The Need for a European Defense Industry Base

Mr. Wolf-Peter Denker
Vice President, Government and Political Affairs,
Daimler-Chrysler Aerospace

OPENING REMARKS

As a German citizen, I am particularly pleased to be attending this Workshop in Hungary, a country to which Germany owes so much. The fact that Hungary is hosting this year’s Workshop is strong evidence that the new NATO has become a reality.

Another reality, one that we need to face, is the current conflict in Kosovo. NATO and the European Union must continue to pursue their common goal of creating a permanent and stable security system in Europe based on a free and prosperous economic and democratic society. Europe needs its own political and military decision-making structures, with associated instruments for recognizing crises and assessing situations, so it can react more quickly and effectively at the security policy level.

The European Union, which is an actor in the fields of foreign and security policy and aims to build up its stability to act as a sovereign body in these areas, also needs to be able to call upon a self-sufficient and independent armaments base. Such European sovereignty, as we see it, is inseparably linked not only with issues that affect the European defense industry but, in the final analysis, with transatlantic security.

EUROPEAN INDUSTRIAL BASE AND CONSOLIDATION

I would like to show you, from the vantage point of a European company in the aerospace and defense business, why the European industrial base is such an important issue to Daimler-Chrysler Aerospace as well as to other defense businesses. For almost ten years now, all the major German aerospace companies have been united in a private structure under the roof of Germany’s DASA. No other aerospace company in Europe covers such a spectrum: civil and military aircraft and helicopters; aeroengines; space technology embracing satellites, space transportation, guided missile systems, and defense electronics, which is taking on an increasingly important role in our field of business. The most important factor about DASA, however, is that it is at the same time a German,  a European, and a global undertaking. Since the merger of Daimler-Benz and Chrysler, we are the world’s first aerospace company with a truly global shareholder structure. As both a European and a globally active company, it is essential for us to come to grips with the future prospects of Europe as a significant factor in both international politics and the global economy.

During the last few NATO Workshops, a main talking point was the struggle to consolidate the European aerospace industry, the key word being EADC. That objective has not been reached as it was originally intended because of the industrial developments through the end of 1998. Nevertheless, consolidation must remain on the European agenda in the medium term because only equal footing between the European and the American industries will enable real transatlantic cooperation and healthy global competition while strengthening Euro-Atlantic security.

In the meantime, DASA has reassessed its strategic options, encompassing opportunities both within Europe and across the Atlantic. As a first step toward consolidation in Europe, DASA linked up with CASA, the Spanish manufacturer, effecting the first major cross-border merger in Europe, which was confirmed by a Memorandum of Understanding that was signed on June 11, 1999. This newly formed industrial group, in which CASA and Daimler-Chrysler will be the shareholders, will become the leading partner in the most important European aeronautical programs, in particular Airbus, Eurofighter, and the future large aircraft.

INCLUDING CENTRAL AND EASTERN EUROPE IN TRANSATLANTIC STRUCTURES

In his Workshop address, Undersecretary of Defense Gansler was quite right to reject the model of “Fortress Europe” versus “Fortress USA” in favor of competitive transatlantic models. However, creating workable transatlantic industrial structures in the competitive global market will depend on our ability to work together in true partnership and on an equal footing, and this involves being able to contribute technological competence to such a partnership and being ready to share technological knowhow. Increasing Europe’s capacity to act also requires the involvement of Central and Eastern European countries and companies, particularly because of their geographical proximity to the current crisis regions in the Balkans, acting as partners on equal political, military, and economic terms.

DASA agrees with the German government that the financial freedom of action of Central and Eastern Europe should not be overstretched; rather, it would give NATO and the EU (WEU) greater room to maneuver if efforts were concentrated on the capabilities essential to integration and participation in the common tasks of the Alliance. The procurement of major new weapon systems, therefore, should not have such high priority, and there is absolutely no need for a fleet of new fighter aircraft or for an army equipped with new tanks. To integrate Central and Eastern European armed forces with NATO, their telecommunications systems need first and foremost to be embedded in the NATO communication and information system. The ability to participate in an integrated air defense needs to be developed, and the general interoperability of weapons systems, including associated logistics, needs to be established.

So the important point is not simply to replace all former Eastern bloc weapon systems with Western ones. And this is the line that DASA is consistently following in its industrial dealings with Hungary, Poland, and other states of the region, including the adaptation of the Mig-29 fighter aircraft to bring it up to Western standards. To achieve integration of these countries with European and NATO structures, it is essential to allow them to collaborate on joint projects at both the civil and military levels, enabling the local industry to participate in the relevant programs and projects.

WORKING WITH NATO AND THE EU

If Europe wishes to secure its influence on the global agenda, it must accept and live up to its role in NATO. It must also adhere to NATO’s principles, which are the glue that holds this Alliance together—the principles of sovereignty, political solidarity, and adequate military contributions from all its members. Without a European defense industry base, the European states and ultimately the European Union will have only limited options in their foreign policy. And a common European foreign and security policy is realistic only if it can be implemented and enforced. This naturally assumes that the European Union is a sovereign unit in deciding how to equip its own armed forces with essential weapon systems, such as fighter aircraft, satellites, missiles, helicopters, defense electronics, and so on. It also assumes that there is a consolidation of market conditions. In other words, fragmented national markets and national frontiers must be overcome so that technology potentials can be concentrated and the armed forces requirement can be pooled. Every European state needs to make its contribution toward fulfilling these political prerequisites.

A technologically efficient European industry that can compete on the global stage continues to be a prerequisite for true transatlantic partnership. But to do this our industry must achieve a size and structure that will make us a competitive and a fitting partner for the U.S. industry. And here DASA sees itself in the right spot.