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Documents considered by the Committee on 19 December 2017 Contents

1EU defence: Permanent Structured Cooperation

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; recommended for debate on the Floor of the House; drawn to the attention of the Defence Committee

Document details

(a) Council Decision establishing Permanent Structured Cooperation (PESCO); (b) Council Decision 2017/971 determining the planning and conduct arrangements for EU non-executive military CSDP missions

Legal base

(a) Articles 42(6), 46 TEU and Protocol 10; special legislative procedure; QMV (see paragraph 0.24); (b) Article 42(4) and 43(2) TEU; unanimity

Department

Foreign and Commonwealth Office AND Ministry of Defence

Document Numbers

(a) (39354), 14866/17,—; (b) (38852),—

Summary and Committee’s conclusions

1.1On 11 December 2017, 25 EU Member States signed up to “Permanent Structured Cooperation” (PESCO) on defence matters, a mechanism introduced by the Lisbon Treaty in 2009.1 PESCO is essentially an EU-level framework for Member States to establish mutual commitments, for example by jointly developing defence capabilities, investing in shared projects, and enhancing the operational readiness and contribution of their armed forces. The European Commission will produce an assessment each year of how the participating countries are meeting the targets they have set themselves.

1.2The participating Member States have also adopted a declaration, which welcomes the political agreement identifying an initial list of 17 projects to be undertaken under PESCO.2 These projects cover areas such as training, capability development and operational readiness in the field of defence. The full list of projects to be considered as part of PESCO are listed in the Annex to this Report.

1.3The UK, alongside Malta and Denmark, did not join PESCO, but it did vote in favour of its launch at the Foreign Affairs Council. As the Decision establishing PESCO was only finalised shortly before its adoption, the Committee was unable to scrutinise the document in the usual way. We had, however, received correspondence from the Minister for Europe (Sir Alan Duncan) informing us of the timetable for the PESCO launch process, setting out the Government’s approach to the UK’s role in this new framework and confirming that, because of the truncated timetable, it would override scrutiny to support the proposal.

1.4The launch of PESCO took place in the context of wider efforts at EU-level to make Member States’ defence policies more coherent. In particular, earlier this year the Council also adopted a Decision establishing a Military Planning and Conduct Capability (MPCC) unit for the EU’s non-executive military Common Security and Defence Policy (CSDP) missions (which are currently in place in Somalia, Mali and the Central African Republic). Further proposals are expected in 2018 to increase the ease with which national troops and material can be transported throughout the EU.3

1.5The Government has supported both the launch of PESCO and the establishment of the MPCC. With respect to the former, the Minister noted that the Government was of the view that PESCO could address military capability shortfalls in the EU, and that it was satisfied that the legal framework would allow for participation by the UK defence industry after Brexit (although the exact conditions for such participation are to be determined at a later stage, without formal UK input).

1.6As regards the MPCC, the Minister informed us that the remit of the new unit was agreed “within UK parameters”, notably as regards limiting its scope to non-executive (advisory) missions only.

1.7We are grateful for the Minister’s letters of 23 November and 8 December informing us of the next steps in the PESCO launch process, given that the formal scrutiny process could not be applied to the Council Decision. We accept that scrutiny override was unavoidable given the short period of time between the finalisation of the legal text and its adoption by the Council.

1.8The launch of PESCO, irrespective of Brexit, would have been a major political development. It has become more so now in light of the Government’s clear interest in safeguarding its ability to participate in projects of mutual benefit under the PESCO aegis. As a non-Member State, the UK will lose the ability—open to the other non-participating EU countries under Article 46 TEU—to request participation in PESCO. In terms of the practical impact of the projects to be launched under PESCO, we consider that the improvements sought to the participating countries’ military capability will take many years to develop. In addition, we remain to be convinced that PESCO itself will lead to a greater willingness among Member States to engage in more joint operations coordinated at EU-level.

1.9Nevertheless, there could be value in the UK’s case-by-case participation in specific PESCO projects, on a voluntary basis. Although the Minister has said that the PESCO legal framework as adopted met the UK’s requirements regarding participation by UK industry after Brexit, the Decision defers the establishment of the general conditions for such participation to a later stage. Both those conditions, and a specific decision on UK participation in particular projects, would have to be agreed unanimously by the PESCO Member States.

1.10We must therefore await further information on the role third countries will be allowed to play, and we expect the Minister to keep us informed of any developments in this area promptly. In particular, we would be grateful to know when the Decision establishing the conditions for third country participation is expected to be considered by the Council, and to be informed as soon as possible about its likely substance.

