The Search for Interdependent Independence in Europe
by Piper Hodson

Traditionally, states have jealously guarded their independence and sought to guarantee their security with as little outside help as possible. Specifically, states have avoided dependence on outside sources for weapons or strategically vital materials. They have wanted to maintain the ability to produce the weapons needed for their own protection in the event that conflict might cut off external supplies.

While many states continue to exhibit this behavior, an interesting and significant counterexample is developing. In Western Europe, four states joined to develop and produce a new interceptor called the European Fighter Aircraft (EFA). In 1986, Germany, Great Britain, Italy, and Spain created Eurofighter Jagdflugzeug GmbH and Eurojet Engines GmbH to manage development of the body and engine, respectively, of the EFA. At first glance, it appears that the members of the EFA consortium are surrendering their independent production capability. A closer look, however, illustrates that these nations continue to be concerned with maintaining the ability to produce fightercraft independently if the need should ever arise.

Reasons for Cooperation
The members of the EFA project are pursuing joint development and production of an advanced fighter aircraft for various reasons. The most important is that the costs involved in researching, developing, and producing advanced weapons systems have escalated dramatically in the last two decades. The participating European states decided that they could acquire the fighters they needed at lower individual expenditures if they cooperated and shared development costs. The joint project saves resources that can be allocated to other projects.

In addition to the decreased individual expenditures that result from sharing the costs of development, the larger production run decreases the unit cost of a plane. Thus cooperation significantly reduces the costs of replacing outdated fightercraft for each individual state while providing income and jobs for the defense industries that are suffering from lack of new orders.

The work provided by a cooperative project for the defense industries is very important. Already in the mid-1980s the European states perceived a decreasing threat from the Soviet Union, and as their attention was diverted from this traditional threat, the states’ will to maintain previous levels of defense spending weakened. Consequently, the defense industries in each of these countries began to face major threats to their survival. The companies that constitute the defense industries of Europe rely heavily on individual weapons projects for their survival. The political peril created by the loss of defense-related jobs led European political leaders to seek methods to maintain some level of the production of weapons within their borders rather than purchasing imports, even if the latter was a cheaper option.

In addition to costs and jobs, the movement toward the single European market produced pressures for cooperation and integration in the armaments market. Two resulting developments will greatly influence the future of European arms production. The first is the myriad of cooperative civilian projects that have developed. The success of these projects has provided an impetus for the development of new military technologies, and, since their successes are achieved jointly and the European Community (EC) as a whole controls the resulting technology, further applications of that technology are most easily achieved through cooperative projects rather than through individual efforts.

A second feature of the movement to the single market is the facilitation of mergers and acquisitions of firms across national boundaries within the EC. The European states have traditionally maintained strict control over the corporate activity of their defense firms. However, the facilitation of cross-national mergers and acquisitions meant that many of the business deals designed to merge companies primarily involved in the production of consumer goods necessarily led to the restructuring of the defense market because the merging companies had units or subsidiaries involved in the production of weapons or inputs for weapons.

All of the above factors continue to provide incentives for the European states to pursue cooperative rather than independent development and production of weapons. In spite of the forces favoring cooperation, it is important to understand that the perceived value of maintaining the ability to produce weapons independently has not disappeared.

Forces toward Independence
While the advancement of the EC has overcome some of the attachment to national sovereignty found in the region, it has not eliminated it; the remaining attachments provide the basis for pressures to maintain an independent capability to produce arms. Sovereignty grants a state government the exclusive power and right to make decisions concerning matters internal to its territory and population. However, that sovereignty also requires that the state have the ability to protect and provide for its population. Some measure of an independent arms industry is essential to that ability. The European states have jealously guarded their independent arms-manufacturing capability in the past as necessary for maintaining complete sovereignty.

In addition to the belief that an indigenous arms production capability is necessary for the maintenance of sovereignty, governments see a domestic defense industry as a tool for managing the national economy. When unemployment reaches an unacceptable level, an infusion of funds into the armaments industry in the form of orders for weapons is a relatively easy way to increase employment. European governments fear that allowing the armaments market to function as a free market would cost their individual countries large numbers of jobs.

