brief 5 Eurofighter 2000: Consequences and Alternatives

february 96 brief 5

Contents About the Authors

Zusammenfassung German Summary 4 Werner Voß is a project director at Preface 6 ISA Consult GmbH, a consultancy specialised in advice on the Eurofighter 2000: introduction of new technologies Consequences and Alternatives 7 and labour market policies. He graduated from the Economics The Origins of the Department of the University of Eurofighter 2000 8 Bremen.

A Comparative Survey of the Country Studies 11

The significance of the Michael Brzoska is research director Eurofighter project 11 at the Bonn International Center for Conversion. He has published Security aspects 12 widely on arms export and production questions. He has Financial and economic aspects 13 degrees in economics and political science from the University of Industrial dependence 14 Hamburg.

The Eurofighter's influence and technology policy 15

Conversion possibilities on the company level 15

Assessment of possible options 17

The status quo scenario: procurement of the Eurofighter 17

Cancellation of the Eurofighter program and no alternative 19

No Eurofighter production - purchase an alternative aircraft 19

Concentrating Eurofighter production in Great Britain 20

Prospects 22

References 24 Cover Illustration: Vladimír Rencín

2 B·I·C·C brief 5 Eurofighter 2000: Consequences and Alternatives by Werner Voß and Michael Brzoska

february 9B·I·C·C6 3 brief 5

Zusammen-

der Jagdflugzeugflotte, die vor allem fassung aus F-104S Starfightern aus den 60er Jahren besteht, erheblichen Nach- German Summary holbedarf. Die britistische Luftwaffe sieht erheblichen Bedarf für den Eurofighter, der als Jäger und Die Entwicklung und Beschaffung Produktion angesichts des grundle- Jagdbomber ausgerüstet werden soll, von Jagdflugzeugen des Typs genden sicherheitspolitischen vor allem für Kampfeinsätze außer- Eurofighter 2000 ist das größte Wandels in Europa nicht vertretbar halb Europas. In Großbritannien laufende Rüstungsprojekt in Westeu- ist. wird die Beschaffung der ropa. Die Gesamtkosten ohne Eurofighter von allen großen Betrieb der Flugzeuge lassen sich auf Die Autoren der Studie sehen nach Parteien unterstützt. Das Projekt ist etwa 100 Mrd. DM bis zum Jahre dem Ende des Kalten Krieges in für die angeschlagene britische 2012 schätzen. Das Programm hat Europa stark verminderten Bedarf Luftfahrindustrie von über- entsprechend große Auswirkungen für Jagdflugzeuge mit geringer lebenswichtiger Bedeutung. auf die Luftfahrt- und Rüstungs- Reichweite wie den Eurofighter. Die Die britische Regierung wird das industrien der beteiligten Länder Zahl der Kampfflugzeuge in den Eurofighter-Programm notfalls in Großbritannien, Italien, Spanien Staaten des ehemaligen Warschauer eigener Regie durchführen. Italien und Deutschland. Um die Auswir- Paktes vermindert sich zunehmend, wird sich wegen des dringenden kungen des Projektes, auch für den weil seit 1992 kaum noch Beschaf- militärischen Bedarfs mit großer Fall einer möglichen Nicht- fungen getätigt wurden. Selbst unter Wahrscheinlichkeit beteiligen. In beschaffung, einschätzen zu können, der pessimistischen Annahme einer Spanien, wo die Luftwaffe bereits hat das Bonner Konversionszentrum erneuten Konfrontation mit über moderne US-amerikanische eine vergleichende wissenschaftliche Russland ergibt sich bei Durchfüh- Kampfflugzeuge verfügt, ist die Untersuchung in Auftrag gegeben. rung der in Westeuropa und Entscheidung offener. Die spanische Sie liegt als Buch in deutscher Russland absehbaren Beschaffungen Entscheidung wird von der Sprache vor1 . Auch im Jahr der von Kampfflugzeugen im Jahre 2010 Haushaltslage und den Kosten des erwarteten Entscheidung, 1996, ist ein deutliches Übergewicht, noch Flugzeuges abhängig sein. noch unklar, ob das Flugzeug in ohne Berücksichtigung der in In Deutschland und Spanien ist das allen beteiligten Ländern beschafft Europa stationierten US-amerikani- Programm überwiegend zu einem wird und, wenn, in welchen Stück- schen Verbände. industriepolitschen Projekt gewor- zahlen. Die Beurteilung der Mög- den, was es in Italien und Großbri- lichkeiten und Schwierigkeiten In Spanien und Italien wird die tannien auch ist. Angesichts der ziviler Nutzung vorhandener Beschaffung des Eurofighter mit der hohen Kosten und der Art der militärischer Kapazitäten hat daher Bedrohung aus dem „Süden“ begrün- geförderten Technologie - weitge- praktische Relevanz. det. Obwohl auch in den südlichen hend spezifisch militärische Luft- Mittelmeeranrainerstaaten die Zahl fahrtechnologie, werden Zweifel an Im vorliegenden „brief“ werden die moderner Kampfflugzeuge ab- der Zukunftsträchtigkeit einer Ergebnisse der vier Fallstudien nimmt, hat die italienische Luftwaffe solchen staatlichen Industriepolitik zusammengetragen. Die unabhängi- auf Grund der starken Überalterung angemeldet. gen Autoren aus den vier am Programm beteiligten Länder gelangen in ihrer Untersuchung der sicherheitspolitischen, wirtschaftli- chen, technologischen und finanziel- len Auswirkungen zu dem Ergebnis, 1 daß ein starres Festhalten an der Michael Brzoska und Werner Voss Mitte der 80er Jahre festgelegten (Herausgeber). Auswirkungen und Alternati- ven des Eurofighter 2000. Eine Vier-Länder- Planung für Beschaffung und Studie für das Internationale Konversions- zentrum Bonn. Nomos-Verlag, Baden-Baden, 1996. 300 pp. DM 49,—.

4 B·I·C·C german summary

Ein Verzicht auf die Beschaffung Die gegenwärtige Restrukturierung ohne Kompensationen für die der welweiten Luftfahrtindustrie beteiligten Firmen würde in den nährt weitere Zweifel am industrie- beteiligten Ländern zu erheblichen politischen Sinn der Beschaffung. Verlusten an Arbeitsplätzen führen. Eine Konzentration der europäi- Die Möglichkeiten der Firmen, den schen Kapazitäten ist überfällig. Die Auftragsausfall durch Ausbau ziviler Produktion des Eurofighter in Produktionszweige aufzufangen, Deutschland behindert die unver- sind begrenzt. Durch direkte meidlichen Konzentrationsprozesse Konversion wird angesichts der auf europäischer Ebene ohne der angespannten Lage in der zivilen deutschen Luftrüstungsindustrie eine Luftfahrtindustrie, der relativ langfristige Perspektive bieten zu hochwertigen und damit teuren können. Fertigungsstrukturen bei den betroffenen Firmen und der man- gelnden langfristigen Vorbereitun- gen durch das jeweilige Management nur ein geringer Teil der Arbeitsplät- ze gerettet werden können. Sehr viel mehr Arbeitsplätze ließen sich erhalten, wenn den betroffenen Firmen Kompensationsaufträge für den Ausfall der Eurofighter-Produk- tion gegeben würden.

