Chatham House, London 29 January 2001

"ESDI and Transatlantic Defence Cooperation" Speech by Lord Robertson, NATO Secretary General at the Conference on "The Globalisation of Defence Industry: Policy Implications for NATO and ESDI" Ladies and Gentlemen, Good morning. It is a real pleasure to be here today. Indeed, as someone who speaks in public quite regularly, I have a soft spot in my heart for Chatham House ?- because like many of you here today, I am grateful to Chatham House for its "rules". They allow me to speak more frankly than I might otherwise be able to do -- and they have occasionally helped me out of trouble, when I went a little too far! Indeed, even in the most forlorn corners of the Euro-Atlantic area, where nobody speaks anything but the local language, the one English expression all conference organisers know is "Chatham House Rules". I must admit, therefore, that I enjoy the irony of discovering that today, Chatham House itself is the only place where its rules don't apply. "The exception that proves the Rule", one might say. But despite the risks involved, I will do my best to be as frank and as thought-provoking as possible -- because I believe that this conference is an excellent opportunity to discuss openly the real challenges we face at the beginning of a new millennium. I believe that the organisers of this conference have chosen a very timely subject for our discussion -- because the 21st century will confront us with an entirely new set of challenges. Globalisation will make our societies more creative and prosperous, but also more vulnerable. The rapid dissemination of technology and information offers entirely new ways of production, but it can also bring the spectre of more states developing weapons of mass destruction. And, perhaps most importantly, regional conflicts will again and again confront us with a cruel choice between costly engagement and costly indifference. And all of this means that we have to get rid of the old thinking, and look at better ways of ensuring our security in a fundamentally new world. I know that there are a lot of experts on defence industrial issues here today, both on the speakers list and in the audience but I have no intention of getting into the details of licensing agreements or transitional regulatory regimes -- I happily leave that to people who are more knowledgeable on those issues. What I will try to do, instead, is try to look to the near future to analyse the impact of the changing environment on NATO together with NATO's response to it, and sketch out how things could - and should - evolve. Today, we find ourselves at a crossroads -- because a major evolution is taking place in Euro-Atlantic security. A new player is moving onto the field, alongside, and with, NATO. As a result, we are in the process of rebalancing some major elements of the transatlantic security relationship -- with burdens being shared more equally, and new roles and responsibilities for Europe. We all know that the idea of a strong and effective European security capability has been floating around for years. For years, European leaders have pointed out that Europe is an economic giant, but a military pygmy. For years, we have heard warnings that Europe needs to contribute more to NATO's capability. And for years, we heard warnings that the US and NATO might not always want to take the lead in handling every European crisis, and that Europe should have some capability to take the lead where NATO as a whole is not engaged. Well, we heard all the warnings, but let's be honest: nothing much came of it. Of course, a few new structures were created, and some attempts were made to pool European capabilities -- but all in all, true and effective European security cooperation remained a mirage for many years. All of that changed two years ago -- and the catalyst was Saint-Malo, reinforced by Kosovo. The Kosovo air campaign made it very clear to anyone looking that we have a glaring transatlantic capability gap. Because Europe was deficient in many of the required capabilities, the US had to take on a disproportionate share of the burden. Kosovo also showed us that we have an interoperability problem between the Allies. National capabilities used in the conduct of the air campaign were often incompatible, and our militaries had to go to enormous lengths to overcome these deficiencies. More broadly, Kosovo showed us that, as we enter the 21st Century, Europe must play a greater role in preserving Euro-Atlantic security. We were reminded that in the early 90s the Balkans deteriorated into civil war for want of forceful action by Europe or NATO. It was not until NATO backed the Dayton agreement that the crisis could be put to a halt. Put very briefly, we now need a stronger contribution from European nations to NATO operations, if we are to avoid transatlantic resentment about burden sharing. Similarly, Europe needs to develop the capacity to take action where NATO as a whole is not involved, so that the Alliance is not dragged into conflicts simply because Europe has no capacity to handle them on its own. The "NATO or nothing" option is no longer sustainable. In sum, no-one could ignore