Integrating the EU Defence Market: An Easy Way to Soften the Impact of Military Spending Cuts? (Brookings)

Opinion | July 12, 2012

Integrating the EU Defence Market: An Easy Way to Soften the Impact of Military Spending Cuts?

By Clara M. O’Donnell

As many European countries introduce their biggest defence budget cuts in years, they have been exploring ways to limit the impact on their armed forces. There has been much talk within the EU and NATO of increasing ‘pooling and sharing’ of European military capabilities. But many governments are struggling to commit to specific initiatives. They are worried that if they share military assets with their allies, they might disagree about when to use them – as happened during NATO’s deployment to Libya when NATO allies were at odds over taking military action. They fear that their national defence companies will be deprived of vital contracts. They also find it politically difficult to sign up to costly multinational procurement programmes at a time when they are cutting back on personnel.

Another way European governments can limit the damage of military spending cuts is through exploiting two new directives designed to integrate the EU defence market. One directive aims to increase the amount of competition in defence procurement across the EU. The other strives to facilitate the export of defence equipment amongst EU countries. Not only do the directives create the potential for significant savings, but also their use will not be as affected by the obstacles hampering ‘pooling and sharing’ efforts.

EU member states agreed to the two directives in 2008-2009, after acknowledging that the way they regulated their defence markets was highly inefficient – hurting their armed forces, tax payers and defence industries alike. Governments often bought military equipment without resorting to competition. At times, this was necessary to uphold national security. But often states were merely protecting their favourite national suppliers. Since 2005, there had been some improvements in buying habits as EU governments committed to open a substantial amount of their defence procurement to European competition through a voluntary code of conduct within the European Defence Agency. But some states continued to use ‘national security’ as a cloak for protectionism. EU member states also imposed unnecessarily strict export controls on their defence equipment. Defence companies frequently had to ask governments for individual authorisation when they moved a component between plants based in different EU countries. When the armed forces of an EU country bought military equipment from a neighbour, they often had to ask for authorisations to buy anodyne spare parts.

As a result of the directives, since August 2011, EU governments must allow defence companies from across the EU to bid when they procure military equipment, unless there are legitimate security concerns. (In contrast to the Code of Conduct on Defence Procurement, the directive is legally binding.) Since June 2012, EU member states also have to offer ‘general’ and ‘global’ licences. Broadly speaking, military goods which benefit from a general licence can move within EU borders without exporters having to ask for specific licences to do so. Global licences are granted to defence companies and allow them to transfer several goods to various recipients.

But the impact of the directives will depend on the extent to which governments use the new tools at their disposal. The new rules do not define which military equipment is so sensitive that it should remain excluded from EU competition. Some governments could continue to use the exemption widely. Even when states use the new procurement procedures, they could manipulate the criteria within their contracts to favour national suppliers. (Something several have done when using the Code of Conduct.) Governments also get to choose which military goods are safe for general and global licences. If they only provide streamlined licences to a limited amount of equipment, the impact of the new system could be modest.

So far there have been both positive and negative signs about the extent to which EU governments might choose to exploit the new rules. A number of countries have taken advantage of the directives to completely eliminate the need for export authorisations for some military equipment when it is being sent to the armed forces of another EU country, or if it is for the purpose of repairs. At the same time, some countries are being more cautious than others regarding the goods which benefit from general licences. For example, while one EU country now grants general licences to all armoured and protective equipment when sent to the armed forces of a fellow EU state, another only provides general licences to helmets and body armour. A small group of states have not even finished introducing the directive on export controls into their national legislation – even though the deadline was June 2011. Even more disconcertingly, a larger number of EU countries are nearly a year late in transposing the rules on procurement.

Over the next few years, EU member states should not only fully embrace the current provisions of the two directives, they should seek to facilitate EU trade further by establishing a common list of military equipment which would benefit from general licences across the EU. They should also collaborate with the US to ensure that military goods with American components do not undermine the benefits of streamlined internal EU export controls. If some governments continue delaying the transposition of either directive, the European Commission should take them to the European Court of Justice. (Commendably, the European Commission has already begun infringement proceedings against the current laggards.) The Commission should also be ready to call to order EU governments which might try to protect their national defence industry even after adopting the new rules. Although hopefully it will be not be necessary, a few rulings by the European Court of Justice against recalcitrant defence ministries would send a clear signal that from now on governments will be called upon to justify their procurement choices.

A more efficient EU defence market might unfortunately lead to some job losses as less efficient European defence companies lose out on contracts. But it may at least increase jobs in the better European firms and help ensure that Europe’s defence industry remains globally competitive. Streamlined export controls will also require some trust amongst European governments to ensure that military equipment is not re-exported to undesirable third parties. But the level of trust required for a government to send a spare part for an armoured vehicle to a fellow EU member state without an individual authorisation will be significantly lower than the trust required to pool aircraft carriers. In addition, integrating the EU defence market will not need any large investments upfront of the sort required when governments agree to large multinational procurement programmes. At a time when many EU member states are cutting back their defence expenditure by 10 per cent, and some have reduced it by over 20 per cent, governments must exploit all the possible cost-saving measures at their disposal – and those measures which are comparatively easier to introduce, even more so.

Are Europeans a Better Transatlantic Security Partner than Meets the Eye? (Brookings)

Are Europeans a Better Transatlantic Security Partner than Meets the Eye?

