European Defense: Efficiency, Wealth and Will

McKinsey and Company recently collaborated with the Munich Security Conference to release a report: The Future of European Defence. It recommends how European Union (EU) nations might improve the cost efficiency of military operations. The report raises, but does not address directly, broader political challenges facing the EU that encompass its efforts on defense. First is the effort to maintain defense as a coordinated EU budgetary priority, difficult under healthy economic circumstances and particularly so at a time of austerity. Second is the political will to decide on and support collective EU security missions. The latter problem is one the EU has wrestled with for decades, and though a less quantifiable challenge, it may be the most important to determining the future of European defense.

The report cites data that point to both Europe’s declining financial share of the global defense burden and its need to get more out of what it spends. The U.S. share of NATO spending is 72 percent, up nine percent from 2001. EU defense spending has declined over the past decade, and EU leadership has been sharply criticized for its diminished role in NATO in recent years. The report’s main focus, however, is how, not how much, the EU spends on defense. “Europe deploys six times the number of different weapons systems than the U.S. – even though it spends only 40 percent as much,” it states. Duplication and incompatibility mean the EU gets even less bang for the fewer bucks (or rather euros) it spends.  The report outlines recommendations to reduce the variety of weapons systems used by EU member countries and coordinating their procurement to improve compatibility and save money. A poll conducted at the European Defense Summit last April, included in the report, shows clear majorities believing that while demand for European defense capability will increase, defense budgets will decline over the “medium to long term.”

Poll respondents also addressed the political willingness to collaborate within the EU. The willingness expressed was conditional: a clear majority saw the transfer only of “non-core capabilities” as being feasible. Respondents also, however, set a clear limit to potential collaboration. The report states: “80 percent of leaders we surveyed say they see scenarios of either opportunistic or strategic collaboration as the most likely response by the governments to the current challenges. Neither a reversion to national approaches nor full-scale integration – a European Army – are seen as a likely paths in the future.” In other words, there are political limits – beyond budgetary barriers and interoperability issues – to how far an integrated EU military capability will be allowed to develop. These views make clear that efficiency gains proposed in the report, while significant, will be gains made at the margins. Europe’s defensive capability is designed to be a far more limited capability in comparison to the U.S.  

The reluctance to develop a unified capability to project power outside Europe is rooted in the continent’s tumultuous history. Major European powers also have differing ties to regions of the world based on their former colonial holdings, complicating the task of deciding what lies within the EU’s geographic sphere of influence and strategic interest. Assuming common goals are agreed upon, sharing payment for them is fraught politically; at least as much as their execution is fraught logistically.

By laying out the path to efficiency gains in European defense, the report makes an important contribution. In a sense, however, efficiency gets the attention because it is the most quantifiable of Europe’s defense challenges. Challenges to Europe’s budgeting and strategic decision-making are qualitative, and the path through them is murkier. As mentioned above, the U.S. has pressured EU leaders on their defense leadership; former Defense Secretary Robert Gates did it most memorably in 2011. Gates’ comments did address interoperability issues highlighted during combat operations in Libya that the McKinsey report recommendations would address. He also, however, underscored the need for the EU to sustain budgetary and strategic commitment – its wealth and its will – to NATO’s defense burdens at a high level. Given the current economic and political strain on the EU itself, this is a tall order. Efficiency gains that are achievable now make economic and strategic sense. They are necessary, but not sufficient. The EU still has political questions to answer about its collective level of contribution to global security burdens, and how it will collaborate to achieve it.