfully  covering  the  early
phases of the procurement cycle. Building on the experience of the
ECAP process and the envisaged LoI mechanisms, this approach
would make possible the efficient harmonisation of operational
requirements. The ability to draw on an autonomous research
budget would enhance the Agency’s flexibility and accelerate the
launch of common projects. At the same time, permanent com-
mon bodies would be in charge right from the beginning, ‘protect-
ing’ potential cooperative projects during their embryonic phase
against national egoisms and bureaucratic inertia, which have
often paralysed traditional intergovernmental arrangements. 

From the development phase onwards, OCCAR would auto-
matically be in charge of all ARCA procurement projects. This
automatism should help increase the number of programmes
managed by OCCAR. The institutional challenge is to find a link
between OCCAR and the ARCA that, on the one hand strengthens
OCCAR’s role vis-à-vis national governments, and, on the other,
preserves its acquis. From this point of view, neither full integra-
tion (implying that all ARCA countries are members  of  OCCAR)
nor loose association (roughly continuing OCCAR’s institutional
status  quo)  seems  a  realistic  option.  A  reasonable  alternative
would be to merge only certain functions at the top of the two 
bodies: the Executive Director for procurement would be double-

51

63-EnglishText.qxd  28/08/2003  12:09  Page 52

3

The European Union and armaments

hatted, holding also the post of OCCAR General Manager, and the
ARCA Director would become chairman of the OCCAR Board of
Supervisors.60 At the same time the current criteria for member-
ship of OCCAR would be maintained, i.e. it would be open to
ARCA member states that participate in a major project managed
by OCCAR and accept OCCAR’s principles of operation. Those
that are not participating in a programme managed by OCCAR
would be represented indirectly through the ARCA’s supervisory
and management boards.

National services would be involved in the work of the ARCA
through experts who provide expertise and advice to both ‘Capa-
bility Groups’ and ‘Project Groups’. Moreover, NADs could form
the ARCA’s management board, dealing with the ARCA’s admin-
istrative issues. However, the ARCA’s statutes must make clear
that the ARCA is in charge of armaments cooperation and that, for
this particular purpose, national administrations are at the service
of the ARCA (and not the other way round).

60. A similar structure should be
established for research, with the
Executive Director for research
chairing  the  ARCA’s  scientific
board.

52

63-EnglishText.qxd  28/08/2003  12:09  Page 53

How to move ahead

3

To be efficient and effective, the ARCA will need not only a
sound legal basis but also the necessary means and sufficient staff.
Such an investment would make sense, since a successful ARCA
will achieve greater standardisation and more efficient coopera-
tion, thereby generating additional cost-savings. Moreover, extra
personnel costs at the ARCA level can – and should – be compen-
sated by reductions in national procurement agencies. On the
other  hand,  there  should  be  strict  controlling  mechanisms  to
ensure that the ARCA itself becomes a model of cost-effectiveness.
This controlling should be done by the ARCA itself, but also by
independent external consultants.61

External controlling should also ensure that the ARCA does
not become a victim of the classical weaknesses of administra-
tions:  over-regulation  and  excessive  bureaucratisation.  The
OCCAR  experience  shows  clearly  that  even  new  and  relatively
innovative organisations are not immune to these vices.62 For the
ARCA, they should be avoided at all cost. 

In general, the ARCA’s working methods should be as com-
mercial as possible. This supposes a high degree of autonomy vis-
à-vis member states, both in financial and management terms.
Lean structures, flat hierarchies and a maximum of delegation of
responsibilities and authority to the actual management level are
key. The Director of the ARCA, together with his executive direc-
tors, should be responsible for recruitment and dismissals, basing
decisions exclusively on competence and performance. 

This model is, of course, nothing but a broad outline that needs
to be spelt out in detail. Even if a basic structure is set up in 2004, it
will certainly take time for ARCA to become fully operational.
Existing  elements  must  be  brought  together  and  effectively
linked, new bodies created, personnel recruited, procedures estab-
lished, etc. Once it is established, ARCA will again need time to
reach cruising speed and even more to make its weight felt. In
other words, the establishment of ARCA will be a process spread
over a considerable period of time rather than an act at a given
moment in time. This process contains many unknowns, in par-
ticular since ARCA will evolve in an institutional environment
that is itself in transformation. It is therefore particularly impor-
tant to develop and maintain both an ambition and a vision of
what the Agency should become, namely a serious European actor
that complements national policies in the most effective way. At
the same time, one should never forget that even a powerful ARCA

61. Another possibility would be
the creation of a permanent Euro-
pean Controlling Office to check
the cost-effectiveness of both the
ARCA and national procurement
agencies.

62. According to OCCAR staff
members, the organisation has
developed 35 different manage-
ment procedures, of which only 5
are actively used in practice.

53

63-EnglishText.qxd  28/08/2003  12:09  Page 54

3

The European Union and armaments

will not by itself be able to solve all the problems of Europe’s arma-
ments sector. It will be equally important to overcome progres-
sively the current fragmentation of Europe’s defence market.

