US embassy cable - 05BRUSSELS4202

C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 004202 
 
SIPDIS 
 
DEPARTMENT FOR EUR/ERA AND EUR/RPM 
 
E.O. 12958: DECL: 11/29/2015 
TAGS: PREL, MARR, EUN, USEU BRUSSELS 
SUBJECT: AN INSIDE LOOK AT THE EUROPEAN DEFENSE AGENCY AND 
EU CAPABILITIES DEVELOPMENT 
 
REF: BRUSSELS 3747 
 
Classified By: USEU Political Military Officer Jeremy Brenner for reaso 
ns 1.4 (b) and (d) 
 
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Summary 
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1. (C) European Defense Agency (EDA) CEO Nick Witney argues 
the prescription for European defense capability shortfalls 
is to "spend money on the right stuff, spend more money 
together and pool efforts and resources." Europe has 10,000 
main battle tanks, 23 separate shipyards (to the US's 6) and 
fleets of fighter jets that lack tanker support to get them 
to the fight. Europe has been mired in a capabilities deficit 
for years, but the European Defense Agency may offer new hope 
in the battle to craft new approaches to the EU's capability 
development process.  The Agency may look to expand its 
organization through managing procurement programs for "ad 
hoc" groups of nations in order to inject some needed cash 
and manpower.  End Summary. 
 
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The Comprehensive Capability Development Process 
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2. (C) Agency Deputy CEO Hilmar Linnenkamp describes the EDA 
as a "capabilities-led defense agency", and emphasizes that 
helping nations deliver fielded capabilities for ESDP 
missions is their primary focus.  Everything else is designed 
to support that goal, as the EDA attempts to meet the 
requirements of the European Security Strategy (ESS).  The 
EDA's capability development function is carried out within 
the context of a wider development process providing for a 
comprehensive and systematic "translation" of 
politico/military requirements into delivered capabilities. 
This Comprehensive Capabilities Development Process (CCDP) 
aims to provide "coherence" by linking ESDP collective 
ambition and strategic defense objectives with military 
capabilities and member states' defense plans, budgets and 
systems investment. 
 
3. (SBU) The CCDP provides a roadmap for the EU to deliver 
improved military capabilities to achieve the vision of ESDP. 
 To maintain coherence, at each stage in capability 
development, the plan asks the overarching question: "What 
does Europe want to do militarily?"  As the development 
process progresses from the EDA's Integrated Development 
Teams (IDTs) through the EU Military Committee (EUMC) to the 
EU Political and Security Committee (PSC) and onward to the 
EU Council, this desired end state is always present.  The 
bulk of this development work will occur within the EDA's 
capabilities directorate, which will take the lead on the EU 
project groups and coordinate with other "experts". 
 
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ECAP Migration to IDT's 
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4. (SBU) A key facet of the CCDP is the EDA's plan for 
individual capability project groups (air-to-air refueling, 
airlift and C3 to name a few).  When the EDA took over the 
European Capabilities Action Plan (ECAP), or "blew it up" as 
EDA staffers describe it, the Agency scored an early intra-EU 
success by snatching ECAP stewardship from the EU Military 
Staff (EUMS).  The EDA has since launched an innovative plan 
to convert most of the ECAP groups to matrix-type Integrated 
Development Teams.  The development teams will draw on 
expertise from a variety of competencies including R&T, 
industry, science, military and finance.  The theory is to 
consolidate knowledge from a variety of skills early in the 
process to avoid surprises when it comes time to pay for the 
hardware or to ask industry to produce the desired 
capability. 
 
5. (SBU) One point to watch will be the relationship between 
the NATO PCC groups and the new EU IPT's.  There were many 
project groups that were under dual NATO/EU PCC/ECAP 
partnership, but the EDA has not developed plans to integrate 
NATO PCC groups into the new EDA project Teams.  This bears 
watching, because it will have a major impact on NATO's 
active involvement in European capabilities development. 
 
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"Ad Hoc" Groups 
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6. (SBU) The European Council Joint Action of July 2004 
authorizes the Agency to "provide for the possibility of 
specific groups of Member States establishing ad hoc projects 
or programs." The EDA Steering Board may also authorize the 
Agency to "enter into contracts on behalf of certain Member 
States," and collect funds from the nations in advance for 
required contracts.  The EDA sees this as a growth area and a 
route around the EU Council imposed ceiling of 80 personnel 
and 20 million Euro budget.  It is also a way to advance 
structured cooperation, an EU concept whereby a self-selected 
group of nations can move ahead of the rest on a defined 
project.  Since Council funding is limited, the EDA sees 
these groups as an opportunity to receive funding for project 
management.  This is a big opportunity for the Agency, since 
its ability to launch capabilities studies is severely 
limited by its staff, wherein only 10 people work in the 
capabilities directorate.  The EDA also may be working with 
the UK to form a group of European nations interested in 
having the Agency contract some air-to-air-refueling planes. 
 
