Vrije Universiteit Brussel

A 'Game Changer'? The EU's Preparatory Action on Defence ResearchFiott, Daniel

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Citation for published version (APA):Fiott, D. (2016). A 'Game Changer'? The EU's Preparatory Action on Defence Research. Paris: Institut deRelations Internationales et Stratégiques.

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PolicyPaper

A‘GAMECHANGER’?THEEU’SPREPARATORYACTIONON

DEFENCERESEARCH

DanielFIOTT/Researcher,InstituteforEuropeanStudies,FreeUniversityofBrussels

RenaudBELLAIS/AssociateResearcherinEconomics,ENSTABretagne,France

April2016

A‘GAMECHANGER’?THEEU’SPREPARATORYACTIONONDEFENCERESEARCH/April2016

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Keywords:EuropeanUnion,PreparatoryAction,DefenceInnovation,DefenceR&D,DefenceR&T

ABSTRACTThe Preparatory Action for Common Security and Defence Policy‐related research iscurrently under preparation, and itwill serve as a test‐bed to prove the relevance ofdefence‐related research at the European Union‐level. The Preparatory Action couldpotentiallyseebetween€75‐€100millioninvestedindefence‐specificresearchoverathree‐year period beginning in 2017. The Preparatory Action follows on from a pilotprojectonCSDPresearchthatwaslaunchedbytheEuropeanParliamentwithabudgetlineof€1.5millionoverthe2015‐2016period.ThePreparatoryActionaimstoserveasabasis foraneventual, fully‐fledged,EuropeanDefenceResearchProgramme. Indeed,shouldtheworkofthePreparatoryActionprovesuccessful, thenextstepwouldbetoinsert a specific thematic area on defence research within the next multi‐annualfinancialframework(2021‐2027)potentiallyworthsome€3.5billion.The idea to specifically invest EU funds in defence research is potentially a ‘game‐changer’.Traditionally,theEUhassufferedfromimportantconstraintswhenusingEUfunds fordefence‐relatedactivities.Presently,projectsandprogrammes fundedundertheEuropeanStructuralandInvestmentFunds,COSME(Europe’sprogrammeforSMEs)andHorizon2020arestilllargelygearedtowardscivilianratherthanmilitaryprojects,even though defence‐related projects are not formally excluded. One of the chiefobjectives of the PreparatoryAction and of any eventual EuropeanDefenceResearchProgramme is to enhance Europe’s strategic autonomy by investing in key defencetechnologies.Yet using EU funds for defence‐relevant research is not without its challenges. Thispolicypaperanalysesthe likelyrelationshipsorapproaches thatmayemerge fromanEU‐funded programme on defence research, and it draws out some of the challengesthatcouldemergeduringtherollingoutphaseofthePreparatoryAction.Onthebasisofthis analysis, this policy paper concludes thatwhile the Preparatory Actionwill be asmall‐scale financial contribution to Europe’s defence research efforts, it could – ifcorrectly calibrated – lead to a step‐change in the way the EU funds fundamentalresearchtosupporttheneedsofEurope’sarmedforces.Notwithstandingthispoint,thispolicypaperrecommendsthatthePreparatoryActionshould: ResistanyduplicationofnationaldefenceR&TandR&Defforts. Mapandcoordinatenational‐andEuropean‐leveldefenceR&TandR&Defforts. Notbecapability‐drivenbutrathermakeprospective,longer‐term,investments. HelpavoidanyfurtherreductionsinnationaldefenceR&TandR&D. StayfocusedondefenceR&TandR&Dbutconvergewiththecivilianinnovationbase. EnsurefairandeffectivedistributionofIPRsbetweenthedefenceandcivilianbases.

