Splendid isolation or Entente Cordial? The future of UK-EU defence industrial cooperation post-Brexit

With a recalcitrant US President, a resurgent Russia, and the threat of a no-deal Brexit, what is the future of UK-EU defence industrial cooperation in the post-Brexit environment and how might this impact the security of the Continent?

This article was submitted to the UK Defence Journal by Mike Archer, Director in the Public Affairs team at FTI Consulting and former UK Civil Servant @MikeRArcher.

At an annual gathering of French diplomats last week, Emmanuel Macron surmised that, “Europe can no longer entrust its security to the United States alone”. Most analysts agree that the cooling of American support for European defence, which begun far before the arrival of Donald Trump, means that countries like France, Germany and the UK should take greater responsibility for their own – and Europe’s – security. To date, there is little sign that this message is getting through, with spending envelopes barely maintaining inflation parity and new equipment programmes being scaled back or mothballed.

One only has to look at recent reports on the state of Germany’s military to feel a palpable sense of concern about the state of European defence. As the UK Defence Journal reported earlier this year, the Bundeswehr doesn’t have enough serviceable tanks to assume leadership of NATO’s Very High Readiness Joint Task Force and the Luftwaffe has only thirty percent of its Typhoon aircraft available at any one time.

This might lead one to the conclusion that Europe’s serious military players – especially France and the UK; an alliance stretching back over 100 years – should pool together and enhance their defence cooperation programmes. In places this conclusion appears to be valid. Key programmes from the Lancaster House Treaty continue to be developed, such as the Future Cruise/Anti-Ship Weapon. In addition, France was one of the first countries to condemn Russia for its use of chemicals weapons on UK soil in an attempt to murder Sergei Skripal, and earlier this year the UK committed Chinooks and troops to support French operations in Mali.

But, with Brexit hanging like the Sword of Damocles, there appears to be somewhat of a disjoint among political leaders. Only last year French Defence Minister Jean-Yves Le Drian said that, “Brexit will not damage in any way the extremely strong defence cooperation that we have with Britain”. Yet, it seems his President disagrees, with Mr Macron stating that forging a close relationship with the UK should not come, “at the expense of the European Union’s integrity”.

In equal measure, the EU has been stalwart in defending its position to exclude UK firms from future contracts on the Galileo satellite project and restrict UK access to the critical Public Regulated Service (PRS), forcing the UK to consider its own options for a GPS satellite network.

Indeed, this debacle has cast a long shadow over the whole negotiations on the future of UK-EU defence and security cooperation post-Brexit. This could put at risk a number of industrial cooperation programmes that have, over the years, provided the UK and EU members with platforms and equipment that they could not otherwise have produced individually, including – of course – Eurofighter Typhoon.

As the UK has made clear, it is in the best interests of both parties to maintain close cooperation on defence and security matters, both in terms of coordination between authorities on internal and external security, and maintaining close industrial links. The UK’s White Paper on the future relationship states that, “Collaboration on defence and security capabilities will ensure that armed forces remain capable and interoperable, that the best use of defence budgets is made and that support is given to the innovation and global competitiveness of the European defence industrial base”. For the EU’s part, they too have been clear that a strong bilateral relationship on security and defence is an aim of the negotiations. At the EU Institute for Security Studies conference in May this year, Michel Barnier stated that, “I firmly believe that a close partnership is in our mutual interest”.

Tellingly, however, when it comes to industrial collaboration, Mr Barnier was less enthusiastic, saying, “industrial cooperation…in the field of defence, is intertwined with EU rules underpinning the Single Market”. Whilst he seemingly kept the door open on UK participation in European Defence Agency Research and Technology projects, he slammed it firmly shut on Galileo.

This aspect, more than perhaps anything else in the negotiations so far, is haemorrhaging good faith between both sides – with the EU seemingly adamant that the UK, no matter how close a partner they may be, cannot be trusted with security data. Even ardent Europhiles in the UK have greeted this with outrage, with well-known Remain campaigner and Chair of the UK’s Parliament’s Brexit Select Committee – Hilary Benn – saying that the decision to exclude the UK was “frankly insulting”.

To add further insult to injury, in President Macron’s speech he argued that, “Multilateralism is, in effect, going through a major crisis”, whilst at the same time showing no signs of breaching EU solidarity on excluding the UK from these critical defence industrial programmes. Indeed, the European Parliament is seeking to go further and exclude all non-EU countries from the ability to participate in the EU Defence Industrial Development Programme (EDIDP). The juxtaposition of these two positions is causing significant frustration in London, with potential consequences for existing bilateral and multilateral relationships across Europe.

The lack of progress in negotiations on defence, coupled with ongoing issues around the future trading relationship, poses a raft of issues for the complex supply chains that operate between European defence firms. Companies like Airbus, MBDA and Leonardo all manufacture products for defence customers across the UK and EU countries, disruption to which could reduce their competitiveness and give succour to international rivals in key export markets.

Is it possible to resolve this impasse? With pragmatism and flexibility on both sides, the answer is yes. Given that the EU shows degrees of flexibility to ‘third countries’ across a number of other areas – for example allowing countries like Argentina, Japan and Ukraine to bid for funding under Horizon2020 – there needs to be a realisation that blocking UK participation, with all the expertise and technological prowess it brings, can only damage European industrial capability. For the UK’s part, accepting that, as a third country, there will be limitations to this participation, particularly around the decision-making process, is equally important. Secondly, EU countries with strong links to UK defence, including Sweden, the Netherlands and Poland, need to speak out more. They need to resist the efforts of some, particularly in the Commission, to punish the UK for leaving the EU, and stand-up to certain Member States who perhaps see an advantage from UK exclusion for their own defence firms.

This is important because the UK’s defence R&D spend represents around 40% of the EU’s total, the UK is a permanent member of the UN Security Council, boasts the second strongest naval capability in NATO and is the home of some of the world’s leading defence firms. The recent Farnborough International Airshow provided a chance to demonstrate this, as a consortium led by BAE Systems unveiled a plan for the next generation of fighter aircraft. Team Tempest, combining the capabilities of BAE, Rolls Royce, Leonardo, and MBDA, was greeted warmly by gathered dignitaries, especially in comparison to the lukewarm response to a similar announcement at the Paris Airshow by Airbus Defence and Space (Germany) and Dassualt Aviation (France). The Tempest, perhaps, represents an opportunity to reset the dial on UK-EU defence industrial cooperation – but only if all sides demonstrate some humility and accept that they are far stronger together.

As the Brexit negotiations enter a critical phase, political leaders on both sides need to face up to the reality of the damage that would be caused to Europe’s defence industrial base if a sensible agreement cannot be reached. With President Macron’s warning still being digested in Westminster, renewed effort is required to avoid a situation where dogma trumps pragmatism, and where the lives of ordinary citizens and the capabilities of Europe’s armed forces are irreparably damaged.