Um die Folgen eines möglichen Verzichts auf die Beschaffung in einem oder mehrerer der beteiligten Länder beurteilen zu können, werden verschiedene Alternativ- szenarien durchdacht. Als eine mögliche Alternative wird vorge- schlagen, statt der jetzt vorgesehenen Aufteilung der Produktion auf die vier beteiligten Länder die Fertigung in Großbritannien zu konzentrie- ren. Dafür könnten den Industrien der anderen Länder Kompensations- aufträge gegeben werden. Damit könnten die Beschaffungskosten gesenkt und zugleich erfolgverspre- chende zivile Technologielinien gestärkt werden.

B·I·C·C 5 brief 5

Preface

The case studies and a summary by Werner Voß of ISA Consult were by Michael Brzoska worth more than US $60 billion (for discussed in a day-long seminar in about 600 aircraft). In addition, long- Bonn on 27 April 1995 with If procured as planned, the range competitiveness, in both government, industry and union Eurofighter 2000 will be the largest military and civilian aerospace, representatives, as well as journalists arms industrial project in Western markets might suffer. If Germany and academics. The case studies were Europe. The program has major cancels procurement, lob losses of than revised and are published in a German-language book that is now importance for the aerospace and 20,000 or more have been predicted. 1 arms industries in all four of the On the other hand, procuring a available from BICC. participating countries: the United mainly because of its Kingdom, Germany, Italy and economic impact does not seem to This brief is based on the German- Spain. be a justifiable decision in times of language summary of that book. It general fiscal stringency. Military specifically addresses, in a Originally planned in the markets are shrinking; civilian comparative manner, the effects of framework of the , the production provides much better the program and possible alterna- program has come under severe long-term prospects. If governments tives in the participating countries. criticism in the changed want to help the aerospace industry, The study benefited from the environment of the early 1990s. support of civilian activities seems contributions and the support of a Both the definition as short-range air wiser. Other alternatives, such as large number of persons. The Hans- superiority fighter as well as its cost solar energy, may even provide Böckler-Stiftung generously helped have fed opposition—predominantly better long-term prospects. to finance the seminar. The in Germany, but also in Spain and Unfortunately, it is not obvious that summary was translated by Andrew to a lesser extent in Italy and the those currently employed in Dennison. Special thanks are due to . programs would the authors who provided detailed benefit from civilian alternatives. contributions, often containing data More and more, economic not available elsewhere. Of course, arguments, especially those related Because of these conversion-related as outside experts, they did not have to the employment of several aspects, the Bonn International access to all the information and thousands of highly skilled Center for Conversion asked material that is classified but would aerospace workers, have become the independent academic experts from have been useful for this predominant counter-argument to the four participating countries to comprehensive study of the pro- such opposition. It is claimed by contribute to a comprehensive study gram. Still, they succeeded in industry that the cancellation of of the program. Authors were asked providing a useful contribution to a Eurofighter procurement would to address the security, fiscal, debate that is more than necessary result in the permanent loss of more industrial, economic, technological given the scale of the program. than 60,000 jobs in all of the and conversion issues arising both participating countries. The aircraft from the program as planned and industries in these countries would from a possible cancellation. Susan be damaged, it is claimed, by the Willett (King's College, University immediate loss of an order probably of London), Jörg Huffschmid (Universität Bremen), Guilio Perani (Archivio Disarmo, Rome) and Arcadi Oliveres (University of Barcelona) contributed detailed country case studies.

1 Michael Brzoska and Werner Voß, eds. Auswirkungen und Alternativen des Eurofighter 2000. Eine Vier-Länder-Studie für das Internationale Konversionszentrum Bonn . Baden-Baden: Nomos-Verlag, 1996. 300 pp. DM 49,—.

6 B·I·C·C introduction

Eurofighter 2000: Consequences and Alternatives by Werner Voß An alternative scenario will look at the possibilities and consequences of This brief will bring together the complete or partial abandonment of results of four country case studies the Eurofighter’s procurement of the Eurofighter 2000 program. program. In this context, various Like these studies, this summary drop-out options will be discussed: will first examine the security issues purchasing another aircraft, perhaps and then those of fiscal, under , or employment and technology policy. concentrating production of the Sections on the short- and long-term Eurofighter in Great Britain. employment policy alternatives will follow. The chapter begins with a short recapitulation of the project’s This brief’s second section will history. Such a description clarifies undertake a comparative description the similarities as well as the many of the prospects, problems and differences between the partner policy alternatives that would follow countries involved, thereby from the various possible political providing a foundation for decisions that governments might understanding the complexity of the make regarding Eurofighter program. production. These alternatives will be presented by depicting various scenarios, which is an effective way of identifying the significant aspects of an issue.

In the period leading up to the production decision, which is expected in 1996, numerous alterna- tives appear possible. They range from completing the program as a four-country project by jointly procuring the aircraft, to one or more of the partners leaving the project, to a decision on the part of all the partners to entirely refrain from producing a new fighter aircraft.

The status quo scenario will provide the context for describing the expectations and difficulties associated with the joint procurement of the Eurofighter. The assumption that increased exports are necessary for the success of the program—an argument frequently made by industry—is of particular importance for this analysis.

B·I·C·C 7 brief 5

The Origins of the

design a fighter with an empty Eurofighter 2000 weight of 9.5 tons minus 250 kg. The major aircraft manufacturers of the four other partner states (, MBB, Aeritalia and As early as the 1970s, the then-defense minister, Hans Apel, to CASA) designed an aircraft of 9.5 expectation that research and declare a spending (and tons plus 250 kg. By February 1985, development costs of a new fighter reassessment) pause for the new the companies had presented the would be very high led various air aircraft. The change to a two designs. Yet neither fully met forces and governments to examine conservative-liberal government in the requirements of the European whether an aircraft could be jointly 1982 rekindled the discussion of a Staff Target; further refinements in developed and built. It was to follow-on model for the F-4 Phan- the respective concepts followed. replace the 1960s vintage F-4F tom. At the same time, impetus Phantom (Germany, Great Britain, grew for multilateral governmental Behind these diverging ideas about Italy), F-3 Tornado (Great Britain), talks. weights lay irreconcilable differences and F-104 Starfighter (Italy). These over the planned aircraft’s role. aircraft were slated for retirement in In the summer of 1983, the defense Despite the compromise reached the 1990s. ministries of Great Britain, , during the preceding negotiations, Germany and Italy began serious the French saw their security better The European Fighter Aircraft negotiations regarding a European served by an aircraft designed (EFA), as it was then known, had a Fighter Aircraft. Already in 1983, primarily for a ground-attack role. number of antecedent models in the staffs were able to agree The low empty weight would also France and Great Britain: France on a joint tactical framework help reduce costs, thereby pursued the demonstration program (Outline European Staff Target, improving the prospects for export. Avion de Combat Experimentale OEST). According to their This was part of a strategy aimed at (ACX), which was later redesignated agreement, the primary role of the a stable and full utilization of French as the “Rafale.” British firms (British new fighter aircraft would be air aircraft construction capacity— Aerospace, GEC , Rolls- defense; additionally, it was to have capacity that was highly dependent Royce, Dowty, Lucas, Ferranti and a ground-attack capability. The on exports. Smiths Industries) began to develop fighter was to have a one-man crew, a new fighter aircraft in the context a range of 550 km, multiple target Export chances also played an of the Pro- acquisition radar and the ability to important role in the British debate gramme (EAP). The British defense take off and land on short runways. over a new fighter aircraft. ministry only began to support this Nevertheless, the distance to the program in 1982. The governments were not able to assumed Central European reach agreement on a clearly battlefield and the prospect of In Germany, aviation companies specified empty weight in the deployment overseas left the British were also defining the requirements tactical framework agreement. air force arguing that a lighter for a new fighter aircraft. It was to Whereas the German air force aircraft would not meet their replace, by the mid-1990s, the F-4 preferred a weight of 8.5 tons, the requirements. The heavier aircraft Phantom used by the German air French side wanted 9 tons. The they wanted also had consequences force. These activities, begun in the British favored 11 tons. As a for the design of the aircraft’s fall of 1976, did not lead to the comprise, they agreed on upper and engines. results German industry had hoped lower limits. for. Substantial difficulties in As with the airframe manufacturers, financing the MRCA Tornado led Despite these differences, the British engine manufacturer negotiations continued. In October Rolls-Royce and its French 1984, the parties agreed on a more “counterpart” Snecma had already concrete description of the project done considerable design work for within the context of a “European the respective aircraft Staff Target.” Shortly thereafter, the configurations. The interests of the aviation industry was commissioned various industries, which were to draw up two feasibility studies. basically structured along national The French aircraft manufacturer lines, clashed on this issue. Dassault obtained a contract to