By Clara M. O’Donnell and Patryk Pawlak

The latest wave of European military spending cuts is swelling the ranks of Americans who believe that Europeans are not contributing enough to global security. But this assessment is too harsh. It is true that Europeans spend less on defence than their American counterparts. They have also been less willing to use force in recent years. But the US itself is reassessing the merit of its military interventions over the last decade. And when one takes into account policies that are not strictly military, such as aid, sanctions and homeland security, Europeans are making some significant contributions to international stability.

A number of European countries are undoubtedly falling short of their NATO and EU promises to develop a global military reach. Many governments have been slow to transform their militaries from immobile forces designed to counter a Soviet invasion into rapidly deployable combat troops. Even prior to the economic crisis, most European NATO allies had stopped spending the alliance’s agreed benchmark of 2 per cent of GDP on defence. And Nicolas Gros-Verheyde, the influential French blogger, estimates that the economic downturn will lead to a 30 per cent drop in total military spending by EU member-states between 2006 and 2014. As a result, even if America cuts its own defence budget by $1 trillion over the next decade – as Congress is currently considering – the US military will still receive more than twice as much as the armed forces of all EU countries combined.

Since the end of the Cold War, a number of European countries have also been reluctant to deploy troops, particularly for heavy combat operations. Many governments have refused to send their soldiers to the most dangerous parts of Afghanistan. More than half of the European countries in NATO did not participate in the deployment to Libya. And many EU military and civilian missions have been too small to make a significant impact. Washington critics are particularly dismissive of the 60 EU officials advising Iraqis on how to improve their criminal justice system and the approximately 500 EU police trainers in Afghanistan.

Europe’s recent military track record derives from the fact that most Europeans have not felt threatened. Many also do not believe that war should be used to obtain ‘justice’. In a recent GMF survey of the US and 12 EU countries, only 33 per cent of Europeans believed that war is sometimes necessary to obtain justice – in contrast to 75 per cent of Americans. In addition, Europeans have been particularly doubtful of the merit of Washington’s use of force over the past decade, be it Afghanistan or Iraq.

In light of this mindset, Europeans have actually been quite active on the military front. According to the Stockholm International Peace Research Institute, in 2011, Britain, France and Germany were still amongst the ten largest military spenders in the world (ranking third, fourth and eighth). The combined defence expenditure of European NATO members is still more than twice what China spends – even though Europeans do not reap the full benefits of it because they duplicate many of their military efforts.

For several years, European troops made up more than half of NATO’s mission in Afghanistan. And on a per capita basis, Denmark and Estonia have suffered more casualties there than the US. Europeans undertook 90 per cent of the strike missions in Libya. In addition, many of the EU’s missions, even if modest, are still helping to stabilise countries across the world. In the Gulf of Aden, an EU naval force protects vulnerable boats from pirates, including the World Food Programme vessels which deliver food to Somali people. In the months to come, the EU will deploy civilians to help the government in Niger reform its security sector (a country where, according to European governments, Islamist militants threaten international security). EU experts will also soon help improve the security at the international airport in Juba, the capital of newly independent South Sudan.

In any case, American policy-makers are themselves reconsidering the merits of how the US has used force over the last decade. The Obama administration has been extricating US armed forces from Iraq and Afghanistan – even though in both countries, the US has not achieved the level of stability which it had initially aspired to. The government’s new defence guidance stresses that the US does not intend to deploy similar missions in future. It also argues that America cannot meet its security challenges through military force alone and that it must strengthen all the ‘tools’ of American power, including diplomacy, development, intelligence and homeland security.

These are areas in which Europeans are significant players. Combined, the EU institutions and member-states are the largest aid donor in the world. According to the OECD, they spent €69 billion in 2011 – notwithstanding the fact that some European countries reduced their budgets because of the economic crisis. This is more than twice the amount the US gave. Between 2002 and 2013, the EU institutions and member-states will notably have provided €11 billion in aid to Afghanistan. And in response to the Arab Spring, the EU institutions alone have offered nearly €7 billion over three years.

Europeans also invest significant resources in homeland security, even if budgets risk declining somewhat over the next few years because of the economic turmoil. Based on the latest OECD figures, the 21 EU member-states which belong to the organisation spent nearly €240 billion on ‘public order and safety’ in 2010 – nearly 90 per cent of what the US spent. This covers police forces, intelligence services, the judiciary and ministries of internal affairs. The US is a beneficiary of this spending too – in addition to supporting Europe’s internal stability, these bodies tackle the international terrorism and organised crime that afflict Europeans and their allies alike.

European countries are also increasing the EU’s involvement in security matters – including through the EU’s bilateral ties with third countries. One EU agency, Frontex, monitors the Union’s southern and eastern border, while another, Europol, tackles organised crime. EU funds for homeland security, although still modest, are increasing despite the economic crisis. From 2014 to 2020, the EU is expected to spend nearly €10 billion in this field. The money will notably fund research into intelligent maritime surveillance systems and help partner countries across the world fight criminal networks and monitor their borders more effectively.

European governments also leverage the EU’s large common market to pursue their foreign policy objectives. They offer preferential trade ties to support the economic development of numerous fragile countries across the world, and to encourage them to improve their governance. Pakistan is one of the states which qualify for some of the EU’s most generous trade concessions. EU countries also impose heavy sanctions on countries which they believe are undermining international security. Among other things, the EU recently introduced an oil embargo against Iran – even though the measure is inflicting significant economic hardship on Greece and other EU states which were already struggling with the financial crisis. And through the offer of EU and NATO membership, Europeans (and the US) have managed to spread stability across the European continent.

