Defence specialisation is a controversial topic. Whereas in many sectors it is regarded as a virtue, this is not the case in the realm of security and defence. As specialisation in this domain is closely associated with dependency and giving up sovereignty, it is viewed with much scepticism. This is all the more the case given that specialisation has often been associated with abolishing defence capabilities due to budget cuts. An additional issue of concern is that the political and military levels have diverging perspectives when it comes to specialisation: whereas the political level is able to see the potential benefits, the military level primarily sees risks.[7] Consequently, there is a gap within defence ministries that makes the issue of specialisation even more sensitive. This partly stems from the fact that it is not always evident what specialisation exactly entails. This chapter will therefore try to shed light on various definitions of specialisation, the existing forms of specialisation (including some real-life examples), and the various advantages and disadvantages associated with specialisation. It offers a framework listing the different categories for considering future potential for specialisation.

Definitions

There is no single agreed upon definition of ‘specialisation’. In addition, various terms are being used to describe the process of specialisation, including ‘differentiation’, ‘integration’ and creating ‘interdependency’, to name just a few examples.[8] The use of different terms to describe specialisation is exactly what makes it difficult to grasp what is being meant when the term is coined. The following definitions of defence specialisation can be found in the literature:

Specialisation means that a government focuses its defence resources on the provision of a limited set of capabilities and therefore consciously abandons others. As a result, countries turn into specialists”.[9]

Specialisation entails “a member government investing in existing areas of excellence and in turn giving up capability in other areas”. [10]

“In role specialisation, each state foregoes some capacity and specialises in another, causing complementarity and dependence. It means that a state can invest resources in specific areas and excel in them, relying upon collaborators to do the same”. [11]

While these definitions differ in their wording, they all refer to specialisation as a process that requires countries to focus their efforts on certain defence capabilities, while abandoning others. Therefore, in this report:

Specialisation refers to the process in which governments invest in those defence capabilities in which they excel or want to excel, while (partially) abolishing other capabilities, for which they become (partially) reliant on partner countries.

Embarking on a process of specialisation can be explained by the logic of comparative advantage. This logic is primarily used within the economic domain, but also holds true when it comes to specialisation in security and defence. The rationale entails that a country should focus its investments on those defence capabilities in which it excels and rely on partner countries for those capabilities in which it does not excel – while the other country or countries act in reverse and, thus, both sides can profit from optimising the capability and save on costs.

Specialisation: confusing terminology

Practice shows quite a different picture than the theory of specialisation. Countries have been reluctant to use the term specialisation because of its negative connotation, namely that it is covering up the unilateral abolishment of a capability. Other terms have been introduced, such as niche capabilities, specialism, pooling and sharing or smart defence, collective tasks and integration. All of them have aspects of specialisation, but are not fully in line with the definition stated above.

Niche or specialised capabilities, specialisms

As a result of historic, geographical and other factors many countries have what they call ‘niche or specialised capabilities’, also labelled as ‘specialisms’. Landlocked nations such as the Czech Republic, Hungary and Slovakia invest in land and air forces as they do not have navies. Within that context, the Czechs have specialised in CBRN capabilities.[12] European countries with naval forces have different specialisms: France and the United Kingdom operate aircraft carriers related to their expeditionary past and overseas responsibilities. The Netherlands has a unique specialism of conventional ocean-going submarines. Although almost never labelled as such, national specialisms exist with regard to amphibious forces, air mobile forces, military satellites, offensive cyber capabilities and others.

In most cases, specialisms are the result of national decisions and not of agreed upon specialisation between two or more countries. Nevertheless, specialisms offer potential for specialisation in two ways:

While specialisms offer immediate potential for specialisation among countries with the same specialised capabilities, the issue of dependency in this format is less critical compared to specialisation models in which one country is fully dependent on the capability offered by another state and vice versa. Therefore, specialisation can best start on a bilateral or mini-lateral basis, in particular between countries that already have a track record of close defence cooperation as trust and confidence are essential prerequisites for accepting mutual dependencies.

