Europe is not in good shape. The economic situation differs greatly among individual EU member states, but Europe as a whole was hard hit by the financial crisis and is still struggling to find its way back to sustainable growth.
Financial and economic problems also challenge the European project politically. They set free centrifugal forces, put pressure on the institutional architecture and undermined citizens' trust in the EU. All this weakens Europe at a time when large parts of its neighborhood are in crisis and the world's balance of power is shifting.
However, Europe has resources to cope with these difficulties. Thanks to its social and political stability, the EU is still a model for many in the rest of the world. Europe attracts huge direct investments from other parts of the globe (€326.7 billion in 2013), and exports goods and services worth €2.42 trillion to other parts of the world. (The US exports amount to €1.87 trillion ).
ABOUT THIS SERIES: Defense News asked 15 thought leaders in military, government, academia and industry -- from Europe to Asia to the US to the Middle East -- for their perspectives on their region and how they fit into world events. The result is a comprehensive collection of viewpoints that puts 2014 into context while forecasting the challenges -- and what must be done to meet them -- in 2015.
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The aerospace, security and defense industries are perfect examples. In civil aviation, Airbus is the symbol of high-tech made in Europe, successful on all world markets and generating hundreds of thousands of highly skilled jobs. In space, European industry is among the world leaders, with systems like Ariane or Galileo prominent flagships. And European defense industries have proven capacity to develop world class products in almost all categories.
It is also true that our industries depend in many market segments on institutional customers. This is particularly true for the defense sector.
Defense spending in the EU has declined from €251 billion in 2001 to €180 billion today. Budget cuts in particular have affected investment in defense R&D. Between 2005 and 2010, European R&D budgets declined 14 percent, down to €9 billion. The US alone spends seven times more on defense R&D than all 28 EU member states combined.
See the other contributors to "2015" Outlook."
As to the BRIC countries (Brazil, Russia, India, China), 2015 forecasts show their combined R&D will be nearly three times as high as that of France, Germany and the United Kingdom together.
There was no coordination with these budget reductions. Each member state acted alone, with no common understanding of which key capabilities Europe as a whole needs to assume its responsibilities as a global actor.
With budget constraints on the one hand and high costs of complex defense systems on the other, European cooperation is a must. The current competitiveness of European defense industry is the fruit of past investments, and will not last if current trends persist. Here is what Europe needs:
An agreement between member states on technology priorities and how to fund them.
A rapid and substantial increase in defense research through cooperative research and technology projects.
New cooperative programs to address pressing capability gaps.
A functioning internal market that guarantees the free circulation of defense goods and services, and enables industry to operate in Europe effectively across national borders.
European heads of state and government will come together in June 2015 to discuss defense. This is a perfect opportunity to take courageous steps forward.
