Difficult times can lead to all kinds of ideas, both good and bad. The European Union (EU) has resurrected one idea that seemed to have been buried some time ago: that of fighting an economic crisis by shifting research money to the defence sector. However, recent studies have shown that the positive economic spin-offs of military research are questionable. Is it wise for the EU to be taking such a course? Beyond arms companies themselves, who will benefit from this change in direction?
In December 2013, the Council of the European Union will meet at a special Summit to decide on measures to support the arms industry in Europe. The proposals on the table are based on several years of preparatory work in both the EU Commission and the Council. This work was supported by the EU body set up to improve cooperation on defence–industrial issues in the EU, the European Defence Agency (EDA), and has been strongly influenced by submissions from arms companies in Europe.
The scope of the actual proposals is modest. The EU has little competence in the defence–industrial field. EU member states have exempted the defence sector from European integration in all relevant treaties since the 1950s. Even if member states find it useful to cooperate, they often choose special intergovernmental arrangements rather than the established EU institutions. Calls from Brussels for strengthening the European arms industry therefore always aim at strengthening Brussels—sometimes, it seems, at the expense of strengthening the European arms industry.
One of the few things the EU can provide in order to support the defence section is research money. The Horizon 2020 research programme running from 2014 to 2020 has a total volume of just over €70 billion. Arms producing companies have sometimes benefited from EU support, for instance via research on dual-use technologies. The window for defence companies opened a little more about ten years ago, when the EU began to fund research on technologies for ‘civil security’, such as surveillance and data mining technologies. A number of arms producing companies have collaborated on research projects in civil security research doing work which was also relevant for their core business. However, the amounts of money involved were comparatively small and companies could not openly direct research towards military applications.
This will soon change. Horizon 2020, while continuing to exclude direct military research, should provide more benefits to arms industries. The key is a greater emphasis on dual-use technologies, which are of direct interest for arms producers. Such research should complement the spending on defense and dual-use research by member states. There is also a renewed push for the EDA to coordinate research. Even with these measures, the gap between the military research spending of the United States and the EU will remain large.
This begs the question: is this a smart course of action beyond subsidizing the arms industry? EU representatives have high hopes.
In December 2012, when EU Council President Van Rompuy announced that the December 2013 Summit would be devoted to defence and security policy, he stated that he wished for ‘a stronger defence industry’ which ‘will contribute to more innovation and competitiveness, and to more growth and employment across our Union’. EU Commission President Barroso added that ‘the defence sector, apart from the political and other aspects is also crucial in terms of exports, cutting-edge research and provides growth and highly skilled jobs’.
Presidents Van Rompuy and Barroso might have been less enthusiastic if they had been better informed, or perhaps if they had been less exposed to representatives from the EU defence industry than to economists who have studied the effectiveness of defence research.
It remains likely that arms producers in Europe will benefit financially when more money is spent on defence-relevant research. They may even be able to expand arms exports but that in itself will not help much to improve growth and reduce unemployment in the EU. For that the industry is much too small. Arms exports from the EU amount to less than one half of one per cent of total exports from the EU and employment in arms production is less than three quarters of one per cent of total employment.
A sizeable effect could only be achieved if defence research led to a major boost to growth and employment beyond the defence sector. It is clearly this idea that the two presidents had in mind. In essence they argue that the technology spin-off from defence to the civilian sector is a major boon for the economy. Van Rompuy and Barroso are certainly not the first politicians to argue for shifting research money from civilian to military-related research but it is astonishing to hear this argument nowadays from European politicians.
Resurrecting the idea of shifting money from the civilian to the defence sector ignores severaldecades of research. There may have been a time, for instance in the 1940s and the 1950s, when defence research did stimulate the economy in major ways. While growth industries such as aerospace and electronics benefited primarily from the size of spending, military research may also have been more willing to take technological risks than the then-small civilian sector. However, this changed with the maturation of industries. Studies from the 1960s onward conclude that defence research is less effective in stimulating economic growth than civilian research. Casestudies of particular industries, such as electronics and information technologies, have confirmed the leading role of civilian research.
Instead of ignoring the state of research into the relative effectiveness of military and civilian research spending, European politicians should know better. A strong case can be made that Europe as a whole, and some European countries in particular, such as Germany, have benefited from low defence research spending (compared to civilian spending, and to countries such as the United States or the former Soviet Union). The idea of shifting research money away from clearly civilian objectives towards defence-related ones is a good idea for European arms companies but it’s a bad one if the objective is to fight the current economic crisis in Europe.