8 B·I·C·C the origins

These differences over the design GmbH was established as the prime The apportionment of project tasks were rooted in the desire of the contractor for the new fighter. was also agreed on: British industries to maintain their Eurojet Engine GmbH was set up a Aerospace would take on primary influence and to make the most of short time later to organize engine responsibility for developing the the money they had already development. These entities allowed front fuselage and half of the right- committed. Which industry was to the various national industry groups hand wing. MBB would develop the lead the common project was thus participating in the European central fuselage and the vertical tail an important question. Despite a Fighter Aircraft to join interests at unit. Aeritalia would design the left variety of compromise proposals, the international level. wing as well as half of the rear the parties could not find a common fuselage. The Spanish aircraft solution during the mid-1980s. The The program office NEFMA has manufacturer CASA would do attempt to develop and produce a been responsible for awarding development work on the other half new fighter in the context of a five- contracts since the beginning of the of the right wing as well as the rear country arrangement was development phase. MoU No. 1 also fuselage. Rolls Royce (UK), MTU abandoned. France went its own stipulates that German and British (now a part of Daimler Benz way with the development of the companies and institutes will each Aerospace AG, Germany), Fiat “Rafale.” The Spanish government receive 33 percent of the Avio (Italy) and SENER (Spain) refrained from doing the same only development contracts, the Italians were the primary contractors for the after the other three Eurofighter 21 percent, and the Spanish 13 development of the states guaranteed it both an percent. EJ2000. economic stake commensurate with its financial contribution and The second framework agreement Development work continued and protection from an uncontrolled (MoU No. 2), signed on 18 January the EFA project grew less cost explosion. 1987, settled a number of additional contentious. Only occasional aspects of the ongoing development controversies over rising prices The governments of Great Britain, phase. In September of the same attracted any public notice. These Germany, Italy and Spain signed the year, the partner countries signed controversies did not, however, call first Memorandum of Understand- the “European Staff Requirement for into question the validity of the ing (MOU No. 1) on 21 October (full) Development” (ESRD). This program in principle. 1986. Therein they declared their specified more concretely the intention, in principle, to jointly operational requirements for the This did not occur until the collapse develop and procure a new fighter new aircraft and thus the of the Warsaw Pact. The FDP, aircraft. The aircraft was to be development process in general. Germany’s Liberal party, decided to capable of combat both close-up and withdraw its support for the project beyond-visual range. It was to be The governments made a non- at its traditional Epiphany armed with AMRAAM and binding commitment to procure 760 conference in January 1990. Intense ASRAAM guided missiles (though aircraft. Germany and Britain both controversy and broad-based the ASRAAM option has since been intended to purchase 250 units or 33 investigations soon surrounded the dropped). Furthermore, the EFA percent of the total production. Italy “Jäger 90” project, as it is known in was to acquire all-weather and day- agreed to purchase 160 aircraft (21 Germany. How the aircraft’s costs and-night capability. The new percent), while Spain planned to buy could be reduced was at the center of fighter aircraft’s primary function 100 (13 percent). the debate. was to be air defense, but it was also to be suitable for ground attack. National parliaments took up the In the period that followed, the question of the new aircraft during program’s increasing difficulties in The international program office 1988. Additionally, the partner the development of certain NATO European Fighter Aircraft defense ministries signed MoU No. components—particularly the Management Agency (NEFMA) was 3 in November 1988, which was to avionics—became well-known. to supervise the project, and began be retrospectively valid from Indeed, technical problems made it operations in February 1987. The January 1988. impossible to adhere to the establishment of corresponding timetable agreed upon in 1988. The industrial program structures had first flight of a prototype, initially already occurred. In Munich, in June planned for 1991, was postponed 1986, the Eurofighter Jagdflugzeug numerous times; the first flight finally took place in April 1994.

B·I·C·C 9 brief 5

Moreover, the Spanish government On the basis of the original The Eurofighter 2000 would stay announced in February 1992 that it configuration, including two jet with EFA’s airframe and the EFA’s would buy only 87 instead of the engines, industry outlined potential twin jet engines. Those countries planned 100 aircraft. The German savings. Changes in the aircraft that would continue with the government also signaled that it design led the authors to speak of a production phase would be able to would prefer to purchase 140 instead “New European Fighter Aircraft” fit the aircraft as they desired. The of the previously planned 250 (NEFA). NEFA, it was said, could decision on procuring the aircraft aircraft. These events all confronted be built for a unit price of 100 would be made in 1995. the project with increasing tension million DM. The savings were to between the four participating come from reduced equipment Despite the joint continuation of the countries. standards, more rationalized logistic project, one problem remained structures and more concentrated acute: the financial difficulties In the context of continued domestic investments. Governments received incurred by the price dynamic of the debate, the German defense the study in October 1992. planned aircraft could not be solved minister, Volker Rühe, provoked a by the restructuring measures. serious crisis for the consortium in A few days later, the British Rumors of significant cost increases June 1992. Rühe proposed government underlined its intention and risks continue. abandoning the planned project and to continue the original program— building a new, significantly cheaper alone if need be. Britain also This inability to control costs could aircraft—dubbed “EFA light.” suggested a trilateral continuation of induce substantial changes in the the project to the Italian and Spanish procurement plans of the various The British government, in governments. This ruled out a joint governments. Only Great Britain particular, reacted very negatively to termination of the development appears committed to its original this proposal. The uncertainty of project. Realizing that it could only intention to purchase 250 (or even developments in Eastern Europe leave the project at great cost, more) aircraft. Spain has reduced its justified for the British government Germany decided to stay involved at purchase plans from 100 to 72. Italy that a new fighter with the least through the end of the seems to only want 130 planes commonly defined characteristics development phase. instead of the original 165. The was needed. At the same time, the situation in Germany is still unclear. British government argued that In December 1993, the four Discussion about the effects of the pursuing a new aircraft design would governments agreed to continue the reduced procurement plans were still devalue the research and project on the basis of changes in the ongoing at the time of writing. development costs that had already overall configuration of the aircraft. been incurred, while adding addi- In order to symbolize a new Every reduction in the number of tional costs because of delay beginning, they renamed the project aircraft built inevitably increases the involved in redesigning the aircraft. “Eurofighter 2000.” The precise unit cost. This does not make the nature of this agreement is still not decision to participate in the In an effort to maintain Germany’s entirely clear to the general public. procurement and production of the participation in the cooperative A Memorandum of Understanding Eurofighter any easier. No definite venture, the Eurofighter consortium dividing the extra costs resulting cost calculations were available at was commissioned to undertake a from redevelopment (MoU No. 4) the end of 1995. study on how the expected costs of was only signed in April 1995. the original version could be In this respect, the EFA crisis of reduced by 2 billion DM. Savings Commitment to the multi- 1992 and the programs continuation would be aimed, in particular, at functional design of the aircraft into the present also shows the great lowering the calculated unit-cost by continued: the Eurofighter 2000 was strength of military, technological 30 percent. This would bring the to have both air-to-air and air-to- and industrial interests. By the same price per aircraft under what the ground roles. The German air force token, it demonstrates how difficult German government viewed as the viewed the later function as it is to change the trajectory of such “magic” 100 million DM threshold. ancillary. In contrast, the British a multilateral program once it has government underlined its intention begun. to enhance the aircraft’s ground attack role.

