Defense procurement

John C. Hulsman is president and co-founder of John C. Hulsman Enterprises, an international consulting firm.

The past few months have highlighted two seemingly unrelated stories: The never-ending, ongoing trauma over the future of the euro and the second the hard-to-explain German decision to keep investing in the MEADS (Medium Extended Air Defense System) air and missile defense system.

But far form being incongruous, these two narratives are indelibly linked. As with so much else in Europe today, it is the hidden ties between things that actually provide illumination as to what is actually going on. For in a nutshell, these two stories tell the tale of the future of German (and more widely European) defense procurement in the new age of limited budgets.

Old answer to a new question

Best of all there is an actual answer - the Patriot missile system specifically and the method by which this output is reached more generally - that point the way forward for German defense procurement as a whole.

The MEADS folly is quickly explained. As defense expert Götz Neuneck of the Hamburg Institute for Security Politics bluntly put it on German television, MEADS “is a system that technologically will not function, against a threat that doesn't exist and at a price that no one is willing to pay.” Jointly developed by the American, German, and Italian defense departments, from the start MEADS has been plagued by cost overruns and the basic existential point that it has never been tried operationally, and only sparingly in exactly one test.

Despite these seemingly obvious warning signals, by the end of March 2014, when the joint development program comes to an end, Germany will have spent a precious 1.2 billion euros ($1.8 billion) on a system that is still years away at best from being battlefield-ready. Worse still, there remains an other-worldly real enthusiasm in the German defense ministry to continue with the program, even though the US (which has paid for about half the common expenses up to now) wants no more part of it. As former MEADS supporter turned critic, Green member of parliament Tobias Lindner, put it about the program, “in the end such products reduce themselves to absurdity.”

Lurking questions

The logical fallacies with this approach can be quickly dispensed with. Is the German government truly prepared to make a massive new spending commitment, all the while an ever-dwindling defense budget will be the new normal, and with the system five years away from working at best? In place of America, new, significant European defense partners must be quickly brought on board, prepared to shoulder up to half the cost. Where do these angel investors lurk? Why should this colossal procurement risk be taken when there is already a highly successful real world option - the Patriot Missile System, in which Germany has long played a central role - that has been working for decades, which German troops are currently manning to defend Turkey from the ravages of Assad?

It is here that our two news stories fatefully intersect. For the rhetorical questions can all be easily answered if the real world context of the euro-zone crisis is added to the mix. Given Germany's absolutely central role in backstopping the future of the euro, and given the reality into the medium- to long-term of European fiscal austerity, the procurement future can be clearly glimpsed.

Easy answers

No, the German government should not be prepared to take such a significant risk with MEADS given defense budget realities. No, there will be precious few new European takers to shoulder the fiscal burden of replacing the wary Americans. In the end, the future - given the reality of endemic European fiscal constraints - lies in coming home from the dance with the one you brought.

This course is indeed making a virtue out of economic necessity, but as the Patriot example illustrates well, it does not have to be a gloomy path. First, it must be made clear that Germany already owns and should retain Patriot, the best battlefield-ready system currently around for air and missile defense. 300 German troops are deployed on the Syrian-Turkish border, manning two of six NATO Patriot systems defending our Turkish ally. There is no need to theoretically reinvent a wheel that is already practically working.

Second, there will certainly be a drive over time by the German military to extend or expand missile defense capabilities. Given euro realities it makes far more sense to reject starting over with a system not operationally ready at best, hoping it all works out in the end.

Conceptual leap

Instead the future of Patriot in particular and defense procurement in general will lie in integrating new capabilities into already proven defense systems. The Patriot is currently undergoing modernization so that the system can meet tomorrow's threats. Germany would only be paying a small portion of these upgrade costs, as they are being split between 12 partner nations, including the US. Given that the German fiscal margin of error is so slight, it is hard to imagine any other long-term strategy to follow.

Lastly, this does not have to be a tale of doom and gloom. Rather, Germany can market these flow-in capabilities as they arise, profiting by selling these on to other countries. Again, this is merely following the well-trodden path of current custom. There is no reason such a trend cannot continue well into the future.

They key to future German success in defense procurement then lies less in understanding the rather specialized mechanics of the process and more in making a huge conceptual leap, connecting the dots between what is needed and the overwhelming new European context that is dominating everything else. As the Patriot example attests to, this is the link that must be mastered if German defense procurement is to rise to meet the challenges of this new, more difficult, age.