Labour’s intent: Resetting Britain’s defence relationship with Europe

As Britain’s Labour party closes in on power, it has floated the idea of a “security pact” with the European Union as part of a post-Brexit rapprochement. Restoring defence industrial cooperation should be a key element of this reconciliation – but London’s best approach may lie as much through Paris and Berlin as in the corridors of Brussels.

The EU has little locus in military operational affairs; since Russia’s invasion of Ukraine, Europe’s generals have foregathered under NATO’s auspices. But the crisis has put the spotlight back on the enduring importance of a robust and capable defence industrial and technological base in Europe – one that can, for example, produce 155mm shells at the pace and scale required. Even before major war returned to Europe, as part of its efforts to become a defence player the EU had been concentrating on boosting research and development and fostering cross-border cooperation on weapons procurement.

Europeans’ ambition to better integrate their defence technological and industrial base goes back decades. This is not just because of the huge waste and duplication involved in maintaining separate national efforts; a fragmented European industry could not hope to remain indefinitely competitive in export markets. (Collaboration with the US arms industry was never a viable alternative, given the rooted American refusal to share defence technology.)

The imperative to integrate was most keenly perceived by the major western European nations with the biggest defence industries. As early as 2000, France, Germany, Italy, Spain, Sweden, and the United Kingdom agreed a treaty cryptically known as the Letter of Intent. Their shared goal was to consolidate the defence industry, and as part of this they understood demand-side consolidation to be a necessary precondition: the six countries must harmonise their military requirements, to offer industry substantial joint procurement projects around which it could restructure. Subsequently, the EU set up the European Defence Agency (EDA) to subsume this effort in a wider project for an EU that was about to double in size.

The case for a truly European defence technological and industrial basebecame received wisdom. In 2007, EU defence ministers agreed a strategy affirming that no individual member state had the resources to maintain a comprehensive, world-class defence industry in isolation. Getting proper value from limited national defence budgets required them to pool effort and resource on a continental scale.

Developments in the civil sphere demonstrate what might have been possible had this ambition been comprehensively pursued. For example, the European automotive industry survived and prospered by restructuring itself into a few major companies, with components and subsystems sourced from across the continent. The Horizon civil research programme has been a runaway success, as researchers and technologists across Europe have learned the value of cross-border collaboration.  

The defence integration effort showed some successes – for example, the creation of MBDA, a pan-European missile house able to compete with American behemoths such as Raytheon. Overall, however, the results were inadequate. Fatally, EU treaties allow a “national security” opt-out from the disciplines of the single market; inertia and vested interests have therefore ensured that defence procurement still takes place mainly within national boxes. In response to this evident failure, the EU made yet another effort in the late 2010s, with the most significant of several initiatives being the commission’s launch of the European Defence Fund (EDF) – over a billion euros a year from the general EU budget to support cross-border research and development cooperation. Some results have followed. But, as reporting by the EDA has laid bare, levels of national spending on defence research, the seed-corn of the future, remain well short of agreed targets, as do levels of cooperative spending.

Nor has the Ukraine crisis altered the dynamic. As the boss of Airbus recently lamented, the response has been “mostly of a national nature and not much of a European nature”. Defence budgets have ballooned, but European governments – especially the central and eastern member states, which feel most immediately threatened – are spending much of the extra money on massive arms purchases from America and Israel, and even South Korea and Brazil. (Things might have been different if the major western European arms companies had followed their automotive peers in investing to give the newer member states a share of the action; but they did not.) To make matters worse, Berlin and Paris are now regularly at loggerheads, and not just on defence issues; and Brexit has not helped, with Italy opting to join Britain and Japan in the Tempest project for a sixth-generation combat aircraft – an initiative specifically designed to rival FCAS, the existing Franco-German-Spanish effort.

In an ideal world, renewed British readiness under a Labour government to engage in defence industrial and technological cooperation with European partners could be a timely catalyst. But the world is not ideal. A Labour government may find the British defence industry unenthusiastic; its two big beasts, BAE Systems and Rolls-Royce, have enjoyed largely unchallenged access to UK government defence procurement funds, and see a rewarding future in the Tempest project and the AUKUS arrangement with the United States and Australia (though it takes some naivety to imagine that AUKUS will provide rich pickings other than what the Americans decide they do not want for themselves). Yet a Labour government planning a 10-year programme to rebuild Britain should reflect that, as customer, its interests are not identical with those of its main suppliers. The recent history of British national defence procurement has been one disaster after another. In contrast, France has squeezed much more capability out of a smaller defence budget, while Italian shipbuilder Fincantieri (a close industrial partner of France) has soared to global success. These examples should prompt a major rethink of Britain’s defence procurement habits and practices.

It will not help that the EU’s response to British overtures is likely to be inherently unattractive. The political declaration which accompanied the Brexit withdrawal agreement foresaw “an ambitious, broad, deep and flexible partnership” including on foreign, security, and defence policy; and it proposed “structured consultation and regular thematic dialogues”. But on defence research and industrial cooperation, the political declaration offers British involvement only in the latest EU initiatives (the EDF and permanent structured cooperation), as well as the EDA. But not only is this evolving Brussels ecosystem still struggling to produce results, it has also been specifically designed to make participation by third parties as difficult as possible. The US was the real target here, but the UK would face the same obstacles. And there would anyway be little advantage to Britain in late-stage involvement in collaborations chosen, designed, and maybe already apportioned by insiders.

So any effective restoration of defence industrial relations between British and EU partners has to start ‘upstream’, at the political and strategic level. In other words, Labour’s leadership would have to reprise the sort of conversations that underlay the Letter of Intent treaty. They will need to open up frank discussions on the health and future prospects of the defence industry in Europe, and to develop a shared analysis of the future defence capabilities Europe requires in the light of Russia’s invasion – and of America’s inevitable refocus on the Asia-Pacific, whether that comes under Trump or Biden. (There is even a conversation to be had here, especially with Paris, about the future of nuclear deterrence: but that is a whole other story.)

Fundamental discussion of this kind cannot be started with 28 people in the room, not least if half of them believe that Trump can be propitiated by massive orders to US arms companies. Labour should begin to test such thinking in western European capitals – in Paris and Berlin, and indeed with the other three members of the Letter of Intent group. These, after all, remain the EU member states that should be most alive to what will be lost, in both economic and security terms, if Europeans cannot work together to keep more of their defence spending within the continent, and to satisfy more of their defence needs from world-class European suppliers. The Letter of Intent group acting in concert – the treaty, after all, is still in place – would have a decisive voice in steering future EU defence efforts, and could facilitate British reintegration. But, even if that route proves fanciful, bilateral cooperation with these key potential partners could be valuable – as the Lancaster House treaties with France have already demonstrated. A new Labour defence team will need to address European partners individually as much as collectively.

“Diplomacy without arms”, Frederick the Great observed, “is like music without instruments”. From the Caucasus to the Middle East, European and British orchestras seem pretty muted these days. The pooling of efforts and resources is inevitable if better instruments are to be produced and afforded. Re-engagement by a British Labour government with defence partners in the EU should work to the advantage of both.