Pooling and sharing, smart defence

The term specialisation is also closely associated with the concepts of ‘pooling and sharing’ and ‘smart defence’. For example, the Protocol on Permanent Structured Cooperation of the Treaty on European Union states that one of its aims (for the member states) is to “bring their defence apparatus in line with each other as far as possible, particularly by harmonising the identification of their military needs, by pooling and, where appropriate, specialising their defence means and capabilities, and by encouraging cooperation in the field of training and logistics.”[13] Three different, though potentially interrelated concepts are mentioned here in one sentence: pooling, specialisation and cooperation. To create more clarity, it is important to distinguish areas of overlap between the different terms while at the same time noting their specific meaning.

The phenomenon ‘pooling and sharing’ has been developed in the EU. It offers countries that do not possess (or no longer possess) a certain defence capability the opportunity to still make use of that capability through the pool. Concretely, this may entail that a common capacity could be created which can be shared between the partner countries. In such instances, states explicitly choose to rely on the ’joint unit’ when needed, providing some degree of relief for those capabilities that are not required on a regular basis. A concrete example of pooling and sharing is the Multi-Role Transport and Tanker (MRTT) fleet with a pool of military-configured Airbus 330 aircraft.

The concept ‘smart defence’ was developed by NATO. The three central elements of this concept are the pooling and sharing of capabilities (sometimes also referred to as specialisation[14]), setting the right priorities and improving coordination efforts. Especially the pooling and sharing component is of relevance here but cannot be seen independently from the other two aspects. NATO’s Strategic Airlift Capability (SAC), consisting of pooled C17 transport aircraft, is an example of smart defence. As with regard to the MRTT pool, countries participating in SAC have drawing rights of flight hours (for which they pay), but the capability is collectively owned.

The question then remains how ‘pooling and sharing’ and ‘smart defence’ differ from specialisation. This essentially comes down to the degree of dependency. With the two concepts there is a certain degree of dependency between partner countries, but this is significantly lower than with specialisation.[15] While pooling and sharing also implies the setting up of a joint structure for the defence capability at hand, specialisation goes beyond that, as some countries become entirely dependent on other countries for the provision of the abandoned defence capabilities.

Collective task

In NATO, the term collective task is used for the provision of fighter aircraft for air policing the air space of the three Baltic States.[16] For relatively small states like Estonia, Latvia and Lithuania, it is very expensive to maintain an air force. After becoming NATO member states, the air policing task has been carried out by other Allied countries on a rotational basis, as the small defence budgets of the three countries did not make it possible for them to purchase and maintain fighter aircraft by themselves.[17] This model can be labelled as an ‘organised non-specialisation’ since one or more countries decide not to have a capability by themselves ‘by design’ but receive that capability from other nations, albeit without offering a specialisation themselves. However, it could be argued that countries such as the Baltic States can allocate their growing defence budgets almost completely to strengthening their land forces – which is also considered as a priority by NATO. Therefore, non-specialisation can be considered as a form of traditional specialisation.

Non-specialisation also exists in other capability areas. Only two European countries have their own nuclear weapons; all other European nations are fully dependent as ‘have nots’ on the nuclear umbrella provided by NATO’s nuclear weapon member states, primarily the US. The same applies to missile defence or certain categories of unmanned systems. The larger a country’s size and defence budget, the more capabilities it can maintain by itself. The smaller a country’s size and defence budget, the less capabilities it can maintain by itself. The rising costs of high-tech weapons also drives the reduction of ‘haves’ and increases the number of ‘non-haves’. This explains why some smaller European nations have already embarked upon the road to far-reaching forms of dependency, while often using other terms than specialisation.

Integration

In particular in various bilateral formats, defence cooperation has reached the level of integration by which dependencies have been created. As dependency is a key issue in specialisation, it is important to take a closer look at defence integration. Three examples are the German-Dutch defence cooperation, the naval cooperation between Belgium and the Netherlands, and the cooperation efforts of the Belgian and French land forces.

