EDA Chief Executive Witney Delivers Keynote Address to ASD on Future of European Defence Industry
(Source: European Defence Agency; issued Oct. 13, 2006)
Keynote Address by Nick Witney,
Chief Executive of the European Defence Agency,
At the ASD Convention
Vienna, Austria, 13 October 2006

Two years ago I was privileged to address the ASD Convention, on that occasion held in Göteborg. The European Defence Agency was at that time a mere three months old. So your 2004 Convention was, for me, very much the beginning of the road – which makes it interesting to recall what has changed, and what has not.

Then, I recall discussing how the European security and defence policy (ESDP) had newly become operational. I referred to the first four operations, either completed or in hand. Today, the score is 16 – with 12 of these operations on-going at this moment, ranging from peace-keeping in Bosnia to the EU force providing stability during the election period in Congo. Additionally, the possibility of the EU assuming responsibility for Kosovo is now under discussion – and none of this includes the very substantial European deployments being made in the south of Lebanon, in support of the United Nations. In short, over two brief years the EU has established its position as a major international supplier of security services – and there is no sign of the demand reducing.

Closer to home, I recall pointing out in Göteborg that I stood before your Convention as 50% of the then staff of the Agency. So I am happy to report today that I now constitute only just over 1% of the Agency’s personnel strength.

Some things, however, have not changed. I spoke two years ago of the fundamental importance of achieving greater consolidation of both the demand and the supply sides of the business of defence in Europe, with movement towards a European market for defence equipment as a necessary condition for achieving that consolidation. That imperative remains the same. But the last two years have seen some important progress.

We now have the Code of Conduct on Defence Procurement, subscribed to by 22 of the Member States participating in the Agency. And we have the new Electronic Bulletin Board, a practical embodiment of this new marketplace, offering new opportunities to suppliers across Europe to compete for contracts which previously would have been protected under Article 296 of the Treaties. There are now over 50 such opportunities posted on the Bulletin Board by 9 Member States, with an aggregate value that we estimate at over €3bn. And we have the associated Code of Best Practice in the Supply Chain – one of the many Agency endeavours which, I should make clear, would simply not have been possible without the help of François Gayet and his team.

Of course, some will say that none of this means anything until the first cross-border contracts are actually won and awarded to suppliers from other Member States of the Union. And that is true. But what we can say at this stage is that the Electronic Bulletin Board seems to have got off to a good start – reinforcing me in my sense that a crucial psychological watershed has been crossed. For decades past, the automatic assumption about procurement of defence equipment was that it should be done on a national basis. That assumption is now replaced by one of Europe-wide competition. And the benefit will be felt not only by the customer – the taxpayer, and the armed forces – but by Europe’s defence technological and industrial base as a whole.

Nor have matters rested there. In September, the National Armaments Directors in the Agency’s Steering Board signed up to two important new agreements on Security of Supply and Security of Information – thus removing two major reasons why in the past procurement authorities have hesitated to turn to non-national suppliers. The agreement on Security of Supply in particular, with its mutual promises of help in times of crisis or operational emergency, represents a major step forward in terms of mutual solidarity and interdependence between Ministries of Defence across Europe.

Two years ago, I also emphasised the importance of defence research and technology – and of closing the widening gap between investment levels in Europe, and in the United States. Research and technology has been a particular focus in the Agency’s second year of activity. It has been sobering to collect the data, and realise that the combined spend on defence R&T of all the Ministries of Defence in Europe is less than the annual DARPA budget. Propelled by the EDA’s first major conference in February, and in particular by some highly influential industry contributions, notably a trenchant keynote speech by Tom Enders, your President, research and technology rose sharply up the political agenda – so that Defence Ministers in our Steering Board embraced the conclusion that we must “spend more, spend better and spend more together”.

