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Article 296: Friend or Foe?

EuroFuture Magazine, Winter 2006 - 01 janvier, 2007
Analyse and essay
Hajnalka Vincze

The armaments sector is the par excellence strategic field, be it in geopolitical, economic or technological terms. Due to the coincidence between the most abstract questions related to sovereignty and the most tangible nature of the products (origin, composition, design), the policies pursued in this area are particularly revealing of, and determining for, the direction Europe is about to take.

Armaments issues are, in several respects, the moment of truth for European integration. The whole European process being based on what is commonly referred to as “constructive ambiguity”, the irruption of the most controversial questions in the most unforgiving way creates an entirely new situation. One in which the ever-growing gap between rhetoric and reality becomes all too visible. The traditional discourse about Europe becoming a “fully-fledged international actor on its own right” or “a distinct and original entity” clashes spectacularly with the reluctance of the majority of Member States to draw the logical conclusions and provide the appropriate means.

What confers, in this case, a particular taste to the usual “philosophical” debate over the EU’s “finalités”, is the extremely concrete, tangible form in which these issues arise when it comes to the armaments field. There is nothing ambiguous about whether you can or cannot assess a crisis situation on your own, whether you can or cannot operate your military apparatus independently, and whether you do or do not need a Third party’s (at least tacit) approval to make choices, defend yourself and act on the international scene. The difference between dependence and independence is built in the “ironware”.

***

Article 296 of the Treaty establishing the European Community (TEC), which allows Member States to derogate from the rules of the Common Market in the armaments field, is most often presented as the very embodiment of retrograde protectionism: anti-market and anti-European. In other words, this article is considered as the main obstacle to the rationalization of the defence sector, on behalf of higher principles such as “best value for money” (in government procurement) and “level playing field” (for the industries). It is, therefore, eagerly singled out as being at the origin of European fragmentation in the armaments area. The only flaw in this otherwise attractive reasoning is that it confuses cause and consequence. Far from being the source, Article 296 is rather the reflection of our divisions. In particular that of the divergences, not to say antagonisms, between our ideas on Europe’s future: power or not, European or not.

If the reinforcement, via a collective European leverage, of our autonomous capacity to decide and act would be highly welcome, the fact is that without a commonly shared will to exist strategically “Europeanization” is synonym of abdication of sovereignty. And in this light, Article 296 appears as a safeguard rather than an obstacle. 

What Does Article 296 Mean?

The exemption Member States enjoy on the basis of Article 296 is extensive, but not absolute. Experience suggests that the interaction between individual Governments, the Commission and the Court is bound to increase in importance, even though the ultimate definition of what an “essential security interest” is remains the prerogative of the State.

Content

Originally Article 223 of the Treaty of Rome, figuring as Article III-436 in the so-called constitutional treaty, Article 296’s wording has not changed an iota over the last half-century. By invoking “the essential interests of its security”, each Member State can derogate from the Internal Market rules in basically two ways. First, it is granted the right to secrecy: it can refuse the disclosure of any information on the grounds of national security. Second, concerning arms, munitions and war materials, it is entitled to take any measure it deems necessary for the protection of the above-mentioned interests.

Formally, Article 296 is placed in the “General and final provisions” section of the Treaty, which ensures that the exemption it contains is valid for every single element of the Common Market (from competition and trade to transfer and procurement). Content-wise, it is part of the few articles of the TEC (30, 39, 46, 296, 297) designed to allow for exceptions in situations where public security is at stake. These are like built-in “safety valves”: emergency exit doors in case a conflict arises between Common Market regulations and the paramount considerations of security.

Limitations

The exemption provided by Article 296 is restricted in several ways. First, the article itself limits its own use when specifying that it only applies to products contained in a particular list established in 1958. In reality, however, the list has so far proven to be generic enough to accommodate Member States’ needs. At the same time, Article 296 also takes care to note that derogatory measures should not affect competition in the non-military field.

Furthermore, Article 298 makes sure that in case of possible misuse of Article 296, the Commission has either the possibility to look for negotiated arrangement together with the Member State concerned, or it can (just like any other Member State affected) directly bring the matter before the Court of Justice.

Practice

Based on the increasingly dual (civil-military) nature of the products, technologies and industrial actors involved, the Commission has been steadily trying to reduce the scope of application of Article 296. And, by the same token, to gradually extend its own control over this crucial area. The Member States, for their part, has been regularly accused of making a quasi-systematic use of the derogation possibility.

The Court’s case law points to two conclusions that are rather opposing but not entirely incompatible. On the one hand, the verdicts tend to limit state prerogatives: exemptions are said to need case by case justification, with the burden of proof lying with the Member State. On the other hand, the “particularly wide discretionary” powers of

Member States in defining their need for protection are unequivocally recognized. The vagueness this duality implies is consubstantial to Article 296. Ultimately, the State is the sole legitimate judge of what constitutes its “essential security interests”. Appreciations vary according to time periods, countries and, in particular, following our (more or less responsible, more or less farsighted) vision of strategic imperatives.

Why Does It Matter (so much)?

The armaments sector is the par excellence strategic field, be it in geopolitical, economic or technological terms. Due to the coincidence between the most abstract questions related to sovereignty and the most tangible nature of the products (origin, composition, design), the policies pursued in this area are particularly revealing of, and determining for, the direction Europe is about to take.

More than Usual Ironware

The eminently strategic character of the armaments sector comes from the key role it plays both with regard to the security and prosperity of the citizens and to power relations on the international scene. Beyond pure military efficiency, access to defence technologies and industrial capabilities shapes political and diplomatic freedom of manoeuvre. The existence of an autonomous defence industrial and technological base is the prerequisite for independent decision-making and independent action. Without it, there is no credibility, hence no negotiating position whatsoever. Put differently, it is the material pillar of our sovereignty.

