EU shoots for China's arms
business By Federico Bordonaro
Beijing recently called on the European
Union to lift a 17-year arms embargo imposed after
the bloody Tiananmen Square protests in 1989. As a
result, the issue is again in the spotlight,
highlighting what China needs from Europe in its
rise as a global power.
Further, one has
to ask exactly who in Europe would benefit most
from lifting the increasingly controversial ban.
Before taking a closer look at the
industrial and commercial side of the matter,
however, the nature and scope of the weapon sales
ban
should be clarified. While the overwhelming
majority of recent analyses focus on the political
and strategic aspects at issue - concentrating
particularly on the risks of a fresh
trans-Atlantic feud - some juridical aspects of
the embargo certainly deserve more attention.
There is no precise and univocal
interpretation of the ban. What is more, since
1989 some European states have carefully avoided
expressing one of their own. However, according to
most interpretations, the prohibition covers only
"major weapons platforms", ie aircraft or naval
vessels, as well as "lethal weapons" such as
machine-guns and missiles. Weapons subsystems, or
militarily relevant dual-use products such as
advanced machine tools, are not covered.
The consequence is that some militarily
significant items have been sold by Europeans to
the Chinese military during the embargo - legally.
Evan S Medeiros and Seth G Jones wrote in The Hill
last year ("Heading off European arms to China",
March 2), "The engines for China's new Song-class
diesel submarine and its newest 054-class frigates
are reportedly German and French, respectively. In
the late 1990s, the United Kingdom sold China sets
of naval aviation radars and France sold Crotale
ship-to-air missiles and launchers."
Although an EU "code of conduct" was
introduced as late as 1998, its regulatory
capabilities are weak, since it is not legally
binding, nor does it have a comprehensive scope.
This is why Washington hopes to persuade its EU
allies to revise the code - and to agree to a list
of sensitive items that Western corporations must
not sell Beijing if they want to avoid US economic
retaliation.
EU and US intelligence
agencies reported last year that China's "true"
military effort amounts to about US$78 billion a
year, and that even with the embargo in place, EU
countries are already responsible for 2.8% of
China's military purchases. What is more
important, though, is that such EU sales include
quite sophisticated engine technology for fighter
aircraft as well as propulsion engines for the
Chinese navy.
China's
needs Beijing's goal is to improve its
military might dramatically in four fields: the
missile sector, military aircraft, shipbuilding,
and information tech/defense electronics.
A combination of industrial domestic
capabilities and selective imports is crucial to
China's military buildup. In the 1980s and until
the late 1990s, niche capabilities were filled
with high-tech acquisitions from Soviet, and then
Russian and Ukrainian defense industries and labs.
Russia and Israel provided both weapons and
projects in the last decade. The EU
military-industrial complex, however, quickly
became China's preferred strategic partner at the
dawn of the 21st century.
It is too often
overlooked that Beijing has made significant
progress in building up its own
military-industrial complex in the last decade,
and particularly since 2000.
China's
strategy for improving its defense-industry
capabilities is based upon three "pillars": first,
selective modernization in C4ISR (command,
control, communication, computers and
intelligence, surveillance and reconnaissance),
aerospace strength, missile technology, strike
accuracy, area-denial and anti-jamming systems;
second, better civil-military integration, focused
on improving civil production by national defense
manufacturers to enable China's financial solvency
in relation to its enormous effort; and third,
targeted weapon acquisition from foreign countries
("A New Direction for China's Defense Industry",
RAND Corporation, 2005).
As usual,
political and geostrategic aims dictate
industrial-military efforts. Since China is
concentrating on obtaining strategic dominance in
the China Seas, and particularly against Taiwan,
its main tactic is to become (or appear) strong
enough to compel Taiwan to accept unification,
while discouraging the US from trying to prevent
it.
Thus China's efforts have been
primarily directed at strengthening its missile
sector, in which considerable progress has been
made since 2000. Short-range ballistic missiles
such as DF-11 and DF-15 are some of its newest top
domestic products. For the moment, Beijing appears
still in need of more modern, effective
land-attack cruise missiles, cutting-edge
anti-ship cruise missiles, long-range
surface-to-air missiles and anti-radiation
missiles. Nevertheless, the recent advance in its
domestic missile sector suggests that Beijing's
dependence upon foreign industries for such
products could come to an end within a few years.
Regarding warships, although the Chinese
navy still lacks long-range amphibious vessels
comparable to those of the world's greatest naval
powers, Beijing's shipbuilding sector now produces
"a wide range of sophisticated naval platforms,
using modern design methods, production techniques
and management practices", according to the RAND
report cited above.
As for the military
aviation sector, China's progress in building
fourth-generation fighters (J-10) has been made
possible by foreign aid, and weaknesses exist when
it comes to mastering serial production of complex
aviation platforms. Also, heavy bombers and
military transport aircraft are still
insufficiently developed.
Likewise,
Beijing needs to improve decisively its access to
surveillance and communications satellites with
global coverage. In this respect, China's
participation in the Galileo Positioning System is
believed likely to help close the gap -
notwithstanding Galileo's official civilian-only
use (see Galileo: Why the US is unhappy
with China, Asia Times Online, February 8).
Europe's potential
suppliers Many signs indicate that more
than a few EU political and industrial players
would be pleased by the end of the embargo. It is
well known that France, Germany, the United
Kingdom and Italy count among the most important
sellers in the international weapons market.
Between March and September last year,
Europeans gave some of the most explicit proof of
their present disunion. While Washington
repeatedly warned against lifting the embargo,
France took the opposite route, last summer
calling the ban "obsolete". The British government
appeared internally divided over the issue. In
March, Deputy Prime Minister John Prescott
declared that the EU should end the arms embargo
on China, apparently contradicting previous
signals from the government, before British
lawmakers warned against lifting the embargo. In
the end, the embargo wasn't lifted in 2005, but
China regularly puts pressure on EU member states,
as Beijing perfectly understands that influential
EU milieus strive to get strategic autonomy from
the US.
The powerful EU defense
corporations would certainly benefit from the
embargo's elimination. Although Beijing seems
confident of developing enhanced domestic
industrial capabilities in a timely manner,
leading EU defense companies could indeed provide
China with key technologies - even though the
Europeans, in line with the usual great-power
practice, would be prepared to sell only their
previous-generation products.
The European
Aeronautic Defense and Space Co - EADS, the EU
defense heavyweight - has clearly adopted a
long-term partnership perspective and wants to
play an active part in Chinese aeronautic and
space-sector growth and development. And here too,
as in the case of the Galileo satellite navigation
system, some analysts are worried that the
technology transfer involved in an EADS civilian
deal with Beijing could have serious strategic
implications.
Other EU-based defense
giants, such as France's Thales and Italy's
Finmeccanica and Alenia Marconi, would obviously
increase their commercial activities with China.
Thales has had offices in China for 20 years. And
in 2004, the Italian government had authorized
military exports to China for more than 127
million euros ($151 million).
However, it
is possible that in case of a ban lift, EU
member-states and defense firms would refrain from
selling weapons or platforms directly to China.
The real issue is - and would remain - the export
of subsystems and related equipment, missile
technology, stealth systems, command and control
capabilities, naval platforms and military
aircraft.
For European governments and
defense companies, the United States is a crucial
political, strategic and economic ally. Massively
increasing European arms and dual-use technology
sales to China may appear to be a huge business
opportunity for many EU players, but the
political, security and economic consequences of
such a move could prove discouraging.
Federico Bordonaro is
senior analyst with the Power and Interest News
Report. He can be contacted atfbordonaro@NOSPAMpinr.com.
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