Transaction Costs and Security Institutions: Unravelling the ESDP (Transformations of the State)

Transformations of the State Series Editors: Achim Hurrelmann, Carleton University, Canada; Stephan Leibfried, University of Bremen, Germany; Kerstin Martens, University of Bremen, Germany; Peter Mayer, University of Bremen, Germany. Titles include: Outline of the themes of the series: Achim Hurrelmann, Stephan Leibfried, Kerstin Martens and Peter Mayer (editors) TRANSFORMING THE GOLDEN-AGE NATION STATE Michael Dobbins HIGHER EDUCATION POLICIES IN CENTRAL AND EASTERN EUROPE Convergence Towards a Common Model? Moritz Weiss TRANSACTIONS COSTS AND SECURITY INSTITUTIONS Unravelling the ESDP Heinz Rothgang, Mirella Cacace, Simone Grimmeisen, Uwe Helmert, Claus Wendt THE STATE AND HEALTHCARE Comparing OECD Countries Anna Holzscheiter CHILDREN’S RIGHTS IN INTERNATIONAL POLITICS The Transformative Power of Transnational Discourse Kerstin Martens, Alexander-Kenneth Nagel, Michael Windzio and Ansgar Weymann (editors) TRANSFORMATION OF EDUCATION POLICY Steffen Schneider, Achim Hurrelmann, Zuzana Krell-Laluhová, Frank Nullmeier and Achim Wiesner DEMOCRACY’S DEEP ROOTS Why the Nation State Remains Legitimate Anja P. Jakobi INTERNATIONAL ORGANIZATIONS AND LIFELONG LEARNING From Global Agendas to Policy Diffusion Michael J. Warning TRANSNATIONAL PUBLIC GOVERNANCE Networks, Law and Legitimacy Thomas Rixen THE POLITICAL ECONOMY OF INTERNATIONAL TAX GOVERNANCE Hartmut Wessler (editor) PUBLIC DELIBERATION AND PUBLIC CULTURE The Writings of Bernhard Peters, 1993–2005 Hartmut Wessler, Bernhard Peters, Michael Brüggemann, Katharina Kleinen-von Königslöw and Stefanie Sifft TRANSNATIONALIZATION OF PUBLIC SPHERES Jochen Zimmerman, Jörg R. Werner and Philipp B. Volmer GLOBAL GOVERNANCE IN ACCOUNTING Public Power and Private Commitment Peter Starke RADICAL WELFARE STATE RETRENCHMENT A Comparative Analysis

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This illustration is taken from the original etching in Thomas Hobbes’ Leviathan of 1651. Palgrave Macmillan and the editors are grateful to Lucila Muñoz-Sanchez and Monika Sniegs for their help in redesigning the original to illustrate what “transformations of the state” might mean. The inscription at the top of the original frontispiece reads “non est potestas Super Terram quae Comparetur ei” (Job 41.33): “there is no power on earth which can be compared to him”. In the Bible, this refers to the sea-monster, Leviathan. (Original Leviathan image reprinted courtesy of the British Library.)

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Transaction Costs and Security Institutions Unravelling the ESDP Moritz Weiss Senior Fellow and Lecturer, Centre for Security Economics and Technology, Institute of Political Science, University of St Gallen, Switzerland

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© Moritz Weiss 2011 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978–0–230–28012–0 hardback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

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Contents List of Tables

viii

List of Figures

ix

List of Acronyms

x

Series Editors’ Preface

xi

Acknowledgements

xii

Part I Preferences, Security Institutions and Transaction Costs in World Politics 1

2

Introduction

3

Two puzzles in ESDP ESDP and the internationalisation of the use of force The argument: transaction costs and security institutions The main findings: transaction costs and the emergence of the ESDP The research design The plan of the book

11 15 17

Theorising Preference Formation for Institution-Building in European Security

19

Realism: anarchy and power Liberal Intergovernmentalism (LI): market and domestic interest groups Constructivism: socialisation and culture Theory, practice and the necessity of an innovative approach 3

Transaction Costs and Security Institutions Transaction costs and preference formation in European security: an analytical framework Transaction costs for the provision of European security Transaction costs within the ESDP The causal pathways Transaction costs and preference formation in European security: the empirical link

4 6 7

20 22 24 26 29 29 38 40 41 43

v

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vi

Contents

Part II Unravelling the European Security and Defence Policy (ESDP) 4

5

The Demand for a Security Institution: German, British and French Perceptions of the Environment in the 1990s

53

Germany and the gradual rise of risks in the 1990s The United Kingdom’s adaptation to a new environment in the 1990s France and the increasing instabilities of the 1990s A demand for a security institution: German, British and French perceptions in perspective

53

58

Germany – From Defending the Alliance’s Territory to Crisis Management for the Union

60

55 56

German preferences on substantive scope Explaining German preferences on substance: facing more risks, while relying less on the United States 6

60 67

Great Britain – From Opposing the Union towards a Subordinated ESDP

79

British preferences on substantive scope Explaining British preferences on substance: ‘It’s Time to Repay America the Soldier’ 7

France – From Gradual WEU Integration to Full-Scale ESDP

79 86 97

French preferences on substantive scope Explaining French preferences on substance: providing security in a highly uncertain environment

102

8 Germany – An Incrementally Decreasing Willingness to Bind the Country

114

German preferences on institutional depth Explaining German preferences on depth: uncertainty, asset specificity and the institutional path of ESDP 9 Great Britain – From No EU Security Policy to a Purely Intergovernmental ESDP British preferences on institutional depth Explaining British preferences on depth: modest uncertainty and the opportunities of non-specific assets 10 France – A Consistently Intergovernmental Approach towards ESDP French preferences on institutional depth Explaining French preferences on depth: maintaining residual rights of control

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Part III Transaction Costs and Security Institutions: ESDP Unravelled 11 Alternative Explanations and Theoretical Scope of the Transaction Costs Framework Testing the plausibility of a transaction costs framework Defining the scope of the transaction costs argument 12 Conclusion – Theory-Development in the European Security and Defence Policy Transaction costs, security institutions and unravelling the ESDP The principal conclusions: filling the gap with a new conceptual lens Transforming Europe’s governance of defence without replacing the state

173 173 181 189 190 203 206

Notes

211

References

237

Index

263

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Tables 3.1 The ‘explanandum’: preferences for institution-building in European security 3.2 Analytical dimensions of preferences on substantive scope 3.3 Analytical dimensions of preferences on institutional depth 4.1 The demand for a European security institution: German, British and French perceptions in perspective 5.1 Detailed overview of German preferences on substantive scope 5.2 Germany and its ‘signalling’ with the United States 5.3 German transaction costs for the provision of European security and its resulting choice of the institutional context 6.1 Detailed overview of British preferences on substantive scope 6.2 The United Kingdom and its ‘signalling’ with the United States 6.3 British transaction costs for the provision of European security and its resulting choice of the institutional context 7.1 Detailed overview of French preferences on substantive scope 7.2 France and its ‘signalling’ with the United States 7.3 French transaction costs for the provision of European security and its resulting choice of the institutional context 8.1 Detailed overview of German preferences on institutional depth 8.2 German uncertainty within the ESDP 8.3 Germany and asset specificity in the ESDP 8.4 German transaction costs within the ESDP and institutional depth 9.1 Detailed overview of British preferences on institutional depth 9.2 British uncertainty within the ESDP 9.3 Great Britain and asset specificity in the ESDP 9.4 British transaction costs within the ESDP and institutional depth 10.1 Detailed overview of French preferences on institutional depth 10.2 French uncertainty within the ESDP 10.3 France and asset specificity in the ESDP 10.4 French transaction costs within the ESDP and institutional depth

30 44 45 58 67 75 78 86 93 95 101 110 112 120 124 129 132 140 143 148 150 157 161 166 168

viii

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Figures 1.1 The analytical framework: transaction costs and security institutions 2.1 Sources and mechanisms of security preferences in International Relations theory 3.1 Four basic assumptions of a transaction costs framework 3.2 Motivational premises of a transaction costs framework 12.1 Overview of German, British and French preferences on the institutionalisation of European security from the I) Amsterdam-IGC towards the II) Convention-IGC

10 27 33 35

196

ix

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Acronyms A-400M CFSP CoW CIMC DG ECAP EDA EP ERRF ESDP ESDU EU EUMS GDP HQ IGC IISS IR LI MoD NATO NRF NMD OCCAR OSCE PfP PolSec QMV R&D SACEUR SHAPE UK UN US WEAO 9/11

Airbus Military Transport Plane Common Foreign and Security Policy Correlates of War Composite Index of Material Capabilities Directorate General European Capabilities Action Plan European Defence Agency European Parliament European Rapid Reaction Force EU’s European Security and Defence Policy European Security and Defence Union European Union European Union Military Staff Gross Domestic Product Headquarters Intergovernmental Conference International Institute for Strategic Studies (London) International Relations as a discipline Liberal Intergovernmentalism Ministry of Defence North Atlantic Treaty Organisation NATO Response Force National Missile Defence Organisation for Joint Armament Cooperation Organisation for Security and Cooperation in Europe NATO’s ‘Partnership for Peace’ EU’s Political and Security Committee Qualified Majority Voting Research and Development Supreme Allied Commander Europe (NATO) Supreme Headquarters Allied Powers Europe (NATO) United Kingdom of Great Britain and Northern Ireland United Nations (Organisation) United States of America Western European Armaments Organisation Terrorist attacks of 11 September, 2001 in New York and Washington DC (USA)

x

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Series Editors’ Preface Over the past four centuries, the nation state has emerged as the world’s most effective means of organizing society, but its current status and future are decidedly uncertain. Some scholars predict the total demise of the nation state as we know it, its powers eroded by a dynamic global economy on the one hand and, on the other, by the transfer of political decision-making to supranational bodies. Other analysts point out the remarkable resilience of the state’s core institutions and assert that even in the age of global markets and politics, the state remains the ultimate guarantor of security, democracy, welfare and the rule of law. Do either of these interpretations describe the future of the OECD world’s modern, liberal nation-state? Will the state soon be as obsolete and irrelevant as an outdated computer? Should it be scrapped for some new invention, or can it be overhauled and rejuvenated? Or, is the state actually thriving and still fit to serve, just in need of a few minor reforms? In an attempt to address these questions, the analyses in the Transformations of the State series separate the complex tangle of tasks and functions that comprise the state into four manageable dimensions: ● ● ● ●

the monopolization of the means of force, the rule of law, as prescribed and safeguarded by the constitution, the guarantee of democratic self-governance, and the provision of welfare and the assurance of social cohesion.

In the OECD world of the 1960s and 1970s, these four dimensions formed a synergetic constellation that emerged as the central, defining characteristic of the modern state. Books in the series report the results of both empirical and theoretical studies of the transformations experienced in each of these dimensions over the past few decades. Transformations of the State? (Stephan Leibfried and Michael Zürn (eds), Cambridge 2005) and Transforming the Golden-Age National State (Achim Hurrelmann, Stephan Leibfried, Kerstin Martens and Peter Mayer (eds), Basingstoke 2007) define the basic concepts of state transformation employed in all of these studies and provide an overview of the issues addressed. Written by political scientists, lawyers, economists and sociologists, the series tracks the development of the post-World War II OECD state. Here, at last, is an up-to-date series of reports on the state of the state and a crystal-ball glimpse into its future. ACHIM HURRELMANN, STEPHAN LEIBFRIED, K ERSTIN MARTENS AND PETER MAYER xi

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Acknowledgements Since the British sea change of St Malo, scholarship on European security and defence institutions has been en vogue from a variety of perspectives. Meanwhile, a community of European Security and Defence Policy (ESDP) researchers has emerged, bringing together scholars from the distinct domains of Public Policy, European Studies and International Relations Theory. From my point of view, several factors came together to prompt this dramatically increased interest: (1) After the failure of the European Defence Community in the 1950s, the ESDP is the first serious attempt to deal with military issues within a European Union framework. The market has been established, the currency has been introduced, so military planning is one of the few functions that the EU has not provided so far. (2) The EU’s defence pillar is a genuine security institution, rather than a classical alliance as the prototype of security cooperation in an anarchical world. As a result, the ESDP is also about the deliberate internationalisation of the use of force and, therefore, about the transformation of the modern state as a genuine form of political organization. (3) In some ways, the ESDP is an act of emancipation from the United States, partly even an opposition to US policies; in other ways, it represents the perennial desire of Washington that Europeans should invest in more and better military capabilities. In short, it is a highly ambivalent (and politically contested) institution. Finally, when I began to work on this subject there were relatively few approaches that went beyond ad hoc explanations. This has changed. Today, more policy-oriented researchers like Robert Hunter or Jolyon Howorth and, increasingly, scholars in International Relations such as Christoph Meyer, Seth Jones, Adrian Hyde-Price, Frédéric Mérand and Dirk Peters have published important monographs on the subject. Fortunately, these debates still lack a contribution applying theories of political economy linked to historical-institutionalist thinking. In combination with the focus on preference formation, this will be precisely the analytical lens and, hopefully, the added value that this study provides. This book started out as a completely different project. Being strongly influenced by my first International Relations professors, Friedrich Kratochwil and James Davis, my proposal set out to apply sociological notions of risk to the emergence of the ESDP. However, my plans, as originally envisaged, rapidly turned out to be premature. After changing my institutional affiliation to Jacobs University, Bremen, I gradually modified my research plans. Markus Jachtenfuchs strongly shaped my thinking on European integration and

xii

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how to approach the ESDP. He asked those pointed questions that obliged me to re-examine my ideas and evidence. He also ‘forced’ me to continuously submit parts of the eventual thesis and always reminded me to view it through the lens of the ultimate ‘product’. Bernhard Zangl challenged me on numerous occasions to refine my argument and was the person with whom I had the hardest contests over my study. Despite my willingness to lose – without exception – all the squash matches I played against him, he frequently disagreed with important parts of my study. However, our arguments were – also without exception – constructive and, therefore, this study (and I personally) profited a great deal from his supervision. Finally, Philipp Genschel made a vital contribution to this book. He made numerous highly constructive comments, so the book has gained significantly from his perspective. This combination of intellectual and personal inputs substantially supported my personal work on this topic. Before I thank my fellow colleagues, two ‘grand seigneurs’ must be mentioned. Max Kaase was extremely supportive in bringing me to Bremen in the first place and Stephan Leibfried helped me with the publication process. I owe a great debt to both of them. Like any such project, this study would have been very different without the contributions and support of many friends and colleagues: Michael Blauberger, Simon Dalferth, Marc DeVore, Julian Eckl, Katharina Kleinen-v.Königslöw, Sibylle Lang, Stephanie Rhinehart, Ingo Rohlfing and Margit Schreier. In addition, I would like to thank the ESDP unit of the German Ministry of Defence. The staff not only gave me the opportunity of several (iterated) interviews, they also helped me to contact their colleagues in France and the United Kingdom. Thanks also to several anonymous reviewers for their input and to Liz Blackmore and Alexandra Webster at Palgrave Macmillan for seeing through the publication process with great care and enthusiasm. Moreover, I am greatly indebted to two institutions. While Jacobs University generously supported me over the whole period of my Ph.D. work, the Centre for Security Economics and Technology (C SET) of the University of St Gallen provided me with a postdoctoral fellowship, which, among other things, allowed me to write this monograph. Finally, my greatest thanks go to my family, a handful of very close friends and to Kaija Landsberg for their continuous support over the past years and decades. Writing the book would have been much more painful without their friendship and encouragement; and I promise not to repeat it too often in the future. MORITZ WEISS, ST GALLEN October 2010

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Part I Preferences, Security Institutions and Transaction Costs in World Politics

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1 Introduction

This book examines cooperation and institution-building in European security by building on analytical insights from transaction cost economics. The creation of the European Security and Defence Policy (ESDP) constitutes one of the most significant transformations in recent world politics. Given the state’s monopoly on the legitimate use of force, the governance of security in general, and military planning in particular, are constitutive activities of the modern nation state (Leibfried and Zürn 2005; Mayer and Weinlich 2007). Despite, or rather because of, the great importance of these transformations, there is widespread disagreement among scholars and practitioners as to the why and how of the emergence of the European Union’s (EU) defence pillar (e.g. Posen 2006; Meyer 2006; Jones 2007; Mérand 2010; Peters 2010). This book addresses the most basic puzzle in this context, namely, the sources of the member states’ institutional preferences: it explains why the governments wanted what they wanted when they entered into negotiations for security and defence institutions with their partners. Why did they want to internationalise parts of their security and defence policy? More specifically, which functional tasks were to be included in the ESDP and how binding should the arrangements be? In other words, this book unravels preference formation in the emergence of the ESDP as a security institution. First of all, I argue that the relative magnitude of transaction costs was the primary determinant of the member states’ preferences for institutionbuilding in the field of security and defence. In general, these costs – equivalent to “frictions in mechanical systems” (Williamson 1985: 1) – emerge from the cooperative exchanges of the main actors within the European security setting. More specifically, the EU governments’ ex ante and ex post assessments of both the risks of opportunism and governance costs are shown to be decisive for a comprehensive understanding of institutionbuilding in the ESDP (Lake 1999, 2001). The book builds broadly upon historical-institutionalist thought, which regards a reduction in the costs of cooperation as the most vital effect of institutions. It takes the reverse of this idea as a point of departure and traces back the impact of transaction 3

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Transaction Costs and Security Institutions

costs on preferences for building the ESDP in the first place. Consequently, the study argues that the EU governments preferred precisely those institutional arrangements that were best adapted to their transactions, which differed individually in terms of uncertainty and asset specificity. In other words, preference formation was ‘driven’ by the governments’ attempts to adjust the rules of the ESDP to their existing and anticipated transaction costs. In addition, the book contributes to current debates on the transformations of the state by examining the hard case, that is, national security and defence policy. Given the fact that military planning and the legitimate use of force are normally regarded as constitutive elements of the state, the emergence of the ESDP poses one central puzzle to scholars and practitioners alike: Why and under what conditions do great powers with a substantial independent military capacity deliberately seek to create institutions which will limit their autonomous military planning in the medium- to long-term? The analysis below reveals two important answers. First of all, I argue that there is not a single linear trend towards the internationalisation of security policy, not even within the highly integrated European Union. As Andrew Moravcsik has demonstrated for economic integration (Moravcsik 1998), I will show that an exclusive focus on national variation neglects important facets of internationalisation of the defence function. Instead, cross-issue variation – for instance, Germany preferring some selected embedding of the monopoly of force, while vehemently opposing others – provides a more differentiated, and thus more comprehensive, approach to the current transformations of the state (see also Genschel and Zangl 2008; Genschel and Leibfried 2008). Second, I argue that, owing largely to functionalist logic, the internationalisation of the monopoly of force can be primarily explained in terms of national levels of transaction costs. Just as the monopoly of force can be regarded as a means of resolving functional problems (that is, protection from outside military threats), state preferences for internationalising parts of this function might follow a similar logic: reducing the present and anticipated transaction costs that arise from the provision of European security.

Two puzzles in ESDP This book tackles two puzzling developments in both the practice and theory of European security governance. While the former refers to the realworld expansion of the EU’s activities in this issue-area as well as its timing, the latter is theoretical, in the sense that the empirical record insufficiently corresponds to the expectations of the main research programmes that International Relations (IR) as a discipline suggests. Firstly, the political developments under investigation represent a puzzle of empirical logic (e.g. Whitman 1999), because the observable expansion in

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Introduction 5

European security policy can be regarded as very surprising: the significant progress made towards a European security and defence pillar within the EU rather than NATO (Talbott 1999: 50), as all commentators had expected. A retrospective view of the two most important players in the mid-1990s illustrates not only the puzzling nature of ESDP, but also the surprising timing of its emergence. On the one hand, it was evident for several reasons that the United Kingdom (UK) would never opt for a genuinely European solution for defence issues. Instead, it would always stick to the special relationship with the United States (e.g. McInnes 1998: 835). If a European pillar in security and defence issues were to be strengthened, it would be located within NATO. This had been American policy since Kennedy, British policy even before that, German policy most of the time and would have to become French policy as well. In other words, there were some uncontested parameters to European security architecture. On the other hand, France had just elected Jacques Chirac as its new President.1 He immediately began one of the most prestigious projects in French politics, namely, a massive transformation of the armed forces coupled with a new defence policy. Apart from the end of the Cold War, two developments, in particular, made French defence reforms seem inevitable: first, the quasi-failure to project their own forces into the Gulf region in 1991; second, their close cooperation with the United Kingdom on the ground in Bosnia. What could we expect from these two developments emerging at the same time? The answer is clear: French rapprochement with the Atlantic Alliance (Grant 1996). Thus, at first glance, a strengthened European pillar within NATO would have appeared to be the obvious path to European security and defence policy. However, the actual development differed significantly to the extent that the pillar exists, in fact, outside the Alliance and inside the EU; in Henry Kissinger’s words: “the distinctive feature of the European Union military force ( ... ) is to create a capacity to act outside the NATO framework” (Kissinger 2001: 34). In retrospective, the ESDP might be rationalised as natural; for policy-makers and commentators at the time, it was not. Due to the primarily intergovernmental nature of the EU’s security and defence policy and the resulting predominance of the national governments (Howorth 2007: 1), the most basic starting point for an analysis of its emergence is thus the member states’ institutional preferences. Secondly, the significant extension of the ESDP during the previous decade represents a puzzle in the theoretical sense. Although all scholars acknowledge the central importance of governments as the key actors in the ESDP, standard research programmes in IR do not provide a persuasive explanation of why they wanted what they wanted (e.g. Smith 2004: 201–6; Jones 2007: 4–5). In a recent attempt to set the research agenda, Tuomas Forsberg concluded that the “little theoretical work that exists on European defence either pre- dates the emergence of the ESDP or does not attempt to

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contribute to explanatory theorising” (Forsberg 2007: 1). To briefly illustrate this point, conventional Realist thought is confronted with the challenge of why similarly positioned states want significantly distinct – sometimes even opposite – things (e.g. Waltz 1979; Posen 2006; Jones 2007). Secondly, Liberalism faces the difficulty of how to develop an explanation of state preferences in the absence of a pluralist market of domestic interest groups that struggle for adequate representation at the inter-state level (e.g. Moravcsik 1998; Moravcsik and Nicolaidis 1999; Dover 2005). Finally, (bottom-up) Constructivist approaches are better equipped to explain differences among states, but their weaknesses become evident when they are faced with nonincremental changes (e.g. Tonra 2003; Meyer 2006; Mérand 2008). Despite providing some singular insights, the three research programmes encounter difficulty when asked to explain both the similarities and variations between the member states as well as the continuities and changes of the individual preferences. Put differently, the real-world developments in the ESDP are largely incompatible with the predominant approaches in IR (Howorth 2007: 24). Why did the EU members want to build a ESDP at all, and why did they prefer a specific institutional design for accomplishing the security tasks? This book’s guiding research question is, therefore, how can we explain the member states’ preference formation with respect to the institutionalisation of the ESDP? More specifically, the analysis focuses on the preferences of the ‘Big Three’, Germany, Britain and France, with respect to the common build-up of political-military structures.2 When and, in particular, why did the Big Three’s preferences change or remain stable? How do we account for similarity and for variation? While a systematic answer to these questions alludes to a range of distinct debates in political science, the analytical scope is limited to the extent that two objectives predominate: a contribution to the problematique of preferences and security cooperation in International Relations (e.g. Pollack 2001; Smith 2004: 177);3 and based on the results of this analysis, a qualified input to debates on the transformations of the state (e.g. Leibfried and Zürn 2005; Hurrelmann et al. 2007).

ESDP and the internationalisation of the use of force The emergence of the ESDP challenges traditional conceptions of statehood because it is ultimately about the deliberate institutionalisation of military planning at the European level, which substantially affects states’ ‘exclusive’ control of the armed forces. As a consequence, when governments were negotiating the establishment of the ESDP in the previous decade, the internationalisation of the use of force was at stake. It is Max Weber who has most prominently argued that the monopoly of the legitimate use of physical force differentiates the modern state from all previous forms of political organisation (Weber 1978: 54–55). Historically, the

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Introduction 7

rise of the modern state and its establishment of the exclusive means of force (the police and the military) went hand in hand. Charles Tilly has emphasised that, based on the state’s success in the competition against rival forms of political organisation, the use of force can be regarded as the first – and probably foremost – attribute of modern statehood (Tilly 1992; see also Spruyt 1994).4 Among the most important corollaries of exclusive control of the means of force is the supposed indivisibility of military planning. Thomas Hobbes forcefully argued that the sovereign must not delegate or pool these means of force to a sub- or supranational level (Hobbes 2008: 216). Such a policy would undermine the state’s authority and certainly destroy it in the long term. However, developments in Europe after the end of the Cold War seem to ignore these reservations. While the North Atlantic Treaty Organisation (NATO) survived the disappearance of its raison d’être and went ‘out of area’ rather than ‘out of business’ (e.g. Haftendorn et al. 1999), the increased activities of other international organisations, such as the EU, inspired commentators to speak of a “system of interlocking institutions” in Europe (Wörner 1992). These developments can be broadly understood as an internationalisation of the use of force, whereby military planning is gradually shifted from the national to the international (or European) level (Jachtenfuchs 2005; Mayer and Weinlich 2007). Even though these increased forms of cooperation do not suggest that governments have given up control over military planning, the question arises of what this internationalisation ultimately implies for the state’s monopoly of force. In other words, if we observed change within this key dimension of modern statehood, this might have significant implications for the questions of to what extent the state is about to be transformed, and why. These issues will be the subject of the book’s concluding chapter.