A common European Defence Equipment Market (EDEM)

The creation of a common defence market is the third element in
an effective reform of the European armaments sector (beyond the
reorganisation of research activities and the establishment of a
European procurement system). An integrated EDEM would con-
sist of a set of customers served by a set of suppliers trading without
restriction. The advantages of such an EDEM for both the supply
and the demand side are generally acknowledged: European com-
panies would get a much larger home market, could restructure
across national boundaries to reduce duplication, create centres of
excellence and take advantage of longer production runs. At the
same time, competition would encourage suppliers to optimise
production capacity and help to lower costs, and thus save scare
public resources. 

The objective of an EDEM has already been set by WEAG. The
CPD in particular has laid down a set of principles, addressing
specific issues such as cross-border competition and technology
transfer on the basis of common procedures. However, these prin-
ciples have not really been implemented. In particular the attempt
to open up markets by establishing national procurement focal
points and declaring procurement needs in national official pub-
lications  has  suffered  greatly  from  a  lack  of  binding  commit-
ments.63

Drawing on the experience of the single market, the EU could
offer additional means to facilitate the realisation of an EDEM.
The most efficient way to achieve this objective would be to:
(cid:90) use first-pillar instruments wherever possible in order to get

legally binding and rapidly applicable provisions;

(cid:90) adapt existing Community law and polices to the specificities of

the defence sector;

(cid:90) analyse systematically which areas of the LoI Framework Agree-

ment can be transformed into Community law.

63. Sandra Mezzadri, op. cit. in
note 19, pp. 10-14.

In its Communications of 1997 and 2003 the Commission has
already defined the various areas where action would be needed to

54

63-EnglishText.qxd  28/08/2003  12:09  Page 55

How to move ahead

3

establish an EDEM based on Community law. The difficulty is the
political decision by member states to create such a market rather
than its technical implementation, However, it is worth describing
briefly the main patterns of an integrated market, if only to put an
end to the demonisation of the issue itself.

Procurement law
Existing EU public procurement law for commercial items is based
on three principles: Community-wide advertising of calls for ten-
ders, the banning of technical specifications liable to discriminate
against potential foreign bidders and the application of objective
criteria in tendering and award procedures. Contracts have to be
put out to open tender (open to all interested parties) or restricted
tender (open to selected candidates), as decided by the authority
placing the contract. Only in specified exceptional circumstances
may authorities have recourse to negotiated tendering.

It goes without saying that provisions for commercial markets
cannot be simply applied to defence goods and services. For exam-
ple, the complexity of modern weapons systems for which the cus-
tomer defines detailed technical and operational specifications
makes it difficult to assess whether procurement decisions are
taken on the basis of ‘objective criteria’. Moreover, security of sup-
ply and confidentiality are much more important in defence than
in commercial markets. However, all this does not mean that it
would  be  impossible  to  define  binding  provisions  inspired  by
Community law for an integrated EDEM. 

In general, a regulatory framework for European defence pro-
curement  should  operate  at  two  levels:  one  for  national  cus-
tomers, and a second one for the ARCA. 

For national procurement decisions, the application of Arti-
cle 296 should be restricted to highly sensitive goods. As suggested
in the Commission’s Communication of 1997,64 only cryptogra-
phy,  nuclear,  radiological,  biological  and  chemical  products
should continue to be excluded from European rules. All other
products falling under Article 296 and so far exempted should be
subject to a specific defence procurement directive. 

Such a directive should be based on existing public procure-
ment law but take into account the concerns of member states on
the specificity of the defence sector. This means in particular that:

64.  ‘Implementing  European
strategy on defence-related indus-
tries’, op. cit. in note 32.

65. The ownership of IPRs in de-
fence contracts varies greatly be-
tween EU member states. The LoI
Framework  Agreement  deals
with this issue as well, but only
within the creation of a transna-
tional defence company. 

55

63-EnglishText.qxd  28/08/2003  12:09  Page 56

3

The European Union and armaments

(cid:90) calls  for  tenders  should  be  organised  Community-wide  but
restricted to companies that have the necessary security certifi-
cation from their respective national authorities;

(cid:90) access to technical clauses of tenders, proposals and contracts

would be restricted on a need-to-know basis;

(cid:90) the EU directive must include provisions for IPRs65 and security

of supply, based on the LoI Framework Agreement;

(cid:90) for off-the-shelf procurement, offsets,66 or at least indirect off-
sets,67 should be prohibited in order to guarantee transparency
and open competition. 

This  procurement  directive  could  be  introduced  step-by-step,
starting with components and subsystems and gradually being
enlarged to integrated weapon systems. A gradual approach such
as this would make it possible to gain experience with less sensitive
items and make adjustments, if necessary, before the directive is
fully  applied.  However,  member  states  and  the  Commission
should, right at the beginning of the process, set a deadline for full
application of the directive (for example 2010).