As for the German-Dutch cooperation, it has witnessed far-reaching integration over a long period of time, but in the last decade with integrating units.[18] Except for the 1^st German-Netherlands Army HQ, units can still be withdrawn from the command or parent unit in order to be deployed nationally. This has happened regularly with Dutch ‘red berets’ companies of the 11^th Air Assault Brigade, when deployed in the context of the NATO enhanced Forward Presence in Eastern Europe. The integration of a Dutch tank company in a German tank battalion is the most far-reaching form of integration. Although it can still be deployed outside its parent unit, in the case of collective defence operations this would not make any sense. Furthermore, there is a degree of dependency when it comes to armaments, given that Dutch tanks are leased from Germany. Consequently, the Netherlands is dependent on Germany for their maintenance and upgrading. Thus, the German-Dutch tank cooperation is also a clear example of specialisation in support functions, where one state, in this case the Netherlands, has become dependent on another country, Germany, for the provision of support functions.

Belgian-Dutch (Naval) Cooperation (Benesam)[19] is also an example of a specific form of specialisation. The Netherlands provides the education, training and maintenance facilities for both countries with regard to the M-frigates and Belgium vice-versa for the minehunters. This model strengthens military effectiveness and it is cost-saving.[20] It can even ‘protect’ the capability from being scrapped in times of budget austerity. When the Netherlands considered the option of de-activating its M-frigates early this century, the argument that this would have a tremendous impact on the Belgian Navy prevented the related decision from being taken.[21] Today, both countries fully coordinate the common acquisition of the next generation of frigates and mine countermeasures capability. Thus, specialisation in these support functions has become a driving force for combining defence planning and the procurement of the same equipment for future use.

The third example is the cooperation between the Belgian and French armies. In 2018, France and Belgium entered into a strategic partnership, the Capacité Motorisée (CaMo), aimed at extensive (armaments) cooperation between both countries’ land forces.[22] Concretely, this entails that the Belgian Land Component will operate French armoured vehicles, type Griffon and Jaguar, from 2025 onwards. As a result, Belgium will, to a certain extent, become dependent on France’s (operational) priorities.[23] For both countries this is a win-win situation, as the vehicles are equipped with a unique system of network radios, which facilitates the integration and sharing of information at different levels.[24] CaMo will not only allow for operational integration (a Belgian company can operate in a French battalion and vice versa), but it also opens the door for common education and training.[25] At this stage, it is not clear if the two countries will specialise in maintenance (copying the Belgian-Dutch Benesam model), but the CaMo partnership certainly offers potential in this respect.

Explanation: + means ‘low dependency rate’; ++ means ‘medium dependency rate’; +++ means ‘high dependency rate’.

Source: The Clingendael Institute

Framework for specialisation

The confusion about terminology and the negative connotation of the term specialisation require clarity and a categorisation of what specialisation may entail. Another term might even be considered, for example excelling capabilities or mutually agreed specialisation, in order to use a positive label. Importantly, to avoid sub-optimal outcomes and to ensure specialisation is beneficial, close coordination with partner countries is crucial, both bilaterally and within multilateral organisations such as the European Union (EU) and the North Atlantic Treaty Organization (NATO). This will generate ‘specialisation by design’ – following deliberate, coordinated and well thought out decisions by at least two governments, driven by how best to maintain and strengthen capabilities and ensuring complementarity – instead of ‘specialisation by default’, following uncoordinated decisions by one government. Concrete examples of specialisation by default are the decisions by Denmark to give up its submarines (2004) and by the Netherlands to abolish its P3 Orion maritime patrol aircraft (2003) and its last two tank battalions (2011), in all cases without agreements with other countries to compensate for these losses of capabilities.

The absence of a single definition also means that specialisation may be interpreted in various ways and can thus come in different forms. Based on the definition provided above and the existing models, this report offers a framework for specialisation. It incorporates three forms of specialisation (see Figure 2): structured European capability groups, specialisation in support functions, and traditional specialisation.

The next chapter offers concrete options for the three forms of specialisation.