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INTRODUCTIONThe Preparatory Action for Common Security and Defence Policy (CSDP)‐relatedresearch is currently under preparation, and it will serve as a test‐bed to prove therelevanceofdefence‐relatedresearchattheEuropeanUnion(EU)level.ThePreparatoryAction could potentially see between €75 ‐ €100million invested in defence‐specificresearchoverathree‐yearperiodbeginningin2017.ThePreparatoryActionfollowsonfromapilotprojectonCSDP research thatwas launchedby theEuropeanParliamentwith a budget line of €1.5 million over the 2015‐2016 period. The aim is for thePreparatoryActiontoserveasabasisforaneventual, fully‐fledged,EuropeanDefenceResearchProgramme(EDRP).Indeed,shouldtheworkofthePreparatoryActionprovesuccessful,thenextstepwouldbetoinsertaspecificthematicareaondefenceresearchwithinthenextmulti‐annualfinancial framework(2021‐2027)potentiallyworthsome€3.5billion(EUISS,2016:27).The idea to specifically invest EU funds in defence research is potentially a ‘game‐changer’. Traditionally, the EU has suffered from important constraints when usingfundsderivedfromtheEUbudgetondefence‐relatedactivities.Presently,projectsandprogrammes funded under the European Structural and Investment Funds (ESIF),COSME (Europe’s programme for SMEs) and Horizon 2020 are still largely gearedtowardscivilianratherthanmilitaryprojects,eventhoughdefence‐relatedprojectsarenotformallyexcluded.OneofthechiefobjectivesofthePreparatoryActionandofanyeventual EDRP is to enhance Europe’s strategic autonomy by (co)investing in keydefencetechnologies.YetusingEUfundsfordefence‐relevantresearchisnotwithoutitschallenges. As the recent ‘Group of Personalities’ (GoP) report states, among the keychallenges facing the Preparatory Action will be correctly modulating issues such asIntellectualPropertyRights(IPRs)(EUISS,2016:72).ThispolicypaperdoesnotlookspecificallyattheconclusionsoftheGoPreportandnordoes it outline potential technology areas that thePreparatoryAction could invest in.Rather, it looksat thepotentialdevelopmentof thePreparatoryActionas it relates toEU‐level governance of defence research. The paper therefore looks at the likelyrelationshipsorapproaches thatmayemergeand itdrawsoutsomeof thechallengesthat couldemergewhenrollingoutof thePreparatoryAction.Accordingly, thispolicypaper is structured in relation to four major questions: 1) is the Preparatory Actionambitious enough when compared to Europe’s historical trends in defence R&T andR&Dand the changingnatureofdefence innovation?;2)howshouldEuropeans thinkaboutdefence innovationunder thePreparatoryAction?;3)howwillnationaldefenceresearch efforts relate to thePreparatoryAction?; and4)what are the likely politicalandstrategicconsequencesofamovetowardsaEuropeanisationofdefenceresearch?THEPREPARATORYACTION:TOOLITTLE,TOOLATE?DefenceinnovationiscriticalifEuropeanstatesaregoingtobeinapositiontomaintainaminimum level of strategic autonomy.Without consistent, long‐term, investment in