For procurement projects run by the ARCA, OCCAR rules
and procedures should apply.68 This means, in particular, that
competitive  tendering  and  the  award  of  contracts  could  be
extended to non-EU/WEAG members on the basis of reciprocity
but  also  limited  to  countries  participating  in  a  given  project.
OCCAR’s current transitional arrangements, in contrast, should
be definitely lifted in order to allow for full application of the prin-
ciple of global juste retour. In general, OCCAR rules would be more
flexible than the EU directive, thereby creating an incentive to
move procurement decisions from the national to the European
level.69

Competition law
Existing community competition law contains four main areas of
action: (1) merger control, (2) state aid, (3) anti-trust and cartels,
and (4) liberalisation. State aid and merger control are of particular
interest for their possible application in defence.

As to merger control, Community law already applies to indus-
trial restructuring of defence companies once civilian activities are
also concerned. In hi-tech sectors like aerospace and electronics,
this is the rule rather than the exception. However, in particular in
strategic sectors competition is facing a general dilemma. In these

66. Offsets are practices involving
industrial compensation required
as a condition of purchase in sales
of defence articles and/or serv-
ices. Offset activities include sub-
contracting, licensed production,
technology transfer, marketing as-
sistance, financial assistance, in-
vestments  and  joint  ventures.
These activities may generate Off-
set Credits which themselves may
be traded between suppliers and
to  particular  pro-
applied 
grammes. 

67. Direct Offsets allow for com-
pensation in goods and services,
which are directly related to the
project, whereas indirect Offsets
are associated with goods and
services unrelated to those that
are sold.

68. See in particular Chapter VI of
the  OCCAR  Convention, 
in
Burkard Schmitt, op. cit. in note 1,
pp. 51, 52.

69. Greater flexibility would come
from two sides: first, even applied
on a global basis, juste retour repre-
sents a kind of ‘offset’ for com-
monly developed and produced
systems. Second, it could be easier
to restrict call for tenders to coun-
tries participating in a project.

56

63-EnglishText.qxd  28/08/2003  12:09  Page 57

How to move ahead

3

areas, competition normally takes place on a wordwide scale, and
only European companies that have attained a critical size are able
to compete with the big US groups on global markets. Industrial
consolidation is therefore necessary to improve competitiveness.
This means, however, that, at least at prime contractor level, Euro-
pean governments will have to accept national, if not European
monopolies for strategic assets to sustain a viable EDITB.

On the other hand, these monopolies are easier to accept in
defence markets than in other markets, because governments are
in an extremely strong position: they are not only the main (if not
the only) customers, they also play a unique role as regulators and
sponsors. Moreover, they are normally able to invite suppliers
from third countries to participate in a tender.

More important will probably be to maintain a minimum of
competition in the second- and third-tier supplier base. Driven by
new customer demands (system-of-systems approach and net-
work-centric  warfare),  prime  contractors  increasingly  develop
into large system integrators, capable of offering complete solu-
tions even for complex system architectures. This has a profound
impact on the relationship between prime contractors and their
subcontractors,  implying  vertical  concentration  (takeovers  of
suppliers by prime contractors) and the emergence of strong – if
not exclusive – links between prime contractors and subcontrac-
tors.70 These trends, if taken too far, could eliminate competition
at the component and subsystem level and represent a risk for
technological innovation. 

All of this needs to be taken into account if EU competition
rules are to apply to defence. As the Commission has pointed
out,71 there is probably no need to establish a specific directive,
but to agree on ‘guidelines’ on how the Community competition
rules in general, and the European Regulation on Merger Control
in particular, shall apply to the defence sector. In order to provide
industry with a stable and transparent framework for consolida-
tion, national governments should work closely with the Com-
mission on the definition of these Community guidelines and
undertake not to invoke Article 296 any more.

Concerning  state  aid,  the  application  of  Community  law
should be politically uncontroversial. In fact, the Commission
intervenes only if subsidies distort intra-community trade, which
has never been the case in defence so far. The French government,
for example, has subsidised GIAT Industries heavily over the last

70.  See  Joachim  Rohde  and
Markus Frenzel, op. cit. in note 3,
pp. 84, 85.

71. See Burkard Schmitt, op. cit. in
note 1, p. 173.

57

63-EnglishText.qxd  28/08/2003  12:09  Page 58

3

The European Union and armaments

decade but this has never helped the company to win a foreign con-
tract in the face of other European competitors. In fact, most state
subsidies  for  defence  companies  aim  at  helping  companies  to
restructure and reduce staff. Having a social character, such subsi-
dies are in any case allowed under the provisions of current EU law. 
It  might,  however,  be  worth  formally  stating  that  national
investments in defence research represent legitimate aid, since
they encourage both innovation and competitiveness. Competi-
tion law in defence must also allow for state aid that preserves ade-
quate security of supply, in particular in highly sensitive areas.
This, again, could be formulated in an interpretative guideline.