The fact that Europeans wield such extensive foreign policy ‘tools’ does not mean they always use them wisely. Nor should it allow Europeans to neglect their armed forces. Governments must ensure that their peacekeeping efforts are not hampered by inadequate military equipment, and that they retain the capacity to respond to a serious military threat if one were to emerge. But America is less alone in upholding global security than some in Washington would suggest.

The Implications of Military Spending Cuts for NATO’s Largest Members (Brookings)

The Implications of Military Spending Cuts for NATO’s Largest Members



  • Andrew Dorman

    Professor of International Security, King’s College London, and Associate Fellow, Chatham House


  • Bastian Giegerich

    Senior Researcher, Bundeswehr Institute of Social Sciences, and Consulting Senior Fellow for European Security, International Institute for Strategic Studies


  • Camille Grand

    Director, Fondation pour la Recherche Stratégique


  • Adam Grissom

    Senior Political Scientist, RAND


  • Christian Mölling

    Research Associate, International Security Division, Stiftung Wissenschaft und Politik


  • Nonresident Fellow

    Foreign Policy, Center on the United States and Europe


There have long been debates about the sustainability of the transatlantic alliance and accusations amongst allies of unequal contributions to burden-sharing. But since countries on both sides of the Atlantic have begun introducing new – and often major – military spending cuts in response to the economic crisis, concerns about the future of transatlantic defense cooperation have become more pronounced.

A growing number of senior officials are now publicly questioning the future of NATO. In June 2011, in the midst of NATO’s operation in Libya, Robert Gates, then US Defense Secretary, stated that Europe faced the prospect of “collective military irrelevance” and that unless the continent stemmed the deterioration of its armed forces, NATO faced a “dim, if not dismal future”. Ivo Daalder, the US Permanent Representative to NATO, and James Stavridis, NATO’s Supreme Allied Commander Europe, have argued that “if defense spending continues to decline, NATO may not be able to replicate its success in Libya in another decade”. The alliance’s Secretary General, Anders Fogh Rasmussen, has warned that “if European defense spending cuts continue, Europe’s ability to be a stabilizing force even in its neighborhood will rapidly disappear”. While Norwegian Defense Minister Espen Barth Eide has claimed that “exercises have shown that NATO’s ability to conduct conventional military operations has markedly declined. […] Not only is NATO’s ability to defend its member states questionable, it might actually deteriorate further as financial pressures in Europe and the US force cuts in military spending”.

In order to explore the validity of these claims, this report outlines trends in military spending across the EU since the onset of the economic crisis. It then analyzes the fallout of the downturn for the armed forces of NATO’s largest defense spenders – France, Germany, the United Kingdom and the United States.

Room for manoeuvre: The deleveraging story of Eurozone banks since 2008 (VOX)

Room for manoeuvre: The deleveraging story of Eurozone banks since 2008

Claus Puhr, Stefan W Schmitz, Ralph Spitzer, Heiko Hesse, 14 June 2012

In the following column we investigate balance-sheet growth, capitalisation, and deleveraging of European banks since the end of 2008 and show that based on existing empirical evidence banks have so far reduced their leverage (i) markedly and (ii) mainly by raising capital rather than reducing exposure to the real economy. In doing so, banks were able to address two concerns at the same time: One related to their fundamental soundness (“banks are undercapitalised”), the other related to potential harm done to the economy at large (“banks are causing a credit crunch”). This is particularly important, as history has shown that deleveraging too slowly can lead to periods of stagnant growth.

Greece’s Election and Its Aftermath (The Utopian Blog)

After Greece’s elections, everything suddenly looks very different. But it remains unclear whether anything much will actually change.

Greece’s elections last Sunday are a historic low for the country’s two traditionally dominant parties, PASOK and Nea Demokratia (ND), which have ruled the country since the collapse of the Junta in 1974. Together they garnered only 32% of the vote. To put this result in perspective, one has to consider that their combined total was less than what ND alone received three years ago—when it was beaten into second place by PASOK!

According to polling companies, the collapse of support for the two main parties accelerated in the last week leading to the election. This is why the final result—and especially the strong showing for the Coalition of the Radical Left (SYRIZA), which ended up as Greece’s second strongest party with close to 17% of the vote—was hard to anticipate. (SYRIZA got a final boost once it proposed a “Government of the Left” and—given the popularity of its young leader—managed to position itself as a more modern left-wing party than the Greek Communist Party (KKE), whose vote stagnated compared to the 2009 elections.) Less unexpected was the electoral success of the Independent Hellenes (10.6%) on the right and the Golden Dawn on the far right (7%, a 2400% increase from its 2009 tally!).

What all four of these parties have in common is their absolute rejection of the terms of Greece’s bailout. Other than that one single fact, their political platforms could not be farther apart. It is highly unlikely that they’ll be able to form a joint government.

In fact, if one takes into account the latest statements by various party leaders, any coalition government now seems highly unlikely. ND and PASOK, with 108 and 41 seats respectively, aren’t strong enough to govern alone—even if they could reach an agreement on a common agenda. Given the anti-bailout stance of four out of the seven parties elected to parliament, the only remaining hope now is that the Democratic Left party (DIMAR) could join ND and PASOK. But as of now, DIMAR’s president, Fotis Kouvelis, shows no signs of being willing to cooperate with PASOK and ND. Nothing is decided yet, but the next few days will determine whether Greece will delay further elections and form a makeshift coalition government—a coalition government that may lend the country an appearance of stability for a few weeks, but is likely to be stillborn—or whether there will be new elections in June.