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defencetechnologiesquestionsaboutEurope’sreliabilityasatransatlanticpartnermayalso arise. In a world where new centres of gravity are emerging in science andtechnology, Europe needs to understand that its contribution to global peace andsecurityandtothetransatlanticrelationshipcannotbesimplycountedinthemissionstheyarepartof.NeitherisacommitmenttospendingacertainamountondefenceasashareofGDPenough(Mölling,2014).Europeans need to wake up to the fact that defence innovation is as important anelement of defence as the ability to field capabilities. Creating and nurturing newdefence technologies isamilitarycapability in itsownright (LouthandBronk,2015).Investing in defence innovation is critical from an economic perspective but from adefence perspective it is vital if European states are to play a meaningful role inmultinationalcoalitions, theCSDPand/orNATOandtosupport theEuropeanDefenceTechnologicalandIndustrialBase(EDTIB).Yetonecannotuseahammertosolveeveryproblem.TechnologyisnotapanaceaforthesecurityproblemsfacingEuropetoday,butdefence innovation is an integral – though not exclusive – part of Europe’s overalleconomic prosperity. In many respects, defence innovation ‘gives an important andsometimes pivotal impulse to industry at large and contributes to economic growth’(MauroandThoma,2016:31).European governments are struggling to invest in defence R&T and R&D.Notwithstanding various methodological approaches to calculating R&D expenditure,Eurostat (2016) calculate that as a share of their total expenditure on R&D thegovernments of the EU28 invested 11.3% on defence R&D in 2007 but by 2014 thissharehad fallen to4.9%.While it is true that the shareof civilianR&Dhas increasedoverthissameperiodfortheEU28(from88.7%in2007to95.1%in2014),itisunclearhow much of this civilian R&D feeds into defence‐relevant or dual‐use researchprogrammes (Eurostat, 2016). This trend is more worrisome when one looks atindividual country profiles. Indeed, from 2006 to 2013 France experienced a 13%decrease in government spending ondefenceR&D;Germany ‐7%; Italy ‐41%; Spain ‐55%; Sweden ‐73%; and the UK ‐30% (European Defence Agency, 2016). WhileGermany experienced a 4% increase in defenceR&T over the 2006‐2013 period, andFrance witnessed a marginal drop of 1.3%, government spending on defence R&Tdecreasedby48% inSpain; ‐57% inSweden;and ‐44% in theUK (EuropeanDefenceAgency,2016).1Thisstateofaffairsisconcerningwhenoneconsidersthatthesestatespledgedtospend20%of their totaldefencebudgetson ‘majornewequipment’and ‘relatedResearch&Development’attheNATOWalesSummitin2014(NATO,2014).Furthermore,despitethesevariousnationaldecreasesindefenceR&Dthememberstateshavebeenreluctantto engage in cooperative R&T endeavours. National R&T investment stilloverwhelminglyoutweighscross‐bordercooperationondefenceR&T,whichdecreasedoverthe2008‐2013periodinbothabsolutevalue(from€499to€204million)andasashareoftotaldefenceR&T(from22%to11%)(EuropeanDefenceAgency,2016).Thesetrendsareevenmoreconcerningwhenonereflectsonthechangingnatureoftheglobal technologyenvironment. Indeed,atpresent there isanacceleration inboth thepaceoftechnologicaldevelopmentandtherateofdiffusion’,andthisisbeingcombined                                                            1ItalydidnotreportitsdefenceR&TexpenditurestotheEuropeanDefenceAgencyoverthe2006‐2013period.

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with advanced manufacturing techniques that are in turn ‘increasing the speed,adaptability and customization of production’ while decreasing costs and waste(FitzGerald and Sayler, 2014: 9‐10). For the defence sector, however, the costsassociatedwithdevelopingnewdefencesystemsandtechnologiesareincreasing,whichrequiresmore and not less investment in defence R&D and R&T (Kirkpatrick, 2004).Furthermore,theUSDepartmentofDefenseisdevelopinga‘ThirdOffsetStrategy’thatisgearedtocultivatingcutting‐edgedefenceandcivilR&TandR&DandtheDepartmenthas requestedUS$18 billion2 over the Future Years Defense Program (FYDP) (Mehta,2016; Fiott, 2016). While precise statistics for China are difficult to ascertain, it isestimatedbyone scholar that ‘China’s spendingonequipmentwould likely includeasmuchas$10billioninmilitaryresearchanddevelopmentspending’(Bitzinger,2015).IfthePreparatoryActionisfundedfor€75‐€100millionoverathree‐yearperiodthiswillbearealisticstart,althoughitshouldbeacknowledgedthatthisisasmallamountofmoney. For example, Sweden spent €71 million on defence R&D in 2013 alone(EuropeanDefenceAgency, 2016). Likewise, it is estimated that the full developmentcostsassociatedwiththe jointlydevelopedEuropeanmedium‐altitude long‐endurance(MALE)will likely total€1billion.TheFrench,Germanand Italiangovernmentshavealready collectively spent €60 million on a two‐year‐long definition study (Osborne,2015). In 2014, Britain and France signed a €166 million contract for a two‐yearfeasibility study for the bilateral future combat air system (FCAS) developmentprogramme(UKGovernment,2014).OnecannotexpectthePreparatoryAction–oranyfuturesubsequentEDRP– tobean immediate financial ‘gamechanger’. It isclear thatthePreparatoryActionisnottheanswertoallofEurope’sdefenceresearchproblems.While the Preparatory Action can potentially provide some leverage for nationalR&T/R&D programmes, it will not be able to change the mind‐sets that Europeangovernmentspresentlyhavetowardsinvestmentindefenceresearch.Thus,convincingparticipatingMemberStates(pMS) thatdefenceresearch isworth the investmentatanational and European level is in many ways a more pressing task than simplyconvincingpMStoengageingreaterEU‐levelcooperationondefenceresearch.COMPREHENSIVEMANAGEMENTOFDEFENCEINNOVATIONThePreparatoryActionwillmainlyfocusonincreasingdefenceR&Tand/orR&Deffortsin Europe and improving the effectiveness of these efforts over the longer‐term. It isindeednecessaryto improve the levelofavailable funds,since itappears thatdefenceR&TandR&Dinvestmentshavebeentheprimarytargetsduringsubsequentroundsofbudget cuts, despite the need to prepare for tomorrow’s defence capacities.Nevertheless,beyondinducingpMStoallocatemoreresourcestodefenceR&TandR&D,onemaywonderhowtodealwithdefenceinnovationmorebroadlyandhowtoidentifythemostrelevantlevelofactionneededtomaintainaninnovativeDTIBinEurope.In this regard, a worrisome development would be a duplication of efforts not onlybetweenmemberstates,butalsobetweenthedifferentlevelsofdefenceinitiatives.EU‐