1.11In the context of UK participation in PESCO after Brexit we will also follow closely any future trilogue negotiations on the new European Defence Industrial Development Programme (EDIDP), which will co-finance specific PESCO projects from the EU budget.

1.12The establishment of the MPCC is also a significant development. It centralises decision-making for CSDP missions to a degree not previously seen, albeit only—at this stage—for non-executive military training missions in Africa. At present, the UK has a veto over expanding the role and remit of the MPCC. After the UK ceases to be a Member State, the other Member States could revisit the structure and limit of the unit, potentially extending its role to also cover executive military CSDP missions.

1.13Given the above, we recommend these Council Decisions be debated on the Floor of the House. That debate should, ideally, cover the launch of PESCO and the MPCC; the broader possibilities for UK-EU cooperation on defence matters after Brexit; and the implications of PESCO and the European Defence Fund for international defence structures outside of the EU framework, in particular NATO. We also draw these documents to the attention of the Defence Committee.

Full details of the documents

(a) Council Decision establishing Permanent Structured Cooperation (PESCO) and determining the list of Participating Member States: (39354), 14866/17,—; (b) Council Decision 2017/971 of 8 June determining the planning and conduct arrangements for EU non-executive military CSDP missions and amending Decisions 2010/96/CFSP on a European Union military mission to contribute to the training of Somali security forces, 2013/34/CFSP on a European Union military mission to contribute to the training of the Malian armed forces (EUTM Mali) and (CFSP) 2016/610 on a European Union CSDP military training mission in the Central African Republic (EUTM RCA): (38852),—.

Background

1.14This Report deals with two related aspects of increased cooperation on defence matters at EU-level established in 2017: Permanent Structured Cooperation (PESCO) and a new Military Planning and Conduct Capability Unit (MPCC). We will discuss these in turn.

Permanent Structured Cooperation

1.15Articles 42 and 46 of the Treaty on European Union, as amended by the Lisbon Treaty, allow a group of EU Member States to launch “permanent structured cooperation” (PESCO) in the field of defence.

1.16PESCO is essentially an EU-level framework for Member States to cooperate on defence matters, with the aim of jointly developing their military capabilities and making them available for EU military operations (the launch of which would still require unanimity among all Member States, not just those participating in PESCO). However, the commitments made under PESCO are binding, in the sense that the European Commission will produce an assessment each year of how the participating countries are meeting the targets they set themselves.

1.17PESCO will be organised at two levels: the political level and the project level. At the political level, the framework will be directed through existing EU structures, including the Political Security Committee (PSC) and meetings of the Foreign Affairs Council attended by EU Defence Ministers. At project-level, only PESCO participating Member States will exercise voting rights when to establish and manage specific programmes of cooperation, which will normally be subject to unanimity of participating Governments.

1.18There are also explicit links between PESCO and the new European Defence Fund, which will fund both defence research and the development of military prototypes. The proposed European Defence Industrial Development Programme (EDIDP, which is part of the Fund), will co-finance projects for joint development of defence technology that are agreed as part of PESCO by 30 per cent, whereas for other projects the co-financing rate is limited to 20 per cent.4

1.19The original Commission proposal for the EDIDP would severely curtail the ability of the UK defence industry to participate in projects its funds after Brexit, as participation would be limited to organisations established in the EU and majority-owned by EU nationals. On 12 December, the Council adopted a general approach which would allow for some, but only limited, third country participation in EDIDP-funded projects.5 We discuss this further in the context of Brexit in paragraphs 1.49 below.

Formal launch of PESCO

1.20The process for PESCO’s launch took place as part of the EU’s wider Security and Defence Implementation Plan.6 At the June 2017 European Council, the EU’s Heads of State and Government committed themselves to drawing up within three months a “common list of criteria and binding commitments” in the field of defence.

1.21In July 2017, France and Germany released a draft notification letter. On 28 September, France, Germany, Italy, and Spain, supported by the European External Action Service (EEAS), submitted a draft notification on PESCO, expanding on the July version. UK officials from both the Ministry of Defence and Foreign and Commonwealth Office have attended PESCO workshops at both the technical and policy level and “have engaged closely in PESCO’s development”.7

1.22In November 2017, twenty-three Member States submitted their formal notification of their intention to launch PESCO, with the UK—alongside four other countries—not participating at that stage.8 That notification also contained a list of proposed commitments, which include increasing participating countries’ spending on defence research; investing jointly in defensive technologies, with harmonised requirements across all participating Member States; providing the necessary in-kind support for EU CSDP missions; simplifying the cross-border transport of military personnel and materiel within the EU; and expanding the use of EU Battle Groups.

