Select Committee on European Scrutiny Thirty-Fifth Report




Financing of EU-led crisis management operations having military or defence implications.

Legal base:



Foreign and Commonwealth Office

Basis of consideration:

Minister's letter of 19 June 2002

Previous Committee Report:

HC 152-xxxii (2001-02), paragraph 21 (12 June 2002)

Discussed in Council:

17 June 2002

Committee's assessment:

Politically important

Committee's decision:





    1. In a letter dated 5 April 2002, the then Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Mr Ben Bradshaw) provided us with a Presidency compromise text of 22 March 2002 on the Financing of Crisis Management Operations with Military or Defence Implications.[39] He said that, although Article 28 of the Treaty on the European Union sets out the broad principles, it had become clear to the Member States that a framework agreement was needed on the financing of EU-led crisis management operations under the European Security and Defence Policy (ESDP) which have military or defence implications.
    2. Under the Treaty, the operational expenditure arising from operations having military or defence implications must be charged to the Member States, though if a Member State formally declares its abstention it will not be obliged to contribute towards the costs.
    3. On 12 June we considered a letter from the Minister for Europe (Mr Peter Hain) of 11 June, in which he said that, according to the latest Presidency compromise text dated 4 June, the financing of operations would be based on the principle of "costs lie where they fall", with each Member State funding its own contribution of personnel and/or equipment, but that certain costs would be defined as "common costs". Further work was needed on the precise definition of common costs. The Government expected these to cover administration, communication, transport and local personnel.
    4. The Minister's letter

    5. The Minister for Europe now writes to say that, as expected, a final text setting out the general framework for the financing of ESDP operations was approved at the General Affairs Council on 17 June. He attaches a copy and notes the substantive changes.
    6. We understand that there was no consensus between the Member States on whether transport, barracks and lodgings for the forces as a whole should be a common cost[40] or whether each Member State should pay for the transport, barracks and lodgings of its own forces. So it was agreed to insert language into the text of the framework agreement which left it to the Council to decide on a case-by-case basis, that is with each operation, whether transport, barracks and lodgings for the forces should be a common cost, or whether each Member State should pay for its own costs — "costs lie where they fall"[41].
    7. According to the Minister, an additional tiret has been added to Section 2.1 of the text stating that "when launching an operation, the Council will decide on a case-by-case basis, taking into account the particular circumstances of the operation, whether the costs for the transportation of the forces, the barracks and the lodging for the forces will be funded in common".
    8. The Council did agree, however, that the costs of transport, barracks and lodging for the headquarters should be a common cost. This change is reflected in Section 2.4a of the text. The Annex sets out clearly which of the four types of headquarters are referred to for each element of common costs.
    9. Section 2.2 reads:
    10. "Common financing of incremental costs for ESDP operations with military or defence implications does not entail financing of military assets and capabilities offered by participant States on a voluntary basis and compiled in the Helsinki Force Catalogue (HFC), or of shortfalls in capabilities that occur in the course of the Force Generation Process".

    11. The Minister tells us that a paragraph has been added which states:
    12.  "The Helsinki Headline Goal Catalogue as agreed by Member States imposes that the sending nations are responsible for obtaining transportation resources to deploy, sustain and redeploy its forces. Therefore, the present arrangements on financing specific operations do not put this objective into question and do not interfere in equipment plans".

    13. We understand that this wording is intended to impress on Member States that, in addition to their contribution to the common costs, however small, they will continue to be expected to build up their own military capabilities in line with their commitments under the Helsinki Headline Goal.
    14. Section 2.3 now omits the previous reference to "including specific incremental out of theatre costs in direct support of the operation". It was considered that "out of theatre costs" was too loose a definition.
    15. Section 3 moves the review forward from June 2005 to June 2004. It was recognised by the Council that the ESDP Financing Framework Agreement has had to be based on theoretical situations and that it was not until live operations were undertaken that it would be clear exactly what would be most efficient, both in terms of the total cost and of the shares of the individual Member States.
    16. House of Lords European Union Committee

    17. The Chairman of the House of Lords Select Committee on the European Union, Lord Brabazon, in a letter to the Minister dated 24 June, expresses concern about the implications of section 2.2. He asks what progress is being made to persuade those Member States which do not commit 2% or more of their GDP to defence to increase their defence budgets.
    18. Lord Brabazon also raises the issue of a disproportionate burden falling on those countries, such as the UK and France, which are better equipped in the immediate future to meet the headline goal and commit troops.
    19. Conclusion

    20. We thank the Minister for bringing us up to date on this framework agreement. We note the concerns raised by the Chairman of the House of Lords Committee. We understand that the Government has made a careful analysis of the effects on the UK of the different proposals for funding these operations and therefore do not necessarily share all of the Lords' concerns. Nevertheless, we should be interested in the Government's response to Lord Brabazon's letter and ask the Minister to copy his reply to us.
    21. Meanwhile, we clear this document.


39  Not reported. Back

40   Common costs are split between the Member States, using their GNP as the key, as in the case of the Community budget. The UK will be expected to pay 18% of the common costs of any ESDP operation, regardless of whether it is involved, or the forces it contributes, unless it has declared its abstention. Back

41   In these cases, the UK would pay for its own forces only. Back

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Prepared 19 July 2002