We have reached a share it or lose it moment

Despite all the cuts to defence budgets, Europe's militaries are not doing enough pooling and sharing of equipment and personnel; that is the opinion of Thomas Valasek, author of "Surviving Austerity - The Case for a New Approach to EU Military Collaboration".

In the report, produced for the Centre for European Reform, Valasek argues that European countries should be looking to mitigate the effects of financial pressures by pooling military resources with like-minded nations, creating "islands of co-operation". Regardless of the shape any such cooperation may take in future, Valasek is clear that very little is going on now.

"Pooling, sharing and collaboration is not something that comes naturally," he says. "The defence establishment has been set up to build capabilities more or less alone over the cold war. Obviously the different countries adhere loosely, some more successfully than others, to NATO and more recently EU capability goals. But the process of setting up procurement agencies, procuring gear, looking after it, training operators ...that's all been done historically on a very national basis."

This situation is partly due to the mindset within various defence ministries, and partly due to the varying standards of equipment in use across the continent. Many nations still operate assets purchased during the cold war, and as a result a lot of work and money is needed to upgrade them to 21st century standards or replace them.

"There is still a lot of hardware in our arsenals that frankly we have inherited and we don't really know what to do with," says Valasek. "It could conceivably be used for operations but it would have to be significantly upgraded - whether that means new electronics suites, communications, or in the case of helicopters things like night vision and modern avionics.

"What a lot of countries do is claim this equipment as their contribution to NATO and EU force calls, but of course when push comes to shove and it needs to be used it turns out it isn't actually all that useful because it hasn't been upgraded."

Joint operations in Afghanistan have helped spur some smaller NATO members into action, with a handful taking steps to get rid of equipment that is simply past its prime or unusable in an international environment. But the equipment alone is not to blame.

"In the field we work jointly," says Valasek. "When it comes to generating capabilities historically we have always done so alone. Some countries have done better than others in thinking beyond their own borders - the Benelux countries have been very successful, and the UK/Netherlands is another example - but a lot of other countries haven't even given it thought.

"They may have set up these non-integrated units - joint brigades - but in reality they may exercise together once a year. These are still units that are built completely nationally. They generate no economies of scale, the countries still train, equip, procure and pay for all the back offices themselves and that is of course very expensive."

There is nothing that supranational institutions like the European Union and NATO can or should do to force countries to pool, but Valasek says they have to become aware that they can "ill afford" not to consider sharing. Both NATO and the EU could help by encouraging sharing initiatives.

"NATO's defence planners regularly visit the defence establishments to advise on force structure/budgets etc. Why can't these teams also include somebody with experience on pooling and sharing who could advise the respective defence ministries on opportunities in this field?" he says.

"The other way NATO and the EU can help is by breaking down some of the barriers to collaboration. The EU is already doing so by introducing the defence procurement directive, which will come into effect this August. That will have the effect of streamlining individual countries' procurement policies and the way they treat the defence industries."

"Historically, many joint projects have fallen apart simply because they involve one country that is very protective of its defence industry and another that isn't. Obviously the country that is not will have reasons to fear that the other government will try to steer all the orders for this joint national unit towards its own national champion."

"The directive, passed nearly two years ago, makes it difficult for countries to claim the national security exemption and thus exempt defence procurement from cross-border competition," says Valasek.

"When it comes into effect countries are expected to start buying more from outside suppliers. Therefore those countries that have had a rather liberal and open procurement policy, like the United Kingdom, will find that others will move closer to its philosophy in defence procurement."

The UK philosophy on sharing and pooling is already proving to rather forward thinking, with two major treaties signed with France in late 2010, one of which includes the sharing of some nuclear deterrent maintenance facilities.

"The fact that these two biggest players have recognised that they too need to move towards more pooling and sharing in order to avoid losing some of their key skills and capabilities really sends a powerful message to the rest of Europe, the message being 'we have reached a share it or lose it moment'," says Valasek.

"Because budgets have been dropping for the past 20 years - and for the last few months quite precipitously - we really can't afford the already rather limited spectrum of forces that many EU and NATO countries have," says Valasek.

"If you are pushed into a situation where you may be forced to cut some of your units and lose some of the skills, it's far better to preserve them through collaboration to simply share the expense of that particular skill. It's far better again to internationalise it and to keep it than to be forced to lose it because you can't pay for it out of your national budget. The fact that Britain and France feel compelled to pool and share does remind all the smaller countries out there that this has become a necessity rather than a choice."

The first test of the UK and France's suitability as partners under a new treaty and their ability to operate together is in Libya, Valasek says. American reticence to continue to lead operations means that the UK/France partnership within NATO has taken centre stage.

Militarily, the UK and France operate relatively well together, but where the treaty could fall down is if, over time, either country continues to give preference to their own national industrial base in awarding contracts to support joint forces.

"The treaty contains very specific calls on the countries to stop giving privileges to their national suppliers," says Valasek. "I'm being told that's effectively an admonishment to France to stop being protectionist. Clearly if French defence companies are seen as taking disproportionate advantage of the orders for joint units at the expense of British companies, I imagine that there will be those in the British defence establishment who will withdraw their support for the treaty."

With the issue of military compatibility and industrial competition essential to the treaty's success, its easy to see why Europe's smaller nations couldn't simply 'tag along' and "free ride" on major defence treaties.

The spending cuts across the continent have been severe. In Latvia, defence cuts have reached nearly 50 per cent in recent years, and even Germany is looking at cuts of around 25 per cent by 2015. In Germany's case, conscription is to end and force numbers will be reduced from 250,000 to 185,000.

"What defence ministers have done is cut into force structure," says Valasek of Europe's recent cuts. "Instead of the usual 'salami' tactic where you chop off ten per cent everywhere, they have actually abolished entire skills.

"Ideally we would move towards pooling and sharing as we go through our force structure revisions, but that isn't happening. The reality is that, sadly, most countries are going through their budget cuts and force cuts in isolation. Partly because there isn't enough time to explore opportunities for collaboration, partly because collaboration requires start-up money. You may choose to pay people off if you make them redundant, you may have to pay for the cleanup of a base you shut down and there simply isn't money in the budget for new expenses.

"I hope that when they are done with cutting - and realise that they are left with, in the case of some countries, rumps of militaries - that they would then move towards pooling and sharing," he says. "Ideally we would do that before we decide to cut, but, sadly, it will probably happen the other way around."