The argument: transaction costs and security institutions Douglass North once summarised Ronald Coase’s seminal message as follows: “when it is costly to transact, institutions matter” (North 1990b: 12). As a point of departure, I simply turn this message on its head: when institutions in the ESDP exist, I may find that costly transactions precede and determine the actors’ preferences for building these institutions in the first place. The major argument of this book, therefore, is that the relative magnitude of transaction costs primarily determines the EU member states’ preferences for institution-building in security and defence issues. Oliver Williamson once compared transaction costs in social relationships to ‘frictions’ in mechanical systems (Williamson 1985: 1). Cooperative exchanges between the main actors in the European security order entail – either ex post or ex ante – ‘frictions’ which can lead to malfunctions and conflicts. From this perspective, transaction costs originate in this context from the

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Transaction Costs and Security Institutions

general provision of European security as well as from transactions exclusively within the ESDP. The study’s underlying logic is therefore that of dealing with a familiar topic from an unfamiliar perspective. Prominent concepts of political economy are systematically adapted to the analysis of European security. While the ‘explanandum’ – preferences – is frequently applied to questions of economic integration (e.g. Moravcsik 1998), it is most of the time considered only implicitly by scholars of the ESDP (e.g. Smith 2004; Jones 2007). Similarly, the main explanatory building-block – transaction costs – is well established in political economy, but had never been systematically applied to preferences for institution-building in security issues. The book’s framework for studying (non-) cooperative exchanges between the actors in their search for security at acceptable costs draws heavily on theories of political economy (e.g. Williamson 1985; North 1990b; Lake 1999; Wallander 2000; Weber 2000). Accordingly, the EU member states are largely treated as if they were firms. The market is the European security order, in which governments aim to produce security. Viewed through the lens of transaction cost economics, the political actors are engaged in relational contracting. In security policy, too, the cooperative exchange agreements between the EU members are necessarily incomplete and, therefore, problems of credible commitments arise. The contracting parties provide information and establish safeguards that positively or negatively sanction certain behaviours. In other words, the governments want to build institutions to structure future state interactions. However, cooperation may be pursued at very different levels of substantive scope and institutional depth. Therefore, the real challenge is determining the impact of transaction costs on a member state’s decision to cooperate on a substantive issue based on a certain institutional form. As I will show, the respective magnitude of transaction costs is to a large extent determined by the attributes of asset specificity on the one hand, and uncertainty on the other. The ‘explanandum’ builds on the well- established distinction between scope and depth (Lindberg and Scheingold 1970: 65–98). While preferences may refer to those functional problems that the member states want to be subsumed within the European framework, the (un)willingness on the part of the state to increase coordination efforts and to partly bind itself also need to be examined. Therefore, I combine the two analytical dimensions – substantive scope and institutional depth – to create a typology of preferences for institution-building in European security (Chapter 3). Following Jeffry Frieden, security preferences are understood as the EU members’ ‘desired ordering of potential outcomes’ of a deliberation/negotiation over the institutionalisation of security issues at the EU level (Frieden 1999: 42). The ‘explanans’, namely transaction costs, is based on the premise that obtaining information about other actors’ behaviour in the European security setting is costly. The governments not only have to assess ex ante the

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Introduction 9

valuable attributes of their exchanges, they must also safeguard compliance ex post, due to the inherent incompleteness of all contracts. Building on the work of Oliver Williamson, transaction costs are understood as the “comparative costs of planning, adapting, and monitoring task completion under alternative governance structures” (Williamson 1985: 2). The focus is thus on two dimensions: uncertainty addresses the question of how other main actors will act in the near future with respect to security problems; asset specificity describes the governments’ investments in political-military structures that can or cannot be redeployed for alternative purposes. While security is broadly defined “as a low probability of damage to acquired values” (Baldwin 1997: 13), the two principal motivations behind institution-building in this issue-area are assumed to be: (1) greater protection from threats and risks, (2) at acceptable costs (Lake 1999). The corollary is that the pooling of resources shapes the initial incentives used by governments when considering cooperation in this domain. As previously indicated, the resulting transactions with other states also entail costs. The analytical framework of security cooperation distinguishes between two kinds of transaction costs. Firstly, ‘risks of opportunism’ raise the problem of credible commitments and enhance the costs of cooperation. Governments are faced with three kinds of expected costs of opportunistic behaviour in security arrangements: abandonment, entrapment and exploitation (Lake 1999: 52–8). An EU member state may be concerned about being ‘abandoned’: left out of further steps towards integration. This thinking is, for example, highly influential within all debates on so-called flexible arrangements. At the same time, a state could also be ‘entrapped’: subject to undesired conflicts. This sort of consideration is particularly prominent among neutral states in the EU characterised by highly restraining national traditions. Finally, there is the possibility of being exploited. For instance, France and the UK are the two main leaders with regard to the military aspects of the ESDP. Both were, at some point, worried about the extent to which the half-hearted efforts of other members could thwart the objective of improving military capabilities, while at the same time having a say in essentially all ESDP decisions. In short, they complained about being exploited. The extent of all of these risks of opportunism depends on two interrelated dimensions of transactions, namely, uncertainty about the future behaviour of the cooperation partners and the specificity of the assets to be exchanged (Williamson 1985: 52–60). Secondly, in contrast to opportunism, increasingly hierarchical structures may reduce these risks, but lead inversely to so- called governance costs which can be understood as the costs of making and enforcing agreements (Williamson 1985: 90–1).5 It costs money and often raises the political stakes when a government chooses to build a security institution instead of dealing with the problem unilaterally. In particular, the states participating in a security arrangement have to give up some degree of autonomy, which has

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Transaction Costs and Security Institutions

always been a desired asset in world politics. Flexible answers to problems that sufficiently take the national context into account simply become more difficult and thus more costly. It would be difficult, for instance, for an EU member state to renege on its contribution to a multinational battlegroup (Lindstrom 2007). The loss of reputation, at the very least, would be tremendous. Therefore, subscription to the battlegroup concept implies governance costs for the participating governments. The member states must commit to keeping their promises and in this way establish safeguards of credible commitment (Lake 1999: 58–9). Again, uncertainty and asset specificity are the critical attributes of transactions. The more hierarchical the security institution, the smaller the member states’ residual rights of control, and thus the higher the potential governance costs. Finally, the focus of this study is on the EU member states’ policies on providing European security. More specifically, I distinguish between those transactions that address the general provision of European security and those that occur exclusively within the ESDP. While the United States plays a major role in the former, the latter refers exclusively to the EU member states. Accordingly, the question of why the governments wanted to build the ESDP at all is primarily explained by the transactions for general provision of European security. In this context, the ex post comparative assessment of existing institutions is critical. In contrast, the transactions within the ESDP explain how the governments wanted to design the new institution, so the anticipation of future transaction costs is vital. The transaction costs framework may be summarised as shown in Figure 1.1.

• ∆ Uncertainty about future behaviour of cooperation partners

Attributes of transactions

Transaction costs

• ∆ Asset Specificity (jointly produced goods are [not] redeployable to other purposes) • ∆ Risks of Opportunism (e.g. entrapment, abandonment, exploitation) • ∆ Governance costs (e.g. potential loss of national control)

Transaction costs framework of analysis

∆ Transaction costs for the ∆ Transaction costs within provision of European security the ESDP ∆ Preferences on substantive scope

∆ Preferences on institutional depth

Figure 1.1 The analytical framework: transaction costs and security institutions

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Introduction 11

This is mid-range theory-building, where I begin with some general propositions about preferences, security cooperation and institution-building and move to more specific processes and mechanisms of institutional choice and development in political-military issues. The underlying assumption is that EU member states faced with high transaction costs – ex ante and/or ex post – will prefer far-reaching institution-building in terms of substantive scope and institutional depth. From this perspective, causes are primarily explained in terms of their effects. An investment may temporally be the cause of a profit, as the latter follows from the former. Building on functionalist logic, however, the causal path is reversed: effect explains cause (Keohane 1984). A government prefers to invest in an institutional arrangement because it expects the latter to reduce transaction costs or to provide alternative profits. Taken together, this suggests that governments internationalise a part of their monopoly on the legitimate use of force for primarily functionalist reasons. European security will be jointly provided, and the ESDP will increase problem-solving capacity while maintaining maximum policy autonomy (see also Lepgold 1998). In other words, it is primarily security problems combined with the (expected) behaviour of other actors that drive preferences for ESDP, whereby the state, as a particular form of political organisation, is sustainably transformed (though Finally, the theoretical contributions of this study only gain persuasiveness and plausibility once confronted with the hardest possible challenge at the empirical level. The objective is to resolve one of the central puzzles of security cooperation: “How states develop interests (...) that permit them to jump into security cooperation is the challenge that all explanations are facing” (Müller 2002: 371). Thus, the research design establishes strong variances of national preferences, whereby the proposed framework must account not only for differences and similarities, but at the same time continuities and changes.

The main findings: transaction costs and the emergence of the ESDP Both the structured, focused comparison of the ‘Big Three’ as well as the consideration of alternative explanations suggest a systematic impact of transaction costs on preferences in European security. When we want to find out why Germany, Britain and France preferred (not) to cooperate within the EU, we first need to analyse their respective assessments of how to provide European security. Thus, a comprehensive understanding of why a government wanted certain security tasks (not) to be executed by the European Union requires a comparative assessment of NATO and the EU as the two main institutions that can provide the public good of European security. This cost–benefit analysis is, in turn, vitally shaped by the organisations’ capacity to reduce the transaction costs involved in European security. As an underlying condition, all EU governments were increasingly concerned about instability in their own backyard. They faced the problem

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of how to establish order on a multilateral basis. In short, they needed to transact. This kind of demand, however, does not tell us where such an arrangement should be established. As a result, the governments assessed on a comparative basis whether the EU or NATO would effectively contribute to a reduction of those risks of opportunism that emerged from the provision of European security (without escalating governance costs). Since NATO had been traditionally the default option, the question was first and foremost whether the United States’ commitment to all kinds of European security problems was still credible. Both the ‘isolationist’ and ‘unilateralist’ concerns about the United States and the resulting uncertainty had an enduring impact on all three countries’ assessment of how to provide European security. NATO had progressively become more costly to the EU members, and the risks of opportunism had increased as well. This encouraged the governments to consider new institutional options and therefore accounts not only for some of the similar preferences, but, in particular, for the overall trend in the ESDP’s creation. At the same time, the latter hardly explains the non-trivial differences between the Big Three’s preferences. This was first and foremost based on their very different bilateral relationships with Washington. After all, the hegemon – being apparently tired of providing the public good of European stability – overtly opposed some of the EU’s increased responsibilities for military planning and, instead, wanted to see them continue within NATO. Put differently, it indirectly threatened its European partners with further disengagement from Europe if certain conditions were not met. In this way, the attempts made to reduce some of the uncertainties might result in even more uncertainty, should the US withdraw. Since the Big Three differed significantly in their assessment of the desirability of this, the member states’ took very different views as to which outcomes were preferable. For instance, the evolution of British preferences represented a particular challenge for the transaction costs framework. The shift of St Malo was not only the most drastic change, but also the most consequential, since it opened up the road to Cologne and Helsinki in 1999. In general, Great Britain wanted to strengthen the EU’s responsibilities for military planning, while at the same time regarding the ESDP’s compatibility with NATO a priority. The primary driving force behind the British approach was, then, the increase of transaction costs in the course of the 1990s. The process-tracing of the signalling between the United States and Britain demonstrates that the latter was increasingly concerned about US isolationism, which was particularly strong on Capitol Hill. Full-scale American commitment to all varieties of European security problems was partly questioned in London. This dramatically increased British uncertainty about NATO and thus the risks of opportunism the UK faced for the provision of European security. At the same time, Washington’s red lines were still taken seriously and constrained British support for extending the EU’s responsibilities in

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Introduction 13

military planning. Thus, London faced the question of how to provide security within Europe if the United States became increasingly reluctant to assume this role. A viable ‘EU- only option’ represented a promising point of departure for gradually providing security for Europe. At the same time, this required compatibility with NATO as high-intensity combat missions would not, for a considerable amount of time, be feasible without the US. Therefore, incompatibility could produce new uncertainties and risks of opportunism. The comparative institutional assessment of NATO and the EU in terms of their capacities to reduce transaction costs for the provision of European security in the medium- to long-term encouraged the Blair administration to support the establishment of an ESDP. In sum, the tradeoff between making functionally reasonable investments in the ESDP while at the same time retaining the special partnership with the US is the key to understanding the development of British preferences regarding substantive scope. To further examine why the EU members preferred a specific design for structuring their future interactions, we need to analyse the transaction costs that emerged exclusively within the ESDP. For that purpose, this part of the analysis concentrates on the ex ante anticipation of future institutions. More specifically, a government’s assessment of uncertainty about the partners’ commitments was just as important as the specificity of those assets in the areas where the EU member states cooperated. The interaction between these two dimensions determined, then, the magnitude of transaction costs within the ESDP. This, in turn, explains the governments’ (un)willingness to bind themselves within the EU’s institutional arrangements. While all governments wanted some safeguards for their investments, they jointly backed away from establishing more binding agreements. In part, this can be traced back to the need to create an institution compatible with NATO and was thus primarily based on the unwillingness to lose residual rights of control. In fact, most of the ESDP’s military assets were general rather than specific. It was thus rather to avoid rising governance costs than risks of opportunism which drove most governments’ approaches. Again, this explains the similarities between the EU members’ preferences to the extent that the planned degree of specificity had an impact on each of them. This also accounts for the incremental convergence that could be observed with respect to preferences of institutional depth. All members wanted some safeguards for their contributions to ESDP and to provide some information which enhanced the efforts of coordination between the member states. Nevertheless, I found important differences between the Big Three, which require separate explanations. For example, the French government initially promoted an approach similar to the UK’s, but in the course of the analysis it moved gradually closer to Germany. This did not, however, imply that France had given up its consistently intergovernmental approach to the ESDP. In particular, it opposed interference from EU institutions and thus wanted to enhance

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the institutional capacity through ‘flexible arrangements’ with a dominant role for governments. In short, the objective was improved coordination rather than integration. The analysis traces these preferences back to the modest magnitude of French transaction costs within the ESDP. In the mid1990s, this could be derived from its low uncertainty about Germany and the marginal extent of asset specificity. Neither the risks of opportunism nor the governance costs were high for Paris, although both factors gradually increased and thus accounted for France’s slightly greater willingness to bind itself since the end of the 1990s. In contrast to Great Britain and Germany, however, France’s desired outcomes were driven neither by the concept of general military assets (as was the UK) nor by the necessity of establishing primarily efficient solutions to military shortfalls (as was Germany). Not only were its military forces in good shape, but the general nature of these assets served primarily as a kind of assurance rather than an initial trigger. After all, the French government was confronted neither with extremely high political nor with unbearable financial costs with respect to ESDP. Indeed, when the ESDP was launched, the government was somewhat uncertain about the potential exploitation of Germany and abandonment of the UK, which would ultimately side with the US rather than Europe.6 The French, like the British, therefore wanted to create safeguards for their investments in ESDP. Aside from the general nature of most military assets that substantially reduced governance costs, flexible arrangements could limit some of these risks of opportunism in the future, and were therefore strongly promoted by the French government. In terms of transaction costs, both these safeguards should make the mutual commitments more credible. Others were simply not required. Hence, France was relatively immune to opportunism and its main objective was to retain permanent control in military affairs. It consequently regarded the potential governance costs of more hierarchical structures as more costly compared to the continuing risks of opportunism. In this respect, the analysis demonstrates not only why the EU members initiated the ESDP process, but also why they were so hesitant about investing into genuinely specific assets. In sum, a transaction costs framework can systematically explain the why and how of the EU’s defence pillar; it unravels the ESDP. The trigger for the Big Three’s willingness to enhance cooperation on security issues was the increasing extent of uncertainty they were faced with – albeit to different degrees.7 The risks of opportunism in NATO had increased. The underlying logic was to create an institutional arrangement that provided information to all members and thus facilitated improved coordination. The transaction costs that then emerged within the ESDP determined the member states’ assessment of the details of how to build the institution. Bearing this in mind, it is, in fact, the inversion of the transaction costs argument that may best account for the rapid emergence of an ESDP. It was basically the redeployability of the EU’s assets that brought the British into the ESDP. This institutional design

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Introduction 15

of general military assets facilitated the reduction of some of the emerging uncertainties, without creating new ones through a possible American disengagement. In terms of transaction costs, the limitation of asset specificity was actually the key and thus explains preferences for institutional depth.8 Finally, these findings suggest that for the transformations of the state governments did not all follow the same route to internationalising their security and defence functions. It varied from country to country and from issue-area to issue-area. For example, the UK strove in some issue-areas for even more internationalisation than Germany. In addition, the analysis demonstrates that the monopoly of force is by no means delegated or transferred to the European Union (see Mayer and Weinlich 2007). Instead, the EU member states provide information for their partners in military planning, thereby pooling some of their sovereignty, and embed the monopoly of force into the ESDP (see also Jachtenfuchs 2005). Interestingly, the empirical record clearly points out that governments prefer to internationalise the means of using force (their military capabilities) rather than their operational responsibilities. In other words, it was preferences in defence planning rather than operational preferences, that were more far-reaching in the ESDP. In particular, France and the UK jointly promoted the establishment of European capabilities. Based largely on a functionalist logic, this study demonstrates that the member states’ willingness to internationalise the use of force to a certain extent was ultimately dependent on the ex post reduction or ex ante limitation of transaction costs for providing European security. In conclusion, we arrive at a somewhat ambivalent result. The analysis shows how the internationalisation of the defence function through ESDP might change the role of the government, but does not replace the state. While the ideal-typical differentiation between hierarchy and anarchy appears as anachronistic for an examination of contemporary security politics (Waltz 1979), ‘governance by governments’ nonetheless remains indispensable for the provision of European security. In this sense, the results closely correspond to the thesis by Philipp Genschel and Bernhard Zangl. The state is transformed from the exclusive holder of the monopoly of force to the principal manager of the use of force; and this is increasingly dealt with at the international level, as will be shown in this book (Genschel and Zangl 2008: 430–1).

The research design The research design is based closely on Alexander George and Andrew Bennett’s propositions on case studies and theory-building. Although a transaction costs framework is firmly established in political economy, it has not been applied to security preferences. This suggests, in turn, that in the early stages of a research programme, selection on the dependent variable can serve the heuristic purpose of identifying the potential

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causal paths and variables leading to the dependent variable of interest. (George and Bennett 2005: 23) The sampling procedure is, therefore, targeted at establishing differences (George and Bennett 2005: 153–60). The issue at stake is determining which EU member states to select and how to limit the time period (e.g. Geddes 1990). Andrew Moravcsik argued in the most thorough analysis of preference formation to date that there were three distinct groups in the negotiations of security and defence issues at Maastricht in 1991, namely the pro-NATO group, the compromise group, and the autonomy group (Moravcsik 1998: 451; see also Forster 1999: 111–22). I therefore selected the leading member of each group since the “preferences of the most powerful actors will be accorded the greatest weight” (Keohane 1984: 71). The result of this sampling procedure is the selection of Germany, the United Kingdom and France.9 The advantage of choosing the most powerful countries is that they explicitly formulated their preferences. In contrast, states that did not expect to achieve everything they wanted from the bargaining process are much more hesitant in their formulation, in order not to leave the Intergovernmental Conference (IGC) with a clear defeat. Hence, the data is not only easier to gather, but is also more reliable. This is not a sine qua non, but is, nevertheless, helpful. In order to obtain variation over time, I again refer mainly to the dependent variable. It should be noted that there was a major shift in the institutionalisation of EU security policy in 1998–9, so the analysis starts before that shift and compares that period to the time after it. In a nutshell, this combination of establishing variation over time and space suggests limiting the empirical analysis to the Big Three and to examine both the time before St Malo and afterwards (for example the AmsterdamIGC vs. the Convention-IGC). In addition, the explanatory strategy refers to a processual perspective of preference formation and institution-building in European security (Pierson 2004; George and Bennett 2005). Therefore, a “structured, focused comparison”10 systematically analyses the institutional development according to a “process-tracing logic” (George and McKeown 1985; George and Bennett 2005). The main point of this kind of comparison is that the qualitatively analysed cases are not arbitrarily combined with each other, but compared in a formal and systematic way. According to Paul Pierson, “[i]t makes good sense to begin [any study of institutionalisation] with the prospect that actors choose institutions because they believe that doing so will benefit them” (Pierson 2004: 106). However, it may be insufficient to rely exclusively on rational–functionalist accounts (Pierson 2004: 109–31). Hence the study is supplemented and weighed against non-functionalist sources of institutions by integrating some systematic modifications into the framework. In particular, several of the components of the envisaged

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Introduction 17

costs and benefits are derived from cognitivist or interpretative concepts (e.g. Rathbun 2007: 541–9). The methods used in the study, as well as the attention paid to path dependence, sunk costs etc. basically make the investigations historical-institutionalist. Using this procedure, I can empirically examine the political context and based on this, the rational–functionalist models help to explain the outcome. This provides a great advantage for theorising security institutions: I can bridge the gap (Checkel and Zürn 2005) between liberal theories, which essentially neglect the effect of institutions on preferences (e.g. Moravcsik 1997, 1998), and institutionalist theories, which merely assume rather than investigate state preferences (e.g. Keohane 1984; Haftendorn et al. 1999). Finally, the primary empirical evidence consists of documentary sources. Firstly, it includes strategies, position papers, reports, speeches and other official sources;11 secondly, a comprehensive newspaper survey;12 thirdly, some policy papers and secondary literature of historians and political scientists. For secondary evidence, I used publicly available data sets, such as the Eurobarometer opinion polls or the Composite Index of Material Capabilities (CIMC) of the Correlates of War Project (CoW). Finally, I conducted numerous structured, open- ended interviews with several senior officials and policy experts.13 A qualitative content analysis examined this broad range of data according to theoretically derived or inductively explored categories.

The plan of the book This book is divided into three main parts. The first begins by reviewing scholarship on security institutions in general and the ESDP in particular. As a result of several deficiencies of the literature and building on theories of political economy, the book’s analytical framework is developed and how it applies to the empirical study is explained. This study – a structured, focused comparison of the Big Three – comprises the second part of the book. Following a parallel analysis of a demand for security institutions, two chapters for each of the Big Three explore and explain preferences for substantive scope and institutional depth respectively. Finally, the last part of the book focuses on the theoretical and empirical implications of the analysis, and evaluates these results from the perspective of the transformations of the modern nation state. The starting point of Chapter 2 begins by examining the three standard approaches within International Relations for their contribution to the research questions and their underlying puzzles. Due to the largely dissatisfactory results, its final section addresses the ‘new institutionalism’ (Powell and DiMaggio 1991; Hall and Taylor 1996), which provides a bridge to the book’s own framework. This framework is set out in Chapter 3. By building on historical-institutionalist thought and transaction cost

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economics, the analytical building blocks for the study of security preferences are developed. The second step of the third chapter comprises the empirical link to preferences and the ESDP in order to clarify precisely how the empirical analysis is conducted. Based on these theoretical foundations, the preferences of Germany, Britain and France’s for institution-building in European security are examined according to a process-tracing logic. After analysing the Big Three’s perception of the security environment and thereby identifying a general demand for institution-building, the structured, focused comparison systematically addresses why the EU, rather than NATO, was increasingly given the responsibility of military planning for European security. The first three chapters focus on the exploration and explanation of preferences with regard to substantive scope between the mid-1990s and the Convention in 2003–4. The underlying puzzle is why the EU members began to set up ESDP at all. The study’s transaction costs framework serves as the theoretical lens for the explanation. The second part of the comparison analyses the preferences of Germany, Britain and France for institutional depth. The guiding question of these three chapters is how the governments wanted to design ESDP. Again, the exploration of the development of these preferences is followed by a transaction costs explanation. The final part of the book addresses the explanatory leverage of the transaction costs framework and discusses the implications for examining both security institutions and the transformations of the state. First of all, based on the construction of some mostly-likely cases (Eckstein 1975: 108–13), Chapter 11 provides alternative explanations for substantive scope and institutional depth. Due to the fact that the empirical analysis was biased to the extent that only powerful and allied states were examined, the scope of the argument is considered further. For that purpose, a ‘plausibility probe’ of Irish preferences within the parallel time span is conducted. Furthermore, some of the desiderata of the structured, focused comparison are discussed. The final chapter then summarises the main theoretical and empirical results and concludes that Germany, Britain and France’s preferences for ESDP are primarily triggered by transaction costs. On that basis, it attempts to close the circle that was opened up by this introduction. Building on the empirical and theoretical results, it answers the puzzles formulated above and addresses the study’s contributions to theory, concepts and substance in International Relations. Finally, it concludes by considering the contested issue of what the results of this study imply for the transformation of modern statehood.

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2 Theorising Preference Formation for Institution-Building in European Security

The introductory chapter has addressed the book’s focus on cooperation and institution-building in European security from the perspective of International Relations. Hence, this chapter discusses the various ideas this discipline suggests for tackling the research puzzles. Some of these explanations exist explicitly (e.g. Posen 2004, 2006; Smith 2004; Meyer 2006; Jones 2007; Mérand 2008), others are derived from broader research programmes (e.g. Moravcsik 1993a, 1998; Moravcsik and Nicolaidis 1999). This study’s approach to the existing literature builds strongly on Imre Lakatos’ notion of ‘sophisticated falsificationism’ of research programmes.1 The reason is that Lakatos refuted simplistic notions about testing theories by replacing them with a more differentiated perspective. Crucially, however, he maintained the importance of evaluating existing theories (Waltz 2003: vii–x). Lakatos argued that a research programme should be “checked” in two ways (Lakatos 1970: 116). Firstly, the question of internal consistency is tackled by this chapter, which is about the problem of logical contradictions at an abstract theoretical level. Secondly, the question of external consistency with observable facts will be selectively considered at the beginning of part three of the book, that is, following the empirical analysis. It will refer to real-world developments that may contradict theoretical expectations derived from the specific approaches.2 The outcome of both checks determines to what extent we may ultimately speak of a progressive or degenerative research programme (or, ‘problemshift’) (Lakatos 1970: 116–22, 133–4). As a result, we may have some indications of which theoretical approaches we should reject for the subject of this study, which to confirm, and which to modify. The primary objective of this study is to contribute to International Relations’ theories of cooperation and institution-building in security issues. The following section therefore confines itself to the most relevant approaches from this perspective: (1) Realism or a power-based account, (2) Liberal Intergovernmentalism or an interest-based approach, and (3) 19

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Constructivism or a culture-based explanation (Hasenclever et al. 1997; Zangl and Zürn 2003: 125–48; Hix 2005: 374–8). The aim is to extract as much explanatory leverage as possible rather than simply refuting the approach in question: what are the supposed ‘drivers’ of preference formation, and what the potential ‘tracks’? How would the main research programmes explain the European Union (EU) member states’ security preferences in European security? What ‘explanans’ do they focus on, and what are the causal mechanisms?

Realism: anarchy and power This section explicates Realist predictions for preference formation in security and assesses the power-based contribution to the research question. Realist thought still dominates thinking about security in International Relations.3 This is particularly applicable to American Political Science, which has increasingly become interested in the EU’s recent efforts to institutionalise security and defence more strongly during the past few years (Art 1996; Art et al. 2005/6; Jones 2003, 2007; Posen 2004, 2006; see also Hyde-Price 2007; Peters 2010). Although there are some major differences among Realist approaches to security cooperation – ranging from offensive (e.g. Mearsheimer) and defensive (e.g. Waltz and Jervis) to neoclassical (e.g. Wolforth, Schweller, Kydd) variants, we can nonetheless map a common ground that neorealist accounts share (e.g. Mearsheimer 2001: 17–22): that is, anarchy and the distribution of material capabilities (i.e. power) determine the polarity of the international system. The relative position of an individual state in this system, in turn, induces its security preferences – more precisely, to maintain or increase its power.4 This represents the most fundamental ‘explanans’ of the state’s security preferences from a Neorealist perspective. At a general level, Realists would predict that this study would find three interrelationships. (1) Similarly positioned states are expected to have similar preferences (Koenig-Archibugi 2004: 144–5); (2) Changes in preferences are preceded by changes in the state’s relative position in the system (Posen 2004: 6–9); (3) The more powerful a state is, the less it wants to bind itself, but strives, instead, for autonomy (Waltz 1979: 107–16). Furthermore, we can discern different variables intervening between the system’s structure and an individual state’s preference formation. So- called neoclassical “realists, for instance, introduced mediating factors, such as the national leaders” threat perception (e.g. Christensen 1996) or domestic structure (e.g. Zakaria 1998).5 Realist scholars such as Barry Posen and Seth Jones, who explicitly attempted to explain the emergence of the ESDP, relied on a mixture of the international and the European system. Firstly, the shift from bi- to unipolarity accounts for the fact that the ESDP emerged at all (Posen 2004: 10–12, 2006). The EU states wanted to project power abroad and become

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more autonomous from the United States (Jones 2007: 24–32). Secondly, “structural shifts in Europe at the end of the Cold War triggered an increase in security cooperation through the EU. Cooperation allowed European states to bind Germany and ensure long-term peace on the continent” (Jones 2007: 11). Accordingly, we can formulate specific predictions for the study’s research question: Firstly, the EU member states will prefer closer security cooperation to establish power projection capabilities. They will organise these cooperative efforts independently from the United States. This striving for autonomy among the EU members would be reinforced over time between the mid-1990s and 2003–4. Secondly, Germany’s neighbours wanted to ‘bind’ the re-unified country. The EU represented the logical long-term solution for such a ‘binding strategy’. This would only be possible if Germany were to pursue a status quo policy. Accordingly, Britain and France would be expected to have a similar preference order that is a cooperative arrangement that binds Germany. This would be expected to be stronger in the mid1990s than in 2003–4 since fears of German hegemony and the consequent necessity to bind it had gradually decreased. Germany itself would support these initiatives as long as it generally stuck to its status quo objectives. After this overview of Realist thought on this study’s research question(s), I now examine those ideas in the light of the Lakatosian criterion of internal consistency. Two problems, in particular, must be tackled: the consistency between the general and specific expectations and the issue of ‘(soft) balancing’ vs. ‘bandwagoning’ vs. ‘binding’. First of all, the more specific expectations can be derived with certainty from the more general interrelationships, but some important questions emerge. For instance, the description of Germany as a status quo power appears empirically plausible, but is difficult to trace back to Realist premises. Furthermore, it is unclear why states should prefer more autonomy from the US, while at the same time entering into binding arrangements among themselves. Although the latter are not directed against the US, they nonetheless concern the Americans. In more general terms, when does a state want autonomy, when does it want to bind another state (and thereby itself) and how does this relate to the state’s relative position in the international system? These ambivalences in Realist thought lead us directly to the second set of inconsistencies, namely, the debate on ‘balancing’ (e.g. Vasquez 1997; Baumann et al. 2000; Pape 2005; Howorth and Menon 2009). In the context of this study, the problematique can be broken down into two questions. What precisely can we expect from the relative positions of Britain, France and Germany with respect to their preferences for security cooperation: balancing, bandwagoning, buckpassing or binding? If states choose to balance, Waltz et al. are right; if states choose to bandwagon, Schweller et al. are confirmed; and so on. John Vazquez most prominently argued that it is exactly this vagueness of Realism that qualifies it as degenerative in a Lakatosian

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sense (Vasquez 1997). This kind of internal inconsistency is primarily based on the criticism that the research programme cannot be falsified. This brings us directly to the question of what can, in fact, be regarded as an instance of balancing? Realism’s vagueness finds its ultimate pinnacle in the literature on soft balancing (e.g. Pape 2005; Paul 2005). Since none of the well-known forms of security policy were directly observable, some scholars proposed the concept of soft balancing, that is, “constraining US power by other (diplomatic) means” (Paul 2005: 58–9): “While the US does not present a military threat to Europe, it is the structural condition of unipolarity that has caused European states to aggregate power. This is not quite balancing as conventionally defined, since European states do not view America as a military threat” (Jones 2007: 24; see also Posen 2004: 24; Art et al. 2005/6: 184). These modifying shifts may adjust the research programme to external consistency, but at the clear expense of internal coherence. Therefore, the research programme does not unambiguously suggest what should be regarded as an instance of, for example, (soft) balancing or bandwagoning. In sum, the Realist research programme is faced with considerable internal inconsistencies. This is primarily reflected in attempts to adjust the programme’s ‘protection belt’ to empirical reality, whereby incompatibility with its ‘hard core’ is created. The consequence is – at least, the peril of – non-falsifiability. While the highly complex institutional arrangements of the ESDP may be regarded as a moderate balancing act, they are simultaneously an attempt to sustain the American commitment to Europe – in other words, bandwagoning. The Realist categories therefore appear as problematic even though the underlying premise of ‘power driving preferences’ may be heuristically promising (e.g. Peters 2010).6 After this rather critical assessment of Realism’s explanatory leverage, Chapter 11 examines in more detail the external consistency of the research programme by applying it to a ‘most likely case’. The combination of both checks ultimately represents an appropriate foundation for assessing its explanatory qualities.