                                                            2OfthistotalthePentagonplanstoinvestUS$3billioninA2/ADtechnologies,US$500milliononguidedmunitionschallenges,US$3billiononsubmarineandunderseachallenges,US$3billiononhuman‐machinecollaboration,US$1.7billiononcyberandelectronicwarfareandUS$500milliononwargaming,demonstrationsandoperationaldevelopment(Mehta2016).

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levelR&TandR&Deffortsshouldcomplementnationalandindustry‐ledeffortsandnotduplicatethem.Thisthenbegsanimportantquestion:whatkindofinnovationisEuropelookingfor?Itisobviousthatstatesandfirmshaveheterogeneousneedsandobjectiveswhendealingwithdefenceinnovation.Itisthereforeimportanttodisaggregatedefenceinnovation in order to identify the level that will most likely help achieve theappropriateoutcomes.During the ColdWar technological evolutions used to drive the evolution of defencecapabilities. The rapid rhythm of technological changes resulted in a quasi‐plannedobsolescence that favoured the quest for ever‐greater performance. Since the 1990s,however,therhythmoftechnologicalprogresshasslowedindefencesystemsbecausemostmajordefence‐relatedtechnologyfieldshavereachedaplateau(BellaisandDroff,2016) in a way similar to what is observed in civilian business (Gordon, 2016).Thereforeitispossibletoconsiderdifferentapproachestopromotinginnovationinthefield of defence capabilities. This is important because the various CSDP‐relatedresearchprojectsthatmaypotentiallyemerge(e.g.capabilities,commonstandards,newtechnologies,etc.)willrequiredifferentinnovationapproaches.This trenddoesnotmeanthat there isnoneed forbasicandappliedresearch.Onthecontrary,suchresearchremainsessentialifoneistoavoidstrategicsurprisesandtotestthe military potential of emerging technologies. Nevertheless, with regard to moreimmediatemilitaryrequirementsandoperations,capacityneedscanrelyonadifferentapproach to innovation that focusesmore on re‐combining existing technology bricksand improving existing platforms rather than looking for radically new, high‐performance,systemsatthetechnologyfrontier(Henrotin,2014).AsDesportes(2009)notes,thisformofinnovationcanbettercorrespondtowhatarmedforcesneedinordertoachievetoday’smissionsanditismuchmoreaffordable.However,whenanalysingtoday’sprocurementprocessesinEuropeitisclearthattheyremaincharacterisedbyaColdWarmind‐setthatistechnology‐drivenandconditionedbythedynamicsofplannedobsolescence(Bellais,2013).Bothdimensionsdonotfitwelltogether, and it could be useful to disaggregate capability‐driven innovation (mainlypushedbyshort‐runrequirements)andtechnology‐driven innovation (mainly forhigh‐end, longer‐term, perspectives). As intra‐budgetary competition does not favour alonger‐term perspective in many countries, the pMS could use the European level inorder to focus on themost prospective, blue‐sky research. Such a decision could alsoavoidconflictsofinterestbetweenthepMSduetotechnologicalandindustriallegacies.Oneshouldalsoanalyse thecomplementaritybetweennationalandEuropean fundingwith regard todifferent time frames. In fact,many stateshave to focuson short‐termcapabilitiesandonlythelargeststatesexpecttoinvestinlong‐termprojects.However,owing to budgetary constraints, even large states find it difficult to dedicate enoughresources for medium‐ and long‐term defence research. Accordingly, the scarcity offinancial resources leads to akindofmyopiadespite a clearperception thatR&TandR&Dinvestmentscouldbenefitarmedforcesoverthelong‐term.ThereforetheEUcouldplayasignificantandveryeffectiveroleiffundingcouldsupportthemostprospectivedefenceresearchprojects.Suchfundingcouldfillgapsnotonlyintermsoftechnologymappingbutalsofordealingwithintertemporalarbitrage.Whileit