Another thing to note is is that the current electoral law produces odd and hardly representative results. For instance, ND received 2 percentage points more than the Coalition of the Radical Left. But this resulted in the party gaining 56 more parliamentary seats. This difference is explained by a 50-seat bonus that the current electoral law gives the party with the most votes in order to ensure stable governments. Clearly, however, this law was created for an electoral landscape dominted by two large parties, and is now outmoded.

It is also interesting to note that, because a party has to garner at least 3% of the vote to enter parliament in Greece, more than 19% of the electorate supported parties that did not ultimately make it into parliament. These include: Popular Orthodox Rally-LAOS, Democratic Alliance, DRASI (Action), Dimiourgia Xana (Recreate Greece), Social Agreement (Koinoniki Symfonia), and the Green Party (Oikologoi Prasinoi). So extreme is the fragmentation of Greece’s party system now that the parties that did not manage to enter parliament collectively received a higher percentage of the vote than the party with the most votes—a party that nevertheless received 108, as opposed to zero, seats in parliament! (The liberal parties who failed to enter parliament in this election—Democratic Alliance, DRASI, and Dimiourgia Xana—would be able to form a relatively strong center-right faction in parliament if they formed an alliance for future elections.)

Many messages could be drawn from this mess. For one, Greeks turned against the two established parties in part because they are no longer able to uphold their end of the bargain in the traditional “patronage contract,” which rewards their reliable supporters with favors from public coffers. For another, Greeks voted against austerity measures. And yet they voted—at least nominally—in favor of a European future. This may appear extremely contradictory, but for many voters and party leaders it is not. Time will tell if theirs—Europe: yes; Austerity: no—is a realistic aspiration.

The paradoxical truth is that the result, while to a great extent a protest vote, was for many a vote of hope: hope for something different. In any case, we should not consider these results as solidified partisan identities on the part of the voters. According to pre-election polls, many voters decided their votes in the last days leading up to the election. On top of this, there are people who—especially after learning the results—had second thoughts about the parties they had ended up voting for. This is the most volatile the Greek party system has been since the early 1950s. The result of the next elections could look very different.

Combining the Greek result with the friction in Franco-German relations that will likely result from Francois Hollande’s electoral victory in France, it is little wonder that European leaders have so far remained largely silent about Greece’s elections. Before they react to the result, they want to see whether a stable government can be formed. For now, it looks unlikely that Greece will be able to form such a stable government. The outcome of the Greek elections therefore increases uncertainty about the Euro’s future. The markets will most likely react negatively and remain volatile until things clear out.

Since the election everything looks different. But it remains to be seen whether anything much has actually changed.

Harris Mylonas is an Assistant Professor of Political Science and International Affairs at George Washington University and an Academy Scholar at the Harvard Academy for International and Area Studies. Akis Georgakellos is a Political Analyst/Strategy consultant and a directing partner at Stratego—a Greek company.


You can access the original posting here.

Pre-Election Report: 2012 Greek Parliamentary Election (The Monkey Cage)

Link: The Monkey Cage

By Harris Mylonas

From the University of Tartu—where I am for a conference—the French and Greek elections look very distant. But CNN live on my tv screen together with facebook and twitter messages on my laptop screen serve as potent reminders of these elections—and given my origins—particularly the Greek one.


The two main parties in Greece that have dominated the party system since the end of the Greek Junta in 1974, PASOK (center left) and Nea Demokratia (center right), are likely to get enough seats to form a coalition government—possibly with one or more smaller parties. Their pleas for stability and their alarming messages about the catastrophic consequences of an anti-austerity coalition ruling the country seem to have convinced enough Greeks to vote once again for them. They will garner together around 40-45% of the vote.


The left will get altogether around 30-35% of the vote, but it is deeply fragmented between multiple parties: Coalition of Radical Left (SYRIZA), Communist Party of Greece (KKE), Democratic Left (DIMAR), Social Agreement (Koinoniki Symfonia), and Green Party (Oikologoi Prasinoi). None of the small parties on the center right have secured their entry in the parliament and will collectively receive around 7%. This latter group includes Dora Bacoyannis’ party, Democratic Alliance, Stefanos Manos with DRASI (Action), and Thanos Tzimeros with Dimiourgia Xana (Recreate Greece). But parties of the right (Independent Hellenes and Popular Orthodox Rally-LAOS) and the far right (Golden Dawn) seem to be doing better. Collectively amassing around 17% of the vote share.  What is harder to predict is the turnout, but it will most likely be around 75%.


For many, social media have created a parallel reality. For instance, most of my friends self-identify as moderates and reading their posts could have given me an impression that the 7% that will vote for center right will actually rule Greece on May 7th. Social media help mobilize and coordinate existing supporters, but are not well positioned to generate new supporters. Moreover, social media create a virtual reality where your friends “like” or “retweet” your opinions and eliminate any opposing voices. Slowly but surely in the end your opinion prevails. You win. But this victory has very limited external validity.


Coalitions are impossible if we take the party discourse at face value. They are precluded by political leaders who are either trying to solidify their base (e.g. ND) or who place conditions for cooperation that are impossible to be met (e.g. DIMAR). However, the day after the election is always different. Coalition-building pressure is born by the reality of the vote and the need to govern the country. Yet even if such a coalition government were to be formed, the fear is it will not be able to implement the necessary reforms and the Greek people may have to vote again by the end of the summer.


The irony of this election is that the result of the French election may actually undermine the very cleavage dividing the Greek electorate. If Hollande wins in France, the Greek parties that have been in favor of the current policy mix may wake up on May 7th in an EU that the Merkel-Sarkozy consensus of how to solve the crisis has ceased to be dominant.


