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\u003cp style=\u0022margin-bottom: 0.0001pt; text-align: left;\u0022\u003e\u003cspan style=\u0022background-color: white; text-align: justify; color: #212121;\u0022\u003eA new political environment on both sides of the Atlantic has added an extra edge in recent times to longstanding transatlantic tensions over defence-industrial policies, aspirations and expenditure. And two of the latest moves by the United States in the new sparring match between Washington and European capitals on this issue could be characterised as a US \u0026lsquo;carrot and stick\u0026rsquo; approach to Europe.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eFirst, what has changed in the wider political environment? For one thing, US President Donald Trump espouses a much more transactional \u0026ndash; rather than a trans-atlanticist \u0026ndash; relationship with his European NATO partners. He has berated them in language not really heard before for not spending enough on defence. And he champions \u0026lsquo;America-first\u0026rsquo; when it comes to acquisition. The European Union, meanwhile, is finally becoming interested in actual defence capability, rather than rhetorical ambition, and intends to support this new, more realistic and pragmatic approach with significant defence research and development (R\u0026amp;D) funding. A clash between Brussels and Washington was inevitable. \u003c/span\u003e\u003c/p\u003e\n\u003ch3 style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eLetter of discontent \u003c/span\u003e\u003c/h3\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eThis duly occurred at the beginning of May, with the delivery of an abrasive joint letter from US Under Secretary of Defense for Acquisition and Sustainment Ellen Lord and Under Secretary of State for Arms Control and International Security Andrea Thompson to Federica Mogherini, the EU\u0026rsquo;s High Representative for Foreign Affairs and Security Policy. The focus of their ire was how Brussels was establishing what it calls Permanent Structured Cooperation (PESCO) and the related European Defence Fund (EDF). Both are intended to improve the EU\u0026rsquo;s military capabilities. For the US, however, Brussels\u0026rsquo; \u003c/span\u003e\u003ca href=\u0022https://www.ft.com/content/ad16ce08-763b-11e9-bbad-7c18c0ea0201\u0022\u003e\u003cspan style=\u0022background: white;\u0022\u003eapproach\u003c/span\u003e\u003c/a\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003e risks EU capabilities developing in a manner that produces \u0026lsquo;duplication, non-interoperable military systems, diversion of scare defense resources and unnecessary competition between NATO and the EU\u0026rsquo;.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eFor those who even occasionally follow these issues, the language here \u0026ndash; the conflation of interoperability with buying the same equipment and the conjuring of the spectre of Brussels in competition with the Alliance \u0026ndash; should be familiar.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eAt the same time, both EU initiatives could lock US industry out of participation, since the mechanism for third-party involvement has yet to be finalised. This reflects tensions among the EU member states over how to establish this, and how liberal or restrictive the rules should be.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eWithin Brussels circles, some view the joint letter as the \u0026lsquo;stick\u0026rsquo; in this US carrot and stick approach to developments within the EU. As to the carrot, this other element predates the missive to Mogherini, and initially at least had a far lower profile.\u003c/span\u003e\u003c/p\u003e\n\u003ch3 style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eEuropean Recapitalisation Incentive Programme\u003c/span\u003e\u003c/h3\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eIn September 2018, the US launched the European Recapitalisation Incentive Programme (ERIP). This is a comparatively modestly funded project to help those European NATO members that retain Soviet-legacy equipment to replace it with US-manufactured systems.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eWhile ERIP is anything but a competitor to either the EDF or PESCO, in a sense it serves as a reminder of what Washington offers in terms of supporting European security. Given the aim of ERIP in replacing Soviet-legacy equipment, its focus is on those Eastern European states that have joined NATO more recently, and which are geographically nearest an assertive Russia. For them, the US, as the backbone of the Alliance, rather than Brussels, is seen as the ultimate guarantor of their security.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eIn defence-industrial terms, Europe is disadvantaged structurally in comparison to the US. It is a fragmented market, with a still-fragmented manufacturing base. The US defence industry benefits from having a large domestic market, with the largest defence expenditure in the world. The US has two tactical combat aircraft manufacturers (Boeing and Lockheed Martin) and at most two future tactical combat aircraft requirements \u0026ndash; one air force, the other naval. Europe has six manufacturers (Airbus Defence and Space, BAE Systems, Dassault, Leonardo, Saab and Turkish Aerospace), with presently three rival future-fighter programmes.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eThe EDF and PESCO are attempts to partly redress this dilution, although in some areas there is a danger that they could have the opposite effect. The EDF, for example, could attract nations to develop duplications of defence-industrial capabilities to benefit from the fund, risking increasing the number of players in an already oversubscribed sector.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eThe funding for ERIP is dwarfed by the amounts that the EU is proposing for the EDF and PESCO. US ERIP funding is US$190 million for the acquisition of helicopters and infantry fighting vehicles by \u003c/span\u003e\u003ca href=\u0022https://www.state.gov/european-recapitalization-incentive-program-erip/\u0022\u003e\u003cspan style=\u0022background: white;\u0022\u003esix countries\u003c/span\u003e\u003c/a\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003e, while the EU is proposing to spend the equivalent of \u0026euro;13 billion (US$15bn) on defence R\u0026amp;D and capability development under the EDF from 2021 to 2027. The EU and US initiatives are also different in ambition and intent. But the level of US expenditure is not necessarily the point. As well as being the carrot alongside the letter to Mogherini, it can be seen as a reminder of the importance of Washington to European security.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan style=\u0022background: white; color: #212121;\u0022\u003eBrussels may have the ambition and the budget to begin genuinely to strengthen its large-scale military capability and develop the Europe\u0026rsquo;s defence industry, and laudable goals they may be, but for the moment at least the balance of actual capability rests with the US and NATO.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cstrong\u003eThis analysis originally featured on the IISS Military Balance+, the online database that provides indispensable information and analysis for users in government, the armed forces, the private sector, academia, the media and more. Customise, view, compare and download data instantly, anywhere, anytime. The Military Balance+ features defence budget and other economic data for European states, the United States and other global countries, including spending levels for weapons procurement and defence research and development.\u003c/strong\u003e\u003c/p\u003e","className":"richtext reading--content font-secondary"}), document.getElementById("react_H0VhWunFsEyQRSkYdy0Ruw"))});
Transatlantic rift threatened as the European Union seeks to boost domestic defence industrial base and the United States sees a nascent buy European policy.\u003cbr /\u003e\n\u003cdiv\u003e \u003c/div\u003e
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