The cost of non-Europe in the area of security and defense. Study for the European Parliament.

Release date: 2006-05

Despite manifold efforts both on the demand and on the supply side, there is still no integrated European defence market. Even though hardly any European state is still able to afford to finance and sustain a full spectrum of defence-technological and -industrial capabilities, there are strict national rules hindering or even prohibiting foreign ownership of defence companies or cross-border alliances. Even though a strong, globally competitive, industrial base is essential to provide the necessary choices and options for Europe in its decisions as regards its presence and influence on the world stage, defence equipment is procured nationally. Therefore, the advantages of internationalisation, that is the choice of the best location and the best provider, are of no use on the nationally fragmented defence markets in Europe.
The disadvantages of not having a common defence equipment market are:
• The potential for rationalisation can not be fully used
• Inefficiency as a result of limited competition
• Overcapacities in defence industries
• Overly high prices and a waste of taxpayers’ money.