Global Security Goals and Industrial Cooperation

OPENING REMARKS

This seminar is very aptly titled. That is because global security is a key concept for orienting those who analyze options and make decisions in our fields. The goals of global security are now strongly influencing how industries cooperate, particularly in these ways: 

• The term global security acknowledges the fact that there is no longer a sharp difference between defense and security. After the attacks of September 11 and with the spread of planet-wide terrorism, the notion of “threat” has changed radically, ranging from typical military attacks (from the air or with missiles, to name but two) to traditional terrorist actions all the way to hyper-terrorism, with its potentially catastrophic consequences. 
• Global security also underscores the crumbling of the old distinction between internal and external security. Merely defending its geographic boundaries no longer allows a country to protect its national interests. Defense and security must be pursued—increasingly so—on a global level, beyond one’s own domestic territory. 
• The global security concept implies that no single country can dream of achieving the goal of absolute security by itself. Security is a goal that must be shared with other countries, not only politically but in terms of operations and tools with which to counter threats. 

These three elements have changed profoundly the contribution that technology and industry are making to defending peace and security. 
High-tech industries, particularly aerospace and defense companies, possess most of the technologies needed to satisfy the new requirements of integrated defense and security. This is because of: 

1. The dual and cross-industry nature of many technologies adopted by the aerospace and defense industry 

2. The fundamental equivalence of the basic operational requirements that must be met for both defense and security 

These operational requirements stem from the deep changes in the nature of military operations, which range from traditional wars to policing and controlling territories (peacekeeping/enforcing and post-war):  

• The control of information, which leads to the total control of the operating scenario and of one’s own resources 
• The need to ensure the survival of both forces and infrastructures faced with conventional and NBC threats 
• The availability of effective surveillance, observation, and alert systems required to detect and assess potential threats in the areas potentially subject to attack as well as the means to protect them adequately 
• The availability of effective and speedy decision-support systems and command and control systems to ensure that available assets are adequately managed and led. 

MEETING OPERATIONAL REQUIREMENTS

All of these needs are fully shared by the defense and security sectors and can be met by absolutely equivalent technologies such as communications, Information Technology networks, and manned and remotely piloted aircraft and satellites. These considerations form the fundamental premise for cooperation between industries. 

Such cooperation is vital for operational reasons. How effective actions are that are taken to prevent and oppose threats is directly linked to the ability of the operating assets to interact. They must be able to talk transparently and effectively. They must be flexible, interoperable, and complementary. They must be based on fully standardized operating procedures that will allow operators to use them effectively and immediately, regardless of each operator’s nationality. 

Therefore I ask how we can even imagine an operational asset endowed with these characteristics without promoting and increasing in a significant way the cooperation between industries in the development of new technologies, in research activities, and in joint programs for defense and security products and systems. 

Cooperation is crucial for the optimal management of available resources and to develop the required capabilities. Such cooperation can best take place by coordinating efforts, avoiding duplication and waste of resources, and harmonizing programs to acquire technologies, materials, and equipment. 

FORCES FOR AND AGAINST COOPERATION

If everyone believes that the prerequisites for greater cooperation between companies are essential to satisfying global security challenges, the scenario (and the European scenario particularly) continues to send signals that contradict the twin goals of bringing together and unifying defense and security strategies. On the one hand, it would appear that the conditions have never been more favorable for the rationalization of supply and the consolidation of demand. After the uncertainty bred by the end of the Cold War, we have seen operational requirements become completely defined, to the point where the goal of making the requirements of European armed forces homogeneous seems within reach. Conditions also seem very favorable in terms of governance. After OCCAR and LoI, the European Defense Agency offers European Union countries another great opportunity to achieve the two goals they have pursued for many years, albeit confusingly and intermittently: 

• To develop European military capabilities in a joint and coordinated fashion 
• To restructure European defense industries in a naturally consequent way. 

On the other hand, many factors reinforce the conflicting elements mentioned before: 

1. The persistent lack of a common foreign policy, which is a crucial requirement for building a military instrument that is coherent and functional for shared and common foreign policy goals. It is not by chance that opinion is still divided on the possibility of a European army. Some believe there should be a common army; others remain convinced that each nation should have its own army and contribute adequate forces in the event of specific international crises. 

2. The chronic lack of funding. To confine our example to the European Defense Agency, we all know that in 2005 its budget will be limited to a mere 25 million Euros. 

3. The non-harmonization of research and development programs and of national and transnational initiatives, with persistent duplications in strategic areas such as UAV/UCAV, network-centric capabilities, tactical and strategic mobility, and ships and land vehicles. 

4. The persistence of national barriers, including legal barriers, that limit competition within a single European defense market. This in turn leads to difficulty agreeing to the shared code of conduct required to apply Article 296 of the Rome Treaty. 

CONCLUDING REMARKS

I would like to conclude by saying something positive about the industry I represent. 

In an uncertain and difficult scenario characterized by a worrying divergence between the growing technological complexity of products and the financial resources available, and under increasing competitive pressure from the American giants, European industry has made considerable efforts to rationalize its structure and to improve its performance. Defense industries have long understood the need to cooperate, whether structurally or on individual programs, and there are many examples of such cooperation in both the European and transatlantic context, with the Finmeccanica Group playing a leading role in many of them. But industry must complete a process now underway, a process that has new drivers for consolidation: 

• The restructuring of French industry, with the possible dilution of the presence of the state  
• The high level of awareness of such problems as duplicated industrial assets, inadequate domestic markets, and technological and financial gaps with American competitors 
• The existence of four major industrial poles (EADS, BAE Systems, Finmeccanica, and Thales) around which further restructuring of suppliers can revolve. 

However, there already are many sectors in which these groups compete with the Americans on an equal footing. For Finmeccanica this includes helicopters, tactical air-lifters, advanced trainers, radar, and avionics. 

It is evident that the peculiarities of the defense industry are such that industrial and operational drivers are not enough to launch a new round of industry consolidation in both supply and demand. To make this happen the interested governments must issue clear policy guidelines and political support. The severe  political knot I have highlighted makes every other business, industrial, and operational problem very difficult to overcome.