1.23In early December, two additional countries (Portugal and Ireland) obtained parliamentary consent for their participation. This leaves only the UK, Denmark and Malta outside the scope of PESCO.

1.24The formal Council Decision to establish PESCO was adopted at the Foreign Affairs Council on 11 December 2017, before it was deposited with the Committee (see paragraph 1.29 below). The participating Member States have also adopted a declaration, which welcomes the political agreement identifying an initial list of 17 projects to be undertaken under PESCO.9 These projects, which are listed in full in the Annex to this Report, cover areas such as training, capability development and operational readiness in the field of defence. As required by the Treaty, the voting procedure for the Decision was what is known as a reinforced qualified majority, meaning the UK had no veto.10

1.25A decision to formally establish specific PESCO projects, in line with the common list endorsed at the December 2017 Foreign Affairs Council, is expected to be adopted by the Council in early 2018. The participating countries will also draft a common set of governance rules for projects and the general conditions under which “third States” could be invited to participate in individual projects. These further Council Decisions will require unanimity among the participating countries only, meaning the UK will not have a vote. The first PESCO projects are scheduled to be launched in 2018.

The Government’s view

1.26The Minister for Europe (Sir Alan Duncan) initially wrote to the Committee on 23 November 2017 to provide information on the PESCO launch process ahead of the formal vote in the Council.

1.27He explained that, although the Government would not participate in PESCO as a Member State, it wants the process to strengthen the EU’s partnership with NATO; address gaps in Europe’s security capabilities; and promote an “open and competitive” European defence industry. He also added that the higher co-financing rate under the EDIDP for PESCO projects could have the effect of making PESCO the “primary avenue for military capability development between Member States”.

1.28With respect to the possibility of UK participation in specific PESCO projects after Brexit, the Government has encouraged the other Member States to allow for third country participation so that the UK defence industry can benefit from any opportunities PESCO affords even after Brexit. In November, the Minister noted that “detailed discussions on third party access have been deferred until after the launch of PESCO”.

1.29On 8 December (the week before PESCO’s formal launch), the Minister wrote to the Committee with further information. He explained that the UK had “negotiated a satisfactory outcome to the draft Council Decision on PESCO, which addresses key Government concerns, including the participation of third countries and third country industry”. He added:

“Although the UK is not joining PESCO, we will vote in favour of the Council Decision now that we are satisfied our requirements regarding third country industry access have been met. I regret that the pace of negotiations has not allowed sufficient time for your Committee to scrutinise the Council Decision and that overriding scrutiny is, therefore, necessary in this case, but the short timescales are such that this is unavoidable.”

1.30In a further letter of 13 December, the Minister confirmed the scrutiny override, stating that “a delay in agreeing the Council Decision would have had significant political and reputational consequences for the UK”.

1.31The Foreign and Commonwealth Office and the Ministry of Defence formally deposited the Council Decision establishing PESCO on 13 December. In the accompanying Explanatory Memorandum, the Minister for Europe reiterated the Government’s support for PESCO as it “recognise[d] its potential to help drive up defence investment in Europe and to strengthen capability”. He also explained the UK was of the view that projects carried out under PESCO arrangements should remain Member State-owned, and that the capabilities delivered are available not only to the EU but can also be used in support of NATO and UN operations.

1.32The Minister added that the Government’s key objective in the negotiations on the PESCO legal framework had been to “ensure third State access to PESCO” and therefore “allow our defence industry to be able to participate in PESCO projects after EU Exit”. The Council Decision adopted on 11 December allows the PESCO Member States to permit such participation on a project-by-project basis, subject to unanimity. The Minister acknowledges that “much of the detail on third State access has been deferred to a future Council Decision”, the timing of which is uncertain (and on which the UK will not have a vote).

1.33However, it is clear the Government still has concerns over the UK’s access to PESCO projects after Brexit. In particular, the Minister highlighted in his Memorandum the requirement that cooperation programmes “must only benefit entities which demonstrably provide added value on EU territory”. In response to this formulation, the UK has laid a statement to the minutes of the 6 December meeting of COREPER, at which the Council Decision was informally approved. This statement reads:

“The Council Legal Service noted that in point 20 of the annex to the Council Decision establishing PESCO the requirement that cooperation programmes must only benefit entities “which demonstrably provide added value on EU territory” does not limit such entities to those established in the Union.”