10 B·I·C·C comparative survey

A Comparative Survey of the Country Studies

The significance of the maintaining capacity in the defense EUROFIGHTER project and aviation industry. The program also raises the issue of short- and long-term industrial policy. The A comparative assessment of the major results of the four country specific national priorities and studies in regard to these questions developments requires an adequate are depicted in Table 1. They are and overarching frame of reference. explained in greater detail below. A number of important elements have already been mentioned such as security policy and alliance politics. Also, the program must be seen in its economic context including criticism regarding its negative impact on national and of the Eurofighter’s implications for

Table 1: Effects of the Eurofighter program

Spain Italy Germany Britain

Significance for air force planning priority priority medium priority

Are military to a large to a large requirements met? totally mostly extent extent

Political acceptance of the project not discussed high controversial high

Assessment of costs worryingly of Eurofighter very high very high high very high

Industrial dependence : Total economy low low low high Aerospace industry high high influential very high Defense industry high high substantial high

Technology policy : Total economy important secondary secondary important Aerospace industry important important less important important Defense industry important important important important

Short-term little little little very little conversion possibilities on company level

B·I·C·C 11 brief 5

Security aspects Table 2: Aircraft to be replaced by the EF 2000

All four countries continue to Country Fighters Fighter adhere to the formal rationale behind the new aircraft: it is to United Kingdom 134 54 Sepecat Jaguar replace the aging fighters of the F-3 ADV 171 Panavia respective national air forces. The already retired: Tornado GR-1 Italian air force continues to rely on MDD F-4 Phantoms the F-104 Starfighter. Germany’s and Spain’s air defense is primarily Germany 150 MDD F-4 Phantoms, 193 Panavia dependent on the F-4F Phantom— 20 Mikoyan MiG-29 Tornado FGA an aircraft type that was already used during the Vietnam war. The Spain 33 Dassault Mirage 22 Northrop F-5B British air force also relies on F-1 CE/BE 17 Dassault relatively old weapons systems, already retired: Mirage F-1EE including Jaguars and the Tornado- Dassault Mirage IIIs ADV (see Table 2). Since the dissolution of the Warsaw Italy 99 Lockheed 70 Panavia Pact and the , the mere F-104ASA Tornado FGA fact that a weapon system is 15 Fiat G-91Y outdated no longer justifies a new 66 Aeritalia AMX weapons program. Convincing Source: IISS, 1995 military and political rationales are also necessary. The once dominant by certain “uncertainties”; subjective fighter aircraft levels in Europe. The threat perception of a Soviet attack influences can play a role and five West European states, Great is being gradually replaced by other qualitative aspects are not accounted Britain, Germany, France, Italy and somewhat ambiguous threat for. Nevertheless, it helps to identify Sweden had 2,167 combat aircraft in perception to justify continuation of certain trends. 1995. Despite the planned the project. modernizations, e.g., the Rafale and As in the past, one line of argument On the basis of figures from the the Eurofighter, this figure will is to determine and compare the Institute for Defense and decrease to 1,791, a reduction of 17.4 current and planned levels of fighter Disarmament Studies, Table 3 shows percent, by the year 2010. Russia aircraft. This procedure is burdened had an inventory of 3,514 combat

Table and graph 3: Current and planned levels of total number of fighter aircraft in the years 1995—2010

1995 2000 2010 Western Number Western Europe Europe Great Britain 419 419 464 4,000 Russia

Germany 444 360 301 3,000 France 612 532 438 2,000 Italy 348 294 300 1,000 Sweden 344 296 288

Total : 2,167 1,901 1,791 0 1995 2000 2010 Year Russia 3,514 2,302 1,310

Source: Forsberg, 1994 Source: see Table 3

12 B·I·C·C comparative survey

aircraft in 1995 and is planning to of the total decline in threat, the to see threats stemming from the reduce this by almost two-thirds to German defense ministry expressed countries of the south (Maghreb 1,310 by 2010. On the basis of its interest in “shedding excess fat” countries). A number of states in current planing, Russia’s quantitati- from the planned version of the Africa and the Middle East possess ve superiority in 1995 will have aircraft. Still, the official line is third-generation combat aircraft turned into a significant West currently that a complete (such as the MiG-29 and the SU-27). European superiority by 2010. renunciation of such an aircraft is The comparison does not include not possible from the national As these aircraft are technologically Ukraine. It is a major country with security perspective because of the superior to the F-104 Starfighters, its own fighters that could also pose ongoing reorientation of Germany’s the Italian air force places great a threat to the West. But the armed forces. “Multi-directional” importance on acquiring a new summary provided by the Institute threats to German territory and the fighter. The performance for Defense and Disarmament necessity of protecting German characteristics of the Eurofighter Studies also excludes Spain. More troops in out-of-area operations now appear to fit the military importantly, it excludes the United provide the basis for justifying the requirements of the Italian air force States, which will have more than procurement of the aircraft. better than is the case with twice as many combat aircraft as However, in the view of the author Germany. Nevertheless, the author Russia in the year 2010. Addition- of the case study on Germany, Jörg of the Italian country case study, ally it makes no reference to Huffschmid (1996), the military Guilio Perani (1996), also calls into NATO’s possible expansion to specifications of the Eurofighter do question whether the Eurofighter is, include Central East European not correspond to the requirements from a technical perspective, the states. for the intended new missions. best of all possible solutions. There has been no public debate of any In sum, the available data indicate In Great Britain, the military significance in Italy over this matter. that the security rationale for a establishment did not see such a Nor has Spain seen public debate on new aircraft has become weak. At “justification gap” in the early 1990s. the security implications of the least in the mid-term, the available While they recognized that the Eurofighter. capabilities of the western states threat of a massive Warsaw Pact appear more than sufficient in attack had disappeared, they pointed Financial and view of a “threat” that has declined to substantial and growing economic aspects and continues to decline. In view instability within Europe. In the of the difficult economic situation view of the British defense ministry, in Ukraine and Russia, it seems a this was especially the case on the From the very beginning, the mistake that the governments territory of the former Soviet Eurofighter has provoked discussion involved are not negotiating Union. Problematic developments not only of its financial implications further disarmament. The analysis were also occurring outside Europe; but also of its impact on economic, is only marginally different with the Middle East, in particular, industrial and technology policy. respect to the „Southern remained unpredictable. Because the periphery“ of Europe. states of the former Warsaw Pact With public indebtedness sometimes were armed with third generation rising to exorbitant levels, West The analysis in the country case military aircraft —among them the European governments have given studies show that the respective MiG-29 Fulcrums and the SU-27 increasing attention to keeping the military establishments have Flankers —Great Britain would also costs of new weapons systems under significantly shifted their have to modernize its air defenses. control. Sluggish economic growth argumentation, particularly in terms For these reasons, the Royal Air in recent years has reinforced the of the Eurofighter’s future place in Force placed great importance on need to curb budgetary excess. national security policy. The the acquisition of an aircraft Nevertheless, different groups changes in Central and Eastern adhering to the defined requirements within the affected societies have Europe explain much of this shift. of the EFA. This led Malcom viewed the Eurofighter’s cost Rifkind, then state secretary in the development quite differently. Improved relations with former defense ministry and now foreign Other factors, such as preserving “enemy” states have generated minister, to announce in 1993 that jobs and pushing technological growing doubt —particularly in Britain would complete the pro- development, also affect their unified Germany —about the need gram, if necessary on its own. assessment of this defense program. to replace the Phantom with a The authors of the country studies technologically demanding and thus In contrast to Germany and Britain, have concluded, on the basis of the extremely expensive EFA (Jäger 90) Italy and Spain define their security material available to them, that the or EUROFIGHTER 2000. In view requirements more in terms of aircraft’s unit-price (at currently Mediterranean problems; they tend planned production levels) will be at

