Defense Technology International - September 2007 - (Page 26) DISPATCHES GLOBAL Defense investments in Italy generate a national income multiplying factor of 1.83, he added. “That makes the defense-related multiplier factor one of the largest of the economy sectors. But in the U.S. it is higher, between 1.87 and 1.90.” Despite the fact that in recent years defense R&D has been partially outsourced CEOs cite benefits in raising European to the private sector, a “strong public effort defense-research budgets continues to be necessary,” Guarguaglini argued. “Public spending reduces risks for private investors and achieves collective inJORIS JANSSEN LOK•BERLIN terests that transcend private incentives.” The priority for Europe, he said, is to nvestments in defense R&D do more than In the U.S. there are close ties between the keep a nation’s armed forces up to date in research community, industry and institu- spend more efficiently and avoid duplicating equipment and capabilities: they create tions, while in Europe we see a high degree work. “Up to now, too many defense programs have been duplicated at the national economic benefits far in excess of the money of autonomy among the sectors.” and international level.” As There are also significant spent, expand a country’s technology base and an example, he pointed out differences in R&D expenimprove national competitiveness. that NATO, the European This was the message delivered by two ditures among European Defense Agency, national CEOs of leading European defense contrac- nations committed to such defense ministries and the tors at the recent Handelsblatt Conference investments, he added, U.S. all have similar proon Security Policy and the Defense Industry pointing to the six Letter grams on network-enabled of Intent nations—France, in Berlin. capabilities and force proWhile government increases in R&D are Germany, Italy, Spain, Swetection. of obvious benefit to the defense industry, den and the U.K.—which Ranque also called for a Pier Francesco Guarguaglini, chairman and in 1998 signed an agreecomprehensive approach CEO of Finmeccanica, and Denis Ranque, ment to revamp the Euroto the development of chairman and CEO of Thales, made a per- pean defense industry. Of European security capasuasive case for the lift to economic well-be- these, Sweden far exceeds bilities. He cited the recent ing that such investments provide, especially the average spending level, Finmeccanica CEO establishment by the EU investing 38.3% of its nawhen countries work together. Pier Francesco of a European Security Avoiding duplication in R&D was, in tional defense budget on Guarguaglini Research and Innovation fact, cited as an important way of restoring R&D and procurement. balance between European developments Spain, France and the U.K. hover around Forum in Brussels. “To interface with this and the U.S. technology base. Guarguaglini the 27% average; and Germany and Italy body, a group of more than 20 European said the U.S. seeks technological superiority are well below average, with Italy spending aerospace, defense and security companies have teamed up to form the European Orin all areas related to defense, while Europe the least—18.2% of its defense budget. This is bad news, Guarguaglini said, and ganization for Security.” follows a more selective approach. If the European Security and Defense Ranque agreed and pointed to the differ- not only for the Italian military. “Investences between defense and security efforts ments in R&D are crucial to a country’s Policy, an organization formed in 1999 to improve Europe’s military capabilities, is in the U.S. and Europe. He said that to be successful, Ranque asserted, it needs although the European Union nations strong defense and security industries. “To have a much larger population than the get to a healthy European defense techU.S. (460 million versus 300 million) nology industry base, we need to push and more military personnel (1.91 milahead with the creation of a competilion versus 1.37 million), their spending tive market, harmonization of demand, is well behind that of the Pentagon. standardization and other consolidation “The U.S. equipment budget per measures, including R&D pooling.” soldier is €80,000 ($107,200), while But he added that this does not mean for each European soldier it is only the creation of a Fortress Europe. “We €20,000,” Ranque said. “The differmust work together with the U.S. to ence is even greater when comparing make the regulatory processes on both operating budgets: €220,000 per U.S. sides of the Atlantic more free,” Ranque soldier versus €60,000 per the European said. He called for stronger links becounterpart.” Thales CEO Denis Ranque tween the U.S. and Europe, with “more Spending on defense R&D in Europe, meanwhile, is a fraction of that in the U.S.— overall competitiveness. The aerospace and joint ventures and mergers leading to large defense sector is responsible for about 1.7% transatlantic companies that provide com€10 billion compared with €70 billion. “The U.S. refuses all types of dependence of the world’s economic output, but the mon systems to European and U.S. defense while Europe has largely accepted being de- amount of technological innovation it pro- markets.” I pendent on others for certain defense and duces influences more than 50% of global security technologies and capabilities,” output. Even a small increase in R&D Read Janssen Lok’s posts on DTI’s Guarguaglini noted. “Another major differ- spending yields a significant benefit,” he weblog, Ares, updated daily: ence is in the area of R&D coordination: explained. aresblog.net MONEY TALKS I EUROFORUM/FOTO VOGT PHOTOS 26 DEFENSE TECHNOLOGY INTERNATIONAL SEPTEMBER 2007 www.aviationweek.com/dti http://aresblog.net http://www.aviationweek.com/dti
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