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seemsoverambitious to compare this institutional arrangement towhat thePentagonsetupbetweenarmedforcesandDARPA,this initiativecouldrepresentan interestingmodelfortheEU.Indeed,DARPAhasaclearmissiontodealwithlong‐termprojectsthatdo not correspond to obvious capability projects but that avoid strategic surprisesinduced by technology disruptions. As all pMS share this risk, the EU could use itssources to support technology scouting as a complement to the capability‐orienteddefenceresearchmanagedbypMS.This idea would, in fact, not require the creation of a dedicated agency with hugeresourcessuchasDARPA.Whatisrequired,however,isthecoordinationoftechnologyroadmaps in order to clear the way for European funding for foresight projects. Thestructuringof suchprojects can relyona subsidiarityprinciple, throughwhicha leadnation could pilot the funding and then develop a pole of excellence in a giventechnology.Hereitiscriticalto:first,avoidneedlessduplication;andsecond,toproducethe minimum level of efforts needed to guarantee the effectiveness in acquiring thecorresponding technology, granted that there is a budgetary threshold effect intechnologyacquisition(SetterandTishler,2006and2007).Finally, it is also important tomanage a real convergence between the DTIB and thecivilian technological base.With regard to upstream technology and innovation, thereareverylimiteddifferencesbetweenbothsectorsandsoconvergencewouldmeanthatarmed forces could rely on an integrated technological base to reduces costs andmaximise synergies. This is an additional argument in favour of an EU‐levelmanagement of the most prospective defence research projects, since these projectscouldbefully integratedwithintheresearchFrameworkProgrammeunderanyEDRP.Convergence can reinforce existing innovation clusters over the long‐term, it wouldallowEuropetoachieveahigherdegreeofinnovationanditcouldalsoimprovesecurityofsupplyforEurope’sarmedforcesandreducethedefenceburden.Such an objective does notmean any dilution of defence researchwithin the civiliantechnologicalbase.Thiswasamisleadingapproachvisibleduringdebatesaboutdual‐use in the1990s (Guichard,2004),where someused the ideaofdual‐useasaway tocompensate for declining defence budgets by relying on civilian budgets in order tosupport the DTIB. Here the important point is to maximise the ‘cumulativeness ofknowledge’ because technological knowledge is very rarely divisible, and the moreknowledgeinteracts, thehigheritsvalue is(Foray,2004).Fromthisperspective,dual‐use constitutes ameans throughwhich to consolidateEurope’s entire knowledge andinnovationbasewithoutdiscriminationinfavourofeitherthedefenceorcivilianbases.Incidentally, thisobjectiveconstitutesakeyfeatureoftheThirdOffsetStrategy,whichrevisits the quest for a convergence between civilian and defence TIBs (Office ofTechnology Assessment, 1994, 1995) albeit from a proactive rather than defensiveapproach.ByinsistingonadualityofthedefenceandcivilianTIBs,itwillbepossibletoconcentrate limited defence research funding on gaps that are not covered bycommercial or institutional projects (at least in the short‐ ormedium‐term) and thatguarantee the effectiveness of defence‐related funding for defence capabilitydevelopment.

