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European leaders, though calling for an improved defence capability, have shown no sign of providing the necessary funding, the International Institute for Strategic Studies (IISS) warned yesterday.
Tony Blair, the UK prime minister, is leading an initiative to give Europe stronger military muscle after inadequacies were exposed in Nato's Kosovo campaign. The EU's June summit in Cologne produced a commitment to "a capacity for autonomous action backed by credible military forces".
To achieve this, defence ministers are concentrating on getting better value from existing budgets.
But John Chipman, director of the London-based think-tank, said this would not be enough. "Unless defence expenditure is allowed substantially to increase, the build-up of a serious defence capacity will remain the stuff of communiqu�s."
He was speaking at the launch of the IISS annual Military Balance publication, recognised as giving the most accurate data on each country's armed forces and defence equipment.
The latest edition said the dollar value of most European defence budgets was down 7 per cent in 1999 because of the fall of the euro. This followed a 22 per cent decline in real terms since 1992.
"Sustaining defence budgets, even at these reduced levels, is a political challenge for the majority of Nato European governments," the IISS said. "There is no sign that any European country shares the US intention to increase defence spending, particularly on procurement, over the next five years."
While defence spending of Nato's European members was about half that of the US, spending on military research and development was one quarter of US levels. Weapons procurement was plagued by underfunding, underperformance, delays and cost over-runs. "The Europeans appear to have no collective plans to address the growing capability gap," the IISS said.
Even the commitment to buy 620 Eurofighter aircraft by the UK, Germany, Italy and Spain would probably not survive budgetary constraints, it suggested.
Colonel Terry Taylor, editor of the Military Balance, said countries could step up capabilities by increasing the professional component of their armed forces, for example in Germany by moving away from conscription.
Out of 2m people under arms in Europe, only 2 or 3 per cent were capable of undertaking missions such as the Kosovo peace-keeping force. These missions were hard to sustain especially because of a lack of specialists such as engineers and communications and medical staff.
The IISS said the Kosovo campaign, while a success for Nato, also showed the need for spending on several types of equipment.
Unmanned aerial vehicles (UAVs) "played a more prominent role than in any previous military campaign". They helped to acquire targets and assess bomb damage, without risking pilots' lives. But all European UAVs need upgrading. "The next generation of UAVs would be an excellent project for European collaboration," the IISS said.
The lack of air-to-air refuelling tankers was another significant gap in Europe's defences. Combat aircraft, their crew and logistics had to be deployed closer to Serbia, at greater cost. The US deployed 150 tankers, France and Britain 12 each, Italy and Turkey two each and Germany none.
Transport aircraft were a third area. "We need more air lift. It's going to be expensive," Col Taylor said.
No consensus was yet apparent, with France favouring a new European aircraft, Britain considering US alternatives, and Germany leaning towards a Russo/Ukrainian aircraft.
Among other points in the Military Balance were: