Using game theory to assess the evolution of the European Defence Technological and Industrial base

Discourses around “strategic autonomy” and “sovereignty”, traditionally used at the state level, have been recently circulated within the EU supranational context regarding the European defence technological and industrial base, dual-use and disruptive research and innovation, and advances in the tech and digital domains. This article explores whether a high-politics logic intrinsic to “strategic autonomy” and “sovereignty” has been transplanted at the EU-level to enhance the strategic priority of various lower-politics policy fields across tech and digital policy initiatives and instruments. This logic has the hegemonic effect of shaping collective thinking and opening windows of opportunity for EU policymaking, by mainstreaming a security imaginary into broader technological governance processes. The article examines the EU’s scaled-up rhetoric around floating signifiers such as “strategic autonomy” and “technological sovereignty”, as well as the diffusion of overlapping “sovereignty” agendas enacted transversely in the defence, tech and digital sectors. The argument is that their meaning is not yet fixed but articulated via hegemonic interventions across different interconnected policy fields. This makes for conceptual “travelling” and “stretching” with a potential impact on the future of European security integration, by creating of a more unified security imaginary of the EU as a strategically independent and technologically sovereign space.

Part I: Intra-Alliance Collaboration and Discord over Weapons Procurement 1. Alliance Armaments Co-operation: Toward a NATO Industrial Base Michael L. Moodie and Brenton C. Fischmann 2. The MRCA/Tornado: The Politics and Economics of Collaborative Procurement Alistair Edgar 3. Conflict and Competition over the NATO Defence Industrial Base: The Case of the European Fighter Aircraft Andrew Latham Part II: The Dilemmas of Preserving a Defence Industrial Base 4. The Importance of Arms Exports and Armament Co- operation for the West German Industrial Base Bernd Huebner 5. The Swedish Defence Industrial Base: Implications for the Economy Michael H. Hawes 6. Israel and the Lavi Fighter-Aircraft: The Lion Falls to Earth Galen Roger Perras 7. Techno-Nationalism and the Contemporary Debate over the American Defence Industrial Base David G. Haglund , with Marc Busch.

This article analyses the European Defence Industry Programme (EDIP), a landmark EU regulation proposed in early 2024 and currently under discussion by the European Parliament and Council, that marks a fundamental shift in European defence industrialpolicy. Moving beyond emergency responses to Russia’s invasion of Ukraine, EDIP introduces comprehensive mechanisms for strengthening the European Defence Technological and Industrial Base. Through analysis of the draft Regulation’s primary sources, the study examines how EDIP establishes permanent structures for defence industrial cooperation, including the innovative Structure for the European Armament Programme framework, sophisticated supply chain security measures, and mechanisms for Ukrainian defence industrial integration. The article argues that EDIP represents a strategic transformation from voluntary coordination to the active management of defence industrial capabilities, creating flexible yet robust frameworks for long-term European defence industrial development. While implementation challenges remain, particularly regarding security requirements and institutional coordination, EDIP establishes foundations for a more integrated European defence industrial base that will likely shape policy evolution beyond its initial 2025–2027 timeframe.