Liberal Intergovernmentalism (LI): market and domestic interest groups While Realism still dominates scholarship on security cooperation, LI is the dominant research programme for the study of European integration (Moravcsik 1993b, 1998; Wallace et al. 1999; Pollack 2001: 222; Choi and Caporaso 2002: 487–8). The structure of this section is similar to the previous one: I present the theoretical argument and derive expectations for the practice of preference formation in the ESDP. In general, Liberal Intergovernmentalists expect that the preferences of the respective member state will by and large represent those of the most powerful and best- organised domestic interest group. The government’s ‘desired

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ordering of possible outcomes’ ultimately depends on what this group or groups want. In short, proponents of this theoretical strand derive preferences from a pluralistically organised market of domestic interest groups. However, two caveats are called for. On the one hand, the constituency behind security and defence policy is normally weak and diffuse, particularly in questions of institution-building (Moravcsik 1998: 35, 50; Moravcsik and Nicolaidis 1999: 61, 64). The most affected group is supposedly the political-military establishment, who can accordingly be regarded as the most important stake-holder. On the other hand, there is a high degree of uncertainty about cause- effect relationships in this issue-area (Zürn 1997: 300). This makes attempts to influence the government more complex and thus the promotion of particularistic interests is difficult. At a more specific level, Liberal Intergovernmentalists first assume that the role of geopolitical ideas is greater than in economic issues (Moravcsik 1998: 430). As a consequence, the theoretical expectations do not differ significantly from those of approaches that emphasise the role of strategic culture: some ideas may enable preferences for more institution-building (e.g. Germany’s ‘reflexive multilateralism’); others may instead act as a constraint (e.g. aspects of French Gaullism): “Since issue-specific interests prevail, ‘high politics’ concerns will dominate [security and defence policy]” (Moravcsik 1998: 50). Secondly, ideologically motivated elites, so- called dramatic-political actors, supposedly have a relatively high degree of freedom to act (Moravcsik 1993a: 494). If that is the case, a member state’s preferences will largely correspond to those of the most important stake-holders in this domain, namely, the military establishment and the large companies that produce weaponry (Moravcsik 1993b; Dover 2005). When these actors want more institution-building, for primarily economic reasons, the government represents these interests at the international level. From the perspective of Lakatos’ criteria for internal consistency, there is one main aspect that appears problematic for LI’s application to the study’s research question. That is the reliance on ideas and dramatic-political actors. These more specific expectations are basically not derived from the general ones, whereby the argument appears ‘ad hoc’. If the programme’s initial mechanism does not work, LI will refer to another one. That is, however, theoretically largely independent from the original explanation. In Andrew Moravcsik’s case, ‘geopolitical ideas’ serve normally as the main competitor (Moravcsik 1998: 27–35). This kind of modification may facilitate consistency with the real world, but at the expense of theoretical clarity and falsifiability. It ultimately affects the programme’s ‘hard core’ and is thus problematic. In short, LI is faced with remarkable difficulties when applied to issues other than economic ones. In sum, LI remains an important point of reference because it represents a powerful tool for the explanation of external issues that function according to an economic logic, such as the armaments market (DeVore and Weiss

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2010). However, it is faced with unbridgeable difficulties when it applied to political or security issues. Put differently, in the absence of a pluralistically organised market of domestic interest groups, LI fails to offer a coherent explanation and can only be saved by conceptual stretching and ad hoc modifications in the programme’s ‘protection belt’. This is dealt with in more detail in Chapter 11, when LI’s ‘external consistency’ will be under investigation.

Constructivism: socialisation and culture While the two previous approaches rely on a rationalist logic, Constructivism can at least partly be understood as an answer to the problems and anomalies left unresolved by these approaches (e.g. Kratochwil and Ruggie 1986).7 This does not refer to a merely regulative impact on behaviour: instead, constitutive effects on identities are now at stake (Ruggie 1998: 22–5; Wendt 1999: 171–8). Constructivists situate international institutions in their social context. They emphasise the mutually constitutive relationship between institutions and the identities of political actors (Simmons and Martin 2002: 197–8). Accordingly, they oppose a pure instrumentalist perspective. They can be differentiated from the rest of the literature insofar as they question the linear impact of objective structures on subjective preferences. Instead, the environmental structure is not seen solely as posing constraints or opportunities for states, but Constructivism emphasises the degree to which social environments and actors penetrate one another (e.g. Wendt 1987; Carlsnaes 1992). In short, Constructivist approaches derive preferences in security issues from socialising effects that the political actors learn through their interactions. Top- down approaches mainly focus on intersubjectively shared role conceptions and cultures, which are reproduced or changed by interactions. These cultures either affect the preference formation of states directly or have constitutive effects on the states’ identities and subsequently, on their preferences (Meyer et al. 1997; Adler and Barnett 1998; Wendt 1999; Smith 2004). In contrast, the much more widespread empirical research taking a bottom-up perspective focuses either on strategic or organisational cultures (e.g. Johnston 1995; Legro 1996; Katzenstein 1996). These constitute the cultural-institutional context, creating norms and thereby influencing the states’ preferences in security matters. Constructivist theorising is particularly prevalent among European scholars. Since very recently, they also play a prominent role in the debate on European security. While the top- down view is primarily reflected in the literature on ‘Europeanisation’(Tonra 2001: 1–41; Meyer 2006: 112–37),8 strategic culture approaches normally argue from the bottom-up (e.g. Miskimmon 2004; Breuer 2006). At a general level, Constructivists would predict the following interrelationships for this study. (1) The emphasis is on deeper effects of norms and

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culture, not only on state preferences, but also on identities. (2) Identities and the resulting interests are learned through interactions by responding to how an actor is treated by others. The causal mechanism is socialisation in various forms (e.g. Johnston 2001; Checkel and Zürn 2005). (3) There is a mutually reinforcing interaction process of uploading and downloading between the national and the European levels. In the long term, at least, this should lead to some degree of convergence among the member states’ security preferences (e.g. Meyer 2006). When we apply these analytical concepts to the study’s puzzles, we can formulate the following two specific predictions.9 Firstly, a member state’s security culture and identity form the main explanatory building block. Beliefs on security issues that are widely held within a state are expected to ‘drive’ the government’s preference formation for institution-building. Secondly, the relatively high degree of variation to be expected from distinct cultures seems to suggest an analysis of similarities and differences. Nevertheless, the main challenge is to trace back the causal significance to the socialising effects of norms and culture in this respect (Hooghe 2005). Therefore, I largely expect continuity over the relatively brief period of analysis. Belief systems are supposed to be resilient. Hence, an analysis with a short time span is certainly biased in this regard, whereas it seems, nonetheless, legitimate to expect at least some indications of change.10 This brief overview of Constructivist propositions again serves as a foundation for confronting it with the Lakatosian criteria. To a large extent, Constructivist thought on this research question is internally consistent. This is based on the simple fact that a broad congruence between what a state ‘believes’ and what it accordingly wants does not represent a particularly provocative statement. Nevertheless, two problems frequently emerge. First of all, the relatively general nature of a state’s security culture may generate indeterminate expectations with respect to issues of institution-building. Similarly, widely held beliefs will be unclear as what to expect, if one half believes A and the other B. This can produce contradictory results and requires a very precise definition of thresholds. For these reasons, some propositions have been made in the literature for reducing indeterminacy. For instance, three causal mechanisms of how the political-military culture affects security preferences may be expected to be at work: (1) the supply of fundamental goals of political actors (e.g. the ESDP as part of the broader European project?); (2) the impact on the actor’s assessment of the international situation (e.g. necessity for the EU to control its own backyard?); and (3) conditioning of the political actors’ ability to mobilise national resources for military policies (e.g. ‘Europafähigkeit’ in Germany?) (Berger 1998: 16). Such a procedure may make Constructivist expectations slightly more determinate, but can hardly remedy the approach’s ultimate problem in the context of this study.

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That is, secondly, the question of where exactly change originates and how we can explain it. This is even more problematic when we observe non-incremental shifts. After all, political actors are believed to behave on the basis of their identities and interests; they interact with others and so become socialised; this ultimately contributes to their identities and interests; and so on. However, how is it possible to integrate drivers of change into such a circular framework? In this context, the Constructivist reply often refers to so- called norm entrepreneurs (Finnemore and Sikkink 1998). However, it is not clear either where they suddenly appear from or under exactly what conditions they are successful in promoting change. “Activists beyond borders” are relatively often unsuccessful (Keck and Sikkink 1998). Due to the structural nature of the research programme (i.e. norms and culture), the incorporation of norm entrepreneurs into the protection belt appears not to be fully compatible with its ‘hard core’. In sum, (moderate) Constructivism does promise important though incomplete insights into the study’s puzzles. It is primarily expected to be suitable for explaining how to deal comprehensively with the nexus of similarities/differences between member states. In contrast, it appears less successful with respect to timing and the general challenge of continuity and change of individual preferences. However, these questions of external consistency are subject of Chapter 11, when alternative explanations of the book’s framework are addressed in more detail.

Theory, practice and the necessity of an innovative approach The previous sections reviewed the suggestions of IR theory from the perspective of internal consistency. I indicated that the research programmes primarily rely upon structural mechanisms that are derived from power, plenty or interactions (Zürn 1997: 299; Weiss 2005) (see figure 2.1). The results, however, were at best mixed. Firstly, anarchy as the sole determinant of security preferences was not particularly persuasive.11 Secondly, LI’s approach in the absence of a clearly identifiable market of domestic interest groups was problematic to the extent that it shifted the explanatory burden to factors outside the programme’s initial hard core. Finally, socialisation – as an isolated mechanism – does not provide a comprehensive explanation of security preferences. In particular, the idea that EU member states were faced by sudden changes in their domestic cultures does not seems to be a persuasive argument when dealing with the question of change. This critical review of internal consistency, however, does not suggest that preferences should be examined solely on a case-by- case basis, as in the work of historians (Frieden 1999: 57–61). Instead, I draw two different conclusions. First of all, the three research programmes are consulted again as alternative explanations of the book’s own approach to check, in addition, their external consistency. Since these

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ANARCHYPower

Security Preferences MARKETInterest groups

Figure 2.1 theory

INTERACTIONS -Socialisation

Sources and mechanisms of security preferences in International Relations

results may differ, I will ultimately arrive at a qualified assessment of these approaches with respect to their explanatory power. Secondly, the objective of the next chapter is to construct “sometimes true theories” (Scharpf 1997: 22) or “mid-range ideal-typical explanations” (George and Bennett 2005: 233–62; see also Zürn 1997). I will turn to analytical concepts from the “new institutionalisms” (e.g. Powell and DiMaggio 1991; Hall and Taylor 1996), because this scholarship, particularly in its historical form, is capable of reconciling seemingly unbridgeable differences when examining the emergence of institutions. It is shown how actors select new institutions for instrumental purposes, much as rational choice analysis would predict, but draw them from a menu of alternatives that is made historically available through the mechanisms specified by sociological institutionalism. (Hall and Taylor 1996: 957) Accordingly, I begin with general propositions about preferences, security cooperation and institution-building and then gradually move towards more specific processes and mechanisms of the emergence of the ESDP. In short, I develop a transaction costs framework of preference formation in security based on historical-institutionalist thought (Hall and Taylor 1996: 937–42; Keohane 1984; Williamson 1985; North 1990b; Lake 1999). In a sense, the focus on preferences and transaction costs corroborates primarily rational- choice institutionalism (e.g. Riker 1990; Scharpf 1997). The way the study is then conducted as well as the attention paid to path dependence, sunk costs etc. basically make the investigations historical-institutionalist (e.g. North 1990a; Pierson 2004).12 The point of departure is the “contention that conflict among rival groups for scarce resources lies at the heart of politics” (Hall and Taylor 1996: 937; see also Gourevitch 1999). Hence the cooperation problem in European security primarily encompasses a series of collective action dilemmas (e.g. Hall

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and Taylor 1996: 945; Lepgold 1998). I will build on rational-choice ideas derived from the assertion that the member states’ preferences are primarily determined by cost-benefit calculations (Keohane 1984; Williamson 1985; Riker 1990; Lake 1999). However, it is crucial to note that not all solutions to these collective action problems are solely functional (Pierson 2004: 108–9). The causal path of ‘form follows function’ is important, but is not the only one available. For that reason, some systematic modifications are built into the framework. Crucially, the envisaged costs and benefits of institutionbuilding draw on cognitivist or interpretative concepts (e.g. Carlsnaes 2002: 341–4; Rathbun 2007: 541–9). Finally, this line of argument is reflected by the study’s research design because it examines processes of preference formation and institutional development, rather than focusing exclusively institutional choice (Jervis 1997: 155–61; Pierson 2004: 130–53).

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3 Transaction Costs and Security Institutions

The framework of this book builds on historical-institutionalist thought, which regards institutions as based on their capacity to reduce the costs of cooperation. It takes virtually the reverse of this idea as a point of departure and conceptualises the impact of transaction costs on preferences for building the institutions in the first place. I demonstrate how governments prefer precisely those institutional arrangements that adapt best to the different transactions in which they are engaged in European security architecture. In other words, preferences are ‘driven’ by governments’ attempt to adjust institutions to transactions, which differ principally in their attributes (that is, uncertainty and asset specificity). I then develop a mid-range theoretical explanation, which builds on, but modifies, liberal–institutionalist thought. While the study of security preferences can be seen as an input to liberal theorising, the chosen perspective through the lenses of transaction costs contributes directly to the institutionalist research programme (e.g. Moravcsik 1997: 537).1 This chapter sets out a transaction costs framework to explain the twofold challenge of (1) why the EU member states did (not) prefer to build institutions in European security; and (2) how they did (not) prefer to design possible institutional arrangements. It proceeds in two steps. The main analytical building blocks are first introduced at a theoretical level, and they are then applied to preference formation for institution-building in European security after the end of the Cold War.

Transaction costs and preference formation in European security: an analytical framework Before turning to the theoretical details of the ‘explanans’, some conceptual remarks on the ‘explanandum’ are required. Preferences are the way an actor “orders the possible outcomes of an interaction” (Frieden 1999: 42). ‘An interaction’ is primarily the deliberations and negotiations between governments about the institutionalisation of security and defence issues at 29

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the EU level. More specifically, it encompasses two analytical dimensions (Lindberg and Scheingold 1970: 65–98). Firstly, preferences for substantive scope refer to those problems the member states want to be subsumed within the EU. This encompasses the whole nexus of military planning and the Union’s potential responsibilities for these tasks (Rynning 2003: 54). Secondly, preferences for institutional depth mainly reflect the member states’ willingness to increase coordination efforts and to partly bind themselves within the institution (Weber 1997: 324; 2000). As indicated above, these two dimensions are combined to create different types of preferences for institution-building in European security (see table 3.1). This typology facilitates a differentiated perspective on whether the EU members wanted to internationalise parts of their monopoly of force. To what extent did they want to embed the governance of European security within an intergovernmental or even supranational framework? A government that wants the EU to perform collective defence responsibilities as well as high-intensity crisis management would be situated at the maximal level of military planning. In such an instance, the member states would guarantee mutual assistance in case of armed attack and would develop highintensity combat instruments to intervene militarily in crises throughout the world. Similarly, a state willing to give up its veto position on substantial issues and allow the European institutions to accomplish powerful tasks would have a strong willingness to be highly binding. When these two preferences come together, the government would fall into quadrant I). In theory, at least, such a preference would be tantamount to the preference for a full-scale and relatively centralised European Army. In contrast to this type

Table 3.1 The ‘explanandum’: preferences for institution-building in European security Preferences for Institutional Depth Highly binding Preferences for Substantive Scope

Non-binding

Maximal military planning at the EU level

I) EU as a full-scale and dominant security and defence institution based on strongly binding rules

II) EU as a full-scale and dominant security and defence institution based on non–binding coordination mechanisms

Minimal military planning at the EU level

III) EU as a (low-intensity) crisis management institution, but based on strongly binding rules

IV) EU as a (low-intensity) crisis management institution based on nonbinding coordination mechanisms

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of state would be one with a preference for the EU to be exclusively responsible for economic issues. It would even oppose the proposition to grant the EU responsibility for humanitarian relief assistance operations and would be keen to prevent any EU involvement in its national security policy. This type of state would fall into the opposite quadrant (IV). In practice, when it comes to preferences for institution-building in the ESDP, all EU governments can be located somewhere in between these two extremes. Hence most EU member states neither want to supranationalise the monopoly on the use of force nor do they want to maintain all of the resulting rights and obligations at the national level. The ESDP does transform the state, but it is not a one-way street (see also Jachtenfuchs 2005; Genschel and Zangl 2008). As indicated above, this book argues that these types of preferences depend on the relative magnitude of both ex ante and ex post transaction costs. The bottom-line assumption is that when transaction costs are high, governments will have a stronger preference towards institution-building, and would tend, so to speak, towards quadrant I). The following sections introduce the study’s ‘explanans’, transaction costs. An analytical framework is developed for explaining the different types of preferences set out above. This framework departs from some general propositions about institution-building and security provision in international politics and then specifies the transaction costs that governments are faced with when they engage in security cooperation (that is, the risks of opportunism and governance costs). Ultimately, it arrives at the specification of combining uncertainty with asset specificity as the key triggers of preference formation for institution-building in European security. The prerequisites of a transaction costs framework The framework builds on four main assumptions of which two define human behaviour and two the environmental conditions. Firstly, the starting point for transaction costs theorists is always the concept of bounded rationality, which was most prominently promoted by Herbert Simon (Williamson 1985: 30; North 1990b: 17–26; 1990c: 182–3): This refers to behaviour that is intendedly rational but only limitedly so; it is a condition of limited cognitive competence to receive, store, retrieve, and process information. All complex contracts are unavoidably incomplete because of bounds of rationality. (Williamson 1996: 377) When applied to this study, this suggests that states as well as their governments are subject to bounded rationality. Without this assumption, institutional arrangements between the EU members would simply be a problem of planning (Williamson 1985: 31). Instead, this book regards these exchanges as incomplete contracts or as a governance problem (Gourevitch 1999: 143). Secondly, the opportunistic nature of human behaviour implies

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that these contractual relations are always faced with the problem of credible commitments (e.g. Scharpf 1997: 117–24; Moravcsik 1998: 73–7; Lake 1999: 52–8). In contrast to situations of pure coordination, this is particularly critical for the creation of public goods, as those agreements are not self- enforcing. Opportunism is not merely self-interest, but implies rational efforts to “mislead, deceive, obfuscate, and otherwise confuse” (Williamson 1996: 378).2 Thirdly, transaction cost economics abandoned the view that the organisational boundaries of a firm are technologically determined. Instead, the market and the firm are conceptualised as distinct modes of economic organisation or ‘governance structures’ (e.g. Williamson 1985; North 1990b). While the business firm is hierarchical, the market is in a sense anarchical or less institutionalised, in which autonomous parties engage in exchanges. In contrast, a hierarchically organised firm places exchanges under unified control (Williamson 1996: 378). The level of transaction costs determines the particular choice between the two forms: the more negligible the transaction costs, the better suited the market as an allocative mechanism, and vice versa. In politics, however, the vast majority of transactions take place within so- called hybrid forms, such as regimes or networks (Scharpf 1997: 141–5; Williamson 1996: 378). This has predominantly been the institutional setting of European security and defence policy since the mid-1990s. Finally, transaction cost economics builds on the assumption that actors start considering the establishment of hybrid or even hierarchical governance structures when they are faced with some sort of market failure. Exchanges within the anarchical market have led to sub- optimal results from the perspective of the actors’ preferences. However, transaction cost economics assumes that this is not so much rooted in dysfunctional behaviour on the part of the actors, but rather, can be attributed to the institutional setting itself (Keohane 1984: 82–3). Thus, actors aim to make the market work by building institutions that reduce factors such as uncertainty (North 1990b). In this context, however, this book emphasises one critical difference from conventional regime theory that has pervasively built upon this condition (Keohane 1984; Haftendorn et al. 1998). While a market failure implies, to a certain extent, that all EU member states were confronted with the same conditions, I merely treat this environmental condition as a basis for developing the transaction costs framework. Market failure reflects the existence of extraordinarily high transaction costs. The fundamental difference is that I regard market failures not as absolute (Williamson 1985: 8). Therefore, the market as an objective force does not automatically select the best-suited institution to accommodate its dysfunction (Zürn 1997: 298–9; Jachtenfuchs 2002: 214–9). Instead, the market’s impact on the EU member states – or its entailed transaction costs – varies. Therefore, the study’s focus on transaction costs rather than on market failures facilitates an examination of the differences between the EU members

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Bounded rationality

33

Opportunism

Basic assumptions of a ‘transaction costs framework’ Market failure affects ultimate outcomes – but transaction costs affect preferences

Hybrid governance structures between the market and the firm

Figure 3.1 Four basic assumptions of a transaction costs framework

as they are confronted with varying magnitudes of these costs.3 In other words, a market failure as a structural pre- condition may drive the overall project of the ESDP, but the key trigger of the member states’ preferences is the individual level of relative transaction costs they are faced with. Figure 3.1 encapsulates these four basic assumptions. I therefore need to clarify the expected costs and benefits of institutionbuilding for the member states. While this book understands security as a sort of public good (e.g. Brück 2005: 376–7), it ultimately remains an empirical question whether something is a private, club or collective good (Hirschman 1970: 101–2; Keohane 1984: 180; Lepgold 1998: 97). For example, Katja Weber conceptualises collective defence as an ‘impure public good’ (Weber 2000: 16). Similarly, David Lake defines security as an “inelastic, primary good” (Lake 1999: 24). In contrast, Kenneth Waltz understands security as something similar to a commodity or private good: something that a state can possess. For him, the stability of the system is consequently the public good (Waltz 1979: 161–3). First of all, I define security “as a low probability of damage to acquired values” (Baldwin 1997: 13). More specifically, this book follows David Lake’s proposition, which emphasises the two faces of security. The first is essentially about physical survival. “The lower the risk from intentional violence, the more secure – or the less threatened – is the individual or the polity” (Lake 1999: 21). Secondly, security also relates closely to wealth, costs and core values: “a polity is more secure – or again, less threatened – to the extent that its wealth cannot be coerced or otherwise extorted from it by some outside party” (Lake 1999: 21). From this I infer two major motivations behind institution-building in security: greater protection from threats and risks,

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on the one hand; and reduced costs, on the other (see also Weber 2000: 17).4 These two potential benefits represent the main objectives for institutionalising security policy. It follows from this that security is predominantly provided by exchanges with partners. Because pure survival is of diminishing relevance in the contemporary security environment, many governments in Europe increasingly focus on how to produce security as a cooperative undertaking (e.g. Jervis 2005; Brooks 2005; see also French Government 1994; Government of the UK 1998; German Ministry of Defence 2003): The cost of producing security can be enormous. ( ...) As polities employ technologies that lower the costs of projecting force over distance, enter into a division of labour, or create positive externalities that are ‘internalised’ in a security relationship, the factors of production that are necessary to produce any given level of security decline. It is the desire to capture these joint economies that motivates all cooperation. (Lake 1999: 44)5 These so- called joint production economies determine “the gains from pooling resources and efforts with others and thus shape the incentives of polities to cooperate” (Lake 1999: 35). As an important prerequisite, I do generally assume that the higher the expected benefits from cooperation, the more strongly a state will prefer institution-building in the ESDP (Lake 1999: 51–2; Weber 2000: 16–20). Joint production economies in security policy are triggered by three main beneficial mechanisms. Firstly, institutions in the ESDP allow member states to take advantage of expected economies of scale (e.g. Keohane 1984: 90). These are understood as the interrelationship between investment and output. They aim to achieve increasing returns (Hildebrandt 1999). However, it is crucial to acknowledge that scale “economies promote cooperation, but they do not dictate particular security relationships” (Lake 1999: 47). The clearest example in the context of this study would be the procurement of common weapons, such as strategic transport aircraft. Secondly, functional differentiation or the division of labour facilitates an increase in potential gains (Wallander and Keohane 1999: 24). However, it can also give rise to ‘bilateral dependency’ which makes cooperation more complex. “Accordingly, such investments would never be made except to contribute to prospective reductions in production costs or additions to revenue” (Williamson 1996: 377). For example, multinational forces, such as some ‘EU battlegroups’, pursue a relatively strict division of labour with one state providing the actual combat troops, another logistical support, and the last back-up facilities (e.g. Lindstrom 2007). As will be discussed in more detail below, this division of labour provides revenues to the members, but also engenders frictions or transaction costs.

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The Motivation to Build Security Institutions:

Greater protection from threats and risks…

‘Joint production economies’

… at an acceptable cost

Beneficial mechanisms: - economies of scale - ‘funct. differentiation - positive externalities

Benefits from institutionalised security policy Figure 3.2 Motivational premises of a transaction costs framework

Finally, positive externalities can also contribute to joint production economies. They are established by one or more of the cooperating partners, but create benefits for all EU members (e.g. Lake 1999: 49–51). This component is less directly related to financial gains, but often delivers political benefits. For instance, the Big Three’s efforts with respect to Iranian nuclear activities may contribute to the security of the Union as a whole. The immediate costs, however, are primarily carried by France, Germany and the United Kingdom. In sum, these joint production economies serve as the point of departure of a transaction costs framework as the pooling of resources in European security shapes the incentives essential for the EU governments to even consider cooperation in this domain. Their underlying objective is to reduce the production costs of security. In other words, these mechanisms point to efficiency gains that the political actors want to achieve through cooperative efforts: greater protection from threats and risks at an acceptable cost. Figure 3.2 summarises these interrelationships. In short, the governments want to build institutions to structure their future interactions (North 1990b: 6). Ultimately, the efficiency gains or reduction of production costs require transacting with other states. This entails costs as well, which are expanded upon in the following section. A transaction costs framework of security cooperation So far, I have explicitly stated this study’s basic assumptions, conceptualised security as a kind of public good, and presented the benefits that the political actors aim to achieve through institution-building. This section introduces the genuine framework of how to study (non-)cooperative exchanges between the actors in their search for protection from threats and risks at acceptable costs. It draws on theories of political economy (e.g. Williamson 1985; North 1990b; Lake 1999; Wallander 2000; Weber 2000).

