Survival: Global Politics and Strategy, vol. 52, no. 4, August–September 2010, pp. 87-98
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The global financial crisis of 2007–08 and the subsequent recession in most European economies has created a new dynamic for defence spending. Even before the crisis, the punishing demands of operations on armed forces revealed shortfalls in capabilities and the cost of new equipment was rising at a rate of 5–10% per year. As both trends continue, European governments now struggling to control public deficits have launched a series of austerity measures across the board. In the overall scheme of government priorities, defence spending has become discretionary and many defence ministers have already been asked to make do with less money.
There are two basic options in light of these developments: either lower ambitions and accept that reduced financial resources will lead to reduced capabilities, or use the budget crunch as an opportunity to do things differently, to protect capability and perhaps even improve it. Lowering ambitions would need to go hand in hand with an honest assessment of the additional risk such a course would create for the security of European nations. Neither security challenges nor demand for international crisis management operations will disappear. Europe would simply be less able to address the former or contribute to the latter. Such an approach would see funding for defence investment (equipment procurement plus research and development) and international operations hit hardest, because those budget items are easier to cut than personnel or fixed military infrastructure at home. In short, defence capability would be driven by the budget, not by policy. But with less money for defence, the way that money is spent becomes of paramount importance. If budgetary pressure leads to structural reforms that eliminate unnecessary legacy capabilities and focus on capabilities relevant to present operations and future contingencies, this crisis will be a blessing in disguise.
In recent months, senior policymakers have embraced multinational collaboration in Europe to help manage defence in an age of austerity. NATO Secretary-General Anders Fogh Rasmussen recently called on governments to explore role specialisation to enable Allies to focus on particular sets of capabilities rather than to try individually to maintain as full a spectrum as possible. German Defence Minister Karl-Theodor zu Guttenberg, in an address to the IISS in June 2010, similarly advanced the idea of a better division of labour among European allies as a way to reduce budget pressures. The European Defence Agency argued in April that ‘pooling and sharing can provide solutions for more efficiently meeting European capability requirements in a constrained budget environment’. The idea of multinational initiatives is not necessarily new, but shrinking defence purses across Europe are a forcing event and a possible catalyst for change. Multinational collaboration is intended to create more bang for the euro through greater efficiency in the use of resources; it is supposed to help countries spend their pared-down defence budgets better. Whether it will or not depends, as always, on how it is done. There are different methods carrying different costs and benefits and there is a history of multinational collaboration ...
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Bastian Giegerich is Research Fellow for European Security at the IISS.
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