The productive and technological base of a nation is the foundation of its national power. This is not a new phenomenon. The Greek chronicler, Hemocrates, noted 2400 years ago that the ability to wage war-as well as to influence events in the world without using military power--depends to a large degree upon a nation's wealth. A strong productive base provides the means and leverage for action and enhances a nation's ability to influence the outcome of international events. Harvard scholar Paul Kennedy in The Rise and Fall of the Great Powers examines the importance of the productive and technological base in Great Power rivalry: {The} historical record suggests that there is a very clear connection in the long run between an individual Great Power's economic rise and fall and its growth and decline as an important military power.... Technological and organizational breakthroughs... bring greater advantage to one society than another. In the final analysis, the Cold War, in large part, turned out to be a contest between the superpowers' productive and technological bases. While the United States experienced steady growth, the declining Soviet productive base could not support both the demands of the military establishment and those of the Soviet people. Probably more than any other single factor, this poor economic performance led to the demise of the Soviet Union as a superpower and its subsequent dissolution as a state. Had the gross domestic product (GDP) of the Soviet Union expanded at a rate of 3 percent annually instead of declining, the superpowers might still be waging the Cold War. This paper examines the changes in the defense industrial base that have accompanied the downsizing of our Armed Forces and what role the U.S. Government might play in reinforcing important sectors of the productive base. In the past, the essential link between the productive base and national power was the ability to increase production runs of weapons through the course of a conflict. World War II and the Korean War are prime cases of needing time to close the gap between productive output and military requirements and paying for that time in blood and territory. Contemporary planning, however, focuses on future wars that will be of short duration and will therefore be fought with on-hand weapons and munitions, obviating the need for a massive industrial mobilization. Today's more relevant questions appear to be whether the industrial base can, on an ongoing basis, supply the new technologies and weapons that will ensure an overwhelming advantage for U.S. and allied forces, and whether the military can incorporate these new technologies into its inventory on a timely basis. The Industrial Base If future conflicts are indeed fought with off-the-shelf systems, the major challenge for the U.S. defense industrial base will be to field leading edge weaponry rather than to handle massive, sustained production runs. Given the large inventory of defense hardware procured in the 1980s, coupled with the unlikelihood of a large scale war, the capabilities of the defense industrial base will probably not be tested seriously until obsolescence begins to threaten defense capabilities early in the next century. Thus, the argument over support of the defense industrial base beyond current needs turns on whether what remains of the base in the future will be able to respond in a timely manner to the requirement to replace obsolescent equipment or, in extremis, to support a long, hot war if predictions of relatively short conflicts prove wrong. The cost in time and money to reconstitute these once highly-prized skills--that are being allowed to languish--would be considerable. The decline in U.S. defense procurement spending began in 1985 and has continued through 1996. Relative to other portions of the defense budget, the decline in the procurement account has been the most severe. …

Since 1990, the European states have confronted tensions in balancing security of supply imperatives and equipment affordability constraints in procuring advanced weapons systems. Security of supply is equated with the retention of a national defence technological and industrial base (DTIB). Correspondingly, intergenerational cost increases in weapons production have progressively eroded the affordability of maintaining autonomous DTIBs, leading to the internationalization of what were formerly considered ‘national’ defence firms. This chapter challenges the argument of some analysts that these structural factors will lead inevitably to loss of control by national governments over weapons production and the inexorable rise of a globalized defence industry. It demonstrates instead that the European states do exercise significant agency in national defence procurement and industrial policy such that national DTIB protection still prevails, which explains why EU attempts to integrate and foster a strategically autonomous European defence technological and industrial base (EDTIB) have hitherto failed.

: The American Defense Industrial Base is a product of two hundred years of American History. The Industrial Base that was produced as a result of this century's wars and United States Government policy is now undergoing a significant change. The change to the Industrial Base is occurring while the military is transitioning into the Chairman of the Joint Chief of Staff's Joint Vision 2010. The current Administration proposes to shift its emphasis towards increased reliance upon the commercial sector, as has been attempted in the past. Titled the 'Dual Use Technology Strategy,' the Department of Defense is attempting to leverage emerging commercial research and development technology into existing weapon systems. While this strategy addresses the research and development portion of the Industrial Base, it does not direct attention towards industrial base capability maintenance. The sole means of keeping a capable industrial base is through the analysis of critical industrial processes. After prioritizing the processes, contracts must be issued to ensure that the capability is maintained. A comprehensive Industrial Base strategy is required to ensure the necessary support to Joint Vision 2010.

As the incumbent Turkish administration strives to pursue more aspiring goals in foreign affairs, Turkey’s military policy is fast developing in line with this vision. The nation’s defense technological and industrial base can now produce various conventional weaponry. Of these, without a doubt, Turkey’s drone warfare assets have garnered the utmost attention among the international strategic community. In tandem, the Turkish Armed Forces (TAF) have gradually gained an expeditionary posture with forward deployments across a broad axis, ranging from the Horn of Africa to the Gulf and the Mediterranean. Meanwhile, the military’s doctrinal order of battle has been transforming to address the unfolding hybrid warfare challenges in Ankara’s hinterland. Turkey’s proxy warfare capabilities have also registered an uptrend in this respect. Nevertheless, Ankara will have to deal with certain limitations in key segments, particularly 5th generation aircraft and strategic weapon systems which, together, represent a severe intra-war deterrence gap in Turkey’s defense posture. The Turkish administration will have to address this specific shortfall given the problematic threat landscape at the nation’s Middle Eastern doorstep. This study covers two interrelated strategic topics regarding Turkey’s national military capacity in the 21st century: its defense technological and industrial base (DTIB) and its military policy, both currently characterized by a burgeoning assertiveness.

