Blog AnalysisDefense industryStabilization / Peace

What if defense companies contributed to peacekeeping?

(B2) The idea may seem absurd, or obvious, beforehand. But it deserves to stop there for three minutes. Why not ask defense manufacturers for a contribution to peacekeeping?

(credit: European Commission)

A good boost

At European level, the European defense industry will benefit from a 'huge boost' from the public budget, in the form of the European Defense Fund — between 1 billion and 1,8 billion euros (1), for year, dedicated to the research and development of new equipment. That is a non-negligible percentage of the current overall public budget of the Member States. With an additional advantage: the European budget is more secure, being less subject to political upheavals than national budgets.

...with fiscal stability

On the one hand, because the political institutions are established for at least five years, with a very low probability of overthrow. On the other hand, because the budgetary framework, once discussed bitterly, between elected deputies and government representatives, is established for seven years. It is rare and precious. Defense companies are not mistaken. Conferences, symposiums and other seminars are multiplying on the theme. And industrialists, even those most mocking or ironic vis-à-vis Europe, are rushing to Brussels, settling there or strengthening structures.

A market like no other

However, the defense industry is not quite a market like the others. The customer-buyer-user is not the final recipient of the service. The ultimate objective of these industrialists is not happiness. Their buyer will be satisfied when the equipment is effective. If it is a lethal weapon, effective means 'to kill', with precision certainly, but as surely as possible. If it is a 'cyber' weapon, it means neutralizing a site considered 'enemy', regardless of the function of the target. If it's a 'technological' weapon, that means having an effective tapping system, regardless of who is being listened to, terrorist or political opponent. For this industry, whatever its shareholders say, peace is bad news, and tensions are good news. One can not deny it. Just look at the turnover that has soared in recent years.

A European difficulty on peacekeeping

At the same time, the Member States and the European Union are finding it difficult to deploy peacekeeping missions or operations. The cause is multiple. It is based on the lack of political will, the lack of human and material capacities, but also of budget. Without these three conditions met, a mission does not leave or is reduced to a symbolic presence, ineffective, because it does not have the necessary minimum. The discussion to establish a European Peace Facility prove. Among all the questions that arise, one of them is underlying: from which pocket will the money come out? from the national budget or from the European budget? (2) Settling the issue of financing would raise a hell of a mortgage...

A possible contribution

It would therefore not be incongruous for companies that have made strong profits in recent years to contribute a percentage to be determined — of their turnover or their profits, for example — to this European Peace Facility which is painfully seeking to align 10,5 billion euros over seven years (1,5 billion per year). It would only be fair.

A sector that is doing well

Companies in the sector are doing well. Just look at stock market prices for listed companies (3). Safran: 60 euros in January 2015, around 147 euros in January 2020 (+145%). Dassault: 54 euros in January 2015, around 155 euros in January 2020 (+180%), Rheinmetall less than 40 euros in January 2015, nearly 105 euros five years later (+165%), etc. The defense sector weighed in 2014 almost 100 billion euros (97,3 billion according to a parliamentary record).

Necessary engineering

Of course, this requires a bit of political and legal engineering. But it is not an impossible idea. On the one hand, the contribution of companies in a sector has an important historical antecedent: the contribution of coal-steel companies to restructuring in the sector (ECSC Treaty). On the other hand, the European Peace Facility has the advantage of being outside the Community budget. This allows for great flexibility. The proposed regulation on the Facility already includes the possibility of 'voluntary contributions' from third countries. Why not also provide for a 'voluntary' private contribution. The question now is whether the Europeans want to take the step to really play a peacekeeping role.

(Nicolas Gros-Verheyde)

  1. Depending on the assumption made, the figure varies according to the Finnish or European Commission proposal.
  2. Lire: European Peace Facility: debate blocked. A move expected from the High Representative and the EEAS
  3. Companies often have a civil and military activity. One is sometimes doing better than the other.

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).