As Churchill put it, Democracy is the worst form of government—except for all the others. This election is crucial but it will not produce a strong government. However, as the Ancient Greek saying goes, nothing bad comes without something good attached to it.  In this election most Greeks made an extra effort to find out what parties stood for; parties were more frugal in their electoral promises—although the rhetoric has been more radical than before; campaigns cost less—although still a lot more than in other European countries and definitely more than it should have given the situation; and many people that until now perceived themselves as outsiders got involved in politics for the first time—even run for office, but arguably the abilities of the candidates are in many cases questionable. These can be interpreted as hopeful signs that in the long run may lead to a different relationship between parties and society. A relationship that is not based on patronage but on accountability and responsibility. This could be the most important “good” emerging from this financial/political/moral crisis.

Harris Mylonas is Assistant Professor of Political Science and International Affairs at George Washington University and Academy Scholar at the Harvard Academy for International and Area Studies. His book, The Politics of Nation-Building: Making Co-Nationals, Refugees, and Minorities, is forthcoming with Cambridge University Press.



The Implications of Multipolarity for Central Europe’s Security (Brookings)

The Implications of Multipolarity for Central Europe’s Security

By Clara M. O’Donnell

For years, Central Europeans have fretted that the United States might withdraw from the European security arena in order to focus on more pressing issues in other parts of the world. Over the last 12 months, these concerns have been exacerbated. Last spring, for the first time in the North Atlantic Treaty Organization’s (NATO) history, Washington refused to maintain a leading role in a major operation of the alliance. When Britain and France convinced their allies to deploy to Libya, the Obama Administration — which did not perceive Libya as a strategic priority — insisted on scaling back its military contribution after the initial phase of the operation. Then in January 2012, the United States — facing significant budgetary strains — announced that it will make large cuts to its armed forces over the next decade, as it shifts its attention from Europe to the Asia-Pacific and the Middle East. Since, Washington has also declared that it will remove approximately 7,000 combat troops from Europe.

America’s withdrawal from Europe is relative. The new defense guidance stresses that the United States is still wedded to its NATO Article 5 obligations. America’s military footprint in Europe will remain larger than in any other region of the world. The Obama Administration is pressing ahead with missile defense on the continent. It is committed to a variety of measures designed to demonstrate to European allies — in particular those in Central Europe — that the United States still cares for their security, such as the deployment of U.S. patriot missiles and a U.S. air force detachment to Poland. And in a further attempt to stress Washington’s continued commitment to Europe, U.S. Secretary of Defense Leon Panetta announced in February that the United States will contribute troops to the NATO Response Force.

Nevertheless, over the next few years, as America cuts back its armed forces, there might well be other occasions when Washington decides not to provide full military support to address conflicts that are of primary interest to Europeans, but which do not fall under Article 5.

America’s rebalanced military priorities would not pose a problem for Europeans if the latter delivered on their long-held promises to take on more responsibility for transatlantic security. Within NATO, European governments have repeatedly committed to spend two percent of their Gross Domestic Product (GDP) on defense. They have also promised to acquire the military capabilities that would allow them to participate in operations abroad. Since the late 1990s, in light of the wars in the Balkans, European countries have been making similar pledges within the European Union (EU) as well — specifically in order to have the means to address conflicts in which the United States might not want to be involved.

But even when faced with Washington’s military cutbacks, most European governments continue to flout their NATO and EU commitments. By 2008 only five European countries spent two percent or more of their GDP on defense. And in response to the subsequent economic crisis, many have been introducing new — often significant — military spending cuts. Even several of the European countries which frequently express concerns about their own security have been dramatically cutting back spending. According to NATO figures, in 2010 Slovakia reduced its defense budget to 1.3 percent, Hungary to 1.1 percent and Lithuania — which has not expended more than1.2 percent since it joined the Alliance — spent just 0.9 percent. Many of the military equipment shortfalls identified within NATO and the EU remain, among others, the surveillance assets, which were notably lacking in the recent deployment in Libya.

There has been much talk both in NATO and the EU of increasing the level of cooperation between European armed forces in order to offset the impact of military spending cuts. And with strong backing from Washington, both organizations have managed to get Europeans to agree to some cost-saving joint efforts. NATO’s air-policing mission over the Baltic States has notably been extended, and several countries have agreed to develop Allied Ground Surveillance — a drone that will increase NATO’s intelligence capabilities. But the current initiatives are modest given the size of the spending cuts. And according to officials, many countries — including those of Central Europe — remain reluctant to implement more ambitious forms of “pooling and sharing.” Governments are wary of sharing military capabilities with their neighbors, and they are keen on protecting their domestic defense industries.

Poland is the only European country which has responded constructively to Washington’s relative withdrawal from Europe’s security arena. As part of the overhaul in the country’s approach to the EU instigated by Prime Minister Donald Tusk, Warsaw has developed a new interest for EU defense cooperation. The Tusk government remains committed to NATO but, as Foreign Affairs Minister Radosław Sikorski has stated, Poland acknowledges that there will be times when the United States “might want to take a backseat,” and in those cases, “Europe should be able to act in its immediate vicinity.” Warsaw proposed a variety of ways to reinvigorate the EU’s defense and security policy during its 2011 EU Presidency, but these efforts were met with limited interest by its EU partners, including fellow Central Europeans.