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THENEEDTOAVOIDCONFLICTINGTECHNOLOGYROADMAPSThePreparatoryActionhaslimitedresourcesbutitmustprovetheeffectivenessandtheusefulness of EU‐funded defence research, otherwise it will be difficult to secure adefence‐relatedlineinthe2021‐2027EUR&Dframeworkprogramme(FP9).ThereforeonecannotacceptthatprojectsunderthePreparatoryActioncompeteoroverlapwithexistingnationalinitiatives.Unfortunately,uptonow,thereisnoguaranteethatsuchasituation will not appear. One can identify several risks associated with an EU‐levelfunding of defence research resulting from the heterogeneous commitment andbehaviourofpMS.ThefirstriskisthatthePreparatoryActionisseenasajustificationforfurthernationalreductions indefence research, especiallydue to currentbudget constraints.This riskwouldbeofgrowingconcernifanyfutureEDRPinvestsasizeableamountofthemulti‐annual financial framework into defence research. The danger is that certain EUmemberstateswillviewEUfundingasaconvenientreasontofurtherdecrease–oratleast maintain at low levels – national defence research spending. This risk has afinancialdimension,but it isalsoconnectedtotheeffectivenessofdefenceresearchinEurope,asmentionedpreviously.Indeed,ifPreparatoryActionfundingcomestoreplacenationalfunding,additionalfundingmaynothavealeverageeffectatthesupranationallevel.Thiswouldbearegrettablesituation.Onekeychallengewill thereforebe toensure that thecomplementarityof investmentafforded through the Preparatory Action does not give rise to complacency or free‐riding. One should expect Preparatory Action funding to increase the effectiveness ofdefence research by favouring an effective cooperative approach able to delivereconomiesof scale and scope. Indeed, national defence research is not efficient todaybecauseeachpMSdoesnotspendenoughtoachieveanappropriateeconomyofscaleand scope, but also because defence technology requires a minimal level of effort toproduce significant results (Setter and Tishler, 2006 and 2007). Preparatory Actionfunding canbe relevant if it improves the collective levelof effortneeded to reachanappropriate scale, which can then contribute to maintaining the European DefenceTechnologicalandIndustrialBase(EDTIB).A second, more insidious, risk consists of selecting non‐significant technology forPreparatory Action projects. With an eye to avoiding cooperative schemes andpreventing any proliferation of related knowledge,many states and industries wouldprefertocontrolcriticaltechnologythroughnationalfunding.Thisisboundtolimittheperimeters of Preparatory Action‐sponsored projects to non‐essential technology,significantly reducing the added value of a European dimension in defence research.SuchdiscriminationisboundtosignificantlyreducetheeffectivenessofthePreparatoryAction, both inpositioningvis‐à‐vis national efforts and in achievable output, and thiscanjeopardisethenextstepinEuropeanisingdefenceresearch.AthirdriskderivesfromtheconsequenceofheterogeneouspreferencesbetweenpMS.WhenanalysingEDAstatistics, itappearswithoutdoubt that thepreferencesofstateswithalargeDTIBandotherstatesareboundtodivergeorevenconflict.Inthisregard,itseems difficult to define a level playing field that can be ambitious enough while