Transfers
Up until now, EU member states have not made any formal distinc-
tion between arms transfers among themselves and arms exports
to third countries. In both cases, individual, prior authorisation is
required. This involves administrative procedures that are, to say
the least, cumbersome, costly and time-consuming (individual
licences, import licences, import certificates, delivery verifications,
end-user certificates). This practice is a major stumbling block for
cross-border cooperation between European industries. Simplifi-
cation of the system is therefore highly desirable. 

In its recent Communication, the Commission suggests the
‘[alignment of] national licensing systems by adopting the princi-
ple of a global authorisation that would apply to intergovernmen-
tal  programmes  and  industrial  cooperation  programmes’.  In
practice, this would expand the respective LoI provisions to cover
all cooperative projects and all EU member states. Within a coop-
erative programme, individual controls of each transfer would be
replaced by only two general controls, one at the moment when
the GPL is requested and the second through an audit at the end of
the duration of the licence. This approach would streamline pro-
cedures and facilitate industrial cooperation considerably. 

Taking the dual-use regime as a model, a Community regime
could be based on a Council Regulation, outlining control proce-
dures and mechanisms, and a Council Decision, defining the type
of products concerned. National authorities would issue stan-
dardised GPLs, and the Commission would monitor the technical
implementation. 

58

63-EnglishText.qxd  28/08/2003  12:09  Page 59

How to move ahead

3

Exports
Most European cooperation takes place in aerospace and defence
electronics, i.e. sectors that are heavily export-oriented. The impor-
tance of a GPL for them will depend very much on provisions for
exports to third markets. In this regard, the LoI Framework Agree-
ment makes a distinction between the six LoI countries and others.
Sales of systems jointly produced by some LoI countries to other
LoI partners who have not participated in the programme, are no
longer considered as ‘exports’ but as ‘transfers’. This means that
GPLs create de facto licence-free zones between the six LoI nations
for cooperative projects; once a GPL is issued, companies are autho-
rised to sell a given system to all LoI countries without any need for
further  export  licences.  Whether  a  similar  provision  could  be
included into an EU-wide GPL, extending the licence-free zone for
cooperative projects to all EU member states, remains to be seen. A
minimum requirement would probably be to specify in an end-user
certificate that the system stays in the respective buyer country.

Concerning exports of cooperatively produced systems to non-
LoI countries, the Framework Agreement provides each partici-
pant in a given project with a formal veto right. Practical imple-
mentation, however, will probably be fairly flexible. For future EU
rules, the Commission is proposing to formalise this flexibility.
According to its recent Communication, ‘a decision to export out-
side the European Union should take account of the need for prior
consultation with the Member States involved in authorizations
while recognizing the political responsibility of the final export-
ing state.’72 This approach would generalise the former Schmidt-
Debré  agreement  covering  Franco-German  cooperation  and
streamline export procedures considerably. In this context, lifting
the formal veto right for all participants would probably be more
controversial than applying the regime to all EU member states,
because it would de facto still concern only the major producing
countries. 

An EU-wide regime based on the provisions of the LoI Frame-
work Agreement would offer two advantages. First, it would be 
relatively easy to implement, since the EU directives could draw
directly on the respective LoI provisions. Second, it would make it
easier for subcontractors from non-LoI countries to participate in
European projects, fostering specialisation and the creation of a
truly European DITB. 

72. Ibid, p. 178. For a discussion
of the LoI Framework Agreement
provisions on export procedures,
see Burkard Schmitt, op. cit. in
note 36, pp. 16-22. 

59

63-EnglishText.qxd  28/08/2003  12:09  Page 60

3

The European Union and armaments

Simplification and streamlining are most urgent for coopera-
tive projects. However, one should not forget that system integra-
tors normally draw on an international supplier base even if they
produce only for their national government (or for exports). A
Community regime for transfers and exports should therefore be
progressively extended to nationally produced defence systems.
This  should  start  with  components  transferred  to  other  EU 
countries; at a later stage, subsystems could be included. The dual-
use regime could again serve as a model: for specific components
and subsystems, governments could grant EU-wide GPLs to sup-
pliers and limit themselves to controls before the GPL is granted
and once it expires. The system integrator using the component
would then be responsible for obtaining national authority for
possible exports of the final system.73

Such a framework would not represent a common arms export
policy.  However,  it  would  not  only  streamline  procedures  for
cooperation but also establish mechanisms for coordination and
consultation, which, in turn, might lead progressively to a har-
monisation of national export policies.

73. Introducing both directives on
procurement  and  on  transfers
with components would help in
particular small and medium en-
terprises to access new markets.
This is important to foster special-
isation throughout Europe and
helps companies from non-LoI
countries to plug into existing in-
dustrial networks. At the same
time, this approach should be po-
litically less sensitive then regula-
tory measures that concern the
big system integrators. 