Source: The Clingendael Institute

Risks and benefits of specialisation

When a country embarks on a process of specialisation, this automatically implies that it becomes (partially) dependent on other countries for those defence capabilities it decides to relinquish. In general, states are reluctant to give up sovereignty, especially when it comes to the protection of a country’s territory and the people that reside therein, the primary task of a state’s armed forces. Therefore, states prefer to keep that responsibility themselves, and are of the opinion that they should be able to deliver any defence capability to that end.[27] This is especially true in times of crisis, when states are less willing to rely on others for the delivery of the necessary capabilities. Giving up sovereignty and subsequently creating dependency are therefore the primary reasons why specialisation in defence is met with critique.

While the sovereignty and dependency arguments stand out, other factors also play a role in why countries are cautious when it comes to specialisation in defence. One of them is economic in nature: when countries embark on a process of specialisation, this could lead to losing defence industrial capacities when abolishing a certain capability. The result might be a loss of jobs and skills at the national level[28]. While there is an argument in favour – consolidation of defence industries instead of continuing with industrial fragmentation – especially larger countries with an advanced defence industrial base, such as France and Germany, might find this problematic.[29] Another factor at play is political in nature: specialisation means that one country will have to focus on a certain defence capability to which access might be requested by partner countries. There is, however, a risk that the request will conflict with the national interests of the country that possesses the requested defence capability, making that country more reluctant to guarantee access in specific cases.[30] This creates a trust issue: countries do not have the guarantee that partner countries are in any case prepared to provide access to their capabilities. Sovereignty in terms of having the capabilities at one’s own disposal will have to be matched with the risks of relying on partners when a country cannot maintain all capabilities by itself. It should be noted that such risks might vary with regard to capability areas. For example: guaranteeing access to transport aircraft will be easier to obtain than in the case of frontline units.

It is, however, easy to overlook the possible benefits that might stem from specialisation. Severe cuts in defence spending over the past few decades, in combination with an increasingly unsafe world, lead to the conclusion that it would be most welcome for countries to find ways to make most effective and efficient use of their defence capabilities. Specialisation can therefore be viewed as a way to make better use of resources that are already scarce. In this regard, “it is not about saving money, but about creating value in defence, e.g. cost savings, capability and interoperability increases, mutual trust and understanding”.[31] The uncertainty as to which threats and challenges countries might face underlines the need for close coordination among participating countries because it is crucial that they together cover the entire spectrum of defence capabilities. Only then will the countries involved be able to increase their collective military capabilities. This is easier said than done, however, in particular as the armed services of European countries seek further integration with ‘natural partners’ in different nations. For example, the Dutch army has worked closely with the German army for many decades, while the navy has the Royal Navy (UK) as its natural partner. In Belgium, deeper defence cooperation with the Netherlands (navies) has been ‘complemented’ by the close army cooperation with France in view of the two language communities in the country.[32]

If specialisation by design can be generated, it can yield serious benefits. On the military level, it will promote interoperability, which is the ability of the armed forces of multiple countries and the corresponding military equipment to operate in conjunction with each other. In turn, interoperability will ease further military cooperation and foster integration between participating countries. Moreover, through a process of specialisation, medium-sized and small countries will gain access to sophisticated and expensive capabilities, which, given their size, they would be unable to develop or acquire on their own.[33] In that sense, the medium-sized and smaller countries will become dependent on the larger countries. Dependency, however, does not necessarily have to be a bad thing. When smaller countries become dependent on larger countries, it provides an incentive for the latter group to maintain certain defence capabilities, as this will guarantee that the smaller countries will maintain access to those defence capabilities.[34] At the same time, it contributes to solidarity, confidence and involvement.

In addition, specialisation might also reap economic benefits in the longer term. If fragmentation can be reduced and industrial consolidation is created, then economies of scale can emerge: cost advantages that occur when companies increase the scale of production and become more efficient, decreasing the production cost per unit.[35] Concretely, this means that if larger defence industrial companies were to cooperate, they together would reduce the long-term costs of the production process, eventually leading to cost savings and an increased level of efficiency. Furthermore, specialisation (in support functions) will reduce costs for defence departments as fewer facilities and infrastructure will have to be kept open.

Source: The Clingendael Institute