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As indicated above, governments are engaged in contracting with each other (Williamson 1985: 30–2; North 1990c: 189–91). However, the cooperative exchange agreements between the EU members remain necessarily incomplete, and as a result, problems of credible commitments emerge. Hence, the contracting parties establish certain safeguards that define appropriate behaviour and suggest positive and negative sanctions (Milgrom and Roberts 1990: 61–2). However, both the substantive scope and institutional depth of cooperative arrangements vary greatly. Therefore, the main challenge for this analysis is to trace back the impact of transaction costs on a member state’s choice for (non-)cooperation on a substantive issue based on a certain institutional form. It is shown below that the magnitude of transaction costs is largely dependent on the attributes of the transactions at stake: asset specificity on the one hand, and uncertainty on the other (e.g. Williamson 1985: 18–23; Weber 2000: 16–27).6 Transaction costs are the “comparative costs of planning, adapting, and monitoring task completion under alternative governance structures” (Williamson 1985: 2).7 More specifically, the analytical framework of security cooperation distinguishes between two kinds of transaction costs. Firstly, the risks of opportunism reflect the problem of credible commitments, which increase the costs of cooperation. More specifically, the governments need to anticipate whether the cooperation partners will comply with their obligations that result from the (incomplete) contract. In addition, the completion of tasks also needs to be monitored by the exchange partners. The individual magnitude of the risk of opportunism depends on two interrelated dimensions of transactions, namely, uncertainty and asset specificity. While the former refers to incomplete information and interpretation of the partners’ preferences and behaviour (Williamson 1985: 57–9; Rathbun 2007: 541–9), the latter can be defined as a “specialized investment that cannot be redeployed to alternative uses or by alternative users except at a loss of productive value” (Williamson 1996: 377; see also Lake 1999: 8; Weber 2000: 22-5; Pierson 2004: 147–53). In short, how reliable is my partner and how difficult is the jointly produced good to be substituted? As indicated above, there are three kinds of expected costs of opportunistic behaviour that states are faced with in security arrangements: abandonment, entrapment and exploitation (Lake 1999: 53). Secondly, increasingly hierarchial forms of arrangements may reduce most of these risks of opportunism, yet at the same time lead to governance costs (North 1990b: 32–3; Lake 1999: 58–9). A binding commitment to an international institution is not cost-free, but incurs a variety of expenses. In general, it costs money and there is often a political price to pay when a government chooses to build a security institution instead of dealing with the problem unilaterally. The more hierarchical and thus more binding the security institution, the less the member states maintain residual rights of control, and thus the higher the governance costs they face. Crucially,

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the potential loss of autonomy is regarded as interfering with national sovereignty, when institutions are to be built (e.g. Waltz 1979: 126). Again, uncertainty and asset specificity are the dispositive attributes of transactions (Williamson 1985: 47–9, 90-5; Lake 1999: 52–71). To illustrate the tradeoffs between the risks of opportunism and governance costs in security arrangements, I assume that country A cooperates with country B in a United Nations peacekeeping mission. They are consequently faced with the costs of planning, adapting and monitoring the completion of the approved task. After some deliberations between the two about how to proceed in an efficient way, they agree that A will deploy the troops that directly enter the target’s territory and B will provide the logistics from a neighbouring country (in other words, contract). In such a hypothetical situation, it is crucial that both countries can rely on the credibility of the mutual commitments; in particular, country A, which could become ‘entrapped’. For the same reason, the government of A insists on a common operational planning facility. This operational headquarters will not only cost resources to both partners, but also limit the options of both countries. For example, suppose country B is confronted with some shortfalls in strategic air transport and thus wants to use shipping facilities. Country A only learns about this because it has established certain monitoring mechanisms. Accordingly, country A opposes these plans and wants to have the material on short notice without delays. Country B must therefore charter expensive air transport facilities from another country. In other words, entering agreements and thus obligations offers several benefits, but also involves costs – not only financial costs, but also in terms of political autonomy. While the risks of opportunism constantly lurk behind cooperative arrangements, the corollary of building hierarchical institutions involves costs as well, in particular, the loss of control rights. Hence the advice from a transaction costs perspective would be in this situation: “Organize transactions so as to economize on bounded rationality while simultaneously safeguarding them against the hazards of opportunism” (Williamson 1985: 32; see also North 1990c). This way of addressing both the costs and the benefits of social organisation goes beyond simplistic statements of profit maximisation and will be subsequently applied to preferences for security cooperation. The policies of the EU member states’ for providing European security are the transactions under investigation. They are primarily conducted within so- called hybrid governance structures, which represent “long-term contractual relations that preserve autonomy but provide added transaction-specific safeguards, compared with the market” (Williamson 1996: 378). The analytical framework distinguishes between those transactions that focus on the general provision of European security and those that occur exclusively within the EU. While for historical and power-related reasons the United States plays a prominent role in providing European security, transactions

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within the ESDP are conducted exclusively among the EU member states. In transactions related to European security in general, the ex post comparative assessment of existing institutions – first and foremost NATO – is of utmost importance. In contrast, the anticipation of future transaction costs is vital for specifically designing the ESDP and thus for the explanation of preferences relating to institutional depth. Although this book proceeds according to this two-stage analysis, the political actors must address both kinds of transaction costs simultaneously, not sequentially (Williamson 1985: 20–22). Taken as a whole, this analytical framework understands and explains security preferences first and foremost through the lenses of costs and benefits, with a specific focus on transaction costs (Williamson 1985: 90–95; North 1990c: 183; Müller 2002: 370–1). It is important to note that this framework departs from the bulk of the literature, which exclusively examines questions of institutional design (e.g. Abbott and Snidal 2000; Koremnos et al. 2001). These scholars aim to explain the form or depth of institutional arrangements, but completely neglect the scope of these agreements. This is primarily based on the logic of form follows function. The result is largely an explanation of the degree of hierarchy needed to govern questions of security (e.g. Weber 1997; Lake 1999; Koenig-Archibugi 2004). The function or substance of security, however, has so far remained neglected. Thus, the framework’s explicit integration of comparative institutional arrangements provides a conceptual angle from which to tackle the question of substantive scope from a transaction costs perspective. It gives us a theoretical access point to the question of why the EU member states wanted to build the ESDP at all. For that purpose, the chosen perspective has to be much broader. It considers primarily uncertainty and thus the problem of credible commitments. The overall objective, however, is to explain both the desired substantive scope of the agreement and the preferred institutional depth to deal with the issue. Transaction costs for the provision of European security From a comparative institutional perspective, the North Atlantic Treaty Organisation and the European Union represent the main options for most European states to organise the provision of security on a multilateral basis. Broadly speaking, a government may either invest in a particular institution or (threaten to) disengage from its activities. This logic is reflected in Albert Hirschman’s typology of ‘exit’ and ‘voice’ (Hirschman 1970). ‘Exit’ refers to the possibility that “members of an organisation or customers can leave or stop buying a product” (Hirschman 1970: 4). In contrast, we may speak of ‘voice’ if “members of an organisation or customers can express their dissatisfaction” (ibid.).8 The transaction costs framework assumes that governments assess the respective capacity of both institutions in order to reduce

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the risks of opportunism and the governance costs for their joint activities in European security; they either engage more strongly in a particular institution (that is, voice) or they disengage from it (that is, exit). At this stage of the analysis, the primary determinant of transaction costs is uncertainty and opportunism, and thus, the question of credible commitments.9 A state considers not only whether a certain institution should execute a certain function, but also whether another institution could perform that function better: “comparative institutional assessments of the adaptive attributes of alternative governance structures must necessarily be made” (Williamson 1985: 57). When we apply this to the study of European security in the post- Cold War era, we see that it has often been described as a “system of interlocking institutions” (Wörner 1992). Therefore, it is very important to ask, in which institutional arrangement does a government want to deal with certain substantive issues? Preferences for the substantive scope of the ESDP were not formulated in a vacuum. In the words of one of the leading experts on European security: The decisions taken in St Malo, Cologne and Helsinki were all designed to take into account the concerns expressed by the United States and other non-EU Allies. In fact, the United States was the invisible guest at the table of each of these meetings. (Sloan 2000: 19; emphasis added) However, the United States has an impact not only on decisions at the inter-state level, but also in the stages of the individual formation of preferences – albeit to different degrees. Therefore, the question of which functional task the EU should execute is inextricably linked to ex ante and, in particular, ex post assessments of NATO. A member state does not assess the transaction costs of its cooperative exchanges in an absolute way, but instead compares it to the ability of NATO to reduce the costs of the provision of European security: “it is the difference between rather than the absolute magnitude of transaction costs that matters” (Williamson 1985: 22). In particular, the governments consider the risks of opportunism from a comparative perspective. When the risks increase to unacceptable levels within one institutional arrangement, governments are assumed to seek alternative ways to provide for European security. For example, they might assign certain responsibilities to other institutions or create new ones, which are expected to reduce the risks of opportunism to a sustainable level. In Williamson’s terminology, the ‘completion of tasks under alternative governance structures’ is at stake. Although the options of exit and voice should be understood as ideal types, they suggest that the mechanisms of both disengagement and engagement are at work within the European security setting. Hence, a state may participate continuously within NATO, but consider whether some of its tasks may be better performed within the EU.

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In sum, the question of preferences for substantive scope cannot be confined to the EU itself. Instead, I also need to consider the comparative assessment of other security institutions since it is the relative level of transaction costs of cooperative security exchanges that determine a state’s preferences: “the decision whether to exit will often be taken in the light of the prospects for the effective use of voice” (Hirschman 1970: 37). While the study’s analytical framework so far has been exclusively about questions of substantive scope, I next turn to institutional depth as the second dimension of the analysis.

Transaction costs within the ESDP The initial contribution of transaction cost economics emphasised that governance structure was based on a choice between different degrees of hierarchy or institutionalisation (e.g. Keohane 1984; Williamson 1985; cf. Pierson 2004: 103–32). Thus, not only is the literature much more elaborate in this respect, but we also need to narrow down the perspective of this study. It is not so much about the relatively general provision of European security. Instead, the focus is exclusively on the transaction costs of cooperative exchanges that occur – ex ante and ex post – between the members of ESDP. On the one hand, uncertainty determines the magnitude of transaction costs within the ESDP (Williamson 1985: 56–60; North 1990b: 25; Rathbun 2007: 536).10 From a rational–functionalist perspective, preferences for institutions primarily stem from the desire to reduce current and future uncertainties. In other words, the anticipated effects of the institution account for the preferences of a government when designing it (Keohane 1984: 88; North 1990b: 3). As uncertainty is constantly involved in all human interactions, the study examines both behavioural and non-strategic uncertainty (Williamson 1985: 57–9; Rathbun 2007: 541–9). Broadly speaking, the higher the uncertainty about the cooperating partners, the more costly the measurement and enforcement involved. On the other hand, asset specificity designates the level of transaction costs within the ESDP. It refers to the question of to what extent the cooperation partners’ investments can be redeployed to other purposes.11 It was shown above that specific assets promise significant gains by the beneficial mechanisms of economies of scale, functional differentiation and positive externalities. In contrast, general assets “are useful in a variety of transactions. They have the advantage of flexibility and potential efficiency across a broad range of activities, but without specialization they are unlikely to be as effective for a particular transaction” (Wallander 2000: 707). The crucial criterion of whether to assess an asset as specific or general is the question of redeployability (Williamson 1985: 54). The more specific it is, the more difficult and costly it becomes to redeploy it to other uses or users.

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The combination of both dimensions of transactions, namely asset specificity and uncertainty, ultimately determines the nature of the transactions at stake and consequently corresponds to the risks of opportunism and governance costs. Thus there is substantial space for interaction effects between uncertainty and asset specificity, which makes it difficult, but not impossible, to determine them at an empirical level (Williamson 1985: 59–60). While investments into specific assets offer great opportunities to increase the benefits from cooperation, they simultaneously contain important dangers under the condition of uncertainty. Therefore, [n]onspecialization is a form of insurance when the costs and uncertainties of transacting are high. The greater the specialization and the number and variability of valuable attributes, the more weight must be put on reliable institutions that allow individuals [or composite actors, such as governments] to engage in complex contracting with a minimum of uncertainty about whether the terms of the contract can be realized. (North 1990b: 34) Hence, the anticipated limitation of future transaction costs may lead to preferences for general, rather than specific, assets. In turn, if specialisation is promoted, this will require strong and therefore binding institutions. In other words, the high risks of opportunism can be avoided by two strategies which determine a government’s preferences for institutional depth: either to establish binding mechanisms, which prevent (anticipated) cheating, or to build general, non-specific assets, which decreases the potential losses if cheating does occur. In contrast, high governance costs can merely be mitigated by less binding or non-binding future institutions. Ultimately, it is the interaction between these two kinds of costs which determines the size of the transaction costs a state faces within the ESDP. The willingness to keep these costs to a minimum while profiting from efficiency gains of security cooperation triggers the governments’ preferences for how to design the ESDP as a security institution (Milgrom and Roberts 1990: 72–86; Lake 1999: 52–65).

The causal pathways The explanatory logic of the framework refers to one predominant causal pathway. Rational–functionalism primarily accounts for causes in terms of their effects. For instance, profit explains an investment. –However, in a strictly temporal sense, an investment causes profit. This kind of functional explanation reverses the causal path: ‘effect explains cause’ (Keohane 1984: 80). When we apply rational–functionalist reasoning to this study’s research subject, the member states first prefer to reduce uncertainty. Secondly, they want assurance for their investments in European security.

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The study argues that EU member states faced with high transaction costs will prefer relatively far-reaching institution-building in European security. Accordingly, the individual level of transaction costs determines the government’s preferences for or against institution-building and, more specifically, the desired institutional design. Thus the analytical framework proposes the following causal pathway: The more costly a state assesses the transactions with respect to the provision of European security, the more it will prefer to build institutions in this domain. Firstly, based on the study’s premise that the choice of a specific security institution is dependent on the state’s comparitive assessment of the relative magnitude of transaction costs, the following hypothesis can be formulated: H-I): The more a state regards the EU as a relatively effective institution for the provision of European security, the larger the substantive scope it will prefer for it in military planning (given the state’s membership in both NATO and the EU). Secondly, preferences for the specific design of a security institution are driven by a combination of uncertainty and the asset specificity of the transactions at stake. This interrelationship is best expressed by the tradeoff between the risks of opportunistic behaviour and governance costs: H-II) For a state, the higher the combination of uncertainty and involved asset specificity within the ESDP, the more depth and thus bindingness it will prefer with respect to the institutional arrangement. The underlying logic for the analysis of both dimensions is similar. Since information about both the environment and the partners’ future actions is costly, institution-building should facilitate the exchange of information about the substantive issue and other forms of coordination. However, the governments want to have some sort of assurance for the investment in a specific asset: Whenever assets are specific in a nontrivial degree, increasing the degree of uncertainty makes it more imperative that the parties devise a machinery to ‘work things out’ – since contractual gaps will be larger and the occasions for sequential adaptations will increase in number and importance as the degree of uncertainty increases. (Williamson 1985: 60) In other words, if great uncertainty and high asset specificity come together, their interaction would dramatically increase the magnitude of transaction costs and thus the stronger preferences will be with respect

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to both substantive scope and institutional depth (e.g. Williamson 1985: 59–60; Weber 1997: 331; Jervis 1997: 34–9). In contrast, uncertainty plays a lesser role as long as the assets are general. One major caveat, however, is required. This is the problematique of the ‘functionalist fallacy’ (e.g. Mayntz 2004). This study directly tackles the charge of ex post rationalising the member states’ desired outcomes by reference to an alleged profit (e.g. Pierson 2004: 108–29). In retrospect, institutional arrangements often appear as functional answers to a societal difficulty that may be based on a collective action problem. According to Renate Mayntz, this is particularly widespread within liberal–institutional theories of International Relations (Mayntz 2004: 8). I therefore employ two strategies to explicitly confront this challenge. Crucially, I invest serious efforts in operationalising transaction costs ex ante (Williamson 1985: 4). This will steer the empirical analysis. It will be demonstrated that transaction costs do not represent the ‘hammer that makes the world look like nails’. However, they do constitute the primary determinant of preferences for institution-building in European security. Secondly, I contrast the transaction costs approach with competing explanations in order to strengthen this study’s line of reasoning (George and Bennett 2005: 117–9). Ultimately, theoretical explanations can hardly be tested against the real world, but merely against alternative theoretical explanations (Davis 2005: 99).12

Transaction costs and preference formation in European security: the empirical link The previous section showed that first and foremost a transaction costs approach represents a promising framework to explore and explain preferences for institution-building in European security. However, neither preferences nor transaction costs have been sufficiently specified or operationalised with more precise empirical measurements. This is the objective of the next section. The analytical building blocks must be conceptualised in order to make them observable and to confront them systematically with the empirical record of the comparative analysis. Preferences for institution-building in the ESDP The conceptualisation of preferences is based on a mixture of inductive investigation and theoretically inferred building blocks from the literature on international security cooperation.13 The methodology builds on Michael Zürn’s proposals for how to ‘assess preferences’: applying theories, using documents, and (partly) asking experts (Zürn 1997: 298–302; see also Frieden 1999: 47–53). As indicated above, I distinguish between substantive scope and institutional depth, a distinction that will structure the whole analysis. It is

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therefore necessary to first explain why certain member states preferred the institutionalisation of security and defence policy in the EU, and others did not. That is undertaken through the analysis of substantive scope. Afterwards, I turn to the question of how the member states wanted to cooperate in the ESDP or not (in other words, institutional depth). In the following, scope and depth are conceptualised according to measurable subdimensions. This differentiation of the dependent variable serves the purpose of providing an empirical link. Firstly, the substantive scope dimension builds on a documentary analysis and thus primarily on induction. I basically analyse two dimensions of military planning: operational and defence planning: Military planning can be broken down into the two categories of defence planning and operational planning. The nexus is composed of a strategic assessment of the types of conflicts that one is likely to be involved in. Operational planning then consists of defining scenarios that vary in intensity, duration, geographical distance and so on. In turn, operational scenarios provide the rationale for defence planning, which essentially consists of preparing forces for the operations. In short, operational planning is about scenarios, defence planning about preparing the hardware. (Rynning 2003: 54) For the empirical analysis, this differentiation suggests that the possible outcomes of whether the EU should be responsible for certain components of the military planning process are as shown in Table 3.2.

Table 3.2 Analytical dimensions of preferences on substantive scope EU Responsible for Military Planning? Operational planning

Defence planning

A1) Collective defence/mutual assistance

A2) Coordinated preparation of forces and military hardware (e.g. integrated command and control, multinational territorial defence troops)

B1) High intensity crisis B2) Coordinated preparation of forces and management military hardware (e.g. Rapid Reaction Force (including robust peace–making) with operational headquarters, air strike capability, satellite reconnaissance) C1) Low intensity crisis management (including classical peacekeeping; humanitarian relief actions/ assistance)

C2) Coordinated preparation of forces and military hardware (e.g. strategic airlift, coordination of command and control issues, civilian specialists, medical service)

D1) No responsibilites for the EU D2) No responsibilites for the EU

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Roughly speaking, one can distinguish between the operational scenarios of collective territorial defence, expeditionary warfare with distinct intensities and the rejection of any substantive responsibilities in military planning. For example, a member state could prefer the EU to become engaged in some modest peacekeeping for the United Nations, but not Chapter VII peace enforcement nor mutual assistance if an EU member is the victim of an armed attack. For this functional task, it could additionally support common defence planning in order to provide the required military hardware (that is, C1 + C2). Secondly, theories on institutional design are generally more elaborate. There exists a sophisticated debate on institutional choice (e.g. Weber 2000; Koremnos et al. 2001; Simmons and Martin 2002). Building on this literature, I empirically analyse the two main dimensions of rules and functional differentiation (e.g. Wallander and Keohane 1999: 24). They broadly correspond to ideas about pooling and delegation, but are less demanding with respect to sovereignty rights and are thus better suited for the analysis of traditional ‘high politics’ issues, such as security and defence (e.g. Moravcsik 1998: 67–8). The focus on rules stems from legal theory (H. L. A. Hart) and refers primarily to the issue of how decisions are made (for example unanimity and voting). In contrast, functional differentiation touches upon the issue of to what extent a governments prefers a division of labour between itself and the genuine European institutions (e.g. Commission, EU Military Staff). The overarching concept behind both analytical categories is the question of ‘bindingness’ (Weber 1997: 324). An EU member state could, for example, insist on unanimity with respect to sending troops, but allow for some modifications, such as constructive abstentions. At the same time, it could prefer to finance ESDP missions from a common budget. In addition, the Commission should participate within the policy-making process to strengthen the coherence with its ‘External Relations’, so it should be granted some agenda-setting and implementation powers. Such an approach could be located between B1 and A2 of the overview in Table 3.3.

Table 3.3 Analytical dimensions of preferences on institutional depth ‘Bindingness’ of ESDP agreements? How demanding are the rules (e.g. decision–making)?

How is labour divided between the EU and the national level?

A1) Highly demanding and binding rules A2) High degree of division of labour B1) Some demanding and binding rules

B2) Some division of labour

C1) No demanding rules

C2) No division of labour

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At this juncture, it is important to point out one difficult aspect of the analysis of institutional depth. In security and defence issues, in particular, there has been a continuous and lively debate on ‘flexible arrangements’. This is hard to assess from the perspective of the proposed dimensions. A state does not want to bind itself to, for example, collective decision-making, while at the same time, increasing the division of labour with some EU members and wanting more demanding rules. Accordingly, a preference for flexible arrangements has not always, but has most of the time been treated as an instance of ‘more bindingness’, because such proposals have normally been promoted with the purpose of preventing unwilling governments hindering the integrational aims of other states. In a further step, this two-dimensional conceptualisation of preferences for institution-building in European security must be operationalised: what are the appropriate indicators and what are the more precise questions guiding the documentary analysis? The issue of military planning can be tackled in a straightforward manner, by analysing strategic documents such as position papers, security strategies, defence reviews and speeches, and searching for direct statements on the question of which functional tasks the EU is desired to accomplish in the near future (Moravcsik 1998: 10–13; Jachtenfuchs 2002: 220–4).14 In case of possible contradictions, additional evidence is incorporated, such as material from media sources and interviews with experts or senior officials. A position is only counted as a preference when we can detect it in more than a single statement (see also Moravcsik 1997: 544). Whereas the documentary sources and assessment procedures are identical to those used for substantive scope, the analysis of preferences for institutional depth is more complex. The more specific questions are: a)

How demanding does a member state want the EU to be when dealing with a substantive issue? What should member states be obliged to do, or not to do? b) How can these rules be changed? What veto positions does the member state want to maintain? The issue of functional differentiation is mainly about role allocation. The more strongly a member state favours an explicit division of labour, the more willing it is to coordinate efforts and even bind itself. Applied to the study’s research question, I ask: How much functional differentiation does a member state want a) among the member states; and b) between the member states and the EU institutions? Finally, the empirical analysis will adjust the measurement criteria to the agenda of the ESDP that differs in time (that is, the possible outcomes of the

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interaction). The governments which have supported the most far-reaching ambitions are regarded as those with a preference for wide substantive scope and institutional depth. In contrast, the governments which have opposed all reforms or even the negotiation of reforms are at the opposite, low end of the spectrum. The political contest and thus the governance problem is negotiated between these two extremes (Gourevitch 1999: 137). Specifying the transaction costs framework for the ESDP According to rational–functionalist thought, it is first of all necessary that the ‘demand’ be examined, as it represents the sine qua non for considering institution-building from a government’s perspective. Hence, the focus is on the government’s perception of the security environment: (1) What kind of security problems predominate: threats or risks? (2) Have they decreased or increased? The distinction between threats and risks is important here, because it may give rise to distinct policies and thus to different politicalmilitary assets (see also Lepgold 1998): Coping with deliberate threats requires political-military strategies of defense and deterrence – in short, counterthreats. Coping with instability and mistrust requires political strategies of assurance, mediation, and conflict prevention (that is, integration and engagement) and military strategies for cooperative intervention (such as humanitarian assistance or peacekeeping) using a variety of smaller scale and more diverse military contingencies than the kind of national defense used for dealing with invasion or coercion. (Wallander 2000: 710) This demand, however, is indeterminate to the extent that it does not provide evidence for a more specific institutional arrangement, which should deal with threats and risks: where should it be located and who should participate? The answer is given by the book’s transaction costs framework, but one major caveat should be kept in mind: Empirical research on transaction cost matters almost never attempts to measure such costs directly. Instead, the question is whether organizational relations (contracting practices; governance structures) line up with the attributes of transaction costs predicted by transaction cost reasoning or not. (Williamson 1985: 22) Therefore, the empirical analysis focuses primarily on the attributes of transaction costs rather than measuring them directly. The result is an assessment of their magnitude rather than a numerical value. At the most general level, the ESDP is concerned with the EU’s creation of a political-military instrument to deal multilaterally with emerging security problems. More specifically, we can distinguish between two types of assets

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that such an instrument might possess. Firstly, there is the creation of institutional structures within the Council of the European Union for developing a common political approach to address the world’s security problems (e.g. Political and Security Committee, the European Union Military Staff, DG 9 in the Council Secretariat). Secondly, there is the military domain (e.g. the European Rapid Reaction Force, battlegroups). In particular, the focus is on the establishment of military troops, earmarked by national governments, to conduct EU crisis management, from humanitarian to highintensity combat operations (in other words, the Petersberg Tasks). Closely related to this is the aspect of military hardware or capability generation. Here, we can observe defence cooperation among the EU members in certain weapons procurement projects. This is particularly the case with respect to strategic transport as well as some command and control issues. In order to increase the efficiency of these efforts, the EU established a European Defence Agency (EDA) during the Convention deliberations. As indicated above, the gains which states seek from cooperation are comprised of economies of scale, functional differentiation and positive externalities (Lake 1999: 44–52). Having clarified the demand for security institutions, the assessment – rather than measurement – of transaction costs and the ESDP as a public good in terms of two sets of assets, the empirical link to the specific choice of an institutional context is, firstly, provided by the general provision of European security. The focus is on the risks of opportunism, so the primary determinant in this context is uncertainty; that is, the question of how other states will act in the near future with respect to the perceived security problems (e.g. Morrow 1999: 82–3; Rathbun 2007: 541–9). This is the realm of behavioural uncertainty. Based on the fear of opportunistic behaviour, there is, again, a lack of information, whether about partners’ compliance or about their defection (Williamson 1985: 58–9). According to James Morrow, uncertainty about the motivations of cooperation partners raises some distinct problems in politics. This study only needs to integrate one of them into the empirical analysis: “can the parties commit themselves in ways that are credible to others who do not know their precise motivations” (Morrow 1999: 79)? This is answered in terms of the ‘signalling processes’ between the main actors (e.g. Kydd 1997; see also Morrow 1999: 112–3). Thus, I analyse the interactions between the proponents of European security, building on Andrew Kydd’s signalling model, and search the available documents for the answers to two specific questions: (1) What are the main players’ general security interests, both now and as they are expected to be in the future? (2) What are the main players’ specific positions on the EU’s security policies? This enables an answer to the question of to what extent the government may expect compliance or defection from its partners. It sheds light on the assessment of the risks of opportunism that a government is faced with.