The loss of independent control of arms production would also impede flexibility of individual states in foreign relations. States often use military aid and arms sales as tools in their foreign policies; the control of arms exports and transfers becomes a major difficulty in cooperative programs. This has in fact been a point of contention in the collaborative efforts. One of the major conflicts that led the French to withdraw from the EFA project concerned who would control the exports and who would reap the profits from sales. On the whole, states remain anxious to maintain the influence, leverage, and profits they receive from arms exports. Consequently, the foreign policy sacrifices required by cooperation pose a strong barrier to joint arms production efforts. In fact, the EFA project provides an interesting case study of the interaction of the forces for and against cooperation.

Interdependent Independence
One question is often asked concerning the EFA project: Does it constitute a deepening integration of the states involved? In my opinion, the answer to that question is no. It is clear that the four participating European states—while working together to develop and produce the EFA—fully intended to maintain independent production capacities. The European states have gone to great lengths to guarantee that cooperation in the EFA project will not eliminate their capability to build aircraft without the help of others. The states are willing to work together as long as each state maintains the ability to influence every aspect of the group project.

It is vital to note the differences between cooperation and integration in order to understand why this particular project does not promote integration. In order to constitute an instance of integration, the project would have to be managed by a supranational body. The decisions concerning the EFA would have to be based on judgments about the needs of the entire group, rather than on the needs of individual states. While the decision-making body might consider the individual implications of decisions concerning design and assignment and allocation of work, the decisions would consider the efficiency and effectiveness of the project as a whole. The EFA project is not organized as an integrated project.

In the EFA agreement, every state was guaranteed that it would be involved in the production of every element of the aircraft, rather than dividing the production of the afircraft in the most efficient manner. In the agreement, Germany, Great Britain, Italy, and Spain each has a part of the production of the airframe, the engine, and the avionics. The percentage of production occurring in each state is determined by the percentage of the total budget it supplied. In this way, the participating states are able to maintain the equipment and expertise needed to produce aircraft independently if the need should ever arise, and they are not at the mercy of the negative consequences of comparative advantage.

Clearly, the division of labor was assigned in order to please the individual participants rather than provide for efficient design and production of the aircraft. The organization of the companies controlling these processes explains the lack of efficiency in the division. The participants established Eurofighter Jagdflugzeug GmbH and Eurojet Engines GmbH as management companies to oversee the EFA without providing them with power to alter the agreements concerning the requirements for the division of labor.

Observers must note that Eurofighter and Eurojet are not integrated bodies. The management companies are not permanent entities, and they have no authority over the cooperating states. They will disappear when the programs are completed unless the states assign them new functions. They do not exist outside the authority of the states that established them. The management companies exist to maximize the benefits to each of the states and to facilitate compromise among them. Without a body with the function of guaranteeing the best group outcome rather than the best average individual outcome, any project is cooperative rather than integrative.

The fact is, the states chose cooperation rather than integration because, in spite of their membership in the European Community, their interests are still not similar enough to justify the risk of losing the ability to control the design and production. The European states simply will not be ready for integrated arms production until they have politically integrated to the point where acquisition and design decisions are made by a central, supranational authority. As long as the states maintain separate defenses, their requirements for equipment are different. For instance, a major debate in the development of the EFA was whether or not the aircraft would be a one- or a two-seat craft. This is a vital decision for the project, and it is irrevocably tied to the security strategies and structures that each state maintains. In fact, this problem led the French to abandon efforts at joining the EFA project to develop their independent project, the Rafale. In an integrated system, however, all of the states would be tied into the project without the option of building independently. Until their defense needs are similar enough to reduce the debate over such issues to a level observed in any individual state, the European states will rely on cooperative rather than integrative projects.

The states involved in the EFA have found a way to achieve the benefits of cooperative development and production while still maintaining the advantages of an ability for independent production. Their agreement has required compromise on some issues (on control of exports, for example), but, on the whole, individual states have maintained the advantages of an independent capability. Germany, Great Britain, Italy, and Spain have paved a middle road between independence and integration with the EFA project, and with the Tornado project before it. They have achieved interdependent independence.

Piper Hodson is a Ph.D. candidate in the Department of Political Science at the University of Illinois at Urbana–Champaign. Her interests include international security studies, U.S. and Western European foreign policy, and prospect theory. She was the coordinator of the ACDIS graduate discussion group and the ACDIS librarian during the 1992–93 academic year. Her dissertation deals with the application of prospect theory to decisions concerning nuclear proliferation. She is currently working on a U.S. Department of Energy project applying findings from her dissertation research to South Asia.