1.34The Government’s third objective with respect to PESCO was to ensure the legal framework acknowledged the importance of EU-NATO cooperation. In his Memorandum, the Minister explains that there are a number of proposed PESCO projects that “would benefit from cooperation with NATO if they are developed”. As a result, the PESCO Council Decision includes a commitment to “agree on common technical and operational standards of forces” which must “ensure interoperability with NATO”.

1.35The Minister concludes:

“For the UK, NATO remains the cornerstone of Euro-Atlantic Security. We will continue to champion greater cooperation between the EU and NATO, in accordance with the 2016 Joint Declaration and Implementation Plan signed by the Presidents of the Council and Commission and the NATO Secretary General.”

Military Planning and Conduct Capability unit

1.36In addition to PESCO, another significant development in the integration of the EU’s defence structures took place earlier this year. In May 2017, the EU Member States unanimously agreed to establish a Military Planning and Conduct Capability (MPCC) unit for non-executive11 Common Security & Defence Policy missions.

1.37Previously, planning for executive CSDP operations12 has been conducted primarily through one of the five national headquarters (including one in the UK) that have been designated for use by the EU for its autonomous operations. In parallel, for non-executive military operations, Member States forewent the use of any Operation Headquarter (OHQ) at the military strategic level. Instead, the military strategic, operational and tactical levels of command have been merged in the position of the Mission Commander (who is based in the field), with central support from Brussels.13

1.38However, concerns arose that the existing structures, with responsibility concentrated with the Mission Commander, provided too little strategic guidance to non-executive missions. The EEAS has argued that the decision to allocate responsibility for strategic, operational and tactical levels of command to the mission commander in the field “created difficulties in both planning and conduct, sometimes leaving missions deployed in dangerous locations in need of more proactive support from a strategic level headquarters with access to more assets”.14

1.39In November 2016, the Foreign Affairs Council adopted conclusions15 on the implementation of the EU’s new “Global Strategy on Foreign and Security Policy” (EUGS).16 It invited the EU’s High Representative to present proposals to establish “a permanent operational planning and conduct capability at the strategic level for non-executive military missions”, “as a short-term objective, and in accordance with the principle of avoiding unnecessary duplication with NATO”.

1.40On 18 May 2017, EU Defence Ministers unanimously adopted a Council Decision which established a Military Planning and Conduct Capability (MPCC) unit within the European External Action Service (EEAS).17 This unit will, for the first time, establish centralised EU-level command of existing EU non-executive military missions. At present, such missions are active in Somalia, the Central African Republic and Mali. The MPCC will be responsible for the operational control and conduct of these (and any future) non-executive missions.

1.41The MPCC will be based within the EU Military Staff and work under the political control and strategic guidance of the Political and Security Committee (PSC), which is composed of EU member states’ ambassadors and is based in Brussels. The unit will be composed initially of up to 25 staff and benefit from the support of other departments of the EU Military Staff in the EEAS. It will also coordinate its activities with the European Commission and liaise with international organisations such as NATO and the UN.

1.42While some Member States, led by France, have consistently called for an EU military headquarters, the UK has always opposed any moves towards the establishment of an Operational Headquarters at EU-level.18 Indeed, according to the EU’s Institute for Security Studies, the momentum towards the creation of the MPCC was, at least in part, driven by Brexit and the UK’s impending exit from the EU’s foreign policy structures.19

The Government’s view

1.43The Minister submitted an Explanatory Memorandum on the creation of the MPCC on 23 June. He noted that the Government had overridden scrutiny on the proposal as it was taken to Council on the day of the 2017 general election.

1.44With regards to the substance of the Decision, he wrote that the UK had “approached the negotiations constructively” (given its previous opposition to any form of operational control at EU-level), and that the MPCC was agreed “within UK parameters” (notably as regards limiting its scope to non-executive missions and the limited authority of the unit’s Director). He added that the MPCC is “not an operational headquarters or the first step to an EU army”.

1.45In the context of Brexit, the Minister reiterated that the Government will continue to seek to shape the EU’s Common Security and Defence Policy in line with UK objectives after Brexit. In particular, the UK wants to avoid the EU’s CSDP duplicating NATO efforts, and it wants to retain the option of participating voluntarily in future CSDP missions as a non-EU country.

Our assessment

1.46The further integration of European defence capabilities and deployment is a development of major political significance. In terms of the practical impact of the projects to be launched under PESCO, we consider that the improvements sought to the participating countries’ military capability will take many years to develop. Nevertheless, we remain to be convinced that PESCO itself will lead to a greater willingness among Member States to engage in more joint operations coordinated at EU-level.

