EU ARMS AGENCY: STATE OF PLAY

C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 002027

SIPDIS

E.O. 12958: DECL: 05/10/2014
TAGS: PREL PINS TSPL EAGR MCAP PARM ETTC MASS EUN NATO USEU BRUSSELS
SUBJECT: EU ARMS AGENCY: STATE OF PLAY


Classified By: USEU External Affairs Officer Andrew Erickson
for reasons 1.5 (b) and (d).

--------------
Summary
--------------


1. (C) The EU continues to develop the EU Arms Agency
(EUAA),and hopes to have it up and running by the final
quarter of 2004. The agency's mission is to develop a
systematic EU approach to addressing ESDP capability needs.
EU officials note that close coordination with NATO will be
required if the agency is to be successful, and fault current
EU-NATO dialogue on addressing the capabilities shortfalls of
EU members. As the EUAA moves off the drawing board and into
operation, we need to respond rapidly to ensure appropriate
access to the agency as it evolves. With this in mind, we
have nominated one of the key officials in the EU's planning
team for a VolVis program to the US; we suggest aggressive
engagement with him in Washington to ensure that he
understands US redlines and desiderata for the arms agency,
and the rationale behind our thinking. End summary.

--------------
Modalities
--------------


2. (U) On the basis of a tasking from the November 17/18
GAERC, the EU arms agency establishment team (AET) is now
meeting regularly in Brussels to develop an outline of the
new EU institution. It should be noted that the working name
of the new organization is now the "European Arms Agency".
On April 28 the AET issued a report on progress to date.
This report remains in draft until approved by the Council.
It is on the agenda for the May 17-18 General Affairs Council
(GAERC).

--------------
What's Planned?
--------------


3. (C) The GAERC assigned the arms agency four functions,
including "defense capabilities development, armaments
cooperation, the European defense technological and
industrial base (DTIB) and defense equipment market (EDEM),
and research and technology." Specifically, the AET has
identified the need to address "an insufficiently systematic
or comprehensive approach to identifying ESDP's capability
requirements," "a lack of clear future needs on which
collaborations...can be built", and "a fragmented DTIB, which
suffers from a lack of economies of scale and too much
duplication; from under-funding of R&T, and from a
demand-side and a market which remain largely national rather
than European in scale."


4. (C) Comment: it is the last point which bears particular
emphasis, according to Paul Collins, a leading member of the
AET, for it is in rationalizing the EU arms market that
improved capabilities can be obtained from existing
expenditure. We note, however, that placing responsibility
for harmonizing defense industries, establishing ESDP
acquisition requirements and priorities, and assessing EU
force capabilities could lead to a "command economy" for EU
defense backed up by Council decisions that would be binding
on member-states. In other words, there is a strong
potential to institutionalize "fortress Europe" in armaments.
A Dutch PSC representative told us recently that the member
states divide roughly into two camps on EUAA development:
those who emphasize using the organization to increase
capabilities, and those whose interest is more in line with
"Fortress Europe" thinking. End comment.

--------------
A need for close
EU-NATO dialogue
--------------


5. (C) Collins dismissed our question about why the need for
an EU arms agency exists, given NATO's role. The EU has
already made a decision to proceed, he asserted, so this was
a pointless question. The more important question, for
Collins, was how to improve NATO-EU cooperation, particularly
given the "disastrous" functioning of the EU-NATO
capabilities group. Collins argued that only "a real change
of attitude" on the part of NATO would make NATO influence
possible with the European Arms Agency.


6. (C) While scathing in his dismissal of the current
EU-NATO capabilities dialogue, Collins underscored that a
NATO leadership role was "essential" if the European Arms
Agency was to work in a way that strengthened transatlantic
cooperation on capabilities. On the other hand, the reality
of the arms agency was that there would be an EU approach to
research, development, and procurement, and NATO would have
to learn to live with this. The key was determining the
nature of the relationships between the EU and NATO. In this
regard, it should be noted that the EU has rejected the idea
of non-member states participating in armaments agency
decision-making; the EU position is that "transparency can be
secured" through consultative roles for non-member states.

--------------
Thinking big...
--------------


7. (C) Regardless of the evolution of its relationship with
NATO, the European Arms Agency is rapidly staffing up, and
expects to have 26 personnel by the final quarter of 2004.
Budgetary estimates for 2004-2005 will be largely driven by
personnel and accommodation costs and will be approximately
2.4 million euros in 2004 and some 25 million euros in 2005
(including 10 million for non-recurring agency start-up
costs).


8. (C) According to the draft planning document, the agency
will be governed by bi-annual defense ministerial level
meetings ("perhaps back-to-back with GAERCs in November and
May"). On the question of the attendance of the NATO SYG:
the draft AET document says that NATO SYG attendance "will
usually be appropriate." It should be noted that according
to the draft AET document, there "will be a need for
decisions by the Council" on an occasional basis. "Such
occasions might be "when a substantive decision binding on
all participating member states was at issue", "when
decisions...involved competences beyond those of defense
ministers", and "when the additional political force of a
decision by the Council seemed desirable."

--------------
...but starting small
--------------


9. (C) The AET has also sketched out some initial priorities
for work in 2005 (following the achievement of operational
status in 2004). These 2005 priorities include:
-- supporting work on the headline goal;
-- developing more comprehensive and systematic approaches to
capabilities development;
-- assuming oversight of ECAP (the European Capabilities
Action Plan);
-- beginning work on a long-term vision; and,
-- supporting work on collaborative activities.


10. (C) As a specific example of the sort of initial efforts
that the European Arms Agency might undertake, the AET
informally proposed launching an initiative in the SATCOM
area "with the aim of suggesting a way ahead. This area is
considered essential for interoperability and effective
command and control of EU forces. The scope is to analyze
the requirements, possible options and contributions of
existing SATCOM capacities. Proposals will include R & T
focus, cooperative schemes (operational and equipment) and
industrial ramifications."


11. (C) We asked what would prevent the European Arms Agency
from simply becoming a tool for a few powerful EU countries
(such as France) to impose their armaments standards upon the
entire EU. Collins (strictly protect) replied that "the
reality of European capabilities today is that to the extent
that most EU countries have capabilities, they're niche
capabilities. We need to ensure that we plan our procurement
so that the countries that make the best gas masks -- for
example -- end up setting the standard for that capability.
This will not reinforce French dominance, particularly."

--------------
Comment: we need
to engage now for
maximum influence
--------------


12. (C) The agency establishment team has been pushing
forward aggressively with developing the parameters of the
new arms agency. Paul Collins, who is one of the small group
of officials charged with articulating the somewhat
ill-defined EU vision of what the Arms Agency will ultimately
be, has been a key interlocutor of this mission as the EU's
vision evolves. Post has nominated Collins for a VolVis
program, and he has received the approval of the AET to go if
our nomination is approved in Washington. We believe that
this is an extraordinarily important opportunity for us to
engage with a key AET interlocutor before the outlines of the
arms agency get set in stone. We recommend that Washington
interlocutors with equities in this issue be prepared to
engage Collins during his upcoming visit, and particularly,
that Collins eventually departs Washington with a full
understanding of the need to get the development of the
European Arms Agency right. End comment. Schnabel