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Coupled with the usual diplomatic practices, the policy-making process of modern democracies is sufficiently transparent to allow the gathering of reliable information about another state’s motivation (Kydd 1997: 130–8). To hypothetically illustrate this empirical dimension, I assume that a member state perceives an increasingly risky security environment and thus wants to cooperate with its partners. The signalling process, however, is characterised by numerous tensions. The government of one of the main partners is constantly weakened by a strong opposition electoral campaign against investment in power projection forces; and another government wants increasingly to focus on domestic problems rather than European security, for resource reasons. Under these circumstances, uncertainty and thus the risks of opportunism, would be high for the government, since there would be severe doubts about credibility of the partners’ commitments. Taken as a whole, the documentary analysis of transaction costs for the provision of European security focuses on a government’s assessment with respect to two interrelated issues: (1) To what extent do other institutions provide for the public good of European security (in other words, mainly NATO)? What is the government’s assessment of the respective risks of opportunism? (2) Does the government pursue a strategy of voice or rather of exit within the respective institutional context? Secondly, the focus of transaction costs within the ESDP is on the interaction between uncertainty and asset specificity. The combination of these two dimensions then determines the risks of opportunism that face a government and thus its individual level of transaction costs within the ESDP. Uncertainty is examined by the same procedure described above, whereas only EU members (and not the US) are considered. The second important dimension is asset specificity, which is investigated along two dimensions: (1) the costs of investments; and (2) the redeployability of those investments. The difficult question, then, arises of how to measure the degree of asset specificity and the resulting costs. In the context of this study, assets refer to the political-military structures of the EU’s defence pillar, namely political institutions and a catalogue of different power projection forces. a)

What are the financial and political costs associated with each of these assets? Here, we point to the financial costs and, in particular, to political costs, such as domestic opposition or support for the potential loss of autonomy. b) To what extent can the assets be redeployed to other international organisations or national capacities? Here, the focus is primarily on NATO, since it is the most likely candidate for redeploying the assets. This procedure enables us to determine for each

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member state under investigation its level of asset specificity (low, medium or high). To illustrate this with extreme examples, we could assume that a member state’s power projection forces were in a relatively modern shape and that there was widespread domestic unease about the potential integration of the national forces into multilateral structures. At the same time, the EU’s military assets would be organised according to the rule that there should always be some power projection forces available, which could, however, be organised at a strictly national level (such as one of the UK’s national battlegroups). In this instance, asset specificity for the member state would be low; the costs would not be excessive and it would not be difficult to redeploy their own forces for other purposes. At the other extreme, let us assume that the participation of a member state within the EU’s military structures would be costly for both financial and political reasons. Depending on the institutional arrangement, it could provide logistic support for combat groups that are specialised in small-scale maritime warfare. This situation would suggest a substantial level of asset specificity, not only because it is costly to the government, but also because it is unlikely that it could easily redeploy highly specialised logistic support for other purposes. In sum, this study argues that a member state’s preference formation is primarily driven by the transaction costs of its cooperative efforts to provide security. If it assesses the EU as relatively capable to reduce these costs, it will prefer to grant it some responsibilities for military planning. If this government is, then, confronted with a combination of high uncertainty and asset specificity within the ESDP, it will insist on credible commitments by the EU partners. In other words, it wants a binding institutional arrangement. In contrast, when asset specificity and uncertainty remain modest, increasing the bindingness is not necessary. Thus, this study’s framework suggests not only why the EU members have set up the ESDP process, but also why they were so hesitant to invest in genuinely specific assets. In short, it offers a differentiated approach to a complex institutional arrangement.

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Part II Unravelling the European Security and Defence Policy (ESDP)

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4 The Demand for a Security Institution: German, British and French Perceptions of the Environment in the 1990s

The main conclusions we can draw from the first part of this book are (1) the theoretical approaches in International Relations offer competing, though not fully persuasive, explanations of preferences for institutionbuilding in security issues; (2) a transaction costs perspective based on historical-institutionalist thought has so far been neglected, but appears to be a promising point of departure; and (3) finally, the greatest challenge for a theoretical approach is to explain the nexus of ‘similarities/differences’ as well as ‘continuities/changes’. The empirical analysis therefore compares Germany, Britain and France between the mid-1990s and the Convention on the Future of Europe in 2003–4. This period covers the time before and after the actual establishment of the ESDP in 1999. Finally, competing explanations inferred from the main IR research programmes are consulted, after we have concluded the empirical analysis in terms of the transaction costs framework. The objective is not only to confront the ‘functionalist fallacy’ head- on, but also to “identify which variables are not necessary or sufficient conditions for the selected outcome” (George and Bennett 2005: 23). The first empirical step of a transaction costs framework must consider the demand for institutions (Keohane 1984: 65–109). Building on the study’s prerequisite that the states aim to protect their values at an acceptable cost, this chapter explores the governments’ perception of the security environment: How are classical threats assessed? To what extent did the governments perceive an increase or decrease in security risks, such as instabilities in the neighbourhood. 1

Germany and the gradual rise of risks in the 1990s The most striking feature of German perceptions in this period was the emphasis on the novelty of risks. The frequently repeated dictum was that 53

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the security environment had dramatically changed after the end of the Cold War and that new risks were on the rise. This was as much the case during the mid-1990s as it was at the time of the Convention on the Future of Europe. While we may thus assess the German perceptions as largely stable in emphasising shifts, I have nonetheless identified some incremental changes. The trend was a gradual increase in the perceived security risks, both at a quantitative and a qualitative level. First, the German assessment of the security environment occurred within a transformation process that began in the early 1990s. The situation in the Balkans, in particular, bluntly illustrated to contemporary policymakers that there might be not much left of the expected peace dividend of the post- Cold War era. Classical territorial defence was said to be losing relevance, and was being replaced by risks and thus other forms of uncertainty. This diagnosis had, however, no obvious implications. Military forces remained focused on defending their territory. While the German government also considered terrorism and the proliferation of weapons of mass destruction to be severe risks, the focus was in this regard more strongly on instabilities in their ‘backyard’, such as gross violations of human rights and refugee flows (German Ministry of Defence 1994; Kinkel 1996e; German Government 1996; Rühe 1996c). While the former period was dominated by coming to terms at a conceptual level with the Bosnian wars, the next phase was similarly characterised by the unfolding of the Kosovo crisis and NATO’s air war against the former Yugoslavia. In fact, the analysis suggests a slightly enhanced sensitivity on the part of the German government towards the new security risks because it was more strongly affected by them due to its increased involvement (Scharping 1999a, 1999c). The German foreign policy terminology was extended to place greater emphasis on ‘responsibility’. On this basis, the government not only spoke of the new risks, but also implied that it was about to act upon them. The general reform of the Bundeswehr and the specific establishment of planning facilities in Potsdam has to be seen in this context (e.g. Becher 2000; Breuer 2006). In short, the German government continuously perceived increased security risks, whereas its protracted actions were aimed at attenuating the situation. Finally, this trend reinforced itself during the last phase of this study. The German government concentrated particularly upon the problem of transnational terrorism (Scharping 2002; Schröder 2004). The link between instability abroad and insecurity at home was further strengthened (e.g. German Ministry of Defence 2003). After 9/11, one could even say that the general problem of insecurity was increasingly replaced by a sense of general uncertainty. In sum, this section has shown that, over the course of the time periods investigated, the German government not only perceived more security risks

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(a quantitative increase), but also more severe ones (a qualitative increase). This process was largely incremental in nature. Its causal impact on German preferences for institution-building, however, can hardly be inferred from this development alone. It merely became effective through the interaction with German transaction costs for the provision of European security. Before turning explicitly to this issue, however, it is necessary to examine the United Kingdom’s perceptions.

The United Kingdom’s adaptation to a new environment in the 1990s As in the German case, a striking regularity revealed by the analysis was policy-makers’ emphasis on the novelty of risks. The end of the Cold War did not encourage the Conservative government to initiate a formal defence review. However, the defence costs study ‘Front Line First’ in 1994 came close to a comprehensive reassessment by the government (Government of the UK 1994). As we saw with its partners, the end of the Cold War and the end of the Soviet threat led the British government to cut the defence budget, while maintaining a military capability that would regularly make a difference in crises such as the Gulf War or Bosnia (Portillo 1997). Territorial defence, which had always played a lesser role for Britain, became even less of a priority among policy-makers, while at the same time, instabilities and risks were on the rise. In particular, Bosnia was regarded as such an instance, which simultaneously demonstrated the importance of NATO as the “security organisation of choice” (McInnes 1998: 824–7; Mäder 2004: 48–77). In short, new risks were rising gradually on the rise, though this had not yet had a significant impact on British defence planning. In scontrast to its predecessor, the new Labour administration immediately began with a Strategic Defence Review intended to serve as the basis of British security policy in subsequent years. This document clearly set out the government’s view of the security environment and the risks inherent in it, and is thus quoted at length: The strategic environment we face today is very different to that of the previous fifty years. The risks and challenges we face are not simply those of the Cold War minus the threat from the Warsaw Pact. It is both better and worse than that. On the positive side, the collapse of Communism and the emergence of democratic states throughout Eastern Europe and in Russia means that there is today no direct military threat to the United Kingdom or Western Europe. ( ...) On the negative side, however, there are new risks to our security and our way of life. Instability inside Europe as in Bosnia, and now Kosovo, threatens our

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security. Instability elsewhere – for example in Africa – may not always appear to threaten us directly. But it can do indirectly, and we cannot stand aside when it leads to massive human suffering. (Government of the UK 1998: 8–9, No. 2-7) Accordingly, it is possible to observe a certain change in the British perception of the security environment. For the first time, at least in such an explicit way, the government defined the security problems that the country would be confronted with in the subsequent years. “The military challenges we face are increasingly about crisis prevention, peacemaking and peacekeeping – about humanitarian operations rather than the collective defense of territory” (Blair 1998c). In other words, risks and uncertainties have increased, which requires new solutions to today’s problems. Finally, two White Papers from 2003 illustrated the British government’s perception of risks in the study’s last phase. Together with a chapter added to the Strategic Defence Review, they gave a comprehensive account of the UK after 9/11 (Government of the UK 2003b, 2003c). In short, these strategic documents reinforced the trend that had been observable since 1998. Even the possibility of the re- emergence of a conventional threat was now excluded and fully replaced by the priority of expeditionary tasks. All the risks that had already been emphasised in 1998 were still rising – in particular, the link between terrorism and the proliferation of weapons of mass destruction (see also Sawers 2004).

France and the increasing instabilities of the 1990s The analysis of this dimension indicates a high degree of convergence among the EU members that culminated in the European Security Strategy of 2003. In France, too, the politicians emphasised the rise and novelty of new security risks (e.g. Utley 2001: 138).2 Firstly, the end of the Cold War prompted the government to review its defence efforts, which led to the first White Paper since 1972 (French Government 1994). This ‘livre blanc’ served as the central French assessment of the security environment, while the resulting military programme law was soon reformed due to the fundamental transformation of the French forces in the Chirac years. Although territorial defence was not ruled out per se, its prominence – like that of nuclear deterrence – clearly diminished (French Government 1994: 94).3 Instead, the French perceived an increase in security risks such as regional instabilities, the proliferation of weapons of mass destruction and terrorism (French Government 1994: 7–23, 107–18). While the perception of a changing security environment evolved as a gradual process, the conclusions drawn from it were a drastic departure from previous policy. France’s

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experiences in the Gulf War and in the former Yugoslavia encouraged it to reconsider some of the parameters of its military policy. In particular, the non-integration of French forces limited opportunities and influence in the post- Cold War environment and was thus subject to a dramatic transformation.4 Besides, it was inherently costly. In the beginning, the focus was on rapprochement with NATO (e.g. Balladur 1994; Grant 1996; Chirac 1996a),5 as was indicated by the new government’s first military programme law: The analysis of the risks and threats of the future shows that we must be capable ... of projecting ourselves jointly with our European and Allied partners towards distant and varied theatres, both within and outside Europe. (Projet de loi de programmation militaire: 7, cited from Howorth 1997: 34) The second phase was characterised by a very similar assessment of the environment, influenced particularly by the Kosovo crisis at the end of the millennium. According to the assessment, the traditional threats continued to decrease in significance and were replaced by new security risks. The only difference from the previous phase was the government’s focus, which shifted from NATO to the EU’s ESDP (Chirac 1999a, 2000; Védrine 1999; see also Rynning 2002: 162, 166–7). Finally, the terrorist attacks of 11 September 2001 reinforced the trends already under way with respect to French perception of the security environment (de Villepin 2002; Chirac 2002b). While the political leaders of both France and the UK drew different conclusions from that situation in the study’s last phase, their perception of the environment as such was highly similar (Malici 2005: 100–8): Today, there are numerous new security challenges, beginning with the daily threat of terrorism. (...) At the same time, ‘traditional’ war is still plaguing many areas, although the threats now come in various forms. In the absence of a cold war- era global confrontation, armed conflicts in numerous countries no longer fit a coherent pattern. (Alliot-Marie 2005) Taken together, the French focal points were instabilities and crises where military intervention was required.6 This examination pointed towards a solid perception of increased risks looming in the security environment. Despite some subtle differences, the French perceptions were highly similar to those of Germany and the UK. Taking this into consideration, what conclusions should be drawn from this first part of the comparative analysis?

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A demand for a security institution: German, British and French perceptions in perspective The Big Three’s perception of the security environment is convergent, although the timing differs to some extent. From their perspective, the primary demand is reflected by the perception of increased risks and instabilities in the environment. Referring again to Celeste Wallander (Wallander 2000: 710), there is consequently a need for integration and engagement to intervene on a multilateral basis. In contrast, the demand for institutions to deal with large-scale invasion and coercion has dramatically decreased, as Table 4.1 shows. Up to this point, the analysis suggests that the gradually increasing demand might have triggered the Big Three’s preferences for stronger institution-building. It provides a plausible approach to the explanatory task of change. In a classical functionalist sense, increased problems entail preferences for building institutions that tackle these challenges. In short, form follows function. This brief analysis also indicates that the three large states linked the perception of new problems with the proposal for an international solution. Therefore, a functionalist perspective will serve as the starting point for explaining the willingness of governments to internationalise their security and defence function. Nevertheless, there are two major weaknesses of such a simplistic approach. ‘Form follows function’ might make the existence of the ESDP plausible, but it can explain neither the differences between the three states nor why the EU, rather than NATO, was the desired institution for a European defence pillar. For instance, we have no indication yet why the British government preferred to invest major efforts into setting up the ESD, rather than to building further on NATO’s ‘Berlin Plus’ arrangements.7 In other words,

Table 4.1 The demand for a European security institution: German, British and French perceptions in perspective The Big Three’s perceptions of security problems since the 1990s

A Demand for a Security Concerns about Institution? territorial integrity?

Concerns about instabilities in the security environment?

Germany

Slow, but stable decrease

Some gradual increase

United Kingdom

Strong and permanent decrease

Sudden and sustainable increase

France

Permanent decrease

Sustainable increase

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the demand alone is an important prerequisite, but does not provide a comprehensive explanation of preferences for institution-building in European security. This challenge is subsequently met by combining the general demand for a security institution with the specific transaction costs of the individual states. At the same time, such an analysis contributes to a better understanding of the triggers behind the internationalisation of the use of force and, therefore, provides important insights into the transformation of the state.

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5 Germany – From Defending the Alliance’s Territory to Crisis Management for the Union

This chapter comprises two major steps: I explore German preferences relating to substantive scope and then trace their emergence and explain them by applying the study’s transaction costs framework.

German preferences on substantive scope The guiding question is to what extent the German government preferred the EU to be responsible for different aspects of military planning. The most important result of the investigation is the gradual but clear increase in the scope of the EU desired by German policy-makers. In short, German preferences gradually moved towards the EU as a fullscale security institution. In the mid-1990s, Germany’s preferences with respect to the EU’s substantive scope were quite restrained (e.g. German Ministry of Foreign Affairs 1996; Kinkel and de Charette 1996). Nevertheless, the government strongly favoured the inclusion of security and defence issues in the Amsterdam negotiations. While it was aware of the changing security environment and new requirements for operational planning, it had not changed yet its own military objectives and outlook. The priority was still territorial defence, whereby power projection was subordinated, although its slowly increasing importance was acknowledged (German Government 1996; Kohl 1996c). Accordingly, the government ordered the desired outcomes of the Intergovernmental Conference in so far as the EU should play quite a prominent, but still secondary role in several aspects of military planning. By the time of the Convention deliberations, this position had been altered. European efforts in security matters were to contribute increasingly to global security. The raison d’être of the ESDP was, therefore, not only to function as an indirect ‘force generator’ for NATO, but also to strengthen the EU’s capacity to act on the world stage and to contribute to the progress 60

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of the European project (Fischer 2003c; European Defence Meeting 2003). This was prominently reflected in the ‘Defence Policy Guidelines’ of 2003, which could be read as a re-structuring of Germany’s main interests:1 Defence as it is understood today means more, however, than traditional defensive operations at the national borders against a conventional attack. It includes the prevention of conflicts and crises, the common management of crises, and post- crisis rehabilitation. ( ...) Armaments cooperation within a European and transatlantic framework is to be given precedence over the realization of projects under national responsibility. ( ...) German defence policy is determined to a large extent by three factors: multinational integration of the Bundeswehr ( ...), the changed operational spectrum ( ...), available resources. (German Ministry of Defence 2003: 5, 10, 13) This strategic document again stressed the importance of the transatlantic relationship, but at the same time re-interpreted the meaning of Berlin Plus, whereby NATO’s primacy was questioned: the ESDP was to be based on a ‘strategic partnership with NATO’; it “enables Europeans to act independently where NATO as a whole is not willing or there is no need for NATO to become involved” (German Ministry of Defence 2003: 9, [No. 40]; emphasis added). This does not suggest that the Alliance should be replaced by a strengthened ESDP (Struck 2003b).2 The former remained the primary institution responsible for collective territorial defence, although Germany preferred to facilitate mutual assistance under ‘structured cooperation’ within the EU, too. The government emphasised, however, that NATO had meanwhile evolved as ‘one of the cornerstones’ of European security; rather than the primary or even the only one, as it was in Cold War times (Fischer 2003c). Amsterdam and NATO as default Firstly, because it wished to integrate the functions of the Western European Union (WEU), the German government indirectly supported the incorporation of a collective defence clause into the Union (Kinkel 1996a, 1996e; Kohl 1996a).3 The preferred way of achieving this was by introducing a Treaty of the European Union (TEU) article. The other option would be a protocol with ‘opt-in/out’ options.4 Nevertheless, collective defence should also remain NATO’s domain. In short, the EU’s preferred defence function would resemble the previous WEU rules and would thus by no means compete with NATO. Germany’s position with respect to high-intensity crisis management was ambivalent. While the government clearly wanted to incorporate the WEU’s Petersberg Tasks and thus peacemaking into the EU treaty (Kohl 1996a; Rühe 1996a; Kohl and Chirac 1996), it reluctantly preferred to increase the Union’s power projection capabilities (CDU/CSU/FDP 1994; Rühe 1997).

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This suggested a German awareness that high-intensity operations would not work for quite some time due to the lack of capabilities, and would thus remain with NATO. Nevertheless, this would offer the EU opportunities for the future (Rühe 1996a).5 In contrast to some of the previous ambiguities, the German government foresaw a strong EU role in low-intensity crisis management and humanitarian assistance. It made it implicitly clear that the EU should focus on this lower end of the Petersberg spectrum (Kinkel 1996a). Secondly, in the mid-1990s, the German position on defence planning envisaged a relatively strong but complementary role for the EU in the future. Germany wanted a comprehensive common defence policy, encompassing in the long-term a common export policy (Kinkel and de Charette 1996). Then- defence minister Volker Rühe had energetically pushed forward plans to increase European efficiency in military hardware (Rühe 1997). The foundation of German defence planning would, however, remain organised within NATO. At that time, it was predominantly cooperation with France that was critical for Germany in European defence planning (e.g. so- called intended interdependencies) (Kohl 1996b; German Government 1996). This cooperation, which essentially encompassed all areas of planning, was intended to be the nucleus for future European-wide integration, possibly under a ‘flexible arrangement’.6 The German government was, then, faced with the problem that its most important partner was increasingly transforming its military into a power projection force. This had straightforward consequences in terms of a different demand for military hardware.7 Nevertheless, Germany not only maintained the draft, but almost its whole military organisation was to focus further on defending the Alliance’s territory (Kohl 1996b). These divergent views of military priorities led, for example, to highly complex Franco- German projects, such as the TIGER helicopter: “The guiding concept philosophy of the program is the design of a common basic helicopter, which allows utilizing different mission equipment items in its varied roles” (Schymanietz 1992: 37). The German version was planned exclusively for large-scale territorial defence, whereas the French procured a TIGER that can also be used in high- or low-intensity crisis management.8 Finally, Germany also supported multilateral EU efforts in defence planning for the lower Petersberg end. The focus of the common weapons procurement was to be on information technology, transport capacities, deployment logistics and personal equipment (Kohl 1996a, 1996c; Rühe 1997). In sum, the German government was a moderate adherent to the idea of granting the EU some responsibilities in military planning, but at the same time it supported NATO’s uncontested primacy in European security. It ordered the possible outcomes of the Amsterdam-IGC to the extent that the (W)EU’s focus should be on the lower end of the Petersberg Tasks. Due to

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its obvious lack of capability, the German government wanted to cooperate at most levels of defence planning. St Malo and ‘having it both ways’ When we compare the Amsterdam-IGC with the Convention-IGC with regard to security questions, the most striking difference is the distinct possible outcomes of those interactions (EU Reflection Group 1995; European Convention 2002a, 2002b). Due to primarily British opposition in Amsterdam, combined with unanimity requirements, the German government did not actually reach many of its set objectives. It was merely the Petersberg Tasks that were incorporated into the treaty framework, after Britain’s new Prime Minister Tony Blair had given up his veto in this regard. The WEU, however, remained basically separate from EU affairs. This situation, however, altered dramatically by the ‘sea change’ of St Malo and the subsequent European Councils in Cologne and Helsinki (e.g. Dover 2005; Heisbourg 2000a; Howorth 2004). The institutional basis of the ESDP was shaped in this period. Although Germany was surprised by the St Malo developments, it rapidly began to welcome them (Scharping 1999a, 1999b; Hellmann et al. 2005: 157). This reaction was mainly based on the strategic framework that had already guided its Amsterdam negotiations. The German government “started to work on the issue on the basis of the assumption of continuity in Germany’s European policy and took as a basis the two years old six nations proposal for a merger of WEU with the EU in three phases” (Jopp 1999: 6; see also Schröder 1998, 1999a). Firstly, Germany would have preferred a complete merger with the WEU and thus collective defence in the EU. However, this did not appear to be one of its most urgent priorities, particularly given that it was faced with problems for the neutral member states and Britain (Scharping 1999c; Fischer 1999a, 1999b). Thus the German Presidency attempted to avoid a time- consuming discussion on this, and instead, focused on crisis management (Jopp 1999: 19).9 This functional task was to become the main priority of the new ESDP (Fischer 1999a, 2001a). At the same time, this indirectly implied a certain change: from clear subordination of the EU under NATO towards a complementary division of labour. The ESDP was not intended to replace NATO but rather to become a potential instrument for international crises (Scharping 1999a, 1999b, 1999c). Germany even publicly supported French ideas about a potential ‘Europe puissance’ (Schröder 1999b). Secondly, the question of defence planning was dominated by a domestic discourse about the function and equipment of the ‘Bundeswehr’. Several reports on its future were issued in this period (Becher 2000). What should be the priorities in German defence planning: providing the means for crisis management or primarily maintaining territorial defence? In particular, the ‘Weizsäcker Commission’ recommended that the “logic of force planning shall be reversed: instead of preparing for common defence first

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and foremost, future efforts should be geared primarily towards the most likely operations, described as multinational crisis prevention and crisis management” (cited from, Becher 2000: 165). Despite this call for reforms, defence planning for territorial defence remained the first priority for the ‘Bundeswehr’ in this period. That was emphasised by both the centre-right and centre-left governments (Kohl 1998; Scharping 2000). The fundamental tension between a military force initially designed for the defence of territory that was meanwhile expected to function as a kind of rapid reaction force had, however, not been resolved (Scharping 1999a). At least, it was possible to observe a shift in focus because the inherent contradictions were increasingly materialising in practice (Scharping 2000). For example, the transformation of the ‘Eurocorps’ into a rapid reaction force for crisis management operations reflected Germany’s willingness to increase the EU’s military capacities in this functional dimension of security (Schröder 1999a).10 The ‘Eurocorps’ were to represent the nucleus of a European rapid reaction force set-up in Helsinki in 1999. Hence, preferences for increased crisis management capabilities went hand in hand with the willingness to organise them from the very beginning at a multilateral level (Scharping 1999c). In addition, these new German out- of-area activities necessitated a national headquarters as a direct link to forces in the field. For historical reasons, the ‘Bundeswehr’ had so far refused to acquire national facilities for planning military operations. Therefore, new military requirements and the beginnings of the ESDP emerged in parallel. Germany established a Permanent Joint Headquarters in Potsdam, which could simultaneously serve as a national and EU operational headquarters. This strengthened its role as a potential lead nation for the ESDP (Scharping 1999c; Becher 2000: 167).11 The traditional German objective to be ‘bündnisfähig’ was now increasingly accompanied by the necessity to be ‘europafähig’ (Schröder 1999a). Finally, the German government was more strongly engaged in new prestigious procurement projects. In particular, it concentrated its investment efforts on intelligence and strategic transport capabilities (Becher 2000: 167). Germany supported increasing cooperation with respect to airlift capabilities (A- 400M) and the establishment of a European satellite system (Galileo and Global Monitoring for Environment and Security) (Schröder 1999a; Scharping 1999c; Lindstrom 2003). The Convention and a capable ESDP The Convention debate was dominated by the tasks of organising both the catalogue system and subsequently the new battlegroups in an efficient way. The issue of operational planning came close to NATO’s core missions, namely the questions of solidarity and high-intensity crisis management. The German government wanted the EU to play a complementary but increasingly prominent role in both defence and operational planning.

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Firstly, the Convention deliberated on different forms of solidarity clauses. Germany supported a quite broad and all- encompassing ‘general clause on solidarity and common security’ with special reference to terrorist threats, and including military means. Since it was aware of the major problems that these proposals caused for some governments, it regarded ‘flexible arrangements’ as an appropriate compromise that reflected all members’ concerns (Schröder 2003a; Schäfer 2004).12 Updating the Petersberg Tasks was largely uncontested during the IGC in 2003. Germany supported the ultimate formulation of “tasks of combat forces in crisis management, including peacemaking and post- conflict stabilization” (German Ministry of Defence 2003). The government emphasised that the EU’s efforts should be directed particularly towards the higher Petersberg end (in other words, the most demanding missions). This represented a considerable departure from previous German preferences on that issue (Scharping 2002; Fischer and de Villepin 2002). In addition, the government continued to prefer the more specific definition of Petersberg’s lower end (Scharping 2002; Schröder 2003b; German Government 2004). Germany’s view closely corresponded to the broad and comprehensive approach of the European Security Strategy in 2003 (European Council 2003; Fischer 2003a). Secondly, the German government adjusted its position in operational planning towards defence planning. Thus, it also preferred a relatively high degree of institutionalisation of these processes. The objective was to make the EU militarily capable of carrying out the operational tasks assigned to it by the member states (Fischer and de Villepin 2002). Hence, Germany preferred to have the EU’s Capabilities Action Plan (ECAP), developed in close coordination with NATO, represent the basis of its defence planning efforts. Solutions to the shortfalls in military capabilities should be developed within the EU context (European Defence Meeting 2003; Rynning 2003: 55–7).13 Moreover, Germany supported close cooperation with the Alliance to coordinate the Helsinki Headline Goal and NATO’s Defence Capabilities Initiative that had been reformed in Prague 2002. The EU Military Staff (EUMS), in cooperation with NATO bodies, were to be assigned a prominent role. The aim was to limit unnecessary duplications between the European Rapid Reaction Force and the new NATO Response Force (Fischer 2002; European Defence Meeting 2003; Schäfer 2004). Defence planning continued to give less attention to classical territorial defence but, instead, aimed to project power (Schröder 2003a). Here, Germany’s new focus was on the ‘EU- only’ option (German Ministry of Defence 2003). For this scenario, the most important shortfalls to be tackled were strategic airlift and intelligence capabilities, and operative command and control facilities (German Government 2002; Schäfer 2004).14 Most of these resources were required for both high- and low-intensity operations. The government wanted to build upon the cooperation projects outside the treaty framework and gradually integrate them (German Bundestag 2002;

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Struck 2003b). For example, it energetically sought the leadership of the ‘Galileo’ project. In 2002, it increased its funding for research programmes to underline its own ambitions (Lindstrom 2003: 17). Moreover, there were plans to establish a common tactical training unit for A- 400M crews and other training centres (Schröder 2003a; European Defence Meeting 2003). In the course of the Convention deliberations, a growing number of voices criticised the set-up of the EU’s initial headline goal. It was regarded as too large and difficult to deploy. Instead, there would be demand for rapidly deployable small units that could not, however, perform any reconstruction work because their deployment would last for only a short time. The EU’s first mission, ARTEMIS in the Democractic Republic of Congo (DRC), served as a sort of blueprint for these proposals (Meiers 2005: 121–2).15 This initiative, the so- called battlegroups, was developed separately by the Big Three and then confirmed by the rest of the Union in April 2004 (Struck 2003c; Schmitt 2004: 98–9).16 After some hesitant reactions in the beginning, the German government promoted the establishment of these additional instruments, but made two requests vis-à-vis the UK and France, who had initiated the concept:17 Firstly, there was to be no explicit reference made to the planned geographical range (that is, mainly Africa), and secondly, no explicit numbers of soldiers were to be specified within the agreement (that is, about 1,500).18 The underlying objectives, however, were fully supported by the German government. Finally, Germany preferred a gradual opening of the European defence market and stronger competition in order to increase the efficiency of defence spending. Nevertheless, the separateness of this domain was to be maintained. Thus, it should not immediately become part of the single market, but remain within the sole competence of the member states. The newly established and intergovernmentally organised European Defence Agency (EDA) was thereby intended to function as a facilitator (and not as an initiator). Germany, accordingly, preferred better coordination, but not integration (European Defence Meeting 2003; German Ministry of Defence 2003). Taken as a whole, the government ordered the possible outcomes of the Convention as follows: not only was the whole spectrum of crisis management fully supported, but a form of collective defence was also to be integrated into the Union, albeit on a voluntary basis. In other words, the EU should essentially be put on equal footing with NATO. Table 5.1 summarises the discussion. In sum, preference formation undoubtedly points towards an increase in the EU’s desired responsibilities in military planning. These changes were incremental and partly uneven. Although the ‘sea change’ of St Malo brought about new opportunities, and can thus be regarded as a sort of critical juncture at the level of outcomes, Germany did not suddenly adopt a new approach to military planning.19 The government did not have to change its position in 1998–9 because overall development had moved in

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Table 5.1 Detailed overview of German preferences on substantive scope EU’s desired responsibilities in military planning? Germany Peace-keeping and and High-Intensity Crisis Humanitarian Preferences Management Collective Defence Assistance on Substantive operational defence operational defence operational defence planning planning planning planning planning planning Scope Amsterdam (1995/6)

+

+

*

–

+

+

Cologne/ Helsinki (1999)

++

+

+

+

*

–

Convention (2003/4)

++

++

+

++

+

–

Explanation: ++ = fully present + = present to some extent * = neither present nor absent (or, both ... and) – = absent to some extent – – = fully absent

the direction that had been originally preferred by the Germans for many years. However, their reaction was not simply to welcome these new trends, but, instead, to gradually promote an even greater responsibility for the EU in military planning during the Convention deliberations. Hence the empirical investigation of German preferences confronts a comprehensive explanation with two broad challenges. First, I need to explain why the German government preferred substantive security cooperation in Europe at all. Second, I have to account for the incremental, but steady increase of German preferences with respect to the desired substantive scope of the EU in military planning.