1.47The Government had already set out in its policy paper on UK-EU foreign policy that it will seek continued UK involvement in specific EU CSDP missions. Given the possible efficiencies and economies of scale that PESCO could foster, the Government has now also expressed an interest in UK participation in specific PESCO projects (on a case-by-case basis). Brexit will undoubtedly complicate any such involvement, as the barriers to participation by a non-EU country will be higher than for Member States.

1.48In this respect, we have taken note of the Minister’s assurances about the ability for non-EU countries to apply for participation in specific PESCO projects. However, the Council Decision launching PESCO itself only establishes the principle that such participation is possible. The participating Member States will need to establish, at some point in the future, “the general conditions under which third States could be invited to participate in individual projects”.

1.49The Government is still concerned about the possibility of nationality restrictions in those detailed rules. With respect to potential restriction of PESCO equipment development programmes to organisations based in EU countries only, the UK laid a statement arguing that “the requirement that cooperation programmes must only benefit entities “which demonstrably provide added value on EU territory” does not limit such entities to those established in the Union”.

1.50Moreover, although PESCO projects are likely to benefit from a higher co-financing rate from the proposed new European Defence Industrial Development Programme, it is not yet clear whether UK-based companies would be eligible for participation in any projects funded by that Programme after Brexit. We note from the Minister for Defence Procurement’s recent letter on the EDIDP proposal that substantial restrictions on third country participation are still in place.20

1.51The creation of the MPCC is also a significant event. While it is difficult to establish the counterfactual, we are not convinced that the Government would have supported this development in May 2017 if the UK had not made the decision to leave the EU. The functions of the MPCC will need to be factored into the Government’s proposals for any institutional machinery necessary to support the “deep and special partnership” with the EU on foreign policy after Brexit. The Government has explicitly said it would like to continue to contribute to specific CSDP missions, including possibly non-executive missions led by the MPCC, as a non-EU country.

1.52The European Council has underlined its long-term objective of concluding with the UK a new partnership on security and defence matters after Brexit. We still await further information from the Government about its concrete proposals on the scope and parameters of this partnership, which will have to take into account PESCO, the MPCC and the new European Defence Fund.

1.53Given the importance of the launch of PESCO and the establishment of the MPCC, especially in the context of the UK’s exit from the EU, we have recommended these documents for debate on the Floor of the House. We would hope that the debate would cover:

Previous Committee Reports

None.

Annex: List of initial PESCO projects

1 Council Decision establishing Permanent Structured Cooperation (PESCO) and determining the list of Participating Member States (11 December 2017).

2 Foreign Affairs Council, “Declaration on PESCO projects” (11 December 2017).

3 See the Chapter in this Report on “military mobility”. This is also one of the priority areas identified by the PESCO participating countries (see Annex).

4 For more information on the European Defence Fund, see our Report of 13 November 2017.

5 See Council document 15536/17 (8 December 2017).

6 See the previous Committee’s Report of 14 December 2016.

7 Explanatory Memorandum submitted by the Foreign and Commonwealth Office (13 December 2017).

8 Notification regarding Permanent Structured Cooperation (13 November 2017).

9 Foreign Affairs Council, “Declaration on PESCO projects” (11 December 2017).

10 When the Council acts without a Commission proposal, or one from the High Representative (as is the case for PESCO), the qualified majority must include at least 72% of the members of the Council representing 65% of the EU’s population. This is set out in Article 238(3)(b(), TFEU.

11 Non-executive operations are operations that provide an advisory role to the host nation only.

12 Executive operations are operations mandated to conduct actions in replacement of the host nation’s own armed forces.

13 For more information on the MPCC, please refer to this article by the EU’s Institute for Security Studies.

14 https://eeas.europa.eu/sites/eeas/files/mpcc_factsheet.pdf.

15 Foreign Affairs Council, “Council conclusions on implementing the EU global strategy in the area of security and defence“ (14 November 2016), p. 12.

16 The EUGS was cleared from scrutiny by the previous Committee on 14 September 2016.

17 See Council Decision

18 Foreign Policy Balance of Competences Review, p. 62.

19 https://www.iss.europa.eu/sites/default/files/EUISSFiles/Brief%2017%20MPCC.pdf.

20 Letter from Harriett Baldwin to Sir William Cash (11 December 2017).

21 See our Report of 13 November 2017 for more information on the European Defence Fund and the EDIDP.



22 December 2017