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securingtheparticipationofallpMS.Twoimportantissuesareworthconsideringhere.First, Preparatory Action funding could be limited to low‐profile, lowest commondenominator,projectsthatislikelytoproducelimitedresultsandthenharmanyfurtherstepinEuropeanisingdefenceresearch.Second,stateswithalimitedDTIBcouldaskforfullaccesstoknowledgeresultingfromhigh‐profileprojectsthatcorrespondtothecorecompetenciesofthemostadvancedpMS,butthismay,inturn,leadtheadvancedpMStorejectanytrulyambitiousproject.ItisthereforenecessarytoclarifythecoordinationbetweenthePreparatoryActionandongoingnationaldefenceresearchplansexante toavoiddamagingtheinitiative.Sinceitscreationin2004,theEuropeanDefenceAgencyhasbeenworkingquiteextensivelyonmappingtechnologygapsinEurope.ItseemsthenpossibletosetupcomplementarytechnologyroadmapsbetweenthenationalandEuropeanlevels.Thiswouldconstituteagoodmethodforoptimisingfundswhilealsoavoidingtheaforementionedrisks.THEIMPLICATIONSOFEUDEFENCERESEARCHPerhapsoneofthemostinterestingdimensionsofthePreparatoryActionrelatestoco‐fundingandhowthismayraisesensitivequestionsabout IntellectualPropertyRights.ModulatingthewayinwhichIPRswillbetreatedunderthePreparatoryActionwillhavepotentially important political ramifications for the EU. For co‐funded researchprogrammes the member states, firms and institutions could each have a legitimateclaimto IPRs,but fully‐fundedresearchprojectsbytheEU–something thatwouldbeattractivetoindustry–wouldrequireaspecificgovernanceandmanagementstructure.TheexperiencesofIPRmanagementundertheHorizon2020frameworkshowthatanemphasishasbeenplacedon thedisseminationof researchresults to stimulatewiderinnovationintheEU.3Yetthedefencesectorisuniquebecausegovernmentsandfirmsarereluctanttofreelyshareresearchresultsandinformation.ManaginganIPRregimeunderthePreparatoryActionwillnecessarilyrequirethatacceptableIPRconditionsareputinplace,otherwisetherewillbelimitedbuy‐infromindustry.YetonemustbeawareofthepoliticalrelevanceofIPRs.IfinformationisdisseminatedtoowidelyinEuropethroughthePreparatoryAction,thenoneshouldquestionwhetherthe creationandduplicationof industrial effortsandcentresof excellence throughoutEuropeisacrediblewayofsupportingasustainableEDTIB.Here,oneshouldrecalltheexperiencesofdevelopingtheEuropeanSpaceAgency’s(ESA)regimeforIPRs.Indeed,under the ESA IPR regime, industry became the owners of IPRs, despite the fact thattheywere the fruitsof100%ESA‐fundedprojects. In time,ESAmembergovernmentsexpressed concern that this regime could lead to duplicate centres of excellence or,worse still, that the IPRs couldbe transferred tonon‐Europeancountriesor suppliersduring mergers and takeovers. While the ESA has since tightened its rules on IPRs(Stjernevi and Katsampani, 2011: 172), the Preparatory Action for defence researchshouldaimatanIPRregimethatleadstoaconsolidationofDTIBsattheEuropeanlevelratherthantheproliferationoftechnologicalknow‐howintheEUandbeyond.

                                                            3TherulesgoverningtheexploitationanddisseminationofresultsareenshrinedinArticle41ofEURegulationNo1290/2013ontherulesforparticipatinganddisseminationintheHorizon2020programme(11December2013).