Under current trends, Europeans risk finding themselves in a position where they cannot respond to a crisis within their Southern or Eastern neighborhood because they lack the military capabilities necessary to do so. They also risk straining European cohesion. The countries of Central Europe and the Baltics have never had much faith in the ability — or willingness — of their neighbors to guarantee their safety. As they watch Europe’s armed forces shrink in the backdrop of Washington’s shifting security priorities, they risk feeling increasingly vulnerable — even though several of them are allowing their own militaries to dwindle. A heightened sense of vulnerability could reduce the willingness of Central European states to contribute to international military operations far away. Indeed Central Europeans, already weary of expeditionary operations, might become tempted to keep their armed forces close to home to counter potential instability in their own neighborhood. Growing insecurity could also adversely affect the modernization of their militaries. Central European governments risk spending more money on equipment designed to tackle conventional threats, instead of the tools needed for NATO and EU expeditionary operations. Finally, heightened Central European insecurities could even strain relations with Russia, as Moscow could be tempted to exploit this sense of vulnerability to create tensions within NATO and the EU.

In order to avoid this scenario, Europeans need to stem the deterioration of their armed forces. Once the economic crisis is over, they should increase their defense budgets. In the meantime, however, they should commit to more joint military efforts within NATO, the EU and the variety of regional groupings across Europe, such as the Visegrád group, the Weimar Triangle and the Nordic defense cooperation framework. Governments must also strengthen their efforts to develop common security priorities, which is indispensable if they are to ever overcome their wariness to share military equipment with their neighbors. Given the diversity of threat perceptions across Europe — even among the countries of Central Europe — it will be hard for Europeans to develop a common strategic culture. But the overhaul in Poland’s foreign policy in recent years shows that countries can change. America’s withdrawal from the European security arena does not need to undermine transatlantic security.



by Tyson Barker

Washington, DC’s grand, neo-classical Pennsylvania Avenue is festooned with Union Jacks and star-spangled banners. The pomp heralding the arrival of British Prime Minister David Cameron for his March 13-15 visit to the US, his second and more high-profile official visit since assuming office in 2010, is breathtaking. The British foreign office has long placed the primacy of the relationship with the US at the top of its strategic interests. Now the feeling is clearly mutual.

Anyone interested in deciphering the Obama administration’s world view need look no further than its state-dinner diplomacy to see the London’s place in the hierarchy of Washington’s global partners. Since coming to office, Obama has hosted five state dinners – for leaders from India, Mexico, China, Germany and, now, the UK. Taken together, these occasions offer a mapping of the administration’s preferred, or at least presumed, international interlocutors. For the US, the UK is one of these undisputed pivot points.

Another View

Mitt Romney’s campaign team has placed the US’s neglect of the British as the centerpiece of its critique of Obama’s Europe policy. In an attempt to profile its policy muscle, the campaign published a white paper covering the broad strokes of a Romney foreign policy. The paper failed to mention the EU or NATO once. Nor did it include Europe’s economic troubles. It did, however, contain a bizarrely anachronistic pledge to restore the special relationship with the UK. Demonstrating little let-up in this line, a top Romney foreign-policy advisor stated this week that the US-UK relationship in the era of George W. Bush was a “much more equal partnership”. This observation would come as a surprise to most Brits who saw that relationship as profoundly asymmetric. Images of a highly coiffed canine come to mind.

To avoid being dogged with similar criticism, Obama and Cameron penned last May a joint piece in The Times (London) that coined the term “indispensable relationship”. They recognized that in a changing world a changing bilateral relationship does not diminish its importance. And precisely because the US-UK relationship is so robust, it sometimes proves unwieldy. The US, after all, relies on the UK in three areas: as a guardian of security, as a partner in global economic governance and for its place in the EU.

A Secure Relationship

In a bookend to their Times piece, the two leaders opened their Washington get-together with a weighty op-ed on foreign and security policy in The Washington Post that reflects the close cooperation on security issues. Their agenda this week also confirms this relationship. Successes in Libya and its lessons for NATO’s future, timetables for withdrawal from Afghanistan, intensified engagement in Syria, combating piracy on the high seas, and the escalating danger of Iran’s progress towards nuclear weapons-grade uranium enrichment are all highlights of their talks. The re-emergence of the Falkland Islands dispute is also likely to come up.

But the leaders should not forget the other two nodes of US-UK relationship.

Washington and London see eye to eye on global economic governance. The breakdown of G20 coalitions over the past three years – be it on global current-account imbalances, financial-market regulation, currency manipulation or free trade – reveals that the two capitals are on the same side of these issues, often with other European countries galvanizing the opposition. But Cameron’s approach to the UK’s budget woes – balancing spending cuts with targeted tax increases – reflects a more deliberative process than that currently taking place in the US. Britain’s willingness to have budget talks that encompass all areas of spending, from defense to health care to pensions, offers an example to obstreperous Democrats and Republicans. Lastly, shared legal traditions and industrial interests mean the UK could serve as the key broker in the deeper trans-Atlantic economic integration. This could even lead to a Trans-Atlantic Free Trade Agreement (TAFTA) in the coming years.

Regarding the EU, the US national interest is keeping the UK in core Europe. The British lead the call to imbue eurozone crisis management with an emphasis on economic growth, a position that was undoubtedly met with nods of affirmation in the US Treasury, not to mention the International Monetary Fund. The UK’s ambivalence to an EU financial-transaction tax also reflects Washington’s economic interests. Finally, the UK is among the staunchest supporters of the EU-US Passenger Name Record (PNR) Agreement, which homeland-security experts see as vital to maintaining safe and open visa-free travel between the US and much of Europe.