60

63-EnglishText.qxd  28/08/2003  12:09  Page 61

Conclusions

The European Union and
armaments

Since the end of the Cold War, there have been a multitude of ini-
tiatives aimed at fostering and improving arms cooperation in
Europe. Some of these initiatives contain useful elements, but they
are  still  too  limited  to  overcome  the  structural  deficiencies  of
Europe’s armaments sector, namely fragmentation and duplica-
tion. 

More  far-reaching  reforms  are  urgently  needed  to  achieve
greater  cost-effectiveness.  If  not,  the  dilemma  of  budget  con-
straints and increasing costs for complex weapon systems will
make it extremely difficult, if not impossible, for Europe to main-
tain a competitive Defence Industrial and Technological Base and
improve  its  military  capabilities.  Therefore,  a  coherent  policy
should be developed in three areas: procurement, research and the
defence market. 

The EU could be the appropriate framework for developing
and implementing such a policy, in particular because of its broad
range of Community and CFSP instruments. The Commission’s
Communication of March 2003 and current plans for a European
Armaments, Research and Capabilities Agency (ARCA) therefore
offer a unique opportunity to reform Europe’s armaments sector.
The creation of an Agency now seems generally accepted. How-
ever, important stumbling blocks remain, and the current consen-
sus on the principle might well dissipate when discussion of the
details  begins.  The  funding  of  such  an  Agency  and  its  actual
power, its role vis-à-vis industry, its management rules and the
link with the Commission will certainly become bones of con-
tention. It remains to be seen whether consensus on these issues
will be easier to reach in the EU (in particular at 25) than it was in
WEAG.

Granted, in particular if the creation of the Agency is stipulated
in the Treaty, it will be politically difficult to drop the project
again. However, the question is what price is to be paid in terms of

61

63-EnglishText.qxd  28/08/2003  12:09  Page 62

The European Union and armaments

efficiency in order to get the necessary political consensus. There
are probably two major risks. 
(cid:90) The first one is continuing along the lines of the ECAP process
and limiting the activities of the Agency to the short-term capa-
bility needs of the Headline Goal Force only. This would exclude
the bulk of Europe’s military planning, making it impossible for
the Agency to exploit its potential and identify all possibilities
for cooperation. 

(cid:90) The second risk is that the lowest common nominator prevails,
diluting the project to a point where the Agency becomes noth-
ing more than an EU remake of WEAG. Weak structures and
non-binding  arrangements  would  then  bring  little,  if  any,
added value.

Those risks can only be avoided if all EU countries recognise the
urgency to act and draw the necessary conclusion. For the sake of
cost  reduction  and  interoperability,  they  must  dramatically
improve their armaments cooperation even if their foreign and
defence policies differ. If common sense prevailed, most solutions
would be a foregone conclusion, and one can only hope that finan-
cial pressures will be so strong that member states will overcome,
for once, national egoism, bureaucratic reflexes and mutual mis-
trust.

Non-producing  countries  in  particular  –  which  often  buy
American – must understand that a competitive EDITB is also in
their  interest,  because  it  is  the  only  safeguard  against  a  US
monopoly and thus the only guarantee of attractive US offers. The
least they should do is therefore not to prevent the arms-produc-
ing countries from using the EU to set up more efficient struc-
tures. 

As far as the LoI countries are concerned, they should recognise
that traditional cooperation schemes are no longer sufficient, and
that the surrender of prerogatives in armaments to an EU agency
does not mean the end of national sovereignty in defence. This
implies also that they should overcome their traditional reluc-
tance vis-à-vis Community instruments and view the Commission
as a partner committed to a strong EDITB. 

As  long  as  intergovernmental  methods  prevail,  there  will
always be political limits to cost-effectiveness. However, national
sovereignty must no longer be an excuse for non-action at the cost
of taxpayers, armed forces and industry. A brief examination of the

62

63-EnglishText.qxd  28/08/2003  12:09  Page 63

Conclusions

ARCA model suggested in this paper shows that innovative solu-
tions can be compatible with necessary national prerogatives, pro-
vided member states are serious about their proclaimed inten-
tions: 
(cid:90) ARCA’s range of activities should cover the whole procurement
cycle for the development of European projects, but also off-
the-shelf acquisition. Organisation and methods should be
based on a commercial approach.

(cid:90) The ARCA should build on the experience of existing bodies
and use existing methodologies and instruments if appropri-
ate. The ECAP mechanism and the LoI boards for harmonisa-
tion of military requirement and R&T should be transformed
and  integrated  into  the  new  structure.  The  OCCAR  acquis
should at least be maintained, and WEAG’s EUROPA MOU
should become the legal basis for ARCA’s R&T activities. 

(cid:90) To counterbalance as far as possible the difficulties presented
by an intergovernmental environment, the ARCA should have
permanent  working  groups,  sufficient  autonomy,  a  strong
mandate and a direct link to ministers. Moreover, its Director
should be a high-level politician rather than a civil servant.
(cid:90) The ARCA should monitor all relevant capabilities (military,
industrial and technological) in a long-term perspective. As for
military  capabilities,  ARCA  should  analyse  both  EU  and
national planning. 

