Influence by default: Europe’s impact on military security in East Asia

Press release

Press release: Europe has more influence on Asian security than you think

European states and companies – through arms exports, transfers of technology, and arms and dual-use export controls – are having a significant impact on the military balance in Asia. However, there is no geostrategic direction governing this activity. In the continued absence of a policy, European commercial actions could have a destabilising impact on Asian security, according to a new report from the European Council on Foreign Relations.

Influence by default: Europe’s impact on military security in East Asia shows that EU member states issued licences for the export of military equipment to Asia and Oceania totalling €44.1 billion in 2015, up from €30.2 billion in 2014. Europe’s impact is particularly pronounced in the area of submarine technology and naval systems. For example, the Malaysian Navy has purchased two Frenchmade Scorpène submarines under a contract signed in 2002; Indonesia has acquired three frigates from the UK – delivered in 2014 – and recently took delivery of the first of two Sigma Class Frigates from the Netherlands; and France won a 2016 bid to supply Australia with submarines. These purchases are guided by a desire on the part of regional states to prevent military dominance by China. The list of recent European arms exports to Asia suggests that Europe is taking advantage of the attempt by China’s neighbours to prevent an excessive military unbalance with China.

Europe is not aiming at counterbalancing China, however. It is merely responding to a set of opportunities and constraints. Military expenditure in Asia and Oceania rose from $274 billion in 2006 to $450 billion in 2015 (in constant $2015) - an increase of 64 per cent – while it decreased by 8.5 percent in western and central Europe. This has forced European companies to seek business in Asia in order to maintain sales. This trend will continue as military spending in Asia will further increase in the next coming years.

Arms exports to China are prohibited by an EU embargo imposed after the 1989 Tiananmen Square incident. The EU arms embargo on China is not legally binding and has been interpreted differently by individual member states. As a result, many Chinese submarines are powered by German-made engines or equipped with French sonar systems. Exports of such components and parts average €300 million per year.

China also benefits from intangible technology transfers acquired through investments in - or joint ventures with - European high tech companies. This has been a clear strategic priority for Beijing, which increased direct investment in Europe by 77% (up to €35 billion) last year. The report shows that European companies are contributing to the emergence of China as a competitor on export markets by helping to strengthen its arms industry.

Report author Mathieu Duchâtel said, “Europe urgently needs to instil greater coherence into its approach to military transfers and their impact on East Asian security if it is to avoid contributing to greater tensions in the region. It is not in the DNA of the EU to address arms sales as a foreign policy tool because it thinks of itself as a normative power. But exports and export restrictions must be recognised as important elements of influence.”

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