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15 Jun 04. A year ago, in a joint declaration, we urged Member States to beef up their spending on defence research, technology and acquisition, to turn their political commitment on new defence capabilities into concrete realities, and to make better use of limited budgets through the launching of a European Defence Agency. One year later, good progress has been made at the institutional level – an Agency is now in the making, with the opportunity to make a real difference. But all depends on whether Member States will give their creation the resources and support it will need. Having willed the end, they must now will the means.

Since the intention to create a European Defence Agency, under the control of Member States, was announced by European leaders at Thessaloniki in June 2003, Europe’s machinery has moved at remarkable speed to develop the concept. Its establishment is due to be approved by the European Council this week. Its responsibilities include the development of Europe’s military capabilities, the support of strategic technology research, better armaments co-operation, creation of a competitive defence equipment market, and strengthening the defence industrial technology base. Each of these tasks is essential to European security and each is of utmost importance to the defence industry in Europe. Creation of the Agency should be a landmark event.

At last, and not before time, there is the opportunity to pull together demand in Europe and to bring some of the efficiencies of European scale to a sector which continues mainly to operate in a nationally fragmented environment. This is now of urgent and vital importance both for ensuring that Europe gets the military equipment and systems that its forces need and for sustaining our defence technological and industrial capabilities.

But, faced with many institutional and practical challenges, there is a serious risk that the Agency will fall short of the ambitions and expectations set for it. Slowness in the next stage of build-up, complexity of decision-making processes, and a lack of resources, notably for Research & Technology investment, would inhibit its full development. There is a danger that it may not achieve in a reasonable timeframe its goals in relation to an effective European defence equipment market and competitive technological and industrial base. From industry’s perspective there are four keys to unlocking rapid progress.

First, capabilities. Taken as a whole, Europe’s national defence budgets still provide disappointing levels of military output. The European Capability Action Plan (ECAP) was launched to help remedy the problem, but with only partial success to date. The Agency should revitalise this process, setting clear targets for deciding the way forward in the different project groups and thus immediately bringing to a head decisions on the capability shortfalls that have already been identified.

Second, research investment. Structurally this is the link between what our forces need and industry’s ability to provide it. Unnecessary duplication of defence research expenditure in Europe has to come to an end. Other European bodies have been in the past tasked with achieving better co-ordination: but the Agency must do much better than this. We need to agree upon a strategic research agenda and consolidate funds that can deliver it. Control of a modest budget is the surest way to give the Agency the authority it needs. We urge EU governments to take the long term view of strategic research and place resources where they can deliver most combined effect.

The third key concerns the European defence equipment market. This provides the structural link between Armed Forces’ equipment needs and their economically efficient delivery. While the number of collaborative armaments programmes has increased over the years, most defence equipment is still procured

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