B·I·C·C 13 brief 5

the upper, not the lower, level of taxpayer. Germany’s recession in Nevertheless, the aviation industry official price estimates. 1992 and 1993 only exacerbated this. is already suffering from excess The Eurofighter is thus clearly in capacity and the rising number of The Italian budget accounting office competition with other public competitors makes it a “perilous assumes that the project will exceed expenditures. Significant cost place to do business” (Willet, 1996). the planned development costs of increases would further reduce the Globally, excess capacity is at 30 around 800 to 900 billion Lira. Nor already limited public willingness to percent; in some branches, it reaches will it be possible to stay within the finance a new combat aircraft. A 50 percent. GATT guidelines have defense ministry’s figure of 15,525 similar assessment can be made for also made direct support for “natio- billion Lira (1994 prices) for the Spain: procurement becomes less nal champions” more difficult. In entire program, as its completion likely with a price higher than this context, weapons projects has already been delayed. In initially planned. appear capable of circumventing Germany, the federal accounting such restrictions and temporarily budget office estimates that the Industrial stabilizing employment. procurement price per aircraft will dependence not be 90 million DM—as suggested The authors of the country studies by the German defense ministry in see the Eurofighter having the 1992—but closer to 150 million DM. Germany’s relatively low interest in following effects on employment: Huffschmid (1996) calculates that the Eurofighter also stems from the program’s marginal impact on including the aircraft’s armament In Great Britain, the development industry and employment. To an cost and assuming the purchase of of the aircraft currently employs extent, this is also true of Italy and only 100 instead of 140 fighters between 3,000 and 4,000 workers. Spain. On the other hand, Great pushes the unit-price to between 175 Observers expect that direct and Britain’s generally weak industrial and 195 million DM. Great Britain indirect employment will rise to base makes the Eurofighter an issue also has experienced cost overruns 20,000 at the high point of during the development phase. of greater salience. production. It will be Based on a system price of more concentrated in the regions of The arms industries of the partner than US $ 100 million , total Lancashire, Warton and Bristol. production costs of about 600 countries view the program with great interest. Assuming that the aircraft would amount to US $ 60 In Germany, around 2,500 people billion. aircraft would go into production, its share of employment in the were working on the aircraft’s development in 1995. If 140 While the British and Italian German arms industry would be substantial (about 10 percent of the aircraft are purchased at a unit- governments view the cost price of 100 million DM, then the development of the Eurofighter 120,000 workers directly and indirectly employed in the arms annual average employment with concern, there has been less created over a 10-year period debate about either past or future industry). In Italy, Spain and Great Britain, it would be even higher. would be 10,000. If the widely cost overruns. The great importance expected cost increases occur, of the aircraft to air force planning The percentage would go up if the project’s cost were to rise while then employment could rise to in the two countries explains this. So between 13,500 and 15,000. The does the expected economic and public spending was being cut, as this would likely result in the jobs would be concentrated in technological benefit, both to Bavaria and Baden-Württemberg. national aircraft industries and termination of other weapons programs. individual firms. In Italy, there are currently This kind of competition is already around 2,000 people employed on The German federal government, the project. The Italian Defense especially the ministry of defense, well known in Germany. It contributed to the delay in starting Ministry estimates that the faces a different situation. It must production phase will create also contend with a national budget development work on this aircraft in the early 1980s. Officially, all the 15,000 jobs. This would make up pushed deep into debt by the costs somewhat less than half the of unification. Nor are further tax partner countries maintain that the project is important for retaining a number of people currently increases likely to ease the financial employed in the Italian aircraft pressure facing the Eurofighter. minimal capability to participate in the construction of combat aircraft industry. The author of the Modernizing the infrastructure and italian case study, Guilio Perani, economies of the new Länder and in the future. Huffschmid questions this argument, claiming that system thus sees this estimate as covering higher social outlays has exaggerated. He assumes an already made for a very wary capability already exists and can be maintained in the civilian aviation average of 7,000 jobs for a industry.

14 B·I·C·C comparative survey

procurement phase of 12 years significant technological The wide variety of views on the and 5,600 for a period of 15 years. “breakthroughs” are coming from role of the Eurofighter in the The regions currently involved in the civilian sectors of the economy. various national technology the development of the aircraft, These civilian breakthroughs have programs should not obscure the Piedmont, Lombardy, Latium then been integrated into new similarity of perspectives in the and Campagnia, will also get weapon systems in recent years; the defense ministries and arms most of the employment from “spin-off” argument (if there ever industries. These interest groups the aircraft’s production. was much validity to it) has been see the aircraft project playing an turned around. Today it is more important role in advancing In Spain, estimates put direct appropriate to speak of “spin on,” military-technological employment on the aircraft at namely using the results of civilian developments. The major concern around 5,000 during production, research and development for is US competition in military with less than 2,000 employed military projects. Naturally, this aircraft production. In view of the during development. does not rule out isolated increasing importance of civilian technological breakthroughs in the technology, it is questionable While these figures are impressive, it military sector. The Eurofighter will whether a narrow concentration must be remembered that they are not reverse this long-term trend; the on arms production capabilities is the result of public expenditure of aircraft will primarily contain appropriate. several tens of billions of US dollars. present-day technology. The mid- and long-term effect of Conversion such employment subsidies are more Italy is also not pursuing a national possibilities at the than doubtful as they tie up technology strategy in regard to the resources that could be better used Eurofighter. This situation is a result company level elsewhere (see, for example, of the Italian defense ministry’s lack Krugman, 1994, p. 234 ff). of a coherent research and Despite considerable efforts in development policy. Research is recent years, Western European The broad distribution of the carried out by the companies countries have not been able to shift production of the Eurofighter will involved. They are, however, to a path of sustainable development also counteract the necessary oriented towards mid-term process. Supporting a new path to restructuring of the European commercial interests. These growth and prosperity, Huffschmid aerospace industry. It will obstruct companies are not part of a strategy argues for combining a cancellation the creation of European capacities for achieving broader social of the Eurofighter with moves (even if only in the four objectives. towards a solar power economy and participating countries). the development of more ecological In contrast, the British government jet engines. A decision to build the The Eurofighter’s uses military projects in general and Eurofighter would lead to significant the Eurofighter in particular to investments in a technological influence on achieve the primary objectives of its direction incapable of adequately technology policy technology policy. Maintaining and addressing the long-term challenges expanding military-related to Europe’s industrial societies. As Though it is a military program, the capabilities and capacities is a high laudable and appropriate as this Eurofighter will influence the political priority in Great Britain. proposal is, it is an open question technology policy of the The British government is against whether such an economic and participating countries—in officially promoting “critical” ecological reorientation can keep proportion to its industrial technology lists, but the discussion jobs secure in companies highly significance. of future research priorities in the dependent on arms production. The 1994 Statement on the Defence other authors are skeptical on this In Germany, Huffschmid (1996) sees Estimates and Forward Look (see matter. the impact on technology policy as Willet, 1996) show that the defense remaining limited; the limited ministry has in fact defined such The short-term possibilities for technological impact of weapons crucial technologies. Spain is also conversion or diversification of the projects is a consequence of the trying to use military projects as a concerned companies in Italy and strong civilian orientation of doorway into other areas of high Germany are very limited. German research and the German technology. Nevertheless, the experience of economy. Moreover, the really converting companies in the ship- and tank-building industries (Voß, 1992) shows that the creation of civilian divisions in such companies

