Center for Strategic Decision Research

Paris '07 Workshop

THE RELATIONSHIP BETWEEN GOVERNMENTS AND DEFENSE INDUSTRIES IN A GLOBAL INDUSTRIAL BASE

Dr. Jan-Olof Lind, Swedish National Armaments Director

Mr. Jan-Olof Lind
Swedish National Armaments Director

Mr. Jan-Olof Lind (left), Swedish National Armaments Director, with Dr. Hilmar Linnenkamp (center), EPA Deputy CEO, and Mr. Alfred Volkman (right), U.S. Dir of International Cooperation .

"We all know that growing economies in the east are graduating many more students
from their universities than the U.S. and Europe together. Should
we regard this as a problem and, if so, what can be done?
"

It is indeed a great pleasure for me to take part in this workshop and I send my thanks to Mr. Volkman for inviting me to participate on this panel. In my introduction I would like to share some of my thoughts regarding the relationship between governments and industries through the following question: Is the progress we see in Europe on the right course in a global context?

A STRONG FOCUS ON DEFENSE AND INDUSTRIAL ISSUES

First of all, I think the political attention that defense and industrial issues are currently being given is quite remarkable. However, the reason for this is not difficult to understand, and was stated earlier in the conference: a strong security and defense policy needs a strong European defense and technology industrial base as well as a well-functioning defense equipment market. The DTIB is consequently one of the cornerstones of the security policy, and one of the main instruments for achieving it in Europe has of course been the creation of the European Defense Agency.

However, there are other explanations of why great attention continues to be paid to defense and industrial matters:

   Pressure on defense budgets

   The need for further harmonization and consolidation

   Increasing costs for using materiel and systems

   Broad consensus among MSs that action needs to be taken

But questions regarding the DTIB are not new. Ten years ago the agreement between the six LoI countries was signed to facilitate the reconstruction of the industrial base by creating the necessary political and legal framework for promoting a more competitive and stronger industrial base. A number of European countries have similar agreements with the U.S. under the Declaration of Principles. The main difference we see today is the attention we give these matters in a global context.

THE NEED TO ACT

I would say that if we do not act now, we might not reach the goals we defined both from a political and an industrial point of view. We know what the problems are and what the goal is. It is now a question of implementation. But have we made any substantial progress so far? My answer would definitely be yes.

Earlier we heard about the need for levering technologies. But other issues we are dealing with are extraordinarily complex and time consuming, including issues regarding the security of supply, the security of information, and harmonization of military requirements. These are all prerequisites for a DTIB and a DEM that truly function, but they cannot and will not be solved in a day. These issues have to be solved through common rules and regulations, through transparency, and through mutual confidence.

However, we need to recognize that there are 26 countries in Europe that have different industrial structures and demands for defense products and systems. We also need to recognize the challenge that the different industrial bases were created for a totally different purpose than what we need today. The EDA is of course the locomotive for dealing with these issues as well as the melting point for unifying different opinions.  

In my opinion it is important that we take stock of the results we already have achieved in different organizations and under existing co-operation agreements. The one simply must not exclude the other, both from a European perspective as well as from a global perspective. Working together we could gain the added value that is necessary and progress we make in Europe could definitely benefit the transatlantic link and vice versa.

In the defense and equipment market, we need to recognize that it is a far from perfect market and ask ourselves if it ever will be, given its features. But the introduction of harmonized rules and regulations is fundamental. Such rules and regulations will allow governments to use more instruments for running cost-efficient programs and assist industry by making companies more competitive on the global market.

ATTRACTING THE RIGHT COMPETENCIES TO THE DEFENSE SECTOR

Finally, I would like to bring up one other issue, perhaps for consideration by my colleagues from industry. One challenge that we all face is how to attract the right competencies to the defense sector. This is most certainly not a question of Europe versus the U.S. but a question that has to be seen in a global context. We all know that growing economies in the east are graduating many more students from their universities than the U.S. and Europe together. Should we regard this as a problem and, if so, what can be done?

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