Select Committee on European Union Forty-Ninth Report


Letter from the Chairman to the Rt Hon Peter Hain MP, Minister for Europe, Foreign and Commonwealth Office

  Sub-Committee C considered this document at their meeting on 20 June and agreed to clear it. We are, however, very concerned about its contents and while we recognise that much more needs to be done before any agreement on the financing of ESDP operations can be made, we would like certain assurances on the effect of the current document.

  The overwhelming issue, it is felt, is the burden that will be placed on the United Kingdom. It is generally considered that in the event of the EU undertaking military missions, the strongest military nations, Britain and France, will take up a leading role and in doing so will commit a disproportionately high level of manpower and hardware. The Sub-Committee are very concerned that in doing so, these States do not end up out of pocket and that they are fairly reimbursed by other member states. I would therefore like your assurance that the systems of "common costs" and "costs where they fall" outlined in the document do not mean that the United Kingdom, or any other country contributing more than its fair share to a mission, will end up unfairly out of pocket.

  Similarly, the Sub-Committee is concerned about the implications of the document's paragraph 2.2, which states that:

    "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."

  The Sub-Committee have been kept abreast of recent developments on the shortfalls in capabilities, but would like to know what progress is being made to persuade the EU member states which do not commit 2 per cent or more of their DGP to defence to increase their defence budgets.

  Finally, the Sub-Committee feels that this letter offers an opportunity to ask about another outstanding issue. Much emphasis was made in our last ESDP report on the stand-off between Greece and Turkey over the arrangements for ESDP use of NATO assets. I would therefore be most grateful if you would let me know how things now stand.

24 June 2002

Letter from The Rt Hon Peter Hain MP, Minister for Europe

  Thank you for your letter of 24 June about three different aspects of European Security and Defence Policy: financing, capabilities and member states' budgets and EU/NATO arrangements.

  On financing, you express concern that under the agreed system of "costs lie where they fall with a narrow element of common costs" the UK could end up unfairly out of pocket if we take a leading role in a military ESDP operation. We cannot of course predict with total accuracy when, where and on what scale an EU-led military crisis management operation might occur. Nor can we predict at what scale the UK and others might participate. This inevitably means that we cannot give a cast-iron guarantee that the formula agreed on ESDP financing is best value for the UK—to do so would require prior knowledge of the mix of EU-led operations over the coming years.

  That said, the main reasons we have pushed for the formula which was agreed at the General Affairs Council on 17 June are that:

    (i)  we believe that member states having responsibility for paying for their own contributions nationally (option A—costs lie where they fall, with an element of common costs) is the best way of ensuring efficient crisis management. Option B (all costs are common, on a GNP scale) would mean less national "ownership".

    (ii)  Option B would mean that the UK would automatically have to pay 18 per cent (on the GNP key) of the cost of any military ESDP operation, even if we did not participate (unless we had abstained in a vote on that operation and made a formal declaration to that effect). Whereas under option A, the UK would only pay for the equipment/personnel we contributed to an operation (apart from the UK share of the narrow common costs element), meaning that our contribution, both militarily and financially would remain in our own hands.

    (iii)  Under option A we would decide for ourselves when and how to draw down UK forces and put an end to our military and financial commitment. Under a GNP key regime (option B) we would not have that control.

    (iv)  Option A is the method used in NATO, and we judge it to have been the most cost effective for the UK.

  Because of the difficulties of predicting with total accuracy what kind of ESDP operations might take place and on what timescale, the UK was one of the member states to insist upon a review clause being built into the framework agreement. The review will take place before June 2004, ie within 18 months of the Headline Goal target for ESDP to be fully operational.

  You asked what progress had been made on encouraging EU member states who do not currently commit at least 2 per cent of their GDP towards defence spending to increase their defence budgets. It is not for the UK to impose budgetary targets on other countries. But all EU Member States are working in improvements in their military capabilities towards the Helsinki Headline Goal. We are encouraging Member States by example. There have been defence reviews similar to the UK's Strategic Defence Review, in Germany, Netherlands, Belgium, Sweden and Finland. France and Spain will be spending their defence budgets more effectively, aiming to professionalise completely their armed forces by the end of this year.

  You also asked where things now stood on negotiations between the EU and NATO on EU access to NATO planning and assets. Turkey agreed a paper in December 2001, which the Greek government found unacceptable. Following discussion with the Spanish Presidency, the Greek government made proposals just before the Seville European Council, to which the Turks could not agree. But the gap between the two sides has narrowed substantially. The European Council requested the incoming Presidency (in practice the Greeks, because of the Danish defence opt-out) to continue the work, with Javier Solana. This is likely to mean bilateral discussion between the Greeks and Turks. We hope to see a final agreement soon.

3 July 2002

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