Obama’s message to Cameron should be that the UK should continue to maintain its place in the Euro-Atlantic community. That place, however, begins with London’s role in Europe. The US can leverage its relationship with the UK only in so far as the British maximize their influence in the EU. And only Washington has the gravitas to deliver that message.

Tyson Barker is the Bertelsmann Foundation’s director of trans-Atlantic relations.


The economic giant is shrinking (E!Sharp)

The economic giant is shrinking

By Roberto Foa

March 2012

Over the past several months, something unprecedented has happened: a consortium of airlines backed by their country governments have defied EU regulators, and refused to comply with the Emissions Trading Scheme. Even ten years ago, this would have been unthinkable. How could this have come about.

Among European diplomats, an oft-used refrain is that Europe is a political dwarf, but an economic giant. Thus whatever the latest bickering among European statesmen or lacuna in European foreign policy, European ambassadors can at least rejoinder that their continent represents a quarter of the global economy, and that their legal institutions, in Brussels, regulate global conduct in matters from online privacy, to consumer protection, to environmental law.

This is a real power that Europeans have – one of the few, indeed, where the EU wields a truly global influence. It is more obvious when seen from a boardroom in Sao Paolo or San Francisco: when a merger is blocked, or a fine imposed, because of the whim of some institution thousands of miles away, this is a sign of real authority.

Yet behind it has always lain the vast promise of the single market. As long as Europe accounts for the lion’s share of the global economy, countries and companies will bend over backwards to have a place within it. Once this share falls, they have a reduced incentive to comply.

Thus behind the insurrection against European carbon levies, lies a more profound story about Europe’s waning economic significance (see chart, below). Until now, Europe’s economic position has been remarkably stable. Over the past five centuries, present EU member states had a share of global output which hovered between 20 and 30 per cent of the total. Alas, the past is no guide to the future, and barring a major catastrophe elsewhere in the world, over the next fifty years Europe’s share will fall back to a level not seen since the Dark Ages. It is difficult to imagine European regulators maintaining global sway once Europe’s economic share reaches the level of 1990s Japan.

Interestingly, a parallel debate has also taking place in recent weeks across the Atlantic, primarily in response to an essay by Robert Kagan, entitled The Myth of America’s Decline. Just as Europe’s legal hegemony has an economic foundation, so too does America’s military might. The country could hardly account for 43 per cent of all defence spending otherwise. Yet Kagan cites US economic resilience as factor for US hegemony to continue a little longer, as while in 1969 the US had “roughly a quarter” of the world’s income, “today”, he writes, “it still produces roughly a quarter”. The implication is that, as in 1969, America may go on to win a new space race, or even a second cold war.

Sadly for the neoconservative fringe, a fuller look at the data shows America’s future to be little better than Europe’s; the last decades of the twentieth century were a temporary plateau on the inexorable path of decline and fall (second chart, below).

Just as sections of the American policy elite, led by Dr. Kagan, are in denial over American decline, European policymakers have not yet taken in their eroding negotiating position. Even ten years ago, it would have been unthinkable for a consortium of global companies operating in European markets to disregard EU regulations. Now, they do so openly. What will happen in future if Europe is unable to set the agenda in other areas such as tax havens, environmental standards, or the use of its citizen’s data?

First, Europe has only a narrow window to exert its influence in areas, such as climate change or financial services reform. Once that window expires, at around 2025 or 2030, the EU will not be able to push its agenda or even exercise complete sovereignty; whatever right the Union may have on its side, it will simply not have might. Second, to a far greater extent than today, Europe will have to learn to negotiate in order to ensure compliance. And third, faced with the growing impotence of European regulation, domestic policymakers will have to give the Union new instruments to enforce its rules. If Europe ‘grows up’ as a political actor, the ‘shrinking giant’ might maintain some regulatory sovereignty. Otherwise, European ambassadors will need to find a new refrain.


The New European Pirates (The National Interest)

The New European Pirates

February 27, 2012

Tyson Barker

In the wake of the public outcry in the United States over proposed domestic antipiracy legislation, the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA), international regulation is also taking a hit. The edifice of the Anti-Counterfeiting Trade Agreement (ACTA) seems to have crumbled. This time, however, it happened in Europe.

The European Commission has suspended ACTA’s ratification, shunting it instead into the European Court of Justice (ECJ). This is read by some as a means of putting the debate on ice for a year. ACTA’s Commission proponents seem to hope that a favorable ruling by the ECJ will provide the political cover necessary to defuse their critics’ arguments that the agreement is a violation of fundamental rights to internet freedom and privacy.

But Brussels’ attempt to disarm opponents through a court decision is a fundamental misreading of the scope and intensity of the opposition to ACTA. Major protests took to the streets of European capitals earlier this month, with more than one hundred thousand people in Germany alone. These come on the heels of demonstrations in Warsaw and Prague, and coordinated denial of service attacks by the hackivist group Anonymous on the government websites of [3]Poland [3] and the [4]Czech [4] [4]Republic [4].

ACTA is a multinational compact that aims at stemming commerce in counterfeit products, generic medicine and web-based copyright infringement. The agreement was signed in Japan in October 2011 by thirty-one governments, mostly advanced industrial economies, including the United States, EU member states, Japan, Australia and New Zealand. Of middle- and low-income countries, only Morocco came on board. Russia and China, two of the most notorious countries for their intellectual property rights (IPR) violations on- and offline, stayed away.

ACTA could be the latest casualty of a negotiating climate in Europe that has traditionally taken place without the antiseptic of public debate. The battle lines have already shifted on the issue as the rumbling opposition to ACTA crested in the European Parliament (EP) and in Central Europe.