any longer the necessity for Europe to get stronger. Which is why more progress has been made in the past 2 years than in the previous 20. From St Malo to Nice, the EU has moved quickly to set up the structures it needs to take on more in the field of security. It has defined clearly the capability it wants to have: by 2003, the EU should be able to deploy 60,000 troops, with the associated air and naval elements, within 60 days of the order being given; and this corps size force should be sustainable in the field for at least 1 year. EU nations held a capabilities commitment conference last November, to determine what they have now, and what they will need to meet their goal. The aim of this conference was to gather commitments by EU nations to the Headline Goal and to identify gaps. This conference revealed that, while the EU has sufficient numbers of troops and equipment, it doesn't have the necessary capabilities. From strategic lift, to satellite communications, to command and control, to radar jamming -- these are all capabilities the EU does not have. That is why, except for the smallest contingencies, the EU will need NATO's support for EU-led operations. Which in turn is why our two organisations have to be closely linked, and work together. Duplication is in the interest of neither NATO nor the EU. On the contrary, complementarity between our two organizations must be the rule to create the right synergies. ESDI makes sense on both sides of the Atlantic. NATO and the EU, as actors with common strategic interests, should operate transparently to resolve crises. NATO intends to play its full part in this process. In this respect, it has already made real progress. From Berlin in 1996 to last month's Ministerial in Brussels, NATO has taken concrete steps to support, and link into, the development of European capacities. NATO and the EU have also agreed on permanent arrangements on consultation and cooperation between themselves. For instance, the Alliance is adapting its defence planning to accommodate EU defence planning requirements as well. NATO will also ensure that the EU can have assured access to its operational planning capabilities and presume the availability of the NATO assets and capabilities it needs for EU-led operations, such as strategic lift or satellite communications. And the Alliance intends to identify a range of European command options for EU-led operations, with DSACEUR being given European responsibilities, acting as a link between both organisations. All of these steps represent real progress -- progress that is taking place for the first time. Why? Because, for the first time, both sides of the Atlantic have realised that ESDI is a mutually reinforcing process, and will benefit all countries concerned. But as this process goes forward, some fundamental principles will have to be respected, if it is to pay off. We need to ensure that institutional relations are established on an equal footing, so they can co-operate on a basis of equality and transparency. Of course NATO and the EU will keep their autonomy of decision. But they will also be linked together. We must also ensure that the non-EU NATO members are granted satisfactory participation in EU-led operation. These countries are making a direct contribution to European security every day, in NATO, in the Balkans and through their Article V commitment. If ESDI is to work, it needs the support of all European countries, not just some -- and the NATO members most of all. So we must ensure that the participation issue is resolved as it should be. And we must ensure full coherence in defence planning between the two organisations. Our nations have only one defence budget, and one set of forces each. We have to ensure that our armed forces are structured and equipped for NATO and EU missions, rather than NATO or EU missions. This includes, of course, article 5 missions, as well as peacekeeping operations such as those in Bosnia and Kosovo. As you can see, these are real challenges, but we are making progress on all of them. More progress will undoubtedly be made in the near future. But there is one more challenge we must meet if ESDI is to succeed -- and it revolves around capabilities. Because if we do not resolve the challenge of capabilities, we are simply talking about paper armies and empty structures. Let me, again, be very blunt. Today, Europe simply does not have the capabilities it needs to be a truly effective security actor, both for NATO or EU operations. There must be no illusions on this matter. It would be the ultimate irresponsibility for any government to pretend, for political reasons, that its forces have capabilities they do not have -- because those illusions would not survive first contact with an opponent. Nor, for that matter, might the troops themselves. Let's face it -- Europe's defence budgets are not exactly soaring. True, the fall in European defence budgets has generally been arrested. In some cases, the trend has been reversed. That's a step in the right direction. But the Europeans are still deficient in key assets and capabilities. To meet its requirements -- to truly become an effective security actor -- Europe