(cid:90) To fulfil its tasks, the ARCA should consist of three functional
divisions – capabilities, research and procurement – and two
units  for  EDITB  monitoring  and  test  facilities  respectively.
Since ARCA should focus on future military needs, close coop-
eration between capabilities and research divisions would be
particularly important. Participation in the various divisions
and groups must be flexible.

(cid:90) The ARCA should have its own budget for research projects up
to the level of demonstrators. This budget should be co-funded
by governments, the Community and, possibly, industry. Legal
arrangements for research projects should be based on ERG
No. 1. The Agency would work in close cooperation with the
Commission and/or a future Agency for Strategic Research
(ESRA) in order to develop a coherent EU research strategy.
(cid:90) OCCAR should become the programme management organi-
sation of the ARCA procurement division. As such, OCCAR

63

63-EnglishText.qxd  28/08/2003  12:09  Page 64

The European Union and armaments

would automatically be in charge of the development, produc-
tion and in-service support of all projects defined by ARCA
‘Project Groups’.

(cid:90) OCCAR should maintain an (semi-) autonomous status. Its
current management rules, principles and membership criteria
should persist, and any changes should be decided by OCCAR
member states only. At the same time, the Director of the ARCA
should  chair  the  OCCAR  Board  of  Supervisors,  and  the
Agency’s  Executive  Director  for  procurement  should  be 
double-hatted,  holding  also  the  post  of  OCCAR  General 
Manager.

An Agency organised along these lines would not be a revolution in
armaments affairs, but it could probably generate new synergies
and increase efficiency. It would fill the most important gap in
Europe’s armaments sector, namely the harmonisation of military
requirements and its link to cooperation in research. It would allow
for flexible participation, cover all phases of the procurement cycle
and help OCCAR to exploit its potential fully. Last but not least, it
could become an effective interface between member states, on the
one hand, and other relevant EU institutions on the other.

This last point is crucial since the success of ARCA will depend
very much on the way it interacts with other bodies. First of all, the
decision which capabilities are needed is first a political and then a
military decision that falls beyond the scope of ARCA. In conse-
quence, ARCA can only work efficiently if it gets the necessary
input from military planners in member states. Secondly, ARCA
should focus on capability- and project-related military research,
and leave advanced research to other, more competent bodies.
This, in turn, implies close cooperation in particular with the
Commission. The latter will certainly try to include advanced
strategic  research  in  the  7th Framework  Programme  (2006
onwards). If the ARCA is set up in 2004, this will be an excellent
possibility  to  start  coordinating  the  respective  research  pro-
grammes.

The Commission will also be the driving force for the future
debate on a defence equipment market. Most market issues can be
tackled independently of the establishment of the Agency. How-
ever, the creation of the ARCA would undoubtedly have a positive
impact on the creation of a common defence equipment market. It
would not only send a political signal, but also bring in a genuine
European actor on the demand side. This would certainly facili-

64

63-EnglishText.qxd  28/08/2003  12:09  Page 65

Conclusions

tate the dialogue between the Commission and member states, in
particular if the Director of the Agency were a respected, high-level
political personality. Member states should therefore give ARCA
an explicit mandate to make recommendations for the adaptation
of the community framework. 

The establishment of an EDEM is a highly complex endeavour
that it has not been possible to discuss in detail here. However,
from the author’s point of view, the following points are essential.
(cid:90) An integrated European defence equipment market is indis-
pensable in order to increase competition and create a homoge-
neous defence economic space. It needs common rules and reg-
ulations and can only work if it is based on legally binding
commitments. It should therefore be established through the
adaptation of existing Community law.

(cid:90) A common procurement law for defence should be introduced
through the limitation of Article 296 to highly sensitive goods.
It  should  apply  only  to  national  procurement  decisions,
whereas the ARCA would be free to set its own rules based on
the existing OCCAR regulations. A community directive on
defence  procurement  should  be  introduced  progressively,
starting with components and subsystems.

(cid:90) Based on the provisions of the LoI Framework Agreement, a
Community regime for transfers and exports should be estab-
lished. This regime should cover all cooperative projects as well
as components and subsystems integrated into national sys-
tems. 

If all the steps that are currently being discussed and have been pre-
sented in this paper were actually taken, Europe would consider-
ably enhance the efficiency of its armaments sector. However, even
if there were sufficient consensus and political will to act, measures
could only be implemented progressively. Discussions on the vari-
ous aspects of an EDEM will continue for some time, along the
lines defined in the Commission’s Communication. A new organi-
sation for strategic research will not be set up overnight either. As
for the creation of the Agency, the consequences of the Thessa-
loniki Presidency Conclusions for the draft Convention are still
unclear. One might be tempted to say that the Articles I-40.3 and
III-207 would become superfluous if the ARCA were really set up in
2004. However, there are good reasons to maintain the relevant
provisions in the EU Treaty. First of all, it would strengthen the
Agency’s legal and institutional position if it were mentioned in the

65

63-EnglishText.qxd  28/08/2003  12:09  Page 66

The European Union and armaments

Treaty. Secondly, if attempts to set up the ARCA in 2004 fail, the ref-
erence in the Treaty would be useful as a ‘reminder’ to try it again
later. Last but not least, 2004 will probably be only a first step, i.e.
the creation of a basic structure that will then have to be developed
further. Once the new EU Treaty is ratified, the Council could inter-
pret Articles I-40.3 and III-207 as a mandate to draw the first les-
sons and eventually to revise the solution arrived at in 2004.