 
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Relations with EU Member States 
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8. (C) Nick Witney has often said, "EU Nations have to stop 
spending money on the wrong thing, and start buying the right 
things."  Comments like that do not always win friends. 
There may be more at stake than just capabilities, as agency 
staffers say Javier Solana is anxious for the EDA to produce 
results. Javier Solana is quoted as saying, "You're all we've 
got left - you have to succeed.  The whole (European) project 
is riding on you."  EDA officials say that Solana has told 
Witney and others that the EDA has just one year to "produce" 
results, or it risks losing its mandate and in so doing 
becoming subject to budget cuts from non-admiring nations 
like Spain, Italy and Germany.  The EDA has made some enemies 
from the outset, and some nations were clearly displeased 
with the EDA's intrusive investigation of their national 
procurement practices during the EDA's queries into article 
296 abuses (see ref x).  One nation that is actively 
campaigning against the Agency and its drive to reform EU 
procurement practices is Spain. (See ref Z for details of the 
newly-announced Code of Conduct for Defense Procurement.) 
 
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Relations with NATO 
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9. (C) The joint action specifies the Agency should invite 
the NATO Secretary General and "Heads/Chairs of other 
arrangements, organizations or groupings whose work is 
relevant to that of the Agency" to Steering Board meetings. 
So far, that has not happened.  When questioned about this 
lack of cooperation, CEO Witney often says, "the time is not 
right" to develop a formal relationship with NATO.  One EDA 
staff member said that the EDA lacked a security agreement 
with NATO, so it "wasn't possible" to interact on an official 
level. The Agency is keen, however, to establish a robust and 
close relationship with NATO's Allied Command Transformation 
(ACT) in Norfolk.  The Agency feels that both share the same 
mission - transformation -- and they also engage in similar 
matrix type organizational plans.  It may be possible to 
offer the EDA a carrot in the form of a relationship with 
NATO's ACT in exchange for formal arrangements with NATO and 
its other agencies.  NATO's Defense Investment may also 
develop extensive ties with the EDA. 
 
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Budget/Personnel 
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10. (SBU) The Council has allocated the EDA just 20 million 
Euros for 2005 with only 3 million devoted to operations, and 
many EDA staffers tell us money is tight.  The EDA is 
actively pushing for budget increases, although Nick Witney 
predicted next year's budget will remain "stable." Additional 
funds of up to 3 million Euros may be provided to the Agency 
for Research and Technology development programs. Some 
dual-use technology programs benefit from considerable 
investment from the European Commission. 
 
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Relations with US Industry 
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11. (C) Most US industry representatives in Brussels are 
taking a "wait and see" posture with the EDA.  Nick Witney is 
still one of the most popular speakers in town, but he 
provides few concrete details, preferring to talk instead in 
broad concepts.  Many sage Brussels insiders see the future 
fallout from the EDA as a battle within Europe between the 
large multi-nationals who control up to 85 percent of the 
European defense market and the small companies, who will 
likely suffer the most during a serious consolidation effort. 
 The Brussels-based US-EU American Chamber of Commerce has 
assembled a "Security and Defense Task Force" whose 
membership includes most European representatives of the 
major US defense companies.  They track the EDA and its 
initiatives closely. 
 
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European Preference 
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12. (C) Witney and Linnenkamp have been very careful when 
addressing this topic. Witney has acknowledged there is a 
view in Europe that "technology flows across the Atlantic, 
but does not flow back", and that a discussion of "European 
Preference" will likely occur, but he believes EU nations are 
still "divided on the issue of whether there should be a 
European Preference in EU procurement" practices. The Defense 
Ministers, in their EDA Steering Board formation have 
directed the agency to compile statistics on technology 
transfer, and the European Parliament is examining the same 
issue. 
 
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Comment 
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13. (C) If pursued wisely, the EDA's program could produce 
some significant improvement in European military 
capabilities. However, the worst possible scenario would be 
for the EDA to go off in a different direction from NATO in 
capability development. This could leave European countries 
fighting over differing versions of capability requirements 
with the EU advocating different capabilities than NATO. It 
is vital that these groups remain linked. 
 
McKinley 
.