Explaining German preferences on substance: facing more risks, while relying less on the United States The central argument of the following sections is that – in combination with the perceived demand – German transaction costs for the provision of European security gradually increased and thus drove the government to expand the EU’s scope in military planning. This institution was to provide information about both the environment and the partners’ future actions in order to improve coordination. The German government

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conducted comparative institutional assessments of NATO and the EU, and the potential interrelationship between the two security institutions. While Berlin regarded them as essentially complementary, the growing American reluctance toward European security reinforced the government in its preference to strengthen primarily the ‘EU- only’ option. In short, the risks of opportunism within NATO had significantly grown. In the course of the ESDP’s further institutional development, the German government regarded the EU as increasingly capable of successfully reducing the uncertainties stemming from the provision of European security. In turn, it preferred to grant the Union stronger responsibilities for military planning. Accordingly, what we observed was some sort of disengagement – not an exit – from NATO. This was accompanied by increased engagement and thus ‘voice’ within the ESDP. Germany, the United States and the provision of European Security Because this study regards the institutional path as highly important, the analysis needs to depart from the one institution that had predominated European security for decades, namely NATO. Thus, we need to find out how the German government assessed the Alliance and the United States in terms of providing European security: which (un)certainties emerged among the two partners that ultimately contributed to German risks of opportunism? This section demonstrates that the signals sent by the US were increasingly perceived as ambivalent by the German government. It relied decreasingly on Washington for the provision of European security or, at least, its commitment to all security problems. In short, Germany’s risks of opportunism were slowly but gradually rising. The hegemon’s provision of certain public goods in the European security market could no longer be taken for granted. Therefore, the government increasingly promoted the building of European institutions to provide these goods in a coordinated way. As indicated above, the point of departure for the empirical analysis of the signalling processes is the United States’ general security interests after the end of the Cold War and then its position towards European security initiatives.20 The security interests of the United States after the Cold War21 The formulation of US national interests had an impact on Germany’s assessment of how to provide European security in two ways. On the one hand, the government was concerned about the increasingly isolationist trends that began in the mid-1990s; and on the other hand Washington’s unilateralist shift in the new millennium contributed to and reinforced some of these anxious assessments on the part of its allies. Firstly, for many observers on both sides of the Atlantic the end of the Cold War implied that US security policy would gradually turn away from Europe and move more strongly towards, for example, Asia (e.g. Jones 2007: 198–9).22

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While new humanitarian concerns had temporarily led to active support for UN peacekeeping missions, the evident failure of the Somalia intervention shifted the US position back to the belief that humanitarian disasters as such are an insufficient condition for deploying US ground forces. Among the most significant trends was the Presidential Decision Directive “Clinton Administration Policy on Reforming Multilateral Peace Operations” (PDD25). It clearly stated that the US should only become involved in a crisis if vital American interests were at stake. The Republican Congress, in particular, played a prominent role in drafting the more demanding criteria of PDD-25 (MacKinnon 2000).23 In short, the criteria for when to send American forces into a crisis were decisively sharpened (see also White House 1996, 2002). The growing American reluctance to become involved, particularly with respect to ground forces, became apparent during the crisis in the Balkans. Crucially, American non-involvement, combined with demand to ‘lift and strike’ during the Bosnian War – while British and French troops were on the ground – provoked some serious debates within European security circles about the future of the American commitment (Hunter 2002: 4).24 It became evident that the US would be increasingly hesitant to deploy its forces in European crises (Clark 2001: 164–6; Bozo 2003).25 At the same time, isolationist trends in the US Congress had gradually gained importance since the mid-1990s (Berger 1999). The call to the European allies was constantly one of greater ‘burden-sharing’. Due to the budgetary powers of Congress in military affairs, this was capable of having tremendous effects on European security. Joe Biden, then an influential Democratic Senator, stated: A crucial test arose in May 2000 when the Senate narrowly defeated the so- called Byrd-Warner amendment to the military construction appropriations bill. If passed, the amendment would likely have led to a withdrawal of US ground troops from Kosovo by July 2001. Expecting a close vote, Vice President Al Gore sat as president of the Senate, prepared to cast his vote against the amendment in the event of a 50–50 tie. In the end, 15 Republicans joined 38 of the 45 Senate Democrats to give the internationalists a thin 53–47 vote victory. (Biden 2000: 7) Despite this narrow success and some calming statements by the new administration (Rumsfeld 2001a), isolationist voices became louder and more influential after George W. Bush’s election. During the presidential campaigns, the foreign policy protagonists of the new administration had already shown that only the ‘promotion of the national interest’ would justify the deployment of US military forces (Rice 2000; see also Zoellick 2000). The focus in national security was instead to be National Missile Defence (NMD). This was widely understood as a form of ‘decoupling’ from European security.26 More specifically, the Bush team postulated a clear ‘exit

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strategy’ from the Balkans as a contribution to fairer burden-sharing. In addition, most of the running peacekeeping missions were dealing with the notion of nation-building, which was vehemently opposed by the incoming administration (Jervis 2005: 54). Germany’s interpretation of the signals sent by the US was highly instructive. Although American behaviour during the war in Bosnia represented a substantial problem for the French and the British, who had forces on the ground, it had less effect on Germany, which had no troops deployed in those theatres. At that time, its security policy was still highly restrained (e.g. Rühe 1997; Kinkel 1998). Due to Germany’s increasing involvement in European security, however, American isolationism developed from a vague concern into a severe problem (Schmalz 2005: 47).27 For example, after NATO’s Kosovo intervention in 1999 the German government stated: “American politicians, not only in the Senate but in public discussion generally, have to make big efforts to explain to the public why they should be engaged in Kosovo with billions of dollars and thousands of soldiers even though their vital interests are not in the least involved.”28 The American assurance could not be taken for granted anymore in each instance of an unfolding crisis in Europe’s backyard (e.g. Scharping 1999c; Fischer 2003c; German Ministry of Defence 2003). As Joschka Fischer, the German Foreign Minister, stated in Parliament: the “most dangerous situation in world politics would be a withdrawal, rather than active engagement, of the US” (Fischer 2001a; translation by the author). In short, Germany’s risks of opportunism were rising (e.g. Scharping 2002; Fischer 2003c). Secondly, another German concern about potentially opportunistic behaviour can be subsumed under the fear of unilateralism. Robert Jervis stated that it “would be an exaggeration to say that unilateralism is the American way of foreign policy, but there certainly is a strong pull in this direction” (Jervis 2005: 92). The question, then, is how strong the unilateral pull was over the period considered in this study. Even though the mid-1990s had clearly witnessed a more multilateral outlook by the US (Jervis 2005: 54), the option of also pursuing preferred policies unilaterally had never been ruled out.29 This ambivalence was also reflected in the US actions surrounding NATO’s Kosovo intervention. While the preparatory phase was characterised by a US administration that took European concerns seriously, the military campaign was ultimately conducted with as little interference from the allies as possible (e.g. Clark 2001; see also House of Commons 1999). Although one could dispute the real nature of American uni- or multilateralism under the Clinton administration, its important aspect for this study is Germany’s perception. In fact, the German reading of the signals sent by the US was inherently friendly, so the multilateral dimension of US policies received more emphasis (Schmalz 2005).30 As then-Minister of Defence, Volker Rühe, once stated in reference to US President Clinton, “together, the United States and Europe have little to fear, but a lot to

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gain” (Rühe 1996c). This was also based on the much more accommodating tone coming from Washington. For example, the US government had changed the terminology from burden- to responsibility-sharing and had consequently incorporated distinct European efforts, such as development aid, into the transatlantic burden calculation (U.S. Department of Defense 1995; Pickering 1998). However, that basically positive perception gradually changed with the new administration. George W. Bush’s increased emphasis on unilateral initiatives entail Germany to consider new institutional arrangements that were more independent from the US (Jervis 2005: 86–9). This referred, first of all, to issue-areas, such as the Kyoto protocol or the International Criminal Court. This trend then manifested itself after the terrorist attacks of September 11, 2001, when the US bypassed NATO for its military intervention in Afghanistan and used its national Central Command rather than NATO’s Supreme Headquarters Allied Powers Europe (SHAPE).31 The Iraq crisis and the subsequent transatlantic tensions ultimately represented the peak of this trend (Struck 2003a).32 The new pre- emptive and partly unilateral approach put forward by the American administration (e.g. White House 2002) was assessed as highly problematic (Fischer 2002). The growing frictions had also played a prominent role during the Convention’s deliberations.33 This had a lasting impact on Germany since the government overtly opposed American ‘policies’ and was indirectly ‘punished’ for that early on (Schröder 2003b).34 In sum, this process-tracing analysis of German-American interactions since the mid-1990s revealed two main findings. The German government was incrementally more concerned about both isolationist and unilateralist trends in US security policy. This did not, however, lead to a direct effect such as balancing against the lonely superpower, as Realism suggests (Jones 2007: 24–32; Posen 2006: 24). Instead, the provision of certain public goods that the hegemon had previously guaranteed was increasingly questioned, so the transaction costs of providing European security were rising. The problem for Germany was, in fact, ‘too little and not too much America’ in the European security architecture.35 The ambivalent US position towards the ESDP Having identified the two most important trends in US general security interests and how they contributed to German risks of opportunism, I will now focus more specifically on the American position towards European security initiatives. The American approach had always moved on a continuum between support for increased burden-sharing and opposition to greater European autonomy. While the main finding may be described as conditional support (see also Sloan 2000), the precise form differed and thereby affected Germany’s assessment of uncertainty about how to provide European security.

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Until the mid-1990s, the primacy of NATO under American leadership remained unquestioned (White House 1991; Sloan 2000: 6–9).36 While President Bush Sr. was generally sympathetic to strengthening NATO’s European pillar, it was supposed to be strictly within the Alliance.37 This reflected the American commitment to European security, whereas both a ‘European caucus’ and ‘backdoor guarantees’ had to be avoided (U.S. Department of Defense 1995; Hunter 1998). In contrast, the European Union was mainly regarded as an economic partner and competitor. The actual implementation of NATO’s European pillar was pushed forward during the first term of the Clinton administration at NATO meetings in Brussels (1994) and Berlin (1996): “the agreements ratified the essential links across the Atlantic and, it can be argued, the implicit concept of “NATO first” – although this concept was never formally agreed to” (Hunter, 2002: 18; see also Rumsfeld 2001b). The corollary of the ‘Berlin Plus’ agreement for the level of military planning was the principle of “separable, but not separate forces” (Christopher 1993). In the mid-1990s, European security was essentially synonymous with the issue of a European pillar within NATO (Christopher 1993; Hunter 2002: 13–28). The Americans supported this to achieve a more favourable burden-sharing. The red line of ‘no European caucus’, however, had to remain untouched (White House 1996; Sloan 2000: 6–9; Cohen 2000d). The Clinton administration therefore promoted NATO’s new ‘Combined Joint Task Forces’ and the ‘Berlin Plus’ arrangements, while ‘backdoor security guarantees’ resulting from different memberships had to be avoided (Pickering 1998; U.S. Department of Defense 1995).38 Consequently, Madeleine Albright’s ‘3 D’s’ as an immediate reaction to the St Malo initiative neatly corresponded to the established pattern of ‘conditional support’: no duplication, no decoupling and no discrimination (Albright 1998; see also Talbott 1999; Cohen 1999, 2000a). The same conditions were forcefully repeated by the Secretary of Defence, William Cohen, during the finalisation stages of the Nice Treaty in 2000 (Cohen 2000d).39 However, a media survey at this stage of the process-tracing generated a somewhat divergent perspective:40 The Clinton administration, although more relaxed about a nascent European ‘defense identity’ than its Republican predecessors, praises European efforts in official public statements, but then briefs journalists about the risks of Europe’s going it alone. (Pond 2000: 11) Put differently, the US was strongly concerned about the autonomy emphasis of Cologne and Helsinki in 1999 and was consequently afraid that the ‘3 D’s’ could not be met. A good indicator of how seriously the US took the EU’s autonomy plans was their initiative of persuading Turkey to agree not to veto a NATO–EU agreement, which was fragile, but still within the

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context of ‘Berlin Plus’. After all, if Turkey maintained its veto, this would open up the path to independent military planning through separate EU institutions. The US pressed really hard for this agreement. The objective was evidently to keep military planning within NATO.41 Another indicator was the American proposals to organise defence planning within a so- called Model 23. According to that proposal, the US was even willing to incorporate the four non-NATO EU members into NATO’s defence planning process. The previous suspicions of having ‘free-rider through the back door’ were set aside in order to facilitate an agreement with the EU and not drive it into autonomy (Cohen 2000c). In contrast to these concerns, the ESDP was very much appreciated from a burden -sharing position. This suggested a kind of built-in ambiguity for the question of US policy towards the establishment of the ESDP. On the one hand, the official position was explicit support (e.g. Cohen 1999; U.S. Department of Defense 2000); while, on the other, the US government made it clear – often indirectly – that its specific postulations must be met.42 In short, there was substantial space for uncertainty.43 At the start of the incoming George W. Bush administration in 2000, the US position towards the ESDP was essentially unaltered (Rumsfeld 2001a, 2001b; see also Zoellick 2000: 74). The new team, however, included many senior officials, who had vehemently opposed ‘European- only’ security initiatives in the 1990s. This faction was most prominently represented in the Pentagon by policy-makers such as Paul Wolfowitz, Richard Perle and Peter Rodman, as well as John Bolton in the State Department.44 The notion of competition with a potentially unified Europe was reflected in some of the administration’s statements (e.g. U.S. Department of Defense 2002a). The most severe frictions between the US and Germany, however, emerged during the unfolding of the Iraq crisis in 2002–3.45 They became particularly evident both in Secretary Rumsfeld’s thoughts of dividing ‘old’ from ‘new’ Europe and the ‘Letter of the Eight’ and the ‘Letter of the Vilnius Ten’. The peak of these tensions was reached when Washington set red lines around what the EU was (not) permitted to build within the ESDP: first, no military headquarters because this could duplicate NATO’s SHAPE;46 second, no particularly far-reaching agreements on ‘structured cooperation’ because this could also be used to circumvent NATO;47 third, no strong Defence Agency;48 and finally, no collective defence clauses within the EU treaty (U.S. Department of Defense 2003). In doing this, the US opposed virtually all proposals made by Germany, France, Belgium and Luxembourg, and thus large parts of the Franco- German contribution to the Convention (Fischer and de Villepin 2002). The relative ambiguity of the American position, became apparent, however, when the administration simultaneously supported initiatives that would strengthen European capabilities (Cohen 2000c; Rumsfeld 2001b; U.S. Department of Defense 2002b; Jones 2004). On the one hand, it promoted a stronger European pillar, ultimately within NATO. For example, at the Prague Summit in 2002, the Alliance’s defence

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planning was transformed into the Prague Capabilities Commitment (Clarke and Cornish 2002). Its core was a 21,000-strong NATO Response Force that was set-up without the US and that Washington regarded as a mechanism for ensuring a European increase in and modernisation of critical military capabilities. These developments were not only proposed, but very much favoured by the US, because they effectively strengthened NATO’s defence planning capacities and would secure them for the future. Implementation, however, has often been problematic (Bell 2006). On the other hand, the blunt reality of the European Union’s ESDP could no longer be ignored. These difficulties were sharpened by the institutional arrangement of sovereign states having a ‘single set of forces’ that could serve under either the NATO or EU flag. Washington’s conditional support for European security initiatives aimed to have well- equipped forces for the former and subordinated forces for the latter. What did this imply to the German government? To what extent did these ambivalences have an impact on its transaction costs for the provision of European security? The empirical evidence points to a German government that was increasingly aware of and sensitive to these developments. The trend over time among American policy-makers to oppose European attempts for greater autonomy more strongly, while remaining generally supportive of all contributions to more equal burden-sharing was observed by the German government with some concern (Fischer 2001a). The resulting constraints in the form of US conditions for the ESDP led Germany to send conciliatory signals across the Atlantic (e.g. German Government 2004). For instance, after the US had made clear that a standing EU headquarters would seriously harm NATO (U.S. Department of Defense 2003), the German government backed down and followed the British compromise proposals.49 The government did not want to increase further its risks of opportunism within NATO by decoupling from the sole superpower. Hence it was willing to make concessions rather than further estrange itself from the hegemon (e.g. Fischer 2002). The overall support for NATO was particularly strong among MoD officials who had grown up with the Alliance defending the country, but also the highest political levels left no doubt that NATO belongs to the German raison d’état (e.g. German Ministry of Defence 2003; Schröder 2005; see also Rudolf 2004).50 Taken together, the signals sent in this context implied that the crossing of certain red lines set by the US government could ultimately cause the hegemon to further disengage from European security problems. This consequence would not merely represent an incremental growth of the risks of opportunism, but would entail the need for a European provision of certain public goods that the hegemon had previously guaranteed. Such a scenario was never favourably envisaged by any German government (Weiss 2009: 330–8). In short, the signalling process between the US and Germany with respect to the actual establishment of the ESDP contributed to its transaction

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Table 5.2 Germany and its ‘signalling’ with the United States Signals sent by the superpower? Germany, the United States and European Security US security interests US position on the ESDP Amsterdam (1995–6)

Support for NATO / ‘Berlin Plus’ and basically no risks of opportunism

European pillar within NATO

Cologne/Helsinki (1999)

Isolationist concern and slow increase in risks of opportunism

Conditional support for ESDP

Convention (2003–4)

Isolationist concern combined with new unilateralism and increase in risks of opportunism

Still conditional support (but threat of increased risks of opportunism, if conditions were not met!)

costs merely to the extent that a scenario was anticipated that could increase uncertainty exponentially. The German government was permanently aware of this risk and formulated its preferences accordingly. The analysis of those signalling processes may be summarised as shown in Table 5.2. Based on these results of the process-tracing, the final section turns to the task of establishing a causal link between the transaction costs that the German government was confronted with in its attempts to provide European security and its preferences for institution-building in the ESDP. The German choice of the institutional context The theoretical framework of this study suggested two ideal-typical policies that member states have at their disposal when they transact through institutions, namely either to exit or to engage with voice (Hirschman 1970). Against that background, Germany had four broad options for institutionbuilding in European security: I) NATO, as a whole; II) NATO, with a strong ‘European pillar’ (that could act independently); III) The EU as an independent security institution highly compatible with NATO; and IV) The EU as a security institution fully detached from NATO. We have seen that the point of departure for the German government was between I) and II). While there was a belief that the EU should gain responsibilities for military planning, preferences with regard to substantive scope were subordinated to NATO. Therefore, Germany fully supported only peacekeeping tasks for the EU, whereas collective defence and high-

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intensity crisis management were less desired outcomes. The analysis of German-American interactions suggests, however, that Berlin was increasingly concerned about both isolationist and unilateralist trends in US security policy. This is precisely what Oliver Williamson described as ‘nonstrategic uncertainty’ (Williamson 1985: 57–9). The actions of the US were not intended to mislead, rather, there was simply a lack of information about the hegemon’s future behaviour. The German risks of opportunism within NATO were consequently rising. This made option I) less attractive in terms of transaction costs since uncertainty about the US made its commitment less credible and thus the whole arrangement problematic. In this respect, we could think of a pre-Kosovo situation with an American administration unwilling to deploy either ground or air forces. Even option II) was costly to the extent that Washington maintained a veto position in each crisis and, at the same time, did not allow a European caucus within the Alliance. The risks of opportunism, which emerged from the American signals, increased and made options I) and II) uncertain in terms of transaction costs. The provision of European security by NATO had become gradually more costly and made the German government consider new institutional arrangements. It therefore changed the orderings of its preferred outcomes of the EU’s negotiations. Not only low-intensity but also high-intensity crisis management was now supported by the German government. At the same time, the US administration promoted what I call a ‘built-in ambiguity’ towards European security initiatives. The conditions of approval set by Washington were demanding on the German government and had a straightforward impact on its formulation of preferences. They suggested that the crossing of some of the red lines might cause a complete US withdrawal from Europe’s security risks. It was precisely this kind of worst- case scenario that the German government wanted to avoid: namely, to have to live up to the requirement of providing the public good of European security by itself and without any assistance from the hegemon. Here, we clearly see the functionalist origins of the study’s argument. While the retrospective assessment of NATO entailed the turn to the ESDP, the anticipated costs of US withdrawal explain the more moderate approach the German government took to finding a compatible arrangement with both NATO and the EU. In other words, option IV) was foreclosed, or at least made extremely costly. We have thus arrived at the paradoxical result that the risks of opportunism, stemming from the uncertainty about the American commitment, triggered a German preference for investing more strongly in EU arrangements, but at the same time limited the option of fully exiting NATO’s provision of certain public goods.51 In transaction costs terms, the German government expected future security policies to be uncertain in Europe and therefore wanted to increase the scope of the ESDP. The latter was intended to facilitate information exchanges about such matters as crisis management in Europe’s backyard

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or in neglected areas such as Africa. The ESDP was expected to function in the medium- to long-term as a sort of substitute for the previous provision of European stability by the US and therefore decrease the emerged risks of opportunism to a significant degree. That encouraged the government to consider and plan more strongly for EU-only scenarios (see also Aggestam 2000: 74). At the same time, the threat of being faced with rapidly increasing degrees of uncertainty made the government anxious about formulating its position too vehemently. Instead, it returned to its more traditional position of mediating between NATO and the EU. Accordingly, German preferences gradually moved from option II) towards option III) as a higher priority (e.g. Fischer 2001a, 2002; Schäfer 2004). This explains why the government promoted high-intensity crisis management and, to a certain degree, collective defence as the desired substantive scope of ESDP at the Convention on the Future of Europe. In conclusion, this chapter has pointed to the gradual increase of German risks of opportunism involved in the provision of European security. This was primarily based on the mutually reinforcing development of a perceived growth of security risks, linked to growing uncertainty about America’s commitment to European security. Therefore, I also demonstrated why the German government invested most of its efforts in the EU rather than the Alliance. The interaction between isolationist and unilateralist concerns encouraged Germany to strengthen EU- only options. These could, however, only be carried out by taking Washington’s red lines into account. In other words, neither the worsened security environment as such, nor the ambiguous American policies alone, persuasively explain Germany’s preference for increasing EU responsibility for military planning. Instead, the interaction between a demanding environment and a hegemon that was allegedly tired of providing the goods primarily determined the magnitude of Germany’s transaction costs in its cooperative exchanges on providing European security. In short, it wanted to reduce uncertainties without producing too many new uncertainties. This constitutes the key to the German approach towards the substantive scope of institution-building in European security and can be summarised as shown in Table 5.3. When we return to the causal pathways of the transaction costs framework, we see that the German government increasingly envisaged rising costs with respect to the provision of European security. From that we may infer the overall preference to increase institution-building in that domain. The question was thus why the German government preferred to strengthen the EU’s responsibilities in security and defence questions. Based on the importance of the relativity of transaction costs, the Union increasingly emerged as a viable and effective institution for reducing the transaction costs to a sustainable extent. In other words, Germany’s assessment of the decreased American commitment was the driving force behind the preference seen over the course of the analysis for a more capable ESDP. Therefore,

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Table 5.3 German transaction costs for the provision of European security and its resulting choice of the institutional context Germany and transaction costs for the provision of European security

∆ Demand for a security institution

Germany’s resulting choice of institutional context

Amsterdam (1995–6)

Constant increase

Preference for option II) No severe risks of opportunism

Cologne/Helsinki (1999)

Constant increase

Preference moving towards option III)

Increasing isolationist concern

Convention (2003–4)

Further increase

Clear preference for option III)

Plus: increasing unilateralist concern

∆ Signalling with the United States?

the government’s evaluation, that NATO would entail a relatively high degree of transaction costs in the long-term in order to continue providing European security, encouraged it to gradually enlarge the substantive scope of ESDP. Since exit had never been an option for a German government, a compatible arrangement with NATO was promoted. The next step of this ‘structured, focused comparison’ addresses – analogously to this chapter – the United Kingdom’s preferences for substantive scope.

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6 Great Britain – From Opposing the Union towards a Subordinated ESDP

This chapter focuses on the overall question of to what extent the British government preferred the EU to be responsible for different aspects of military planning. The United Kingdom represents a great challenge in this context since there was a tremendous shift between the mid-1990s and the Convention. While France and to some degree Germany maintained their traditional positions, it was the UK’s subscription to the ESDP that made the declaration of St Malo in 1998 such a ‘sea change’ (Whitman 1999: 5–9; Heisbourg 2000a: 8–9; Posen 2006: 167–8). Its underlying aim was to increase Europe’s military capability for different forms of crisis management.