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IfthePreparatoryActiondoesgiverisetoadefence‐specificIPRregime,thenthismayrequire that a single authority be given exclusive management of PreparatoryAction/EDRP‐induced IPRs. For example, by entrusting the EuropeanDefence Agencywith exclusive management of IPRs it may be possible to use IPRs strategically topromote the creation of centres of excellence that provide the EDTIB with theappropriate scales of technological innovation and eventually production through thespecialisation of existing poles. With an exclusive manager of IPRs in place, thePreparatoryAction/EDRP could avoid a proliferation of technologies, a duplication ofeffortsandensurethatanEUperspectiveondefenceresearchismaintained.However, all of this implies a change in the role and functions of the EuropeanCommission and theEuropeanDefenceAgency. Asmappers of new technology areas,these institutionswould find themselves on the supply side of the European defencemarketandsotheycouldcontributetocreatingauniquearmamentmarketinEurope.Onthisbasis,notonlywouldindustryperhapshavetochangetheirperceptionsofthesetwo institutions, but both the Commission and EDA would take on a specialresponsibility formaking the strategic andoperational case for the investment inanduseofspecificdefencetechnologies.Thiswouldrequirethattheseinstitutionsensureadefence and strategic perspective throughout the whole process of defence research.Onewayofbuilding‐inadefenceperspectivethroughthefullcycleofdefenceresearchcouldbetoadoptanEU‘defenceresearchstrategy’(MauroandThoma,2016:60).WhiletheEuropeanDefenceAgencyhasconsiderablymoreknowledgeofandcapacitytoidentifyandmapnewtechnologyareaswithmilitarystrategyinmind,theEuropeanCommission will find itself in unchartered territory. For the Commission, a newresponsibility forstrategic investments in thedefencesectormayrequire that itworkmuchmorecloselywiththeEuropeanDefenceAgency,theEUMilitaryCommitteeandwithbodieshousedintheEuropeanExternalActionServicesuchastheEUMilitaryStaff(MauroandThoma,2016:58).Indeed,theGoPreportalreadyreferstotheEDAas‘themostnatural pick toplay the role of theExecutive and ImplementingAgency’ (EUISS,2016: 68). Over the longer‐term, however, should the EU move towards a EuropeanDefenceResearchProgramme thenquestions about institutional arrangements forEUdefence research may likely emerge. Which EU institution (or combination ofinstitutions)couldbecomeEurope’s ‘DARPA’?Withoutgettingaheadofoneself,suchaquestionnotonlymakesonethinkaboutwhethertheEUhasthecapacitytoengageintheaforementionedtechnologymappingexercises,butitalsoforcesonetoengagewithkeydefinitions:whatis‘Europe’?Whatis‘defence’?This last question is essential. Indeed, it will be crucial to tackle how precisely thePreparatory Action – and indeed any future EDRP – will help meet Europe’s futureoperationalneeds.ThePreparatoryActionwillbeputexclusively to theserviceof theCSDP,buttheEU’spresentoperationalfootprint–whichislargelycivilian–meansthata whole swathe of technology areas could potentially be overlooked.While the HighRepresentative/VicePresident’sforthcomingEUGlobalStrategywillnodoubtclarifythefuture role and shape of the CSDP, one could argue that restricting the PreparatoryAction to CSDP‐related researchmay hinder some forms of technological innovation.Therefore, while the Preparatory Action must address the CSDP it should focus onEurope’s longer‐term technological innovation, the consolidation of the EDTIB, theconvergenceoftheciviliananddefenceTIBsandimprovingsecurityofsupply.Itshould

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avoid addressing immediate capability gaps or present‐day operational and securityparadigms.

****CONCLUSIONThis policy paper has looked at the challenges facing the forthcoming PreparatoryActiononCSDP‐relatedresearch,andithasoutlinedsomeofthepossibleimplicationsofEU‐level funding fordefence research.€75 ‐€100million isnot a sizeable amountofmoneywhen one considers the challenges facing the European defence sector, but, ifused correctly, such an amount could be used to leverage national initiatives and/ormakestrategic investmentsonbehalfoftheEuropeanUnion.AsuccessfulPreparatoryActionisessentialifadedicatedbudgetlineinthemulti‐annualfinancialframeworkisto be achieved in the future. To do this, the EU should focus its efforts on blue‐skyresearch that is technology‐driven rather than capability‐driven. Without a crediblePreparatoryAction thatadds real value todefence research inEurope, the chancesofEuropeanisingdefenceresearchwillbegreatlydiminished.Thus,thePreparatoryActionisnota‘gamechanger’asyet–butitcouldverywellbe.IfthePreparatoryActiondoespave theway for dedicatedEU funds for defence researchunder a EuropeanDefenceResearchProgramme, this could represent a shift in theway that theEU regards andsupportsdefenceresearch.YettherewillclearlybechallengestoasuccessfulrollingoutofthePreparatoryAction.ThispolicypaperhasarguedthatthePreparatoryActioninvitesEuropetothinkabouthow it will comprehensively manage defence innovation. The paper argues that thePreparatoryActionshouldnotduplicatenationaldefenceR&T/R&Deffortsanditshouldfocus on strategic technology investments rather than immediate capability concerns.Furthermore, thePreparatoryActionshouldnot lead to further reductions innationaldefence R&T/R&D spending but it can help create a convergence between Europe’sdefence and civilian technological and industrial bases. The Preparatory Action couldhelpmapand coordinatenational‐ andEuropean‐leveldefence researchefforts and itcould inculcatethe importanceofdefence innovationacrossallEUinstitutionsandEUmemberstates.Thispaperhasalsoobservedthatoverthelonger‐termEUfundingfordefence research may require a rationalisation of the EU’s institutional architecture.Should EU funding for defence research require that EU institutions make strategicinvestmentsinspecifictechnologyareas,thentheseverysameinstitutionsmayneedtoaltertheirworkingpractices.

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