However, the creation of the ARCA is not an end in itself, but
rather a means to improve capabilities, enhance competitiveness
and increase efficiency through more and better cooperation. Cer-
tain principles, like global juste retour, should therefore not be
negotiable. If there is no satisfactory consensus at 25, those coun-
tries that are willing to move ahead should not hesitate to do so
outside the EU Agency. 

Even then, there would be plenty of possibilities to improve
armaments cooperation. The LoI countries, for example, could
launch  a  more  ambitious  second  phase  and  develop  common
rules and regulations. OCCAR could easily be transformed into a
fully-fledged  Agency,  and  nobody  would  prevent  its  member
states from (a) broadening OCCAR’s scope of activities, (b) giving
OCCAR greater autonomy, (c) increasing the number of OCCAR
projects and (d) establishing within the OCCAR framework per-
manent ‘Capability Groups’ and ‘Project Groups’. Certain aspects
could also be tackled in other formats (or even bilaterally). Those
who consider a European Defence Union to be desirable could, for
example, fully integrate their capability planning, establish per-
manent  structures  for  the  harmonisation  of  military  require-
ments and/or go beyond the current LoI Framework Agreement.
Such developments would, of course, change the scope and the
mission of the Agency completely. The latter could then, at best,
try to coordinate the various initiatives, and act as an interface
between EU and non-EU bodies and as a place-holder for the latter
until their transfer into the EU becomes one day possible.

However, this would only be a second-best option. Its only jus-
tification would be to prevent the worst case, i.e. a solution inside
the EU that would reduce rather than increase efficiency and rep-
resent a backwards step as compared with what exists today. The
best solution remains a flexible setting within the EU that allows
the combined use of Community, CFSP and national instruments
for a comprehensive policy. 

66

63-EnglishText.qxd  28/08/2003  12:09  Page 67

Conclusions

Member states should therefore enter into constructive dia-
logue with the Commission on market and research issues and
agree, at the outset, on an ambitious concept for ARCA that pro-
vides for both flexibility and effectiveness. Such a concept should
be  possible  if  governments  accept  the  fact  that  armaments  in
Europe is no longer a purely national domain and redefine their
national interests accordingly.

