A European Defence Union?

Abstract

A European Defence Union? Jacques Fontanel and Ron Smith The end of the Cold War, the unification of Germany and the removal of US troops has rekindled interest in European defence cooperation. The EC has common security policies on its agenda, the military role of the WEU is being enhanced, and the new NATO strategy emphasizes multilateral European forces. A European Defence Union offers large potential efficiency gains. Power, like any natural monopoly, is generated more effectively and more cheaply by joint forces than by the sum of fragmented individual forces. There are also large economies of scale in weapons production. Trends in budgets, costs and threats are making national provision problematic and national arms industries non-viable. An EDU may appear more attractive than either spending vast sums to attain minimum efficient scale or relying on forces that are so small and ill-equipped as to require either dependence on the US or acceptance of effective neutrality. However, an EDU reduces national sovereignty; poses problems of command, control and organization; risks free-riding and adverse reactions by the US and USSR; and is vulnerable to exploitation and rent-seeking by military industrial interests. This paper examines the economics of these issues and suggests a route towards effective cooperation.