THE EUROPEAN ARMAMENTS MARKET AND PROCUREMENT COOPERATION
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1 THE EUROPEAN ARMAMENTS MARKET AND PROCUREMENT COOPERATION
2 Also by Pauline Creasey STRUCfURAL ADJUSTMENT IN EUROPE Also by Keith Hartley NATO ARMS COOPERATION: A Study in Economics and Politics Also by Fran~ois Heisbourg LA PUCE, LES HOMMES ET LA BOMBE (with Pascal Boniface)
3 The European Armaments Market and and Procurement Cooperation Edited by Pauline Creasey Research Fellow Centre for European Policy Studies, Brussels and Simon May Director, Business Development Northern Telecom Europe with contributions by Franc;ois Heisbourg and Keith Hartley M MACMILLAN PRESS
4 Centre for European Policy Studies 1988 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright Act 1956 (as amended), or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 33-4 Alfred Place, London WClE 7DP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 1988 Published by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world Typeset by Footnote Graphics, Frome British Library Cataloguing in Publication Data The European armaments market and procurement cooperation. 1. Munitions-Europe 2. Europe Military relations I. Creasey, Pauline II. May, Simon, '76234'094 HD9743.E862 ISBN ISBN (ebook) DOI /
5 Contents List of Tables Vll List of Figures Vlll Notes on the Contributors IX Acknowledgements X 1 The Political and Economic Background 1 Pauline Creasey and Simon May I Introduction 1 II Forces for West European Security Cooperation 3 III The Bridge between Political and Economic Forces 14 IV Economic and Commercial Forces Encouraging Cooperation 16 v Franco-German Alliances and British Isolation 21 VI National Procurement Policies 23 VII Conclusion 28 2 The European Defence Market and Industry 31 Keith Hartley I Introduction: The Policy Debate 31 II A Framework for Analysis 32 III Some Evidence 40 IV Conclusion 55 3 Public Policy and the Creation of a European Arms Market 60 Fram;ois Heisbourg I Introduction 60 II Supply and Demand: New Trends and Constraints 61 III European Strengths and Weaknesses 68 IV Options for the Future 72 4 European Defence Firms in Cooperation Agreements 89 Pauline Creasey I Introduction 89 II The Creation and Management of Cooperation Agreements 92 v
6 VI Contents III Case-Study 1: Reseau Integre de Transmissions Automatique (RITA) and Ptarmigan 94 IV Case-Study 2: The Harrier Fighter Aircraft 114 V Case-Study 3: The Westland Helicopter Company 126 VI Constraints and Opportunities for European Defence Cooperation 144 Appendix: Technical Discussion of the RITA and Ptarmigan Systems The Options and Prospects for Defence Procurement Collaboration 165 Pauline Creasey I The Special Characteristics of the Defence Market 165 II Aims and Limitations of Common Endeavours 169 III The Implications of Improved Armaments Cooperation between Europe and America 177 IV Government and Industry - Policies and Programmes 182 V The Changing Nature of the Alliance 185 Appendix: A Selection of Western Europe and Cooperative Armaments Ventures, Franr;ois Heisbourg and Pauline Creasey ~~ 1~
7 List of Tables 1.1 Shares in world exports of high R&D intensity products Shares of Western Europe weapons exports in third country markets in Western Europe intra-trade in weapons exports and Western Europe weapons exports to the USA and 20 Canada Demand Major defence producers Aerospace industries Size of major aerospace companies Output of major weapons, Major French arms exporters, Evolution of total military expenditure and the number of combat aircraft, The ratio of arms exports to defence investment, 1983/ World market shares of military sales of helicopters in service, World market shares of European military helicopter producers, The financial proposals of the two bidders Estimated European purchases 138 vii
8 List of Figures 3.1 The shape of things to come? The European arms procurement vicious circle The structure of a cooperation agreement A dynamic model of cooperation agreement activity The Thomson-GTE and Plessey-Rockwell transfer of technology learning curves The development of the Harrier variants Chain of command communications Offset chain of command trunk communications The battlefield communications systems: the interaction between the control switch and mobile subscribers A larger community of mobile users 161 VJll
9 Notes on the Contributors Pauline Creasey is Rockefeller Research Fellow, Centre for European Policy Studies, Brussels and Research Fellow at the Royal United Services Institute for Defence Studies, London. Previous positions have included Research Fellow, London Business School (1984-5), Economic and Social Research Council Scholar at the London School of Economics and Political Science (1980-4), and as administrator in the Home Office and Ministry of Defence, United Kingdom ( ). Simon May is Director, Business Development, Northern Telecom Europe, and former Research Fellow of the Centre for European Policy Studies. Previous positions have included Deputy Secretary General of the Action Committee for Europe (January September 1986), Political Adviser to EC Commission Vice President Christopher Tugendhat (1983-5), Research Fellow of the International Institute for Strategic Studies, Foreign Affairs Adviser to former Prime Minister, Edward Heath, and Adviser to the Chief Spokesman on European Affairs of HM Opposition, Douglas Herd (1977-9). Keith Hartley is Director, Institute for Research in the Social Sciences, University of York. NATO Research Fellow, and Consultant to the United States Department of Defense 1978, and to several United Kingdom government departments. Fran~ois Heisbourg is Director of the International Institute of Strategic Studies, London. Previous positions include: International Security Adviser to the Minister of Defence, France (1981-4), First Secretary, French Mission to the United Nations, with responsibility for disarmament and international security affairs ( ), Policy Planning Staff, Quai d'orsay, Paris (1978-9). Graduate, Ecole Nationale d' Administration (1977). ix
10 Acknowledgements The editors and the Centre for European Policy Studies wish to thank NATO and the Rockefeller Brothers Fund for the financial assistance which they gave for this study. P.C. S.M. X
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