Defence research, in the form of both research and development (R&D) and research and technology (R&T), are important factors in achieving long-term European strategic autonomy. The present paper analyses this debate from a comparative perspective. The first part discusses the inputs provided by the group of personalities report from February 2016 on defence related R&T research, and the corresponding report by the European Parliament (EP) from March 2016 on the future of EU defence research. In the second part, I compare the conclusions drawn in these two reports with defence research developments in China and Russia respectively. By comparing defence research activities in these two non-western states with the European efforts to establish a European defence technological and industrial base (EDTIB) we will be in a better position to answer questions such as: is European defence research in a state of emergency? And, which means should the EU develop so as to mitigate the downward trend in European defence research? An important input to this comparative analysis is the US Defense Innovation Initiative (DII). As this paper stresses, priority given to European defence research is necessary both to cover one’s own defence needs, but also to preserve and further develop the transatlantic security community as well.

This article aims to analyze how logistical standardization through the NATO Codification System (NCS) contributes to Brazil’s strategic insertion into international defense networks without entailing formal commitments to collective defense. The research adopts a case study approach, based on Yin (2009), combining documentary analysis of official and bibliographic sources with surveys administered to civilian and military subject-matter experts (SMEs) from North Atlantic Treaty Organization (NATO) member and partner countries. The results indicate that the the adoption of the NCS strengthens Brazil’s logistical interoperability and the defense technological and industrial base (DTIB) and expands access to markets regulated by Western standards, and enhances regional industrial integration, while also imposing limits on geopolitical repositioning vis-à-vis competing powers. It concludes that technical logistical cooperation serves as a pragmatic tool for modernization and international certification, preserving Brazil’s strategic autonomy and producing long-term impacts on both industry and regional security governance.

The European Defence Fund (EDF) is considered a game changer for European defence. The unprecedented co-funding of research and development expenses of cutting-edge defence systems is functional to strengthen the European Defence Technological and Industrial Base (EDTIB) and the EU’s Strategic Autonomy. This paper analyses the factors that enabled a partial shift from intergovernmental to supranational governance in the European defence market, applying the lens of the new intergovernmentalism theory. The cost of non-cooperation in defence and the Brexit impact will be taken into account to explain the observed shift. The paper highlights the role of the Commission in the integration of the European Defence Agency’s activities with those of the newly created DG for Defence Industry and Space (DG DEFIS). It also examines the extent to which diverging strategic industrial interests of Member States and of industrial players seek to prevent a deeper integration of the European defence market.

The growth in the global economy and the trend toward outsourcing have given rise to concerns over the composition and strength of the U.S. industrial base and the degree of U.S. dependence on other countries for certain goods. The purpose of this article is to examine the concerns surrounding the alleged inroads of foreign manufacturers into the U.S. defense industrial base, as well as the background behind the concerns, with a specific focus on the recent competition over what may be one of the largest defense contracts in U.S. history to supply the United States Air Force with a new fleet of aerial refueling tankers. The article discusses the importance of imports and national defense spending in the U.S. economy, explores the dependence (or lack thereof) of the United States on foreign imports in the defense sector, explores strategies that have previously been deployed to reduce the role of foreign manufacturers in the U.S. defense industrial base, and examines in detail the recent tanker competition. The article argues that this competition required the deployment of innovative strategies on the part of the incumbent in the industry (Boeing) and the potential entrant (Northrop/EADS) in order to balance conflicting economic, political, and military procurement objectives.

For European arms-producing countries, launching a cooperative program represents a compromise between preserving their domestic industrial base and achieving an affordable acquisition. Nevertheless, scientific literature is marred with criticisms regarding the effectiveness of such an approach. Paradoxically, this does not prevent European states from committing to new cooperative programs—the European Commission has set up mechanisms for improving the effectiveness of European defense industry based, de facto, on incentives to launch cooperative programs. This article looks at the place of cooperative programs in Europe to understand whether the new initiatives of the European Union can succeed in improving the effectiveness of military spending as well as enhancing European strategic autonomy. It analyzes the organization of the European armament market to explain why cooperative programs appear unavoidable. It explores how the European Commission could overcome current limitations through community-funded programs, given that such funding would foster the emergence of a European defense technological and industrial base.