B·I·C·C 15 brief 5

can succeed in the mid-term. But efforts of the firms. Yet weak Restructuring requires significant support by both management and security policy rationales and effort from both management and the workers is necessary. Great arguments about keeping a minimal the workforce. As difficulties are Britain also has examples of level of national arms production unavoidable, these activities are not companies that took advantage of capabilities have kept the program always crowned by success. Yet market openings to diversify despite going. This clearly reduces the negative experiences with a lack of public funding. Weapons willingness of both management and diversification also exist in other production made up 75 percent of workers to develop and industrial branches. They do not the jet engine manufacturer Rolls- professionally implement altern- speak in principle against the Royce in the 1970s; civilian atives to arms sales. possibility of reorganizing and production is now 75 percent of the reorienting specific parts of the arms total. Rolls-Royce did, however, As a rule, most of those affected take industry. For this reason, the continue to produce very similar a wait-and-see attitude towards the following section will evaluate all kinds of products and was thus able future orientation of a firm. But the possible courses of action— to concentrate on its core lobbying activities in support of new including cancellation of the capabilities. military programs increase. If a Eurofighter’s production. company has failed to take The prospects for successful precautionary measures, the conversion can be improved if cancellation of a weapons system broader industrial policy also often only leaves the option of supports the transformation process. cutting the labor force—or even Conversion must be seen as an closing the company. investment process that only bears fruit after many years. In the view of the authors, the conditions for this Yet the end of a weapons program are better in Germany and Italy than can be seen long before it occurs; a in England and Spain. But even in decline in demand is thus relatively Germany and Italy, employment predictable. A timely analysis of can only be adequately secured in the endogenous potential of a the short-term if the firms receive company could help to secure new sufficient public funding. Empty product lines and business government coffers make this opportunities. However, it is not unlikely. Issues of competitiveness only the dearth of sound product would also make it problematic. ideas that makes conversion and diversification so difficult. Manage- In Great Britain, the chances of ment and marketing methods have creating additional jobs in other their shortcomings; business industrial sectors is small in view of practices and structures often ongoing “de-industrialization.” The require change (Technologie- substantial cutback in military stiftung Schleswig-Holstein, 1994). orders in recent years has not been compensated for by commensurate diversification. The main strategy of management in British arms manufacturers has been to seek out and secure “monopoly positions” in certain niches of the arms market through mergers and acquisitions. Less lucrative (weapons) divisions have been sold off.

Managers determine the strategic orientation of their companies on the basis of past experiences with government’s behaviour. Thus, a decision in 1992 not to build the Eurofighter would have greatly strengthened the diversification

16 B·I·C·C possible options

Assessment of possible options

- controversial discussion The status quo The following scenarios do not likely; compensation for scenario: claim to fully depict corresponding disadvantages likely future developments. Economic - - improbable at present; only procurement of the processes on the scale of the conceivable if disadvantages Eurofighter Eurofighter program are too are compensated for complex for such an undertaking, - - - inconceivable at present The status quo scenario operates on even if one concentrates on only a ? currently not possible to the assumption that the four few selected aspects. The scenarios evaluate countries involved will jointly can help, however, to assess the complete the Eurofighter program military project from different The difficulty of acquiring data on as planned. Little substantive debates angles. these subjects means that the authors would result from such decisions in were not always able to completely Spain, Italy and Great Britain; In the following tables, these signs answer all the questions raised by support for the project is currently offer a comparison with the status the various scenarios. secure not only in military circles, quo: but also among the public. However, external influences could + conceivable advantages change public opinion, e.g. if ++ probable advantages Germany were to abandon the +++ great advantages

Table 4: Procurement of the Eurofighter as planned (status quo scenario)

Spain Italy Germany Britain

Air force planning satisfied satisfied open satisfied

Political acceptance sufficient sufficient controversial high

Procurement costs very high, very high, alarmingly high, very high, problematic but acceptable in the causing burdens but acceptable case of limited units

Defense industrial very high high substantial very high dependence

Technology policy important secondary secondary important

Short-term conversion little little little very little possibilities on company level

B·I·C·C 17 brief 5

project. A change of mood would be Table 5: Cancellation of the Eurofighter particularly likely in Spain, where without alternative fears of cost increases have existed since the beginning of the project. Effects on : Spain Italy Germany Britain Procurement of the Eurofighter as planned would largely have results Air force planning ------as already described in Table 1. Procurement costs +++ +++ +++ +++ By contrast, Germany will likely again see heated debate before a final Technology - - - - - decision on procurement of the Eurofighter is made. The outcome Industry in general ------of the debate in Germany is still uncertain: the Eurofighter does not Affected arms industry ------fully match the requirements of current security policy and the costs Conversion possibilities ------of procurement will be alarmingly high. Political acceptance ------It is not certain that the four countries really need a new aircraft. But if they do, one of the essential criteria will be the relative procurement costs of the Table 6: No Eurofighter production— Eurofighter and any other purchase an alternative aircraft comparable aircraft type. Such an assessment needs to take into account the export prospects for Effects on : Spain Italy Germany Britain the Eurofighter. The authors of the country case studies judge No Eurofighter production, alternative purchase "off-the shelf" these to be relatively low. They come to this conclusion on the Air force planning ++ ++ ? - basis of the economic situation of Procurement costs + ++ ++ ++ most of the potential buyer Technology - - - - - countries and the export trends of Industry in general - - - - - recent years, which have seen sales Affected arms industry ------abroad shift to more “low-tech” Conversion possibilities ------aircraft. Moreover, competition Political acceptance ? ------has intensified, above all from the United States. Significant cost No Eurofighter production, alternative purchase with license production reductions through the export of Eurofighter aircraft are thus Air force planning ++ ++ ? - unlikely. Procurement costs + + + + Technology ? - - - - - Industry in general - - - - - Affected arms industry ------Conversion possibilities - - - - Political acceptance ? - - - - -

No Eurofighter production, alternative purchase with offset production

Air force planning ++ ++ ? - Procurement costs + + + + Technology + - - - - Industry in general + + + - - Affected arms industry ? ? ? ? Conversion possibilities + ++ ++ + Political acceptance + - - - -