British preferences on substantive scope In the mid-1990s, the Conservative government had the clearest – so to speak – anti-EU position in security matters. The administration wanted to avoid almost any involvement in the EU. The incorporation of the WEU’s Petersberg Tasks only became acceptable because of, firstly, the blunt reality that NATO involvement remained an implicit requirement; and, secondly, because of the change in government to a slightly more ‘European’ Labour leadership. Although Tony Blair had demanded more substance for a Common Foreign and Security Policy (CFSP), he had never elaborated what this would entail. After coming into power, the new government could accept that the EU –not the WEU as initially planned – should deal with some lower- end Petersberg operations. However, the WEU was to be kept separate and developed into a forum where the Europeans could build up a pillar within, and subordinated to, NATO (Government of the UK 1995a, 1995b, 1997). Despite the high level of continuity that the new Labour government had initially promoted in the Amsterdam negotiations, it indicated in the course of the subsequent year that security and defence questions should be increasingly considered in the EU context and that Britain should play a leading role in these initiatives. This shift in British preferences 79

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set in motion the whole process of ESDP, from St Malo through Cologne, Helsinki and Sintra to the reform treaty of Nice at the end of 2000.1 Although the preference change was stronger with respect to defence planning, the UK also envisaged an increasing EU responsibility for military operations. Before and during the deliberations of the Convention on the Future of Europe, Britain made clear that the EU should increasingly play a pivotal role ‘where the Alliance as a whole was not engaged’. This primarily referred to the lower- end Petersberg Tasks. Collective defence was to be continuously excluded from the EU’s functions since it was satisfactorily performed by NATO. Nevertheless, in defence planning the EU was still preferred in order to increase Europe’s overall power projection capabilities. Outright opposition in Amsterdam Firstly, the British government vehemently opposed the incorporation of collective defence into the EU’s functional scope. Instead, the UK had shaped and thus supported the idea of the WEU as the European pillar of NATO that would remain strictly separate from the EU and, at the same time, subordinate to the Alliance. Independent of party affiliation, British policy-makers made unambiguously clear that NATO was the cornerstone of European security (e.g. George 1996: 56). Particularly in territorial defence, the Alliance was to maintain exclusive responsibility (Government of the UK 1995a; Rifkind 1995a; Blair 1996).2 At the Amsterdam-IGC, the UK agreed to the incorporation of the Petersberg Tasks but, nonetheless, we cannot speak of a genuine British preference for engaging the EU in military planning for crisis management (Government of the UK 1995a). Although the EU might deal with some of these issues, the UK saw them as belonging to the lower rather than the high end – for technical (lack of capabilities) and political reasons (US and NATO’s primacy). Strengthened links between the WEU and the EU were welcomed. In opposition to Franco- German proposals, however, no political control of the latter over the former was envisaged. Instead, NATO was to remain the primary forum of consultation for all security and defence questions (Rifkind 1995b; Labour Party 1996; Blair 1997; EP-Briefing 1997b). Finally, the British government wanted the WEU to concentrate on low-intensity crisis management (Government of the UK 1996; House of Lords 1995).3 Secondly, the UK undoubtedly saw the need to increase European military capabilities. Therefore, it supported, to a certain extent, improved coordination in defence planning between the member states (Government of the UK 1995a). This was to be achieved either through NATO and the WEU or on the basis of bilateral and multilateral cooperation. In contrast, it was not envisaged that the EU would play an active role in these defence planning and armaments cooperation activities. In other words, the British perspective was genuinely transatlantic and its close military relationship with

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the US had to be maintained (e.g. IISS 1995: 40; Rifkind 1996a; EP-Briefing 1997b; McInnes 1998: 824–9).4 Besides, the UK was prominently involved in shaping NATO’s Combined Joint Task Forces concept and therefore the ‘Berlin Plus’ agreement (Hunter 2002: 13–9). The Alliance therefore represented the only viable option for preparing the hardware for high-intensity crisis management (Government of the UK 1995a; EP-Briefing 1997b). Finally, the UK proposed that the European governments should begin with a realistic analysis of what they were capable of doing, which would probably encourage them to focus on defence planning for low-intensity crisis management. This was an area where the UK also wanted to see increased (W)EU involvement (Government of the UK 1995b, 1996; House of Commons 1998).5 In sum, the outcome the British most desired would have essentially been no EU responsibilities for military planning. Although the incoming Labour administration ultimately agreed to incorporate the WEU’s Petersberg Tasks into the treaty, it did not genuinely support a strong role for the EU within the European security architecture. Instead, virtually all British policymakers strongly insisted on NATO’s primacy in all respects. Nevertheless, low-intensity crisis management was ultimately accepted. The shift of St Malo The famous St Malo declaration by France and the UK represented a significant point of departure since it was the first time the UK subscribed to the necessity of an autonomous European defence force. At the same time, however, the importance of NATO was emphasised, which points to the two main principles that had so far divided the EU into ‘Europeanists’ and ‘Atlanticists’.6 The declaration was a compromise, combining both positions within one document. While the UK’s Secretary of Defence had re- confirmed the prototypical NATO position in Spring 1998 (Robertson 1998), the British Prime Minister, Tony Blair, announced his new approach to European security during a European Council meeting in Pörtschach (Austria) in the Autumn of the same year: the EU military force should be militarily credible, politically intergovernmental and compatible with NATO (Blair 1998a).7 Firstly, the point of departure for the British government was NATO’s ‘Berlin Plus’ agreement that foresaw three types of military operations: (1) NATO alone; (2) the (W)EU applying NATO assets; (3) the (W)EU alone. Building on former British positions, the Blair administration considered the last option an unlikely operational scenario. Instead, it focused on opportunities to strengthen the second. The precise procedure, however, was to be debated: “We should be prepared to think more boldly and more imaginatively about how we do that.”8 Autonomous operational planning was accepted by a British government for the first time, but the first two options were generally the desired procedures. This also implied that the

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UK still strongly opposed introducing a collective defence function into the EU’s treaty framework. This scenario was to be exclusively the responsibility of the Alliance (Blair 1998c; Cook 2000). Building on the recently introduced Petersberg Tasks, the British government now preferred the EU to have some responsibility for military planning for crisis management operations.9 Its approach was to give the EU a role in crisis management in cases where NATO as a whole chooses not to be engaged. This referred primarily to the lower Petersberg end, but envisaged for the first time the opportunity of gradually moving towards more demanding military operations (McInnes 1998: 834–5): [N]o artificial boundaries should be set as to whether the EU may or may not act ( ...). [W]e have agreed to work on the assumption that, within the agreed range of missions, the most demanding will occur in and around Europe. But we believe that the EU should have the potential to respond to crises on a wider basis ( ...). [T]he spectrum of missions which could be envisaged under the broad headings of the Petersberg Tasks is considerable. It could range from a straightforward humanitarian operation to a demanding peace-making operation. (Cook 2000) While the government’s position came very close to the German approach in terms of NATO, Berlin Plus and the EU’s desired scope, the main difference was still the issue of an WEU–EU merger and thus collective defence.10 Secondly, the issue of defence planning was dominated at that time by the British debate on the country’s defence review (e.g. Government of the UK 1998; McInnes 1998). In contrast to Germany, which was discussing whether to acquire power projection capabilities at all, the United Kingdom had a long tradition of sending expeditionary forces and thus focused on different aspects (e.g. Freedman 1999; Mäder 2004): “The range of contingencies which may arise from the new-style risks and challenges described earlier require a different form of military response to the territorial defence of the Cold War” (Government of the UK 1998: 32). The government therefore strongly opposed any additional spending on territorial defence but wanted, instead, to enhance cooperation in order to create capabilities for the Petersberg Tasks.11 The primary partner of choice was France, although the special relationship with the United States was in no way questioned. The Prime Minister emphasised the huge potential of Franco-British cooperation based on a great variety of overlapping interests. Since the UK’s contemporary Strategic Defence Review conjoined with French efforts to professionalise its forces, the Prime Minister, speaking before the French National Assembly, asked how “we can create a capacity to deploy forces rapidly on a joint basis in future crises, where both countries agree” (Blair 1998a).12 This demonstrates the strong British emphasis on capability generation and thus the desire for

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a larger substantive scope in defence rather than operational planning. This was clearly expressed by the Defence Secretary, Lord Robertson: We should encourage further the development of combined military capabilities, in particular the operational effectiveness of the various existing European multinational forces. Let us not engage in false debate over whether these forces are primarily for NATO operations or primarily for European operations. In both cases they are serving European interests.13 In terms of transaction costs, these statements make clear the general nature of the UK’s preferences for the establishment of military forces in the EU context. They were not to be too specific, but rather capable of being redeployed for different purposes and organisations. This did not come as much of a surprise since military capabilities were ‘at the heart’ of Blair’s initiatives (e.g. Cook 2000). Before we move, finally, to the Convention on the Future of Europe, it is necessary to at least briefly address the question of continuity and change in British preferences because there has been a lively debate on this issue. Some scholars argued that the UK’s initiatives at the end of 1998 represented merely a “shift of government policies rather than core preferences” (Dover 2005: 510–3) or more generally “fixed strategy, changing tactics” (Howorth 2000c: 377). In contrast, others emphasised more strongly the transformative nature of the British approach (e.g. Whitman 1999: 5–9; Heisbourg 2000a: 8–9). This debate ultimately corresponds to what some referred to as the problem of a ‘means–ends chain’: “means at a more fundamental level in the chain are ends at a less fundamental level” (Wallander et al. 1999: 11). Is the UK’s subscription to an autonomous force a means to create more European capabilities for NATO, or an end in itself to establish a stronger Europe? This study’s remedy for this non-resolvable problematique is to rely on Jeffry Frieden’s notion of preferences as “desired orderings of possible outcomes” (Frieden 1999: 42). This enables a relatively precise measurement and thus facilitates a qualified statement on continuity and change at two points in time. From this perspective, British preferences had qualitatively and quantitatively changed between the mid-1990s and 2000.14 To what extent the government viewed this as an end or as a means to different aims – as either tactics or strategy – is not, from the perspective of this study, significant. Instead, we can put on record that within the framework of this study, they represent changed orderings of possible outcomes: the substantive scope of the ESDP was to comprise active crisis management with respect to defence, as well as operational planning. For the first time, there was a desire for an autonomous defence capacity. That was novel.

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Minor adjustments at the Convention This drastic change was followed by gradual adjustments in the British approach to the ESDP. The UK was largely satisfied with the status quo ante, which was reconfirmed by the Nice Treaty in 2000. The desired substantive scope still referred primarily to the lower Petersberg end, whereas highintensity combat operations were intentionally not excluded per se. Thus, the EU was meant to play a prominent role as a sort of ‘force generator’ in defence planning and strengthen the member states’ armaments cooperation, as long the US remained included in this domain. Collective defence, in contrast, was to remain outside of the EU’s military planning activities (e.g. Blair 2000; Blair 2002; Government of the UK 2003b). Firstly, the government’s ‘ordering of possible outcomes’ with respect to the question of solidarity clauses was straightforward. While the UK opposed any proposals that could duplicate NATO’s Art. 5, even under ‘structured cooperation’, the government supported the idea of introducing a solidarity clause with respect to terrorist attacks and natural disasters (Government of the UK 2003c: 5–6). Accordingly, the UK wanted to prevent the EU from performing any kind of collective defence, but nevertheless wanted some sense of political solidarity to be institutionalised (Straw 2003c; Blair 2003; Government of the UK 2003a). The exclusion of Art. 5 arrangements represented one of the UK’s red lines during the Convention-IGC (Straw 2003b; see also Menon 2003: 977). Britain supported the relatively uncontested updating of the Petersberg Tasks. Like the German government, the UK was slightly ambivalent about the most demanding missions being part of the EU’s responsibility in military planning (House of Lords 2002). On the one hand, the government made clear that the EU should become active in all kinds of crisis management (e.g. Blair 2002; Blair and Chirac 2003; see already Cook 2000). On the other hand, the administration implicitly emphasised that NATO represented the European security institution of choice and, hence, the EU would not be involved in highly profile crises. This was particularly emphasised vis-à-vis the domestic audience (Straw 2001; Government of the UK 2004; Hoon 2005). Finally, the British government fully supported the EU’s responsibility for humanitarian and peacekeeping tasks – the lower Petersberg end (e.g. Blair 2001; Straw 2002b). Secondly, the UK continued with the approach it had adopted during the set-up phase of the ESDP. Although operational and defence planning were related, the latter played the more prominent role (e.g. Government of the UK 2003a; Hoon 2005). The UK therefore also supported a gradual opening of the European defence market and stronger competition in order to increase the efficiency of defence spending. However, arms production was not to become part of the single market, but rather remain within the sole competence of the member states. The newly established EDA was intended

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to function as a facilitator rather than as an initiator. It was important that progress in this should not endanger Britain’s strong industrial links with the United States (e.g. Government of the UK 2005).15 In addition, London opposed any additional expenditure on hardware for territorial defence. Instead, Europe was to enhance its crisis management and thus its power projection capabilities. Faster deployment and better intelligence were to be the main priorities of the EU’s defence planning process. Besides, the UK was rather critical of multinational troops so its emphasis was always on the improvement of its own national capabilities (e.g. Straw 2002b; Government of the UK 2003c). Finally, the British government preferred and thus initiated the EU’s Headline Goal 2010, which represented the reformed Helsinki objectives from 1999 in defence planning.16 The Defence Secretary, Geoff Hoon, had announced the battlegroups initiative in Munich in 2004 (Hoon 2004).17 Building on its experience particularly in Africa (for example in Sierra Leone and DRC), France and the UK advanced the plan that rapid deployment could be the military asset that might give the EU a comparative advantage in crisis management. In contrast to, for example, Germany, the British government emphasised the battlegroups’ principle of ‘effectiveness’ rather than ‘multinationality’.18 As a result, Great Britain offered one battlegroup consisting solely of British soldiers, and another one based on bilateral cooperation with the Netherlands (e.g. Lindstrom 2007). The British approach to the new battlegroups, but also its overall preference to grant the EU a prominent role in defence planning, is illustrated well by a statement from the Defence Secretary about the new initiative: The most important factor is that it must be for Member States to produce complete Battlegroup packages, either nationally or in small multinational groups. That means small countries providing niche contributions must ensure they are integrated into full Battlegroups, and not simply placed on the table. The UK is therefore opposed to any heavily centralised force generation process which would allow countries to offer small, incoherent contributions, relying on the EU Military Staff to bind them into groups, and reducing the incentive of this initiative to drive national capability improvement. (Hoon 2005; see also Webb 2004) In other words, Great Britain had a politically pragmatic approach to achieving a ‘bigger bang for its buck’. This could also be applied to the planned European Defence Agency. The ‘UK has promoted a European defence capabilities agency in the draft EU Treaty, to energise the development of capabilities and coordinate associated acquisition policies’ (Government of the UK 2003c: 6; see also Government of the UK 2005). There is no reference to the ESDP as a political project. Instead, Europe should coordinate its capability building.19 According to these examinations, the British government

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Table 6.1 Detailed overview of British preferences on substantive scope EU’s desired responsibilities for military planning? Great Britain and Preferences Regarding Substantive Scope

Peace-keeping and Humanitarian Assistance

High-Intensity Crisis Management

operational defence planning planning

operational defence operational defence planning planning planning planning

Amsterdam (1995–6)

Collective Defence

*

+

––

––

––

–

Cologne/ Helsinki (1999)

++

++

+

++

––

––

Convention (2003–4)

++

++

+

++

––

––

Explanation: ++ = fully present + = present to some extent * = neither present nor absent (or, both ... and) – = absent to some extent –– = fully absent

ordered the desired outcomes of the Convention-IGC in a similar way to the previous phase. It was merely the battlegroup concept that was to supplement the new defence planning processes. Table 6.1 provides a comprehensive overview of this chapter’s empirical investigation. In sum, this exploration of British preferences reveals one major and one minor finding: (1) the greatest challenge is definitely the dramatic increase in the UK’s desire for the EU to have responsibility for military planning. Next, we could only observe some minor adjustments to the new approach; (2) the minor but, nonetheless, illuminating finding was a lack of congruence between operational and defence planning. They were still sufficiently close to each other, so we can reasonably assume the seriousness of the British commitments. However, the UK’s desired outcomes for operational planning always lagged behind its approach to the common provision of the military hardware. This clearly distinguishes this case from the other two.

Explaining British preferences on substance: ‘It’s Time to Repay America the Soldier’20 The central argument of the process-tracing analysis is that the UK’s transaction costs for the provision of European security increased significantly

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over the course of the 1990s and then remained largely stable. This growth led to fresh thinking within the new government and ultimately resulted in the formulation of a novel approach to EU security policy: expanding the EU’s scope in military planning. Tony Blair defined the parameters by stating that he had an “open mind about what this might mean institutionally. But we are not talking about a European army” (Blair 1998b).21 Although the shift came suddenly at the end of 1998, there had been a steady move in this direction, where some important factors conjoined. In-depth analysis shows that the most considerable causal effect was the interaction between the perceived demand for a security institution linked to increased risks of opportunism within the European setting. This interaction effect was particularly salient at the end of the 1990s, but did not increase further thereafter. Finally, the examination demonstrates that the British government pursued a two-fold strategy of voice: it not only increased its weight within the ESDP, but also utilised the new European capabilities so as to be better heard in Washington. Great Britain, the United States and the provision of European security Like the German case study, this section begins with the British assessment of NATO’s capacity to provide European security: to what extent did the ‘signalling’ between London and Washington give rise to uncertainty and thus British risks of opportunism? It is demonstrated that the signals sent by the United States were perceived with growing concern by British policy-makers, since the American commitment could no longer be taken for granted in all situations. This perception of growing ambivalence considerably increased Britain’s risks of opportunism. The hegemon’s provision of basically all public goods in the European security setting was, therefore, questioned. Institution-building became part of the political agenda. On that basis, an EU security and defence pillar represented a viable alternative, while a full ‘exit’ from NATO was never considered. Instead, a mixture of functional solutions to emerging problems and the idea of strengthening Europe’s ‘voice’ in Washington determined the British approach to the problematique. This constellation also remained stable when bilateral relations with the United States were re-intensified after 9/11.22 The security interests of the United States after the Cold War Like Germany, the United Kingdom was concerned about the isolationist trend on the other side of the Atlantic that had begun in the mid-1990s, but was definitely less worried about a unilateralist shift in US security policy. The former found a tentative expression during the Balkan crises. The US was not willing to deploy troops themselves and behaved in a relatively reluctant way during the crisis.23 For the UK, this presented a problem since it had to ‘square the circle’ between an incapable Europe and a reluctant United States (Howorth 2000c: 385; House of Commons 2000). Britain was

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becoming increasingly aware that the time when Washington would continue to write “blank cheques in favour of European security” might be gone (Howorth 2000: 23; see also Rynning 2003: 60; Posen 2004: 15). The most plausible option was therefore to promote French rapprochement with the Alliance in order to establish a capable European pillar. This would have undoubtedly been the most desired possible outcome from a British perspective. In particular, the Ministry of Defence was committed to this course of action. Despite some promising prospects at the start, however, these plans rapidly deteriorated, due to disagreements between Paris and Washington. As a consequence, British risks of opportunism within NATO rose. While the Conservative government drew the lesson from Bosnia that it should concentrate its efforts on further binding the Americans to Europe,24 the new Labour Prime Minister drew a different conclusion: “We Europeans should not expect the United States to have to play a part in every disorder in our own back yard.”25 This view was then strongly reinforced by NATO’s Kosovo campaign in 1999 “because the United States may not want to get entangled in the next Kosovo, British and other European military officials say”.26 In addition, this growing uncertainty about US willingness to deploy military force was accompanied and thus reinforced by an American Congress that insisted on greater burden-sharing within NATO. Some Congressmen regularly tabled amendments to pressure Europe on all sorts of burdensharing questions. After the Republican takeover of Congress in 1994, these propositions came very close to winning a majority: “The fear in Whitehall was that, unless the EU began to respond to these pressures, the Alliance would collapse” (e.g. Howorth 2000c: 385; see also Major 1996; Albright and Cook 2000; Hoon 2005). After severe transatlantic disagreements about NATO’s eastern enlargement,27 these concerns had become steadily stronger since Europe had invested neither in military capabilities nor had new majorities in Congress changed in such a way as to mitigate the fears of defence planners. The new administration, therefore, formulated its position overtly: I know that some feel that being close with the United States is an inhibition on closer European cooperation. On the contrary, I believe it is essential that the isolationist voices in the United States are kept at bay and we encourage our American allies to be our partners in issues of world peace and security. (Blair 1998a, emphasis added) In contrast to its predecessors, the Blair government drew the conclusion from these isolationist trends in Congress that the UK should invest more into European capabilities, which would strengthen the EU’s voice in Washington. It therefore preferred a larger substantive scope for defence, rather than operational, planning. Capability generation without alienating the special partner was at the heart of Blair’s initiative.

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Finally, British concerns about isolationist trends in the US were reinforced by the new administration’s announcement that it would withdraw peacekeeping forces from Bosnia and close other military bases in Europe: The United States’ strategic priorities have also evolved rapidly. A progressive reduction of their commitment from parts of Europe is now under active consideration. The announcement of Donald Rumsfeld, US Defense Secretary, that US forces might withdraw from Bosnia indicate that European governments will need to do more to provide for their own security, especially on the borders of Europe where US interests are not directly engaged. (House of Lords 2002) This sceptical perception was strengthened by the Bush administration’s signals opposing current British security policy. The Blair government was indirectly punished, by Donald Rumsfeld, who met with Tory representative Iain Duncan Smith before the Defence Secretary Geoff Hoon.28 Nevertheless, British–American interactions rapidly improved and while the risk of opportunism constantly lurked in the background, it clearly lost significance for the British government (Government of the UK 2003c: 5–6). The German case study has pointed towards two phases of American signals indicating unilateralist trends: first, during the Clinton years and then, during George W. Bush’s new administration of 2001. This unilateralism was only a minor problem for the British government. The UK perceived the signals sent by the Clinton administration as generally non-unilateralist. Even when Washington decided to respond unilaterally to the terrorist attacks on American embassies in Africa in August 1998 (Clinton 1998), the official British reaction was fairly supportive in emphasising the US’s right to self- defence.29 Similarly, both NATO’s Kosovo campaign and the US’s plans for national missile defence gave rise to some concerns in London, but it was always clear that it was the UK that would be consulted most often among America’s allies (U.S. Department of Defense 1995; House of Commons 1999).30 In short, American unilateralist policies did not noticeably increase uncertainty in British cooperative exchanges related to the provision of European security during these years. In contrast to most of its continental partners, this perception did not change significantly with the allegedly more unilateralist approach of the new Bush administration. The special relationship, in general, and the shared world view, in particular, were continuously emphasised, especially by Tony Blair: “I think, most of all, we have the same perception of the world” (Bush and Blair 2001a, 2001b)., Britain therefore regarded itself, again, as bridging the emerging gaps between the US and continental Europe.31 This unilateralist trend was significantly reinforced after the terrorist attacks of September 11, 2001 and the subsequent military interventions in Afghanistan and Iraq. From the very beginning, the British government made clear that it would

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broadly follow the United States.32 Although the Blair administration had initially been opposed to expanding the ‘war on terror’ to include Iraq, it eventually followed its ‘special partner’.33 The government made clear that large-scale military operations without the US represented nothing more than a theoretical option (Hoon 2003; Government of the UK 2003c). The idea was thus to bring the EU closer to the United States, rather than vice versa (Hain 2003b: 955). In sum, the isolationist signals sent by the US increased British risks of opportunism and thus transaction costs in the provision of European security. Due to the dependence on military cooperation with the US, isolationist fears weighed heavily on the British government, but at the same time, unilateral concerns were largely absent. From a comparative perspective, the transaction costs differ from the German case study to the extent that the isolationism and unilateralism did not reinforce each other over time. Therefore, it was primarily the former concern that increased British uncertainty and thus transaction costs and consequently triggered its preference formation. The ESDP needed to establish a political–military option in order to be taken seriously, should the US choose not to be engaged in a specific crisis. The ambivalent US position towards the ESDP In the following section, I will build on the German case study and supplement it with an account of the specific interactions between Washington and London. While we have seen that the US’s general security interests significantly increased British transaction costs for the provision of European security, at the same time the American administration determined certain prerequisites for its conditional support. Its position moved back and forth between support for better transatlantic burden-sharing and opposition to increased European autonomy. The US administration made an effort on its own behalf to influence the UK’s desired outcomes to the ESDP negotiations. While it had to accept the overall policy shift, it always attempted to define boundaries that the UK should not cross if it wanted to maintain both NATO and the special relationship. Here, we see, as in the German case, how the US constrained its European partners: it made clear that uncertainty and thus the risks of opportunism would dramatically increase for the EU members, if they did not adhere to the American principles. The threat consisted of potential withdrawal from Europe or, at least, from most of its security problems (see also Weiss 2009). The Clinton administration supported a potential strengthening of the European pillar within the Alliance in the mid-1990s (e.g. Christopher 1993; U.S. Department of Defense 1995). The implicit support for NATO’s primacy within the Berlin Plus agreement satisfied Washington. The British government was among the main architects of this agreement, so the US position was not yet a source of uncertainty for the government (Sloan 2000: 12).34

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In fact, you could even state the opposite: the close cooperation between the two countries on these issues increased the certainty that this would be the appropriate design for the European security setting. When the French rapprochement with the Alliance failed, however, the Clinton government’s position on the establishment of the ESDP was ambiguous (Albright 1998; Cohen 2000d). Hence, the interactions between Washington and London intensified to avoid the emergence of further irritations.35 Even as Tony Blair announced the British shift that would lead to the ESDP, he reassured Washington of the UK’s firm belief in the future of the special relationship. More specifically, he left no doubt about his resolve to join in punishing Iraq for its offences against international agreements. This resulted in high-intensity air strikes against Saddam Hussein. It clearly signalled to the superpower the UK’s commitment and that the European defence initiative would remain compatible with NATO.36 During the actual set-up phase “British officials came to Washington regularly prior to each major stage of negotiations with France and the other EU members to reassure US officials that they agreed completely with American perspectives” (Sloan 2000: 17–8).37 This was not directly translated into the British position, but was nevertheless intended to lend transparency to the whole process and thereby reduce unintentional uncertainties.38 When the new institutional arrangements were to be finalised in Nice at the end of 2000, the UK and the US again cooperated closely to provide each other with information. This resulted in a common approach formulated by the foreign ministers which emphasised the restrained scope of the ESDP: What does European defence involve? It means that European contributions to NATO operations, in the Balkans now, and perhaps elsewhere in the future, will be stronger and more effective. It means that where NATO as a whole chooses not to become engaged, the EU will be able to act in response to humanitarian crises, to provide disaster relief and also undertake peace-keeping tasks. (Albright and Cook 2000) At the same time, the American Secretary of Defence, William Cohen, reiterated his country’s conditions and indirectly threatened that NATO could become a ‘relic of the past’ (Cohen 2000a, 2000b, 2000d). This was highly effective with respect to the British administration, which consequently introduced some changes into its final position, accommodating American requests:39 The new force will have its own military staff. But in keeping with US wishes, it will number fewer than 100, most of them acting as advisers based at EU headquarters in Brussels, and will have no planning, logistics or operational capability of its own. ( ...) By giving NATO the right of first refusal over military operations and relying on NATO planning and forces

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from its command headquarters in Mons, Belgium, the Europeans have implicitly decided to give the United States veto power over European military operations, officials said.40 In other words, the American administration largely succeeded in influencing its special partner in this phase of the study. This suggests, from a transaction costs perspective, that the prospect of enormously high risks of opportunism (that is, weakened US commitment) constrained the British government, to the extent that some of the functionally reasonable rules – such as facilities for military planning – had to be subordinated to the American position. Finally, the incoming George W. Bush administration was critical of the ESDP, but did not yet directly interfere in London. The interactions between both administrations started with a telling departure from protocol, when the new Secretary of Defence first issued an invitation to the Conservative defence spokesman, Iain Duncan Smith: The Bush administration signalled its dismay at Tony Blair’s willingness to sign Britain up to the European Rapid Reaction force yesterday when Donald Rumsfeld, the new defence secretary, summoned the Conservative defence spokesman for talks at the Pentagon. ( ...) Mr Blair will be concerned that such a passionate opponent of the force has briefed the US Defence Secretary a week ahead of his own visit.41 However, the Prime Minister was able to alleviate American concerns about the new force and build trust between the two governments during their first consultations (Bush and Blair 2001a, 2001b). The terrorist attacks of 9/11 and the subsequent military interventions in Afghanistan and Iraq brought the two countries even closer together. Just as with the Nice negotiations in 2000, the US administration interfered when Tony Blair began to make concessions to France and Germany at the Convention.42 The critical point was, again, the question of military planning facilities and the headquarters issue. At the end of 2003, when the Big Three were about to reach agreement on this question, the US was concerned about whether its interests were being sufficiently taken into account. The administration and the US President therefore personally intervened in London, again to safeguard its position within the Convention negotiations among the EU members (U.S. Department of Defense 2003). Again, Tony Blair was able to calm American concerns and the headquarters compromise of the ‘civilian–military cell’ was acceptable to the Americans (Bush 2003a, 2003b). The main difference from the previous phase was that the overwhelmingly close security cooperation since the autumn of 2001 had reduced the importance of British isolationist concerns. In other words, the initial

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Table 6.2 The United Kingdom and its ‘signalling’ with the United States Great Britain, the United States and European Security

Signals sent by the superpower? US security interests

US position on ESDP

Amsterdam (1995–6)

Support for NATO/Berlin European pillar within NATO Plus and basically no risks of opportunism