will have to find innovative ways to improve its return on investment, and improve its capabilities. The harsh fact is that a European defence dimension will not happen with present military structures or present military budgets. Why is transatlantic cooperation so essential? For three reasons. First, because it will enhance interoperability. Cooperative development, production and procurement of military equipment are fruitful ways of standardising the equipment our forces need, so they can work together quickly and effectively. Today, the United States spends more than three times what Europe spends on research and development. I'll let you draw your own conclusions on the implications of that for interoperability. Transatlantic cooperation, provided it doesn't hinder healthy competition, will also enhance technological innovation -- because it will mean that technological expertise is shared and enhanced in a wider pool of experts; and because it will mean more resources available to fund research. This means, to me, that we need to reinvigorate the technological partnership across the Atlantic. The recent efforts by the US Government to loosen its restrictions on technology export controls are a very welcome step in the right direction. Most of all, industrial cooperation will mean better, more affordable equipment for Europe, as well as for North America. Let us be very clear: as we enter the 21st century, complete self-sufficiency in the development and production of defence systems is no longer feasible. It is simply too expensive. Development costs are too high, and growing too quickly -- much more quickly than defence budgets. By spreading the risks of technology development, and by providing economies of scale in production, cooperation allows Governments to develop and acquire systems they would not be able to afford by going it alone. This makes good sense for all of our governments, which want to improve their capabilities while controlling their budgets. For all these reasons -- to improve interoperability; to ensure that the best equipment is available at the best price; and as an essential foundation for a more effective Europe -- transatlantic industrial defence cooperation has become more than an optional bolt-on. As we enter the 21st century, it is a necessity. Which means our Governments must take courageous, imaginative decisions to make our procurement and R and D regimes more flexible. Clearly, they recognise the urgency of this requirement, because they have already begun to do so. Within NATO, our Defence Capabilities Initiative has identified the essential capabilities all Allies must have for modern operations, and Allies are working to meet those requirements. Europeans and the US need to be working to make defence trade rules more flexible and pragmatic. Within Europe, Governments are exploring innovative ways to pool assets and budgets to improve purchasing power. And I personally will continue to relentlessly pressure all of NATO governments to make necessary investment in defence. All of these are steps in the right direction, and they are having a positive effect. But we need more. Our aim should be to achieve a genuinely new pattern of reciprocal transatlantic armaments cooperation, and to achieve it as soon as possible. North America and Europe have much to gain by working together to remove obstacles to effective defence trade. I have in mind here not only repealing or liberalising general protectionist legislation, but also resolving significant, specific differences on both sides of the Atlantic in areas such as mergers and acquisition practices, and technology transfer regimes. In sum, as we enter the 21st century, the Euro-Atlantic community -- North America and Europe together -- has to face some tough challenges when it comes to improving our capability. We need to address the capability gap, and ensure our forces can work together. And we have to get the best equipment our tight defence budgets allow. All of this is necessary, if we are to ensure that Europe has the capabilities necessary to meet its aspirations, and be a stronger partner to North America in security, but also if we want to make sure that NATO continues to be able to carry out its missions effectively in the future. Ladies and Gentlemen, In the 21st Century, Europe and North America are destined to work together, on a broad range of operations, to achieve our common strategic goals. To meet those goals effectively, we need to preserve and add to the military strength of Europe and North America -- and our ability to work together. And we will need cooperation at all levels between NATO and the EU -- in planning, in operations, in day-to-day relations and at the highest political levels. There is no other way to succeed, and we must succeed if we want to continue to be able to address real challenges in the future. To make all of this work, we need one essential foundation: a defence industrial marketplace that is open and competitive, and supported by a defence industrial base that is innovative and robust. I encourage you to use this conference as an opportunity to explore new ways to meet this very important goal.