What does this mean in practice? In his speech at the EDA conference, Tom Enders called for a paradigm shift, and more specifically for the creation of a common EDA research budget of €50 million. In response, we have worked with the Member States on the design of a new form of joint investment programme, with the pilot scheme focussed on the force protection area. We still have two or three more weeks’ work to do on this before we can be sure that all the details – and all the contributors! - are nailed down. But I am increasingly confident that, by the time of our next Steering Board meeting in November, we will be in the position to announce the launch of a programme with a common budget, to which most of our Member States will have chosen to subscribe, of very much the size that Tom Enders proposed. If this works, we envisage it as being only the first in a series of joint investment programmes which will provide the primary vehicle for defence ministries in Europe to pool their efforts and resources in defence R&T.

The past two years have also brought the Commission’s European Security Research Programme into being. Those of you who have seen the recently published report of the Advisory Board will note the recommendation for a particularly close relationship between the security research programme and the EDA – a wish we are happy to reciprocate. Indeed, we are already at work with the Commission on our first cooperative venture, in software defined radio.

But your Convention today is sub-titled “Preparing the future” – so what do I see looking ahead? Interestingly, this phrase has been much on our mind in recent weeks – since it captures the main point and purpose of the Long-Term Vision document recently endorsed by our Ministerial Steering Board. The aim of this vision – which can, incidentally, be found on our website – is precisely to provide some orientation and sense of direction to those engaged in “preparation of the future” – which is to say, engaged in taking decisions today and tomorrow which will in practice influence or dictate the capabilities we have at our disposal in two decades time.

The “vision” analyses some of the most important trends which could contribute to the strategic environment awaiting us in 2025, and the nature of ESDP operations in that era. From this analysis it deduces a series of generic descriptions of the sort of capabilities we must prioritise – and it identifies a series of key issues which defence planners must address.

Amongst these challenges are those of industrial policy – how to preserve a globally competitive DTIB here in Europe. The analysis calls for urgent action, suggesting that a fundamental step is to increase our levels of investment – if need be by reducing expenditures on manpower in order to allow resources to be redeployed within defence budgets to procurement and research and technology.

But, beyond simply investing more, the Long-Term Vision argues for more proactively harnessing the full potential that the enlarged Union has to offer. In contrast with other areas of the economy, we in defence are not yet benefiting as we should from what the new Member States have to offer, not least as important sources of human capital with strong traditions in science and engineering. The EDA does not believe that Europe is so richly endowed with technologists and innovators that it can afford to neglect such a valuable resource. And, in the same way, we believe that only by fully integrating all players within a comprehensive European DTIB – by ensuring that anyone who can make a contribution, and in particular small- and medium-sized enterprises and non-traditional contributors such as universities, is enabled to do so – only in this way will the dream of a balanced and comprehensive European DTIB be realised.

Importantly, this dream has now begun to take real shape in the minds of the National Armaments Directors who from time to time constitute our Steering Board. When they met in September, they agreed a common statement of what they believed would be the characteristics of a strong European DTIB – a DTIB involving much greater mutual dependence, and a much more fully integrated European market, than exists today. Prompted by the sense of increasing solidarity to which I referred earlier, they also noted that Europeans should strive to reduce their dependence for key technologies on sources outside of Europe. Such a consensus is hugely encouraging – but prompts such questions as “what are the key technologies that Europe should prioritise?”. And “what policies and practices can we all adopt to get from here, the imperfect world of today, to the European DTIB of the future which the National Armaments Directors described?”. This will be an important part of our work in the coming months, and the subject of the EDA’s second major conference in the early months of next year.

But, in closing, I must come back to the principal aspect of the future that we would like to prepare on the basis of the Long-Term Vision – and that is, to work with the participating Member States to draw up an overall ESDP Capability Development Plan. Such a Plan will assist in further converging thinking on exactly what capabilities we between us need to generate for 10 and 20 years hence. It will also, I hope, provide the context in which Member States will be prepared to share with each other some of their forward defence planning – in other words, to “show and tell” how they currently plan to spend their defence budgets over the coming years. Such mutual transparency should allow opportunities for cooperation to be identified. So the Capability Development Plan can be a key tool in the consolidation of the demand side in Europe, which we all know is difficult but also critically important.

Two years on from my last meeting with you in Göteborg, I think we can feel some satisfaction at progress made. But the Long-Term Vision reminds us how daunting are the challenges ahead. The future will be bright and prosperous only if we redouble our efforts to prepare it, and to prepare it together.


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