18 B·I·C·C possible options

Cancellation of the Were a partner country to reject the In Germany these alternatives have Eurofighter program aircraft, potential buyers would, at a been studied for some time (see minimum, lose confidence in the Bundesrechnungshof, 1994; Wehr- and no alternative aircraft. If export expectations were technik, 1992, p. 7) These studies not fulfilled in such a situation, these show that the European Fighter This scenario only seems possible failures would be projected onto the Aircraft was the optimal aircraft for for Germany, although other partner that had ended its the German air force, “but not at countries would also gain at least participation. The consequence any price.” From the German temporary financial relief from a could be a short-term worsening of perspective, a precise military decision to buy neither the Alliance relations. evaluation of the Eurofighter is only Eurofighter nor another aircraft. possible in the context of an This positive aspect would be In the long-term, such a decision evaluation of its total cost. As far as overshadowed, however, by the should not have a negative impact their security needs are concerned, consequences in the areas of on a well-functioning organization. the Italians would probably benefit security, industrial and technology In view of the diverse technological from buying an alternative aircraft, policy. The limited prospects of difficulties and the price dynamics whereas the British would suffer. conversion would also have negative encountered during the project’s The three alternative scenarios differ employment consequences in the history, the abandonment of the primarily in terms of procurement short run. project by one of the partners cost, impact on technology policy should in no way be viewed as a and conversion possibilities. It is unlikely that either Italy or surprise. Industry was frequently Great Britain will see serious unable to fulfill the expectations (in Purchasing a fighter that has already discussion of such a possibility. terms of both time and cost) that it been developed instead of the Nevertheless, were Germany to had helped to create. Should a Eurofighter would generate cancel its participation, other country decide to exit the program, significant savings (as long as countries would certainly reopen it would be in the context of a long opportunity costs are excluded from discussion of both the Eurofighter history of project problems. consideration). In view of widely and its possible alternatives. This expected cost increases for the would not have any influence on a Eurofighter, the alternatives of production decision in Great No Eurofighter license production or offset Britain. The reaction of the Spanish production—purchase production are also probably less government and public appears less expensive. certain in this respect. an alternative aircraft As these options involve similar or It is often asserted that “irreparable even higher employment levels, the damage” to the Alliance would Should one or more of the partner primary difference would be in result from Germany unilaterally countries abandon their regard to the military-technological withdrawing from the procurement commitment to production, there base of the countries. British phase of the program. Yet according would still be a number of alterna- Aerospace, but possibly also CASA to Huffschmid, experience with tives. These would also close the and DASA, could suffer under such other cooperation projects does not ostensible security gap that would be an arrangement. Yet one has to ask corroborate this. International left open by cancellation of the whether this process would take cooperation projects have frequently Eurofighter. First, an already- place anyway as the development been terminated when one of the developed aircraft could be bought work on the Eurofighter is cooperation partners withdrew. immediately “off-the-shelf“ from complete. In order to maintain abroad. Second, the aircraft could be existing military research and A further complicating factor for the purchased but produced under development capacities, another Eurofighter is that the development license. Third, an alternative aircraft aircraft would have to now be phase is already finished: if the other could be bought but with offset begun. The Future Large Aircraft three partners wanted to move on to production. and the Experimental Aircraft are production of the costly project, the two possible candidates for such pressure to export would intensify development work. with the rising costs of the aircraft. The withdrawal of a partner country (which would perhaps seek an alternative aircraft) would further reduce, if not eliminate the aircraft’s already limited export chances.

B·I·C·C 19 brief 5

The option of offset production would be particularly beneficial in terms of its conversion potential. The overall industrial strength of Germany and Italy would allow them to benefit in particular. Even if the offset agreement was limited to military production, the prospects for maintaining employment in the affected sectors Table 7: Final assembly in Great Britain would still improve. In the latter without compensation to the other partners two alternatives, the jobs argument would lose much of its validity; Spain Italy Germany Britain only the maintenance of a military-technological base could Procurement costs ++ ++ ++ ++ be the subject of continued controversy. Technology policy ------++

Concentrating Industry in general - - - ++ Eurofighter production in Great Affected arms industry ------+++ Britain Conversion possibilities - - - - -

Great Britain’s announcement that it Political acceptance ------+++ would build the Eurofighter alone if necessary has opened up another alternative for the partner countries: purchasing the Eurofighter directly from Britain. Yet this possibility is seldom discussed. Assuming that a new aircraft must be bought, this option would offer a number of advantages that merit serious consideration. Germany, Italy and Spain would not participate in the final assembly of the Eurofighter, but they would purchase the aircraft. Production would be concentrated in Great Britain, to the extent economically feasible (Table 7). At the same time, other partner countries could concentrate on the assembly of certain subcomponents as compensation for the loss of a role in the final assembly.

20 B·I·C·C possible options

Table 8: Final assembly for all countries in the UK only, with full offset compensation (mainly civilian)

Spain Italy Germany Britain

Procurement costs + + + +

Technology policy + - - ++

Industry in general + + + -

Affected arms industry ? ? ? +

Conversion possibilities + + + - - -

Political acceptance ? ? ? ?

The air forces involved would be political-economic strategy. In this civilian sectors of the economy unlikely to change their military- context, three paths are possible: one would strengthen over the mid- strategic assessment of the primarily focused on the civilian term. However, the unavailability of Eurofighter relative to the status quo sector; one involving the military information prevents a precise scenario. But concentrating sector; and a mix of the two. estimate of the actual price benefits. production will likely lead to savings for all the partners. The civilian orientation would aim The success of such a program at “compensation” for the lost would be dependent on the ability The advantages in the other assembly packages (Table 8). The to join new civilian-oriented categories go primarily to Great advantages of this strategy are clear: organizational forms with military Britain. Controversy is thus likely in The jobs that are threatened or lost ones. British industry, however, the other countries—indeed, such a by the termination of military would grow increasingly dependent course is probably politically contracts would be preserved by on weapons production. This might unacceptable. The other partner civilian production—to a degree in in turn pose a danger to the countries would not only be the same firm, but also in other competitiveness of civilian sectors immediately abandoning certain firms. Overall, the employment —at a time military demand is parts of their national military level would remain high and the shrinking worldwide. industrial base, they would also be facing significant job losses. Canceling the production of the Eurofighter would thus need to be embedded in a comprehensive

B·I·C·C 21 brief 5

Prospects

Abandoning the Eurofighter’s final assembly in Germany and The previous sections focused contracts could quickly lead to an concentrating it in the United narrowly on the Eurofighter. On integration of the European arms Kingdom could coincide with a the basis of the country studies, they market. It is much more likely that parallel concentration of tank, assessed the possible effects on less accentuated political concepts, warship and helicopter production. specific factors of various reflecting national positions, will In these areas, Britain would be procurement and production predominate. Cooperative projects obliged to procure military goods alternatives. Even though the will thus play a central role. from other countries. With the help analysis covered only a limited of this arrangement, oversized arms number of aspects, a definite In this context, the Eurofighter has a capacities in Western Europe could judgement was not always possible. high symbolic value. It is true that be quickly reduced. According to Political decisions require the France, the country with which the European Commission, consideration of even more factors Germany has cooperated the most considerable public resources could —factors which are often not in the past, is not part of the project. thereby be saved without incurring amenable to quantification. Nevertheless, four countries are any security risk. However, cooperating closely in what is numerous firms in the affected Policy towards European integration otherwise a very fragmented market. countries would face the challenge is, of course, a particularly of reorienting their production. important aspect. This also involves The organization of this weapon the question of a European defense program suffers from one particular Producing the Eurofighter in all four policy and the related issue of a shortcoming: its very specific countries is likely to delay this (West) European arms market. political agreements on the division of labor are oriented primarily necessary restructuring. Superfluous capacities would be maintained at Greater integration of what are still towards maintaining the industrial considerable taxpayer expense. The nationally structured arms markets status quo established during the “spin-off” argument will be weaker has become even more important in Cold War. The form of cooperation with the next generation of the context of falling demand for selected for the Eurofighter appears weapons, yet the restructuring military products (Walker, to have little potential for addressing process would have been delayed. Gummett, 1993; Hartley and Cox, future economic, technological and 1992). The incorporation of the financial challenges in the military Another factor that is difficult to Independent European Program sector. quantify is the role of exports, Group (IEPG), and its simultaneous which involves primarily financial redesignation as the West European Could not Germany’s abandonment considerations. The four partner Armaments Group (WEAG), has of the production of the Eurofighter countries have very different views given the West European Union be connected with a restructuring of of the Eurofighter’s export greater responsibility for bringing the fragmented and inefficient potential. Britain also has important together the West European arms military technology industry in political reasons for wanting to industry. Up to now, there has been Western Europe? If security interests export: arms exports are intended to no ascertainable success in this prevail in regard to the procurement underline that Britain is still a global direction. The WEAG, in the of a new fighter aircraft, and if the power. In Germany export policy is context of a special study group, has Eurofighter fulfills the criteria set by less clear. Although the analyzed the possibility of a the military, then the question conservative-liberal government is European Arms Procurement automatically arises of whether officially committed to a restrictive Agency. Broad agreement existed British producers could alone cover arms-export policy, Germany has that only with the help of a this demand. been among the world’s biggest common procurement system could exporters in recent years. This is a truly (West) European arms primarily the result of exporting industry be developed. However, used weapons. the manner for concretely implementing such a proposal Concentrating arms production on a remains unclear as does the question West European scale could reduce of who would carry which the pressure to export arms to third responsibilities. countries in order to maintain national “minimum capacities.” Yet As such, neither political nor industrial actors expect that a central West European procurement agency and the competitive letting of

