Food for Thought: "Now or Never: Toward More European, More Connected, and More Capable Armed Forces"

In November the Munich Security Conference, together with McKinsey & Co. and the Hertie School of Governance, published a new report on how to streamline European defense spending titled "More European, More Connected and More Capable: Building Europe's Armed Forces of the Future". Wolfgang Ischinger, Chairman of the MSC, and Frank Mattern, Director Emeritus of McKinsey & Co., discuss the implications of the report for the dire state of Europe's militaries.

Frank Mattern introduces the MSC's report at a public launch event in Berlin (Photo: MSC / Kuhlmann)

Europe's armed forces are in a dire state. European defense capabilities have declined for a combination of reasons: a drop in spending since the mid-1990s, largely uncoordinated cuts in national defense budgets, a lack of alignment when decommissioning weapons systems, and an increase in missions abroad. In many countries, up to half of military equipment – from helicopters to planes – is unavailable at any one time. In October, the fact that none of Germany's six submarines was available made headlines.

Europe's fragmented approach to defense exacerbates the situation: all too often, countries involved in European defense projects put the interests of their national industries ahead of European capability building, military cooperation, and interoperability. In light of the very serious security challenges in Europe’s vicinity and uncertainty about the United States' future role in European security, this situation is unacceptable.

Recently, Europe's governments have taken some first steps to reduce these capability gaps, including spending more on defense. At the 2014 NATO summit in Wales, all NATO member states committed to increasing defense spending to 2 percent of GDP by 2024. Many countries, albeit not all, seem to be on track to meet this goal.

But spending more is, at best, only part of the answer. The most important question is how to spend the additional funds. A new study by the Munich Security Conference, McKinsey & Company, and the Hertie School of Governance, provides answers. The report, published on November 30, calculates how extensive the available funds might be and analyzes how Europe might best use them to establish a more effective and efficient security and defense policy.

First, Europe must prioritize investments into equipment, building capabilities in critical areas like air-to-air refueling and air defense. Furthermore, over the coming years Europe must close an investment gap of USD 120 to 140 billion in interconnectedness and digitization. The resulting improvements will enable existing platforms to communicate with one another, allow forces to process and analyze data jointly, and provide effective cyberforces to defend the interconnected forces. The ability to make these investments depends on Europeans increasing the equipment share of their defense budgets beyond the 20 percent recommended by NATO and moving towards 30 percent instead.

Second, Europeans should invest in system availability. Making more equipment available is the fastest and most cost-effective way to increase military capabilities in the short term. Adding just one additional percentage point of availability across Europe's platforms equals procurement spending in the range of USD 10 billion. Massive amounts of money could be freed up through better maintenance systems. Given that maintenance costs are 30 to 70 percent of the life cycle costs of any platform, joint maintenance needs to be at the heart of any future European defense collaboration – it will keep costs down and availability up.

Third, Europeans must move towards joint planning and procurement. Our team's research shows that joint European defense procurement can deliver savings of 30 percent on equipment investment. In addition, joint procurement would facilitate interoperability, joint maintenance, and joint training. In 2016, the different types of major weapons systems in Europe outnumbered those in the US six times over. As a result, procurement, maintenance and training are very expensive. We must harmonize our requirements.

Fourth, there is no way around further consolidation of the European defense industry. In fact, consolidating suppliers is a precondition to fostering European cooperation and improving training, maintenance, and procurement – and increasing the competitiveness of Europe's defense industry. Governments will need to make consistent, systematic efforts and agree on a clear framework. Without such a top-down approach, each country will tend to continue favoring its own defense contractors at the expense of interoperability and Europe's common security.

Finally, Europe should triple its budget for defense research and development to push innovation. These efforts should include finding new ways of working with startups and other disruptive players who don’t routinely operate in the field of defense. Europe might draw inspiration from the US Defense Advanced Research Projects Agency (DARPA). DARPA's investments have often led to major innovations for both civil and military use.

Some important steps have been taken over the last year, not least the European Defence Action Plan and the activation of the Permanent Structured Cooperation (PESCO) framework for EU defense policy.

Today's rising defense budgets offer a great opportunity to take the necessary steps to build forces that are more efficient and more effective: more European, more connected, and more capable. At the same time, repeating the mistakes of the past and missing this unique opportunity to go beyond "more of the same" could cement the current state of European defense for decades to come.

 

 

Ambassador Wolfgang Ischinger is Chairman of the Munich Security Conference and Professor for Security Policy at the Hertie School of Governance. Frank Mattern is Chairman of the Board of Trustees at the Hertie School of Governance and Director Emeritus at McKinsey & Company.

30 November 2017, by Wolfgang Ischinger / Frank Mattern

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