Executive Summary
Defence and security can potentially be positive elements in the story of the British exit from the EU. Brexit will not alter geography. The UK is a power of great importance to European security and defence. Every significant security and defence challenge for EU member-state capitals will also be a concern for London. Therefore, the challenge is to find pragmatic solutions and policies that enable the EU member states and the UK to work together for the security of their citizens.
In the EU, France and the UK come closest to playing a full-spectrum security and defence role. The UK makes a leading contribution to European security through intelligence collection and analysis in support of both law enforcement, in particular counter-terrorism operations, and the full spectrum of military operations. The British armed forces remain among Europe’s most capable fighting forces. In contrast to many of their continental counterparts, they have particular strengths in the high-end war-fighting spectrum, but also in their ability to provide scarce enablers to international operations, and in the field of defence capacity building. Like the UK’s diplomats, its armed forces have considerable reach and existing relationships beyond Europe.
A new kind of Framework Participation Agreement (FPA) offered to the UK could acknowledge that a third-party country can have strategic importance for EU Common Security and Defence Policy operations. The FPA could include criteria designed to unlock UK contributions for the most demanding EU missions and focus these contributions on military enablers. A dense web of continuous consultations, information-sharing arrangements and reciprocal secondments would provide the UK with opportunities to make its voice heard at all stages of the process, however, short of a formal voting right.
A second element of the way ahead could be created by EU member states in form of a defence and capability partnership, open to a wider group of non-member countries, including Norway and Switzerland. Such partners would negotiate the maximum level of commitment with EU member states, but the primary aim would be to allow them to participate in capability development and European Defence Fund (EDF) activities. As the European Defence Agency (EDA) is the gateway to defence R&D projects, the UK would look for an arrangement with the EDA that is more inclusive than the current Administrative Arrangements as part of such an approach.
The UK’s defence industry retains distinct advantages in terms of skills and technology. The UK’s defence-industrial competences are only partly integrated in the European defence sector; the relationship is immature and slightly asymmetric, with the UK somewhat more dependent on the continental defence-industrial base than vice versa. In particular, regulations and standards tied to the Single European Market (SEM) and their linkages to technology, R&D, the labour market, intellectual-property rights, all the way to transfers and tariffs, present a vulnerability. The impact on the security industry will be larger, because the density of EU regulations and relevant legal acts is higher in the security sector, as is the level of interdependence of EU and UK industries in this sector.
A wait-and-see strategy will miss the window of opportunity to shape the future EU–UK defence and security industrial relationship and to build a solid future legal framework for important areas of the SEM. All parties, industries and governments should immediately assess the short- and medium-term impact of potential Brexit scenarios on supply chains, ongoing procurements and R&D relations.
London and the other EU capitals could embark on a common political project: the forging of a truly European defence-industrial base, based on the shared understanding that the defence-industrial domain represents strategic value for both. Practically, they would set the conditions for mergers or intense cooperation among structurally relevant European defence companies. An opening may exist already: the Franco-German initiative to develop a future combat aircraft. If the UK were to join this programme, it would create a highly visible flagship project. Other structurally relevant projects could be identified and give the UK a stake in the European defence-industrial base.
If there is a common understanding among EU member states and the UK that the defence-industrial domain is of strategic interest, EU countries could choose to make time-limited use of Article 346 of the Treaty on the Functioning of the European Union to reduce the impact of Brexit on defence industry. Such a move would need to be supported by all EU member states and be mirrored by the UK offering reciprocal treatment. The EU and the UK should continue to work on regulation and standardisation in cases where they are members of the same institutional bodies outside the EU framework.
Download the full report below. This research paper was jointly produced by the IISS and the German Council on Foreign Relations.
