China, the keys to power
Philippe Camus is CEO of Keynolt Inc. He has been Executive Director of EADS (Airbus) France.
European defence is naturally at the heart of the strategic thinking of European companies and is also an important element for non-European companies in the sector. But what exactly is covered by the term "European defence"?
For a company, European defence takes shape when equipment, services or research programmes are launched jointly under the authority of a central body in order to meet the needs of several European countries that have previously coordinated their defence strategy. This definition, which is very operational if it is translated in practice, leads to a win-win situation for customer states and supplier companies. Indeed, by relying on a larger and more homogeneous market, companies are able to develop new equipment or new services at lower costs, thus improving their international competitiveness. For their part, States have free access to competitive products from a strategic industry that is secure, export-oriented and technologically advanced. The European Union has recently estimated the cost of the absence of an integrated Europe of Defence at an amount that could reach up to 45% of the annual defence expenditure of the Member States. 100 billion euros per year could be at stake.
63 years after the failure of the European Defence Community, the European Union has just given a new impetus to Europe's defence with the launch of a permanent structured cooperation, and soon, a European defence fund. What is your analysis of the issue?
Recent initiatives seem to be moving in the right direction. A centralised authority is defined, with the European Union taking charge. The launching of a Permanent Structured Cooperation (PSC) should lead to a convergence of strategic points of view, and its industrial consequences. Finally, the European Defence Fund has significantly more resources than those of the European Defence Agency (EDA), which was set up in the early 2000s, in the image of the American DARPA. Due to a lack of resources, the EDA has not been able to generate large-scale collaborative research projects, but it has nevertheless improved stakeholders' understanding of the difficulty inherent in this type of programme.
Both, of course. This is an opportunity because the emergence of a reference market made up of credible customers will be a considerable asset in the global competition. It is also an opportunity because the institutions and tools that are being put in place will define a framework within which companies can increase the efficiency and diversity of their research by reducing unnecessary duplication. The leeway thus freed up will be used to explore new disruptive technologies.
Do you think that this relaunch of Europe's defence policy will enable European companies to stand up to the American giants?
I do not think that the expression "stand up" is appropriate. The global defence industry is characterised by a mixture of cooperation and competition. The term "coopetition" is often used to describe it. The reinforcement of Europe's defence policy is, in some respects, well received on the American side. Whether it is the increase to 2% of the GNP in the defence budget or increased participation in joint actions, European efforts are welcomed. The fact that this translates into enhanced industrial cooperation between Americans and Europeans, within a well-established framework of reciprocity, cannot displease anyone, in particular when tackling new fields with a high technological content, such as cybersecurity for example. It is not forbidden to think that "cooperation" will extend over the Atlantic.
European industrial cooperation is developed mainly, but not exclusively, at the initiative of companies, under the control of governments. Companies identify the points of convergence or divergence which are at the heart of technological choices. Good cooperation often starts with a programme of jointly developed equipment or services. However, state control goes well beyond traditional competition control. As in the United States, mergers involving foreign shareholders are subject to government approval. The availability of certain sensitive technologies is also under control. States also have an incentive power to promote certain reconciliations. This is particularly the case with the launch of particularly structuring programmes. A topical example is the UAV program.
European states often have different expectations and rhythms when it comes to implementing a common policy. How are defence and armaments companies evolving in a multi-speed Europe?
The principle of enhanced cooperation answers this question. Companies rely on one or more cores from several Member States that are particularly active in certain fields: land, naval or aerospace armaments. In my opinion, this is an essential element of the system put in place. It makes it possible to better define the characteristics of programmes or an activity without falling into the trap of disintegration, while remaining open because it is always possible for a Member State to join the initial team later. The "Permanent Structured Cooperation" shares the same view by inviting its members (25 member states) to converge on objectives for the defence budget and the launching of military programmes.