European Council. The European Council had left significant room for manoeuvre concerning the role and powers of the EDA, having simply proposed a joint action to ‘create an intergovernmental agency in the field of research capabilities development, research, acquisition and armaments’ (European Council 2003). In the negotiations of the project team that was charged with designing the institutional structure of the EDA and establishing its exact remit, Britain and France were divided (Interview 2). France wished for the agency to have a strong legal and financial remit to promote European armaments cooperation. Britain, on the other hand, wanted the EDA to remain intergovernmental and adopt a looser facilitative role in developing Europe’s military capabilities. Germany played an important role in ensuring that the British position won through and that the organisation had a relatively limited set of powers and budget (Interview 2). Germany was particularly interested in the potential for the EDA to act as a focal point for European states to coordinate their Research and Technology (R&T). Germany has a relatively low spend on R&T as a component of its defence budget when compared to other major European military powers and saw in the EDA an opportunity to help make up for this shortfall (Interviews 2 and 3). However, Germany was unable to turn these plans into leadership on R&T. Germany had to be cajoled and ‘shamed’ into the first Joint Investment Programme (JIP) of the EDA in 2007 following leadership from the French and Polish (Interview 2). Germany has participated in several important EDA projects; however, these are limited in number given Germany’s relative power and the expectations generated from Germany’s financial contribution to the EDA. It has been particularly active in defining European defence capability requirements in the following areas: the category B Biological Detection Identification Monitoring Equipment Development and Enhancement Programme; the category B Project Maritime Mine Counter Measures; the category B Future Interoperability of Camp Protection Systems Project; the Counter-Man-Portable Air Defence Systems Project; the Maritime Surveillance Project; and the Helicopter Training Programme (Interviews 3 and 4). While there has been some German activity in developing European military capabilities and R&T, its role in two other core tasks of the EDA – armaments cooperation and creating competitive European defence equipment market, and strengthening the European Defence, Technological and Industrial Base (EDTIB) – has been more muted. The EDA’s Industry and Market Directorate has been active in developing ideas about how Europe can strengthen its defence industrial base and enhance R&T. Yet the ability of Member States to invoke TFEU Article 346, which states that the procurement of equipment and services of vital interest to national security is exempted from EU procurement rules, allows states undermine the creation of a truly competitive defence equipment marketwithin the EU. The European Court of Justice (ECJ) and the European Commission rather than the EDA will be the key actors in eroding the ability of European nations to protect their national armaments industries (Dyson and Konstadinides 2013: 86-112). However, for reasons explored later in this chapter, it is unlikely that Germany will play a lead role in encouraging the Commission and ECJ to play a proactive role in this area. Hence this brief overview of German EDA policy demonstrates that while Germany has not taken a back-seat role in the work of the organisation, it has provided only limited leadership. From the inception of the EDA Germany was keen to limit its powers and budget (Interview 2). Furthermore, Germany’s national defence procurement processes continue to take precedence over international collaboration. When viewed within the context of the urgency of remedying Europe’s collective military deficits, Germany has not provided leadership within the EDA that is commensurate with its economic and political weight and it has failed to use the organisation in a coherent manner to identify the possibilities for joint capability development. The remainder of this chapter examines a variety of international and domestic variables which have fostered this limited leadership by Germany, using Neoclassical Realist IR theory to shed light on the relative importance of these different variables.

: Organizational rivalry has been an important facet of the development of the American military establishment, but there are differing views on whether such rivalrous behavior has a positive or a negative effect on the achievement of the missions assigned to the Department of Defense. This paper reports on the results of a discussion, sponsored by IDA, on the impact of organizational rivalry on the defense industrial base, and in particular on the ability of that industrial base to develop innovative solutions to the Department's requirements. The discussion brought together academic researchers and senior IDA staffers who have significant experience in the development and execution of Department of Defense programs and policies. The participants concluded that organizational rivalry does contribute to the development of innovative solutions, but some believed that the Department's current processes act to suppress such rivalries, and thereby stifle the development of such solutions.

: Examines the critical role of the defense industrial base in the implementation of the National Security Strategy. Defines the desired characteristics of the defense industrial base, as well as recent trends and actions to improve the responsiveness of the base. Concludes that an industrial base strategy is required to ensure a defense industrial base that supports Reconstitution.