Italy's uncertain path towards a European defence

Publication date: 2005

The defence sector has always been paramount for a state’s independence and stance towards other states. The demand for arms stems from economic, political and strategic reasons. During the years, national concerns such as internal employment and international independence have favoured the formation and protection of national “champions”, intended as defence industries strong enough to be able to compete with other foreign industries. This rationalization of the supply side of defence has been accompanied by attempts to re-organize the demand-side of procurement, where economic, political and strategic considerations have themselves downplayed the ability of a state to pursue an autonomous procurement policy. First of all, economic reasons have shown the difficulties experienced in formulating sound autonomous procurement policies because of the cuts to national defence budgets and the requirement for new weapons systems. From the strategic and political point of view the end of the Cold War has emphasized that the procurement policy delineated by a state should be consistent with the international engagement assumed by the state: governments should be able to think strategically when shaping their procurement policies in order to fulfil their political objectives together with their economic ones.

After the end of the Cold War people expected to share the dividends of peace, and governments, overwhelmed by internal economic and social problems, have had to reduce the budgets devoted to defence; at the same time, increased unit costs for weapon systems and increased technological requirements for defence products have complicated the procurement planning. The increase in unit costs derives from the need to improve performance against potential competitors, and from the application of new technologies. Deployment of new technologies calls in turn for improved sophistication in design and manufacture. In particular, new weapon systems are heavily based on electronics and precision guidance: these new systems will absorb a huge portion of the development and production costs. Unit costs are too high if the production is confined to national borders: rising costs will inevitably reduce the number of weapons acquired by the government. Technological sophistication in weapons systems is requiring more and more investments that national industries are not able to sustain. Moreover, strategic and political imperatives together with the aforementioned economic ones are pushing towards a more cooperative stance among states: first of all, states are asked to harmonize and standardize their operative requirements in order to be able to face common international challenges; they are also called on to cooperate with other European states to foster a European defence pillar and gain an important position within it.

In the last few years Italy has been able to recognize the economic, strategic and political implications of the European procurement policy, through focusing on and participating in international collaboration projects. As one of the most important defence players in the European context, Italy is trying to increase its influence in the defence realm and to consolidate its industrial basis. During the last five years Italy has undertaken many collaborative projects in various forms of partnership. While its formal engagement has been apparent in the North Atlantic Treat Organisation (NATO) and European context, the country has sometimes pursued an uncertain and contradictory procurement policy. Despite being a paramount actor in the establishment of Organization Conjoint de Cooperation en matière d’Armement (OCCAR), and the European Defence Agency (EDA), it has sometimes pursued policies that seemed to lack a clear strategic or political aim, risking endangering its credibility as a prominent European partner. Its hesitant position towards European collaboration projects has procured delays in programmes and disappointment among other European actors.

Though EDA as a Defence Agency is still at the beginning of its work, OCCAR is what is most similar to a European procurement agency, and therefore it is worth considering where Italy stands within it. Italy is among the founding members of OCCAR, an international agency for the management of integrated programmes among different nations. It was created with a basic belief in the future of a European defence pillar and with a view to being an effective tool for this project, by becoming the best procurement agency in the European defence realm. The most important programme within OCCAR and the European defence landscape is Airbus 400M, a military transport aircraft that sees EADS as its prime contractor. After having shown interest in such an important European project, Italy withdrew its participation in 2001.

Many different reasons have been given for the decision by Italy to withdraw from the programme. The main explanation for this decision has been that Italy did not have a requirement for that kind of aircraft, though experts have advanced different opinions. Nevertheless, from the strategic point of view participation in this programme could have permitted Italy to align itself with the other European leaders, and to participate in the industrial building process, enhancing its credibility on the European scene and helping reinforce the source of a European defence pillar.

Italy is currently engaged in two programmes within OCCAR: FSAF, a missiles system family, and the multi-mission frigates FREMM. The latter programme represents a cooperation with France that dates back to 2002. Cited as the most important naval building programme ever realized in Europe in the context of an international cooperation, this project has met with huge problems that have postponed its funding phase. Italy has had a difficult and contradictory legislative path as regards funding the project: the Italian lack of consistency has raised doubts about Italy’s willingness to engage in the programme. It seems that there is a lack of a strategic consideration of the potential positive effects of such a programme: important spill-offs in civil industry, gains in credibility in the European landscape, achievement of a highly technological product, the possibility of increasing its own exports and, finally, modernization of the Italian naval industry.

Recent years have seen Italy deepening its ties with American defence industries, somehow taking over the role previously occupied by Spain with Aznar, while pursuing an uncertain and contradictory policy toward Europe. Cooperation with the United States is paramount for Italy as for every other state and creates economic advantages: access to the American market is perceived as beneficial and the expectation of technology exchanges bulks large. Nevertheless, aside from such industrial considerations, political and strategic considerations suggest that a deep collaboration with the United States will be difficult, since America would hardly allow transfer of technology to its partners. Italy has shown it is able to offer competitive products on the American market, such as the Presidential helicopter US 101: playing its cards in the American context is very important and trying to penetrating the protected defence market of the US is not only a prerogative of the Italian defence industry. Nonetheless, collaboration with the United States should be thought out strategically: while entering the American market is important, not all collaboration programmes with the US have been successful. Collaboration with the US should not be intended as a political alternative to the European context: Italy should never forget its priority, Europe, which is and will remain its most important point of reference. Italy should determine its procurement policy with an eye to the long term: economic and political considerations should be put aside if it hopes to be an influential player in the European realm. It should plan its procurement policy strategically, with a view to consolidating its industrial basis but also to being considered as a credible and important partner in the European setting. Together with this consideration Italy should not forget that its own competitiveness and credibility can only be enhanced by promoting and investing in technology innovation.

Most European collaboration projects need funds at the level of Research and Development (R&D), and this is a huge shortcoming for Italy. While other European states have re-oriented their procurement planning toward technologically advanced programmes, Italy suffers from chronically poor investments in technology. The high-tech industry is today paramount for a lot of reasons: first of all for the importance that it holds in the war against terrorism, for the potential spill-over on the civilian field, for its contribution to creating a competitive European defence and for the possibility to influence the course of the latter. For all these reasons funds for research and technology are paramount. In addition, Italy should not neglect the importance of investing in space activities, following its European partners.

Italy should be able to shape policies consistent with its European commitment, to formulate its demand for defence, taking into account the impossibility to pursue an autonomous procurement plan and therefore engaging deeply with the European partners. Italy needs to be more determined and reliable in the formulation and management of collaboration programmes. A strong European stance need not prevent potential forms of collaboration with the United States that open the road to the broad American market and foster innovation and competitiveness. Nevertheless, these collaborative projects should not impinge on the ability of Italy to be a credible, influential and reliable European state. Procurement policies are not only industrial and economic policies but also strategic and political ones: long-term considerations should outweigh short-term ones.

Source: M. Ceccorulli
Publication date: 2005

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