Moreover, the armaments sector is of a paramount importance in the global technology race (with the “new industrial revolution” lurking just around the corner). This is largely due to three factors: first, the cutting-edge nature of the products and R&D involved, second, the spillover effect investments in these industries subsequently have on the economy and, third, the active role States are allowed and used to play in this field.

More than Usual Business

Consequently, the significance of the European defence sector goes far beyond the figures. Even if these figures are in themselves impressing enough: according to the Aerospace and Defence Industries Association of Europe, in 2005, European defence companies employed 614 000 persons, and realized a combined turnover of €113 billion. At the same time, the total defence expenditure of the 24 participating countries of the European Defence Agency (all EU members minus Denmark) amounted to €193 billion, 18% of which was spent on investment (equipment procurement and R&D).

If the omnipresence of the State (in its quality of client, investor and regulator) has always been a defining feature of the armaments sector, this special relationship finds its deepest justification in the highest, sovereignty-related considerations.  It is first and foremost because our present and future positions are at stake that active government involvement is a constant and peremptory strategic interest.

More than Usual Europe

Armaments issues are, in several respects, the moment of truth for European integration. The whole European process being based on what is commonly referred to as “constructive ambiguity”, the irruption of the most controversial questions in the most unforgiving way creates an entirely new situation. One in which the ever-growing gap between rhetoric and reality becomes all too visible. The traditional discourse about Europe becoming a “fully-fledged international actor on its own right” or “a distinct and original entity” clashes spectacularly with the reluctance of the majority of Member States to draw the logical conclusions and provide the appropriate means.

What confers, in this case, a particular taste to the usual “philosophical” debate over the EU’s “finalités”, is the extremely concrete, tangible form in which these issues arise when it comes to the armaments field. There is nothing ambiguous about whether you can or cannot assess a crisis situation on your own, whether you can or cannot operate your military apparatus independently, and whether you do or do not need a Third party’s (at least tacit) approval to make choices, defend yourself and act on the international scene. The difference between dependence and independence is built in the “ironware”.

Nearing the Crossroads…

Rapid developments in both the technological-industrial and the military-political field are to propel these most sensitive issues to the top of the agenda, and make formerly taboo concepts inescapable. Leading to the uncomfortable recognition that the notion of European autonomy and the idea of a European preference are the two structuring elements in any meaningful debate.

State of Play

Multiple pressures are adding up nowadays to lend a sense of urgency to the question of “Europeanization” in the armaments sector. Un-coordinated action by individual European countries is clearly insufficient considering the parameters: exploding costs of modern weapons systems, the growing number of EU constraints (technical regulations without taking into account strategic priorities, e.g. with regard to government expenditure), defence industrial consolidation, and assertive US policy aimed at weakening (if not ousting) potential competitors.

The recent “Interpretative Communication” on Article 296 issued by the Commission in December 2006 is a solid sign of its determination to reduce national exemptions. Yet the Commission, even if it acknowledges some specificities of the defence sector, has a purely technical approach to these issues. It is supported by a large part of the increasingly privatised and trans-national defence industry, which is, by its very nature, more motivated by short-term financial gains than geopolitical considerations of any sort.

As for Member States, they are profoundly divided along two basic lines. The first one is between the largest armaments producer countries (potential sellers) and the others (potential buyers). At stake are the required efforts in order to maintain a defence technological and industrial base (DTIB). The second division is a clash between the French and the British visions within the group of producers. It is about assuming (or not) the full responsibilities of the political actor and ensuring (or not) the European character of the DTIB.

Europeanization: a Question of “How”

When talking about “Europeanization” in the context of Article 296 (just like in any other strategic area), there is one fundamental question to bear in mind. This is namely to know whether national safeguards and regulations designed to preserve the State’s capacity to protect sovereignty are taken up at the European level or, on the contrary, are diminished and emptied out.

As long as there will be at least one Member State that takes the need for European autonomy of decision and action seriously, the push towards “communautarization” – the dismantling of national exceptions and exemptions – could only emerge in areas where, and to the extent that, the collective European level is ready (i.e. willing and able) to assume this strategic priority.

European preference: a Question of “When”

Quite predictably, the long-time taboo concept of a “European preference” is bound to move to the forefront of the debates. Indeed, it is intimately linked to each and every aspect of the reflection on Article 296. However, it is also one of the most controversial ideas, and that from the very beginning of the European integration process. In the armaments field, the European preference can take various forms such as:

- More transparency in the defence equipment market and public procurement practices;

- The priority given to European products in government procurement decisions;

- The protection of well-identified key sectors against non-European takeovers;

- The targeted adjustment of the Stability Pact’s rules to have more flexibility in defence spending;

- The obligation for EU governments to use European solutions for their institutional commands (as should be self-evident for Ariane launchers).

The basic question is simple and unavoidable. Back in 2004, Nick Witney, head of the European Defence Agency (EDA) said that “the jury is out on whether” EDA plans “should eventually include a buy-European preference”. In the latest (December 2006) issue of the EDA Bulletin, Ulf Hammarström, director of EDA’s Industry & Market Directorate, writes that a common European vision should involve, inter alia, “less dependence on non-European sources of supply”. He is right. He is also right to note, about the importance of defence industry, that “at root, it is to do with independence, sovereignty and autonomy”.

Alas, all 27 Member States’ willingness to act accordingly is far from being granted. Yet any Article 296-related matter can only be discussed seriously after it is commonly and openly acknowledged that these are the issues at stake.

In: EuroFuture Magazine, Winter 2006

 


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armement, europe de la défense


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