The agreement’s most controversial section centers on the potential effects that its provisions could have on IPR enforcement online. The text requires Internet service providers (ISPs) to identify users deemed to be violating a copyright for possible legal recourse. Critics of the agreement have stated that it provides a framework for a much more intrusive relationship between law enforcement, ISPs and IPR holders on one hand and Internet users on the other. Some hint at the creation of a culture of perpetual surveillance online that could radically alter the Internet’s ecology of freedom and openness.

In the United States, Congress has not had a say in the agreement. Some on Capitol Hill, notably [5]Senator [5] [5]Ron [5] [5]Wyden [5] (D-OR), have questioned the administration’s ability to enter into a binding legal agreement without Congressional authorization. Washington is seen as the agreement’s primary proponent, and it was effectively ratified when President Obama signed it on October 1, 2011. That moment passed with virtually none of the public debate and fanfare that surrounded the signings of SOPA and PIPA in January 2012.

Unconventional Alliances

In Europe, however, national legislatures and the European Parliament (EP) will play a role in approving the agreement. Currently, five EU member states have not signed the agreement. While most originally signaled that they would sign, many have since halted the process. The European Commission has committed itself to the agreement with the lead negotiator, Dutch commissioner [6]Neelie [6] [6]Kroes [6], tweeting that “ACTA does not limit freedom. important for ppl 2 understand all the facts. nothing changes for individual users in EU.”

The Commission is frantically attempting to [7]dispel [7] perceived similarities with the two maligned U.S. proposals, SOPA and PIPA. Although trade agreements have traditionally been negotiated behind closed doors, the degree of opacity in the ACTA negotiations—even from stakeholders involved in the process such as legislators and affected industries—has been marked, presaging the backlash that has taken place in the EU over the past month.

Since the introduction of the Lisbon Treaty in 2009, the European Parliament has positioned itself as a guardian of privacy, data protection and freedom from heavy policing by states. Armed with its newfound role in international agreements, the EP promptly struck down the EU’s accord with the United States on terrorist-finance tracking, known as SWIFT, on the grounds that it did not properly safeguard Europeans’ data-privacy rights. The EP only approved SWIFT after a painstaking renegotiation. The Passenger Name Record (PNR) agreement between Brussels and Washington, which provides for sharing of information about persons in transit, is currently undergoing a similarly arduous process.

Already grumbling about its lack of consultation and the secrecy with which ACTA was negotiated, some in the EP were salivating at the opportunity to reject the high-profile agreement. The French EP member responsible for drafting the body’s opinion on ACTA resigned in protest to the lack of open discussion and consolation with his legislature. At the time, he skewered the terms under which the agreement had been negotiated, describing them as a “masquerade.” The Austrian leader of the S&D, the EP’s main Center-Left group, stated: “Our main criticism relates to copyright enforcement on the internet and the definition and monitoring of activities online. The text is too vague and we need to have clarification of the role of Internet service providers (ISPs) in policing the agreement.” The Socialists released a statement condemning the agreement as “wrong in both content and process,” and the party leader, the former Bulgarian prime minister [8]Sergei [8][8]Stanishev [8], said that he was “proud” that his party was the first to come out against the agreement.

ACTA faced similarly dismal prospects in Germany and Central Europe. Some governments, such as those of Poland, Slovakia and Slovenia, see the agreement as a potential violation of privacy and an abdication of users’ rights. In Warsaw, demonstrators put a mask of the seventeenth-century Catholic protest leader [9]Guy [9] [9]Fawkes [9] on a statue of Ronald Reagan and threatened to do the same to other statues throughout the country. [10]Slovenia [10] [10]s [10] [10]ambassador [10] [10]to [10] [10]Japan [10] has publicly apologized for signing the agreement, which she said she did out of “civic carelessness.” The Romanian government has been publicly admonished for its signature, and the Bulgarian parliament is unlikely to ratify the Sofia government’s signature, making ACTA effectively meaningless.

Europe as Harbinger

But ACTA could be just the beginning. In the coming years, the European political landscape will be a particularly fertile testing ground for the emergence of privacy, Internet-freedom and users’ rights as a tenet of foreign policy and domestic politics. The current patchwork of legal cultures on piracy and Internet freedom is breathtaking. France, for example, has one of the most stringent “three-strikes” antipiracy laws in the Western world. Paris’s 2009 [11]loi [11] [11]Hadopi [11] compels French ISPs to provide information on users of pirated content to authorities who in turn reserve the right to prohibit a user’s Internet access for up to a year upon the third offence.

But in Germany and the former communist states of Central Europe, where history is rife with examples of states using vaguely worded laws as tools for invasive domestic surveillance, privacy and Internet openness as core rights have worked their way into political discourse and even into party structure. The Pirate Party took more than seven percent in the European elections in Sweden in 2009. Germany’s Pirate Party took 8.9 percent of the vote in the Berlin state elections in 2011 and now polls seven percent nationally. Spain and the Czech Republic’s Pirate Parties have won municipal representation on city councils.

The rise of the Pirate Party in Europe could be an anomaly, but the steady organizational building is reminiscent of the rise of another pan-European one-issue group—the Green Party. Once considered an ephemeral expression of environmental concern, the Green Party has become a mainstay of the New Left in continental Europe, serving in governments in states as diverse as Germany, the Czech Republic and Ireland. The confluence of issues around privacy, data protection, net neutrality and open sourcing could become a permanent fixture in the European political landscape, just as ecological issues have in the past thirty years.

Tyson Barker is director of transatlantic relations at the Bertelsmann Foundation.