Difficult times can lead to all kinds of ideas, both good and bad. The European Union (EU) has resurrected one idea that seemed to have been buried some time ago: that of fighting an economic crisis by shifting research money to the defence sector. However, recent studies have shown that the positive economic spin-offs of military research are questionable. Is it wise for the EU to be taking such a course? Beyond arms companies themselves, who will benefit from this change in direction?
In December 2013, the Council of the European Union will meet at a special Summit to decide on measures to support the arms industry in Europe. The proposals on the table are based on several years of preparatory work in both the EU Commission and the Council. This work was supported by the EU body set up to improve cooperation on defence–industrial issues in the EU, the European Defence Agency (EDA), and has been strongly influenced by submissions from arms companies in Europe.
The scope of the actual proposals is modest. The EU has little competence in the defence–industrial field. EU member states have exempted the defence sector from European integration in all relevant treaties since the 1950s. Even if member states find it useful to cooperate, they often choose special intergovernmental arrangements rather than the established EU institutions. Calls from Brussels for strengthening the European arms industry therefore always aim at strengthening Brussels—sometimes, it seems, at the expense of strengthening the European arms industry.
One of the few things the EU can provide in order to support the defence section is research money. The Horizon 2020 research programme running from 2014 to 2020 has a total volume of just over €70 billion. Arms producing companies have sometimes benefited from EU support, for instance via research on dual-use technologies. The window for defence companies opened a little more about ten years ago, when the EU began to fund research on technologies for ‘civil security’, such as surveillance and data mining technologies. A number of arms producing companies have collaborated on research projects in civil security research doing work which was also relevant for their core business. However, the amounts of money involved were comparatively small and companies could not openly direct research towards military applications.
This will soon change. Horizon 2020, while continuing to exclude direct military research, should provide more benefits to arms industries. The key is a greater emphasis on dual-use technologies, which are of direct interest for arms producers. Such research should complement the spending on defense and dual-use research by member states. There is also a renewed push for the EDA to coordinate research. Even with these measures, the gap between the military research spending of the United States and the EU will remain large.
This begs the question: is this a smart course of action beyond subsidizing the arms industry? EU representatives have high hopes.
In December 2012, when EU Council President Van Rompuy announced that the December 2013 Summit would be devoted to defence and security policy, he stated that he wished for ‘a stronger defence industry’ which ‘will contribute to more innovation and competitiveness, and to more growth and employment across our Union’. EU Commission President Barroso added that ‘the defence sector, apart from the political and other aspects is also crucial in terms of exports, cutting-edge research and provides growth and highly skilled jobs’.
Presidents Van Rompuy and Barroso might have been less enthusiastic if they had been better informed, or perhaps if they had been less exposed to representatives from the EU defence industry than to economists who have studied the effectiveness of defence research.
It remains likely that arms producers in Europe will benefit financially when more money is spent on defence-relevant research. They may even be able to expand arms exports but that in itself will not help much to improve growth and reduce unemployment in the EU. For that the industry is much too small. Arms exports from the EU amount to less than one half of one per cent of total exports from the EU and employment in arms production is less than three quarters of one per cent of total employment.
A sizeable effect could only be achieved if defence research led to a major boost to growth and employment beyond the defence sector. It is clearly this idea that the two presidents had in mind. In essence they argue that the technology spin-off from defence to the civilian sector is a major boon for the economy. Van Rompuy and Barroso are certainly not the first politicians to argue for shifting research money from civilian to military-related research but it is astonishing to hear this argument nowadays from European politicians.
Resurrecting the idea of shifting money from the civilian to the defence sector ignores several decades of research. There may have been a time, for instance in the 1940s and the 1950s, when defence research did stimulate the economy in major ways. While growth industries such as aerospace and electronics benefited primarily from the size of spending, military research may also have been more willing to take technological risks than the then-small civilian sector. However, this changed with the maturation of industries. Studies from the 1960s onward conclude that defence research is less effective in stimulating economic growth than civilian research. Case studies of particular industries, such as electronics and information technologies, have confirmed the leading role of civilian research.
Instead of ignoring the state of research into the relative effectiveness of military and civilian research spending, European politicians should know better. A strong case can be made that Europe as a whole, and some European countries in particular, such as Germany, have benefited from low defence research spending (compared to civilian spending, and to countries such as the United States or the former Soviet Union). The idea of shifting research money away from clearly civilian objectives towards defence-related ones is a good idea for European arms companies but it’s a bad one if the objective is to fight the current economic crisis in Europe.
This blog post is published as part of a collaborative partnership between SIPRI and Economists for Peace and Security (EPS).
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