Daily Management Review

Paris and Berlin more than ever at the heart of European defense industry


05/16/2020


The idea of an integrated European defense had been hovering in the air for so long that many had given up on the hope that it would ever come through. Finally, Paris and Berlin have given the send-off to the new military phase within Europe. Through long-awaited market integration and military leadership provided by Europe’s two largest military powers, the old continent is finally reaching its full potential on the global market.



The big announcement
 
Europe’s attempt to integrate economically was an outstanding success: from a simple consortium to rationalize the steel and coal market in the 1950s, one of the world’s most powerful political unions was born, yielding an unprecedented 70 years of peace-time, in an area which had previously been constantly torn apart by dissensions. Widespread wishes for Europe to do the same on the military level, however, consistently failed despite numerous attempts and even a few promising trials. Operation Artemis  was the first EU-led military deployment in Africa and, despite tactical success, failed to launch the continental military integration, per se. Failure to achieve this stage does not only hinge on incapacity to rationalize military movements across countries, but also in Europe’s military-industrial configuration. Until now, European nations had been competing against one another, leading to a systematic commercial disadvantage on the global market, and for the industry to self-destroy through that process. In a surprise announcement , French Emmanuel Macron and German Angela Merkel recently revealed their intention to take the lead on the European military integration, starting with continent-wide rationalization of defense programs. In this new era, French and German industries will assume leadership of military programs, while placing orders towards European suppliers. Military programs will therefore be a joint venture, and no longer the product of one single firm or nation.
 
Taking to the skies
 
Lack of military integration has led Europe to be unable to catch up with American aerial capacities to build 5th-generation fighters, despite comparable technological levels. This will be one of the first issues to be addressed, through the multilateral decision to engage into the Future Combat Air System (FCAS). The new generation fighter plane will catch up on all the latest technological capacities which are today displayed only by US F-22s and F-35s, through the international cooperation. Defense analyst Alexandra Brzozowski writes  : “The French and German governments expect to invest an initial €4 billion in the combat jet by 2025, with France, the project leader, contributing €2.5 billion, according to the French defence ministry. Unlike the Eurofighter, the new FCAS will also include a range of associated weapons, such as swarms of unmanned aerial carriers (drones) interconnected by a cloud, surveillance and command aircraft, cruise missiles, satellites and ground stations. Paris and Berlin want the first flight of the prototype to take place in around 2026.” Paris and Berlin will renew the cooperation which led to the Eurofighter, and Spain will be a major contributor to the project. But Germany will first need to overcome a long-lasting problem of imbalance in its defense stance: despite high-profile armament programs, Germany’s defense is riddled with both low engagement rates in operations and even lower equipment availabilities. Despite outstanding engineering, an army which doesn’t fight will quickly lose its military edge.
 
Land forces projects
 
Land vehicles may be the spearhead of the entire program, as France and Germany are both renowned for the quality of their armor engineering. French defense firm NEXTER (formerly known as GIAT) and KMW are two of the world’s most reputable tank producers and have respectively created the Leclerc  and Leopard 2  MBTs, universally recognized as top of their game. Because they were developed as separate programs, the immense R&D cost was not optimized, resulting in bloated price tags, which both reduced exports and placed an additional expense onto domestic armies. The new joint venture aims at producing the new generation tank, but this time in an optimized process, led by Franco-German KNDS. Armament specialist Josué Michels writes  : “The new tank is already predicted to become the world’s most powerful tank. To make the visionary project a reality, France and Germany are jointly producing the new European main battle tank (embt). The French-German joint venture is called KNDS (KMW+Nexter Defense Systems), combining the names of both manufacturers.” Being the owners of the technology, the French will enable Europe to break away from the American technological domination and increase the European sovereignty. The technological know-how is already acquired by both parties (with the notable difference, though, that German products are not battle-proven), and the new strategy will make the industrial endeavor economically viable.
 
Naval integration
 
Naval industries may be the area where Europe sees the most change in coming years, due to profound shifts in the recent past. The flourishing naval industries which Europe harbored until now have suffered intense competition and, in some case, inability to negotiate transformations properly, leading to a loss of industrial power for several formerly key-players. Germany’s naval industry is under such turbulence  that there is talk of divesting it completely - in recent years, it has been unable to address even domestic needs , despite unfailing support from Berlin. Spain’s shipyards have suffered several embarrassing mishaps  in recent submarine production, and are hanging in by the skin of their teeth. Currently, the only two thriving shipyards in Europe are France’s Naval Group  and Italy’s Fincantieri  - with the French standing out in submarine productions and Fincantieri doing well in surface ships. In naval matters, France will either assume leadership on its own, or possibly form an alliance with Italy, Germany being in no condition to do so. FT analyst David Keohane reports  : “On Friday, France’s state-owned Naval Group and Italy’s Fincantieri finally signed the 50-50 joint venture which will bid for joint projects and sell to the world market as the two companies look to push back against commercial threats from such countries as China, South Korea and the US.
 
After years of trying to integrate the continent’s military forces politically (i.e. from the top down), France and Germany have finally found the way to push the project through: industrially, from the bottom up. Each European nation will benefit economically from the orders placed by the leadership, securing continental support for the military alliance. And European industries will finally be able to compete on the global market, and on a commercially level field.