67

63-EnglishText.qxd  28/08/2003  12:09  Page 68

annex

a

Abbreviations

A400M 

Airbus-400M Transport Aircraft 

AHSG 

ARCA 

B 

BoS 

CEN 

CEPA 

CFSP 

Ad Hoc Study Group 

(European) Armaments, Research and Capabilities Agency 

Belgium 

Board of Supervisors 

European Committee for Standardization 

Common European Priority Area 

Common Foreign and Security Policy 

COARM 

Conventional Arms Exports Working Group 

COREPER 

Committee of Permanent Representatives 

CPD 

DARPA 

DDI 

DG 

DITB 

E 

EA 

EAA 

EC 

ECAP 

ECT 

EDEM 

EDITB 

Coherent Policy Document 

Defense Advanced Research Projects Agency 

Developing Defence Industry 

Directorate-General 

Defence Industrial and Technological Base 

Spain 

Executive Administration 

European Armaments Agency 

European Commission, European Community 

European Capabilities Action Plan 

European Community Treaty 

European Defence Equipment Market 

European Defence Industrial and Technological Base 

E.P.A.SE.RE.TE 

EU Cooperation Programme for Advanced Research and Technology 

European Research Grouping 

European Security and Defence Policy 

European Strategic Research Agency 

European Union 

European Cooperation for the Long Term in Defence 

European Union Military Committee 

European Union Military Staff 

European Understandings for Research Organisation, Programmes 
and Activities 

Framework Programme 

France 

Future Surface-to-Air missiles Family 

ERG 

ESDP 

ESRA 

EU 

EUCLID 

EUMC 

EUMS 

EUROPA 

FP 

FR 

FSAF 

68

63-EnglishText.qxd  28/08/2003  12:09  Page 69

Annex

a

GDP 

GE 

GMES 

GNE 

GPL 

GRD 

IEPG 

IGC 

IPR 

IT 

LoI 

MOD 

MOU 

MTCR 

NAD 

NATO 

Gross Domestic Product 

Germany 

Global Monitoring for Environment and Security 

Group of National Experts 

Global Project Licence 

Group of Research Directors 

Independent European Programme Group 

Intergovernmental Conference 

Intellectual Property Rights 

Italy, Information Technology 

Letter of Intent 

Ministry of Defence 

Memorandum of Understanding 

Missile Technology Control Regime 

National Armaments Director 

North Atlantic Treaty Organisation 

OCCAR 

Organisation for Joint Armaments Cooperation 

PSC 

Political and Security Committee 

POLARM 

European Armaments Policy Council Working Group 

R&D 

R&T 

SGTF 

T 

TA 

TDC 

TEC 

TEU 

UK 

US 

WEAG 

WEAO 

WEU 

Research and Development 

Research and Technology 

Sub-Group on Test Facilities 

Turkey 

Technical Arrangement 

Transnational Defence Company 

Treaty establishing the European Community 

Treaty on European Union 

United Kingdom 

United States of America 

Western European Armaments Group 

Western European Armaments Organisation 

Western European Union 

69

 
63-English-COVER.qxd  28/08/2003  12:11  Page 3

Chaillot Papers

All Chaillot Papers
can be accessed via the Institute’s website:
www.iss-eu.org

The European Union and the crisis in the Middle East
Muriel Asseburg, Dominique Moïsi, Gerd Nonneman and Stefano Silvestri
edited by Martin Ortega

EU cooperative threat reduction activities in Russia
Kathrin Höhl, Harald Müller and Annette Schaper;
edited by Burkard Schmitt

Russia faces Europe
Dov Lynch

European armaments cooperation: core documents
compiled by Burkard Schmitt

Terrorism, proliferation: a European threat assessment
Harald Müller

From Laeken to Copenhagen – European defence:
Core documents, Volume III
compiled by Jean-Yves Haine

International terrorism and Europe
Thérèse Delpech

What model for CFSP?
Hans-Georg Ehrhart

July 2003

June 2003

May 2003

April 2003

March 2003

February 2003

December 2002

October 2002

The United States: the empire of force or the force of empire? 
Pierre Hassner

September 2002

Enlargement and European defence after 11 September
Jiri Sedivy, Pal Dunay and Jacek Saryusz-Wolski;
edited by Antonio Missiroli

Terms of engagement. The paradox of American power and 
the transatlantic dilemma post-11 September
Julian Lindley-French

From Nice to Laeken - European defence: core documents
Volume II
compiled by Maartje Rutten

What status for Kosovo?
Dana Allin, Franz-Lothar Altmann, Marta Dassu, Tim Judah, Jacques Rupnik and
Thanos Veremis; edited by Dimitrios Triantaphyllou

Enlargement: a new NATO
William Hopkinson

Nuclear weapons: a new Great Debate
Thérèse Delpech, Shen Dingli, Lawrence Freedman, Camille Grand, Robert A. Manning, 
Harald Müller, Brad Roberts and Dmitri Trenin; edited by Burkard Schmitt

June 2002

May 2002

April 2002

October 2001

October 2001

July 2001

n°62

n°61

n°60

n°59

n°58

n°57

n°56

n°55

n°54

n°53

n°52

n°51

n°50

n°49

n°48

U
f
in
f
C
r
e
n
a

a
s
t
C
im
w
t

s
t
li
t
p
in

m
p
A
a
o
c

63-English-COVER.qxd  28/08/2003  12:11  Page 4

Up until now, EU member states have excluded armaments
from the European integration process and have cooperated
in this field outside the EU framework. However, there is a
fair chance today that this will change: both the work of the
Convention on the Future of Europe and the debate on the
recent Commission Communication on a common defence
equipment  policy  indicate  a  greater  openness  among 
national  governments  vis-à-vis  possible  EU  involvement  in
armaments. 

This Chaillot Paper argues that the EU could indeed play
a useful role in the necessary reform of Europe's armaments
sector,  because  it  could  develop  a  more  coherent  institu-
tional  setting  and  bring  in  a  broad  set  of  relevant
Community  and  CFSP  instruments.  Both  could  help  to
implement  a  comprehensive  strategy  in  those  three  areas
where  action  is  mostly  needed:  procurement,  research  and
the defence market.

Granted, even if the EU develops an armaments dimen-
sion,  member  states  will  certainly  continue  to  be  reluctant
to surrender national prerogatives. This will inevitably put
limits on any improvements in cost-effectiveness. However,
this  paper  suggests  that  innovative  solutions  are  possible
provided  governments  are  serious  about  their  declared
intentions. 

Drawing  on  lessons  from  existing  cooperative  arrange-
ments, the paper develops in particular a blueprint for the
proposed European Armaments, Research and Capabilities
Agency, and shows how it could work. Moreover, it presents
an outline for a European Defence Equipment Market based
on  Community  law  and  gives  some  indication  of  how  it
could be formed.

published by 

the European Union 

Institute for Security Studies

43 avenue du 

Président Wilson

F-75775 Paris cedex 16

phone: +33 (0) 1 56 89 19 30

fax: +33 (0) 1 56 89 19 31

e-mail: institute@iss-eu.org

www.iss-eu.org

€8