22 B·I·C·C prospects

such a development would require a immobility” (Scharpf, 1973) that If government policy aims to West European arms export policy, gives special interests structural advance the conversion process by which is as unlikely as a central arms advantages over more general, but providing support, then it faces a procurement system. less-well articulated and consolidated dilemma: on the one hand, interests. The arms industry in governments want to increase the The future security policy of West general, and the aviation industry in number of high-qualified jobs. On European countries is a third aspect particular, is especially well- the other hand, out-dated company that must be taken into account. In organized and structured. Even cultures often make restructuring a terms of its origins and its organizations such as trade unions very expensive endeavor. specifications, the Eurofighter is a are well-integrated into this system. Inflexibility on the part of the relic of the Cold War. Politically, As such, these groups represent their companies should not be rewarded. Britain has had little difficulty interests through lobbying better No one should be able to redefine redesignating the fighter as an than less well-organized associations. “minimal capacities in the national important contribution to overseas For example, far more actors and defense industrial base” or operations. In comparison to interests would have to coordinate “conversion” to mean wasting public Germany, the Italian government their activities to achieve funds. The continued existence of has also had an easier time defining a significantly greater public funding every company cannot be new, post-Cold War role for the for the solar power industry. guaranteed; this is true for both fighter. defense-related companies that want The arguments of the arms industry to stay in the military business and The German defense ministry is lobby would probably be less potent those that have diversified into reconfiguring the Bundeswehr for if the conversion to civilian civilian sectors. Instead, crisis management and conflict production had been more successful restructuring must be aimed at prevention, including operations in the past. The relatively limited creating sustainable and efficient outside the NATO area. In the success of such efforts is mainly structures to provide stable short-term, German out-of-area caused by two circumstances. employment. activities will probably be more dependent on transport than on First, conversion usually requires It is widely recognized that in the fighter aircraft. In view of tight considerable investment—at least if short-term, the process of adaptation budgets, the procurement of the diversification is to be directed into to market conditions does not Eurofighter might obstruct the other hi-tech areas. Market always lead to the desired results. German government’s plans for conditions will not always allow this Support for the transition is giving the Bundeswehr an out-of- funding to take place within the necessary, but it needs to be area capability. One must also ask firms or to come from external integrated into a broader national why the current opportunities for a creditors. Public funding will and (West) European industrial further limitation of fighter aircraft sometimes be required. To be policy towards the military and inventories in Europe are not being successful, the funding will have to civilian aviation industry and explored at the negotiating table. be significantly more generous than technology-related sectors. it currently is in the European A fourth aspect is the manner in Union’s KONVER program. Even if the German government which these dysfunctionalities result decides to procure the Eurofighter, from interest groups who enjoy Second, successful conversion and the structural problems of West clear advantages because of their diversification efforts are dependent Europe’s aviation and defense- lobbying activities. The current primarily on the attitude changes related industries will remain. There democratic-pluralist political system among management and the labor is an urgent need for adaptation in is characterized by a balance of force (Grundmann et al., 1995). In the near future—adaptation that power that is based on a network of some companies, it is not one group cannot be achieved at a national associations, parties and state that resents changes in the business level. A comprehensive institutions at all levels. This balance culture, but both management and restructuring of this sector at the of power stems from a multitude of the labor force that need to change European and even world-wide level conflicts that have been fought out attitudes to make conversion is unavailable. The Eurofighter in the past. A more or less effective, posssible. program, as currently planned, is but unyielding representation of not contributing for a visible future. interests is the result. The system thus tends towards “institutional

B·I·C·C 23 brief 5

References

Brzoska, Michael und Werner Perani, Guilio. 1996. "Bedarfs- Voß. 1996. Auswirkungen und lücke unter Finanzdruck. Das Alternativen des Eurofighter 2000. italienische Eurofighter-Pro- Eine Vier-Länder-Studie für das gramm." In Brzoska und Voß, Internationale Konversions- 1996, p. 51 ff. zentrum Bonn. Nomos Verlag: Baden-Baden. Randall Forsberg, ed. 1994. The Arms Production Dilemma. Bundesrechnungshof. 1994. Contraction and Restraint in the Dritter Bericht des Bundesrech- World Combat Aircraft Industry. nungshofes zum Rüstungsvorhaben Cambridge/London: MIT Press. Jagdflugzeug 90/Eurofighter 2000. Berlin. Scharpf, Fritz W. 1973. Planung als politischer Prozeß. Frankfurt Grundmann, Martin, et al. 1995. Rüstungskonversion: Erfolg durch Technologiestiftung Schleswig Wandel der Unternehmenskultur, Holstein. 1994. Handbuch betrieb- Münster/Hamburg: Lit Verlag liche Konversion. Kiel.

Hartley, Keith and Andrew Cox. Voß, Werner. 1992. Die Rüstungs- 1992. "The Costs of Non-Europe industrie vor unsicheren Zeiten. in Defence Procurement. Strategien und Diversifikations- Executive Summary." Study bemühungen rüstungsorientierter carried out for The Commission Unternehmen. Kooperationsbe- of the European Communities reich Universität Arbeiter- DG III. Bruxelles. kammer. Bremen.

Huffschmid, Jörg. 1996. "Ein Walker,William and Phil zweifelhaftes industriepolitisches Gummett. 1993. Nationalism, Projekt. Das deutsche Internationalism and the European Eurofighter-Programm." In Defence Market. Chaillot Paper Brzoska und Voß, 1996, S. 201 ff. No. 9. Paris: Western European Union. International Institute for Strategic Studies (IISS). 1995. Willet, Susan. 1996. "Notfalls in Military Balance 1994 -1995. eigener Regie. Das britische Oxford University Press: Lon- Eurofighter-Programm." In don. Brzoska und Voß, 1996, p. 115 ff.

Krugman, Paul. 1994. Peddling Prosperity. New York/London: Norton.

Oliveres, Arcadi. 1996. "Junior- partner mit ambivalenten Ambi- tionen. Das spanische Eurofighter-Programm." In Brzoska und Voß, 1996, p. 155 ff.

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