Some economic aspects of European defence funding (spoken text)

At the occasion of handing in more that 142.500 signatures of EU citizens to EEAS to ask the EU: Don’t invest in weapons – Brussels 23/01/2018 -

I want to give three short comments about economic aspects of European defence industry funding.

One argument that is used in support of this funding of the European defence industry is that it would create jobs. And of course employment is a very important issue for everyone. However the evidence of military industry being a strong job creator is disputable to say the least. For example, in a 2015 research the European Defence Agency presents figures calculating that the impact of €100 million on GDP, tax and employement either in the health, education, transport or defence sector will be similar. So there is no reason to single out defence as the motor of growth. But, according to this research, the long-term results might be more beneficial as the defence sector offers high-skilled jobs, which according to these researchers lead to a higher long-term GDP growth rate.

Here however is the crucial point, which is made in Dutch research published in the Military Spectator: a growth in high-skilled defence jobs will not lead to an overall employment growth but to a shift in employment from the civil to the military sector. This is what the researchers call the 'crowding-out' effect. In most European countries, maybe not in all because Europe is divers, but in most, there is no big employment problem for high-skilled workers. They are the most wanted employees.

Which leads us to the second argument; that the defence industry is adding ground-breaking technology with spill-over effects to the civil industry. This argument has been debatable in the past but is absolutely outdated nowadays. Notably in IT the civil software industry is on top of all developments, its market is so big and its budgets are so high that it is defence which profits from civil 'spill-over' and not the other way around. That there is sometimes more progress in defence is bcause this sector is provided with, sometimes extremely generous, funds which are not made available for the civil sector. Just exactly what the European defence funcing will do.

Last point: The hope that common European defence production will lead to more efficiency as it would prevent duplication of systems. Of course, if more cooperation would lead to lower defence budgets of member states we as peace activists would be very pleased, because it would leave more budget for sectors we think are more suitable to protect peace, such as climate change preventing measures. We support this idea, but the instrument is not right. The lack of cooperation in European defence production is a political choise of member states who want to favor their own arms industry. It is not something that will be changed by financial measures such as are proposed now, but can only be changed when a more common European vision is developed on security and foreign policy. This will need involvement of European citizens who are in the end the voting ones deciding these issues. It cannot be forced upon countries top-down but needs involvement of civil society. Maybe today is a small step in this involvement and I thank you for this opportunity.

Wendela de Vries