Cologne/Helsinki (1999)

Isolationist concern and strong increase in risks of opportunism

Convention (2003–4)

Reduced isolationist Still conditional support concern and stable level of (but threat of massive risks of risks of opportunism opportunism maintained)

Conditional support for the ESDP (but threat of increased risks of opportunism, if conditions were not met!)

trigger was missing at the Convention or had, at least, lost prominence. The previous British position had been locked in: it wanted to develop the ESDP further, but largely in a way that was fully compatible with the American position. In conclusion, Table 6.2 summarises the results of the processtracing analysis from this chapter. Broadly speaking, the British Conservative government of the mid1990s did not emphasise a changed European security environment, even though it had to intervene, for instance, in the Balkans. This hesitant view was not accompanied by substantial risks of opportunism because – from a British perspective – Washington had ultimately been willing to resolve European conflicts, such as in Bosnia. In the aftermath of that conflict, however, the UK also perceived a decreasing interest and even commitment to Europe’s case among the American political class. Thus, isolationist and burden-sharing signals from the US emerged as a severe problem for the government. Similar to the previous analysis of Germany, the United Kingdom was increasingly concerned about the hegemon’s provision of certain public goods in the European security market. It even fully agreed with America’s complaints about Europe’s unwillingness to invest more strongly in military assets. In contrast to Germany then, the unilateralist pull of the United States in the new millennium was less problematic for two main reasons: firstly, the UK was normally consulted in advance; secondly, it often participated and thus became closer to Washington. Therefore, its transaction costs for the provision of European security did not increase further, as they did for Germany,

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because no mutually enforcing interaction effect emerged. Instead, the risks of opportunism and thus transaction costs remained largely constant. This accounts for the status quo approach chosen by the UK in the course of the Convention deliberations in 2003–4. The British choice of the institutional context The British government had never considered exiting NATO. Instead, it was the prototypical case where we could observe serious attempts to gain a stronger voice in Washington through a capable ESDP. The idea was that only a militarily strong Europe would be taken seriously both at the White House and on Capitol Hill. While for Paris and Berlin this was seen merely as a positive side- effect, it triggered the approach of the Blair administration (e.g. Blair 1998a, 1998c). This contributes not only to the explanation of the UK’s preference for establishing the ESDP, but also to the differences between its desired scope of operational vs. defence planning. The United Kingdom also had four institution-building options in European security: I) NATO, as a whole; II) NATO, with a strong ‘European pillar’ (that could act independently); III) The EU as an independent security institution highly compatible with NATO; and, IV) The EU as a security institution fully detached from NATO. As the main architect of Berlin Plus, Great Britain’s point of departure was clearly between the alternatives I) and II). Like its German partner, then, the risks of opportunism in terms of the uncertain American commitment to provide security in an increasingly dangerous environment triggered British preferences on substantive scope. By the end of the 1990s, the government perceived a lack of credible information about the hegemon’s future security policies in Europe. For instance, numerous commentators mentioned the occasion when political–military advisers presented Europe’s military options to Tony Blair during the 1998 Kosovo crisis. In essence, there were no options and the newly elected Prime Minister was not amused. This coincided with increasingly strong isolationist currents in the United States. It was not so much the immediate engagement (this was relatively assured) as the long-term engagement that was questioned. In other words, British uncertainty about America’s commitment to Europe’s backyard crises significantly increased the transaction costs of options I) and II). Accordingly, the provision of European security was assessed as increasingly costly so alternatives entered the political agenda. The UK government, however, made clear from the very beginning that option IV) would under no realistic circumstances be considered. American signals contributed to the UK’s assessment that the acceptance of the red lines would more effectively reduce transaction costs, while option IV)

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would indirectly accelerate an American withdrawal. Just as in the German case study, then, the somewhat paradoxical result is that the risks of opportunism stemming from the future capacity of NATO to supply European security drove the British shift at St Malo. It entailed the establishment of a security and defence pillar within the EU, while at the same time avoiding its full exit. The objective was thus to find a politically acceptable and military capable institutional arrangement for option III), which would at the same time offer opportunities for an improved voice in Washington and Brussels. In transaction costs terms, the British government wanted to strengthen the EU’s responsibilities for military planning to improve the information exchanges and coordination on the security risks lurking in the background. There was to be a viable ‘EU- only option’ that was nevertheless compatible with NATO. This was aimed at reducing existing uncertainties without producing new ones (see table 6.3). The process-tracing analysis of the signals sent between the UK and the US has provided a good illustration of the mutually reinforcing triggers of British preference formation: transaction costs for the provision of European security increased over the course of the 1990s, due primarily to the interrelationship between a perceived demand for a security institution linked to an isolationist concern by the British government: how should security be provided in the European security setting, if the United States was reluctant to perform this task? In other words, the relative magnitude of transaction costs provides the most fundamental explanation of the UK’s shift in 1998 and, thus, of this book’s major finding. The government ordered the desired outcomes according to the opportunities they offered for reducing transaction costs for the provision of European security. The prospect of having no credible options

Table 6.3 British transaction costs for the provision of European security and its resulting choice of the institutional context Great Britain and transaction costs for the provision of European ∆ Demand for a security security institution

Great Britain’s resulting choice of the institutional context

∆ Signalling with the United States?

Amsterdam (1995–6)

Some increase

Preference for options I) and/or II)

No risks of opportunism

Cologne/Helsinki (1999)

Strong increase

Preference for II) and, Increasing in particular, III) isolationist concern

Convention (2003–4)

Further increase

Stable preference for No unilateralist options II) and/or III) and decreased isolationist concern

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without recourse to uncertain American capabilities led to the assessment that its traditional cooperative exchanges entailed high transaction costs. Therefore, Great Britain preferred crisis management as a functional task for the ESDP, while maintaining its opposition to collective defence. At the same time, the relative magnitude of transaction costs also explained the fairly ‘status quo’ nature of the approach that the Blair administration took during the Convention deliberations. In contrast to Germany, the risks of opportunism based on the isolationist concern were not combined with unilateralist worries. Although the UK might remain the junior partner, it was still the one being consulted by the lonely superpower. According to that, this interaction effect that was so critical for Germany’s increased transaction costs, and thus its preferences, was largely absent in the British case. Moreover, Washington’s direct interference set the conditions that needed to be met to ensure a continuing American commitment – or in terms of transaction costs, a threatening scenario of extremely severe risks of opportunism. This tradeoff between functionally reasonable investments in the ESDP without scaring away the ‘special partner’ constitutes the key to British preferences. Finally, the British case study also suggested the heuristic value of distinguishing between operational and defence planning, which was the minor finding of the study. The increased risks of opportunism at the end of the 1990s encouraged the government to take a significant step forward with respect to operations, while at the same time the overall approach still implied focusing primarily on enhanced defence planning. The American red lines influenced British preferences to the extent that they determined when the special partner would turn away. The analysis demonstrated that this would be applied primarily with respect to operational planning. In contrast, capabilities that would also have a utility for NATO were much easier to tolerate. In other words, progressive steps in defence planning did not risk the rise of new transaction costs for the UK, while a larger substantive scope for operational planning did. The government ordered the outcomes it desired from the EU negotiations accordingly, so because transaction costs decreased or at least remained stable, there was no need for further reforms. Thus the government maintained its status quo approach and wanted merely to improve European capabilities in the course of the Convention negotiations. Again, the UK preferred a stronger EU responsibility for defence than for operational planning.

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7 France – From Gradual WEU Integration to Full-Scale ESDP

French preferences on substantive scope France differed from both preceding case studies to the extent that it was characterised by a high degree of consistency over time. The government preferred far-reaching proposals for the EU’s substantive scope in the mid1990s, even more so during the Convention-IGC almost a decade later. At a simplistic level, one could say that France continuously wanted a great deal. The second major difference was that the government consequently focused on both high-intensity crisis management and the ‘EU- only option’. While neither Germany nor the UK completely opposed these functional tasks for the EU, at least after 1998, both placed a stronger emphasis on low-intensity crisis management and Berlin Plus arrangements. France’s view was that the Union should be essentially responsible for all functional tasks and thus evolve as a full-scale and dominant security institution. Amsterdam and the integration of the WEU At the beginning of the Maastricht reform deliberations, France’s proposals for institutional reforms were fairly unspecific (Howorth 1997: 35). At that time it strongly favoured far-reaching responsibilities for the EU in security and defence. The overall objective was a merger of the WEU and the EU. Firstly, the EU was to become engaged in collective defence. For that purpose, the non-aligned members needed to give up their neutrality. If this was not possible, collective defence could enter the treaties via flexible arrangements. Thus, the French supported the establishment of a European capacity for military action – without requiring all to participate. At the same time, the government emphasised its willingness to supplement, rather than replace, NATO (Juppé 1996; de Charette 1996).1 France also wanted to incorporate the Petersberg Tasks into the EU. The WEU’s and thus the EU’s operational capabilities were to be strengthened, so that the Union could acquire a credible intervention instrument in political crises. The EU was to have unlimited recourse to the WEU’s assets (Balladur 1994; 97

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Chirac 1996a; French Government 1996c). The precise procedure needed to be established as rapidly as possible in order to give the European Council the political authority to deal more effectively with international crises. In addition, the French government correspondingly preferred the EU to have responsibility for all kinds of crisis management (Barnier 1996; de Charette and Dini 1997). Secondly, France clearly supported common defence planning at the EU level (Howorth 1997: 41–3). This should be applied to all functional areas. Even coordination of nuclear policies was considered.2 Future cooperation in European defence planning was to build on the Eurocorps experience, which represented France’s most far-reaching integration since the country did not participate in NATO’s integrated command structure. France advanced the idea of establishing a European Peace Corps consisting mainly of the large EU members (French Government 1996c; see also EP-Briefing 1997b).3 This was the most extensive demand made in the mid-1990s. With respect to the establishment of a European defence market, the French government was more cautious or even protectionist – especially when it came to competition with the large US companies. Nevertheless, it basically supported the objective (IISS 1995: 38–9). Due to the fact that France was fundamentally transforming its military into a power projection force, the government supported increasing cooperation in defence planning. Franco- German coordination was thereby intended to serve as the nucleus of Europe-wide institution-building (Chirac 1996b; French Ministry of Defence 1996). The government wanted to create more European power projection capabilities (such as strategic reconnaissance and transforming the Eurocorps into a crisis management capability) (Barnier 1996; Kinkel and de Charette 1996). Finally, common defence planning should also encompass military assets for low-intensity crisis management. In particular, the government emphasised the importance of improved strategic transport capacities for the EU members (e.g. Juppé 1996; see also EP-Briefing 1997a). In sum, France was the clearest supporter of bringing the whole spectrum of military planning into the EU. It ordered the possible outcomes of the Amsterdam negotiation according to the idea that the EU should evolve as a full-scale security institution in basically all respects. This was, however, not automatically directed against NATO – at least from an official point of view. After all, it was at this time that France seriously considered returning to the Alliance’s military structures (e.g. Millon 1996).4 The breakthrough of St Malo By the declaration of St Malo, the United Kingdom subscribed to one of France’s longest-standing desired outcomes in European security, namely that the “Union must have the capacity for autonomous action, backed up by credible military forces.”5 At the same time, the French had to acknowledge not only NATO’s de facto primacy, but the Alliance’s active involvement in

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the EU’s security and defence policy. That was the initial point of the ESDP, and the government needed to adjust its approach to European security accordingly. Firstly, France’s consistently preferred mechanism would have been a comprehensive integration of the WEU into the EU. In other words, it still preferred a collective defence function for the EU, whereas this was at that time – as for Germany – not such a salient issue and could thus be reasonably postponed.6 This would not be targeted at NATO. However, most EU members were not totally persuaded by these statements (e.g. Chirac 2000; Goulard 2000: 17–9). The French government unambiguously preferred the incorporation of high-intensity crisis management into the EU’s tasks. There was to be no division of labour between an ‘America that does the cooking’ and a ‘Europe that does the dishes’. The French President therefore strove to maintain the momentum of the Cologne European Council and made ambitious proposals for the ESDP, which further framed the debate (Chirac 1999b). In this respect, France was the clearest proponent of a high-intensity combat role for the EU, while both Germany and Great Britain were more hesitant. The French government was therefore committed to excluding NATO as far as possible from the establishment of the ESDP in this phase, because it feared that it might “steamroller the infant ESDP into adopting structures, procedures and policies which would be unduly influenced by Washington and would therefore be likely simply to replicate NATO practice” (Howorth 2000: 56). Not surprisingly, the French government also wanted the EU to engage in military planning for low-intensity crisis management: the earlier, the better (Chirac 1999b).7 Secondly, when it came to the actual military build-up, France was very close to British beliefs about appropriate defence planning within the EU. It wanted the EU to build military forces for power projection rather than territorial defence. This regularly brought the government up against its German partner. For instance, France wanted to transform the Eurocorps into a rapid reaction capability, which also corresponded much more closely to its ambitious national defence reforms (e.g. Chirac 1999a; Rynning 1999; 2002: 137–73). In short, the French supported cooperation in all areas of defence planning, but wanted to focus on one clear priority, namely power projection. Even though France accepted Berlin Plus, it preferred the EU’s defence planning to focus on EU- only operations (Chirac 1999a; Védrine 1999). That was the most significant difference from Britain in this domain. The government therefore wanted to improve the strategic lifting capacities to gain some independence from the United States (e.g. Richard 2000a). For example, it planned some sealift jointly with the Netherlands and initiated a procurement initiative for battlefield-surveillance and target-acquisition capabilities with its main European partners (IISS 2002: 288–294). The EU should carry responsibilities in defence planning for both high- and lowintensity crisis management (Franco- German Defence and Security Council 1999a; Jospin 1999). Taken as a whole, France had promoted ambitious

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proposals since the end of the Cold War and had largely maintained them over the course of the period of analysis. The Convention and full-scale ESDP As with President Chirac’s attempts to maintain the momentum after St Malo with his ‘Action Plan’ (Chirac 1999b), the French government addressed the Convention deliberations with ambitious aims. Not only was the introduction of solidarity clauses promoted, but the EU was also to become a viable actor with respect to rapid crisis management and gradually decrease its dependence on NATO’s assets. Accordingly, the EU members were to increase their power projection capabilities by jointly making their weapons procurement more efficient and by spending more on military equipment. France therefore supported strengthened armaments cooperation, as long as it remained under national control (e.g. Jospin 2001; Chirac 2001a; FrancoGerman Defence and Security Council 2002). Firstly, the French government still supported mutual assistance clauses. Its preferences were linked not only to terrorist threats or natural disasters, and it argued that ‘anything that happens to one member state affects all’. Thus France advanced the dual principle of solidarity and common security (de Villepin 2002, 2003).8 It supported, furthermore, updating the Petersberg Tasks and wanted to strengthen the EU’s capacities, particularly in terms of the most demanding missions. The ‘EU-only option’ should gradually become more capable and thus more likely to be applied (Chirac 2001a, 2001b; Franco- German Defence and Security Council 2003). As a result, the EU was to develop into one of the main regional organisations conducting military operations upon request by the UN. In this context, the Franco-British ‘battlegroup concept’ emerged. In short, Paris preferred responsibilities for the EU’s military planning along the whole spectrum of contemporary crisis management (Chirac 2002b; de Villepin and Fischer 2002; European Defence Meeting 2003; see also Kempin 2004). Secondly, like the United Kingdom, France regarded the ESDP as a kind of force generator. While the former, however, identified new capabilities as primarily useful for NATO, France’s focus was undoubtedly on the ‘EUonly option’ to decrease the long-standing dependence on the United States. With this in mind, the French government preferred a strong role for the EU in defence planning. This process should be guided by the EU Military Staff on a strictly intergovernmental basis (de Villepin and Fischer 2002).9 Furthermore, it supported strengthened European armaments cooperation, while this domain was not to become integrated into the single market, where the EU Commission held a strong position (European Defence Meeting 2003; see also Becker and Kempin 2005).10 French defence planning was decreasingly directed towards classical territorial defence, and, instead, towards projecting power. This crucial shift had taken root in the mid-1990s and thus should be applied to most of the EU’s defence efforts (e.g. French

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Ministry of Defence 2002; Rynning 2002: 157–9).11 In this context, the government also saw the necessity to duplicate some of NATO’s processes since it often did not participate in the Alliance’s defence planning (e.g. Chirac 2002a, 2002b). In addition, the French government strongly preferred to tackle the main shortfalls at the lower Petersberg end immediately.12 The A- 400M project in particular, aimed at creating a European capability for strategic air transport, was a priority. Thus, it also supported a common tactical training unit for A- 400M crews and other training centres (e.g. de Villepin and Fischer 2002; de Villepin 2002; European Defence Meeting 2003). As indicated above, the French government also initiated the ‘battlegroup concept’ of the EU’s Headline Goal 2010, which represented the reformed Helsinki objectives from 1999 in defence planning (EU-ISS 2005: 10–6). While France was actively participating in NATO’s Response Force, it simultaneously promoted this similar, though less demanding, instrument. For the battlegroups, Paris and London primarily built on their experiences in Africa (Kempin 2004).13 The French, in this sense much closer to Britain, regarded ‘military effectiveness’ as the driving force behind this project. In conclusion, the investigation of French preferences on substantive scope can be summarised as shown in Table 7.1. Table 7.1 Detailed overview of French preferences on substantive scope EU’s desired responsibilities for military planning? Peace-keeping and France and Humanitarian High-Intensity Crisis Preferences Assistance Management Collective Defence Regarding Substantive operational defence operational defence operational defence Scope planning planning planning planning planning planning Amsterdam (1995–6)

++

+

+

+

+

++

Cologne/ Helsinki (1999)

++

++

++

++

+

+

Convention + + (2003–4)

++

++

++

+

+

Explanation: ++ = fully present + = present to some extent * = neither present nor absent (or, both ... and) – = absent to some extent –– = fully absent

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In sum, this investigation has identified two main findings. From a comparative perspective, it was France, of the three countries examined, that preferred the greatest substantive scope of the ESDP. Its ordering of possible outcomes referred to the whole range of military planning. In addition, from a temporal point of view, French preferences were characterised by a high degree of continuity. The main challenge is now the issue of to what extent the study’s transaction costs framework, which successfully explained change within the previous cases, is similarly suitable for explaining the pronounced continuity of the French case?

Explaining French preferences on substance: providing security in a highly uncertain environment This section argues once again that the transaction costs of the provision of European security drove French preferences on substantive scope. Even though the ultimate results differ greatly from the previous cases, the mechanism behind France’s preferences was essentially identical. The interaction between a perceived demand for a security institution and the risks of opportunism linked to providing European security represents the key to French preferences on substantive scope. The government saw a need for a political-military instrument to tackle future instabilities in Europe and beyond. The French case, however, differed in two important respects. Firstly, the interaction effect was not constrained by ex ante transaction costs stemming from the threat of a potential American withdrawal. Secondly, the French non-integration into most of NATO’s military planning processes further contributed to the fact that the transaction costs of France’s cooperative exchanges for the provision of security were consistently the highest among the Big Three. France, the United States and the provision of European security As in the previous cases, I focus on French interactions with the United States, even though the latter was not France’s most desired partner for the provision of European security. Nevertheless, France had to deal with the superpower due simply to its weight in most issues of importance for this study.14 Again, I trace back the ‘signalling’ processes between Washington and Paris to determine the latter’s comparative assessment of NATO’s and the EU’s capacity to provide European security. In short, what were the risks of opportunism that emerged from this process that ultimately contributed to French transaction costs? Crucially, France’s few opportunities to access and influence the United States reinforced its isolationist concerns and thus contributed to its high level of risks of opportunism from the outset. While the United Kingdom could ultimately build on its special relationship with the superpower, Germany was in the beginning of the analysis much less involved in those exchanges

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that were to actively provide the public good of European security. When the latter began to engage more strongly, the case study demonstrated that German risks of opportunism also increased. Due to its generally good relationship with the United States, however, some assurances remained that were absent in the French case. It is important to note in this context that French concerns about US isolationism were based much more on concrete policies, such as the Balkans, than on questions of institution-building (such as NATO). During the Bosnian and to some degree the Kosovo crisis, Europe had to wait for the superpower. The problem for France was thus not so much a complete withdrawal of America, but the fact that it retained a significant say in all questions of European security. In this regard, France was, indeed, uncertain about the credibility of the American commitment. The constraining impact of US conditions for the ESDP, which functioned as an important constraint for Germany and the UK, essentially did not play a role in the French case. Finally, the government was concerned when the unilateralist pull in American foreign policy became enhanced, after George W. Bush entered office. This overall constellation of signals continuously determined France’s preference for granting the EU – rather than NATO – full-scale responsibilities for military planning. The security interests of the United States after the Cold War15 At this stage, I return to the two-fold problem of many European countries in their transatlantic relations: isolationist trends, on the one hand; and growing unilateralism, on the other. While the United States’ interests were obviously the same as in both the previous case studies, there was an important difference in the Franco-American interactions. Most significantly, French perceptions of the signals were somewhat different. Two developments were the main cause of France’s uncertainty about the US commitment to European security: Washington’s hesitancy about deploying military forces to the Balkans in combination with concerns that George W. Bush’s administration was staffed with many senior officials who held to a straightforward ‘America First’ position. Firstly, the Bosnian experience was constitutive for French security policy in many regards (e.g. Gnesotto 1996; Grégoire 2002: 7, 16).16 Its impact was even clearer than in the British case. The government interpreted it primarily as a manifestation of European inability combined with an American unwillingness to provide security in Europe’s backyard (Gallis 2006: 14). As one of the most influential contributions argued: The French were dismayed at US reaction to the Bosnian crisis, and the nature of the French anxieties over US policy began to shift. Rather than fearing a continuing US hegemony in Western Europe that the end of the Cold War had rendered unjustifiable, France started to worry more about

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US disengagement, an outcome that would be all the more alarming in light of the limitations of Europe’s intervention in Bosnia. (Grant 1996: 64) At that point in time, France’s efforts were concentrated on rapprochement with the Alliance. This would not only increase Europe’s military ability, but could also decrease Washington’s unwillingness. In other words, it was a strategy of voice. Thus, the government still planned for a strengthened European pillar within NATO. In the words of then-Minister of Defence, Charles Millon: Cumbersome structures and force of habit have weighed heavily on the planning and implementation for the Bosnian operation. (...) There are lessons that must be learned here. France means to contribute to this process by proposing two priority lines of action: strengthening political control and consolidating the European identity within the Alliance. (Millon 1996: Web-Edition) In addition, the French view of US signals sent during the Bosnian crisis was regarded not so much as an unfortunate incident, but as clear evidence of diverging interests between Europe and the United States, a divergence that was expected to increase in the future. From a French perspective, the country had offered as many concessions as possible to the Alliance during the negotiations about its re-integration. In particular, French forces operated not only under NATO procedures, but even under its command (Gloannec 1997: 86), so French reservations about both integrated military structures and American dominance needed to be overcome. Nevertheless, after French rapprochement with the Alliance had failed, (e.g. Tiersky 1997; Utley 2001: 142–6) the government drew one central conclusion: while the provision of European security required non-American solutions (in other words, exit), military operations would evolve further on a multilateral basis (Howorth 1997: 34; see also Menon 2000: 120–30). This was made apparent in retrospect by a report from the French Parliament about the relationship between the United States and Europe: In the first place, there is no longer an automatic connection between European security and US intervention: during the Cold War, a crisis within Europe had consequences internationally and directly affected American interests. These days however, crises within Europe, such as the conflicts which shook the Balkans during the last decade, are part of a regional problem, and do not automatically affect the United States. Certainly the US did intervene, somewhat late in the day, in Bosnia, and at the beginning of the Kosovo crisis: realistically however, it has to be said that it is more a question of the inability of Europeans to deal with

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these situations on their own, rather than the interests of the United States, that prompts US intervention. (French National Assembly 2005: 13 of 60) Uncertainty about the satisfactory provision of European security had grown significantly due to the conjunction of instabilities in its backyard, France’s ambitions to do something to counter them and America’s hesitance about committing itself. In other words, France was confronted with significant risks of opportunism. At the same time, voice opportunities within NATO’s military structures were basically locked and French forces had nonetheless to adjust to the Alliance’s procedures in the field. In short, France’s transaction costs for the provision of European security were at comparatively high levels. This isolationist concern among French officials was further reinforced by signals from the US Congress (Gloannec 1997; Gallis 2006: 30). The American domestic situation was believed to create substantial problems with respect to the deployment of US ground troops in the medium- or even short-term. These prerequisites – linked to the expectation that further crises would certainly evolve – were a cause of serious concern within the French government. As the United States was thought to have been gradually disengaging from European security since the mid-1990s, it should also have given up the claims to its leadership position. This latter point, in particular, led to tensions between French and American officials (Menon 2000: 69–71).17 Furthermore, many members of George W. Bush’s administration saw France’s ambitions as some sort of challenge to the American leadership.18 They therefore advocated ‘America First’ even more strongly. More specifically, notions such as ‘hyperpuissance’, ‘grandeur’ or ‘monde multipolaire’ (Chirac 1999a; Védrine 1999), were primarily understood as French efforts to mobilise international opposition to American initiatives (e.g. Berger 1999): Some US observers characterize France as an antagonist. The current French ambassador reportedly has charged that some US officials have deliberately spread ‘lies and disinformation’ about French policies in order to undercut Paris. (Gallis 2006: 2) This highly suspicious attitude towards the French was held across the political specturm, from moderate voices, such as Condoleezza Rice, to the neo- conservatives, who were particularly hostile.19 These tensions finally culminated when the French foreign minister overtly opposed the US in the UN Security Council in March 2003 (e.g. Hofmann and Kempin 2007: 3–6). Secondly, the French government was somewhat concerned about unilateralist trends in American foreign policy. This had already been perceived

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at the end of the 1990s, but gained greater relevance after George W. Bush entered office in Washington. France had always wanted to have some voice in US security policy, but at the same time it accepted America’s special status as a superpower. Nevertheless, the French President vehemently reprimanded the US Congress for not ratifying the Comprehensive Test Ban Treaty in 1999: The French president said that he “deplored the current American disengagement on several major issues as a result of congressional decisions.” ( ...) Mr. Chirac focused his anger on Congress, saying that it “all too often succumbs to the temptations of unilateralism and isolationism”.20 This fear of unilateralism was also the fundamental building block of the whole idea of ‘multipolarity’ that France had so often promoted (e.g. Chirac 1999a). Both the French foreign minister and the President “called for ‘a multipolar world’ in which the United States would have decreasing weight internationally, starting with growing US absence from European security.”21 In plain contrast to Britain and Germany, France was in this regard the only country that interpreted the unipolar world order as a sort of threat to its interests. The French Foreign Minister Hubert Védrine referred to the United States as a ‘hyperpuissance’ and said: “La France, qui est l’héritière d’une histoire prestigieuse, est potentiellement menacée par cette évolution du monde” (Védrine 1997).22 This clearly did not imply that France was concerned about its territorial integrity in the classical understanding of ‘threats’ in International Relations, but instead that its interests as a global power were from time to time threatened when they diverged from the American ones. In other words, French concerns pointed towards a qualitatively different relationship between Paris and Washington (Serfaty 2005). These worries were relatively constant within the French political class, even though they became rather more prominent after the United States declared the ‘war on terror’ in late 2001 (e.g. French National Assembly 2005: 14 of 60). France perceived the war on terror as a predominantly unilateral enterprise that indirectly weakened European security. The government argued that France wanted to remain a reliable and responsible partner of the US, while avoiding becoming a blind ally (e.g. de Villepin 2002).23 The American intervention in Afghanistan with minimal assistance from its allies had already been criticised, and the war against Iraq was then subject to overt opposition from the French government (Gallis 2006: 2). The traditionally problematic bilateral relationship severely worsened over these frictions about America’s unilateral actions, as the French saw them (Chirac 2003a), and only gradually improved afterwards:24 “Europe and the United States are so different that it would be useless to pretend that they share exactly the same vision of the world; they nevertheless share fundamental values and numerous interests” (French National Assembly 2005: 36).

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Like the German case, the US’s security interests and the concomitant signals it sent inspired a mutually reinforcing trend among France’s political actors. While the isolationist concern was based primarily on concrete crisis management, such as in the Balkans, it was reinforced by the overall French assessment that Washington did not take other powers sufficiently into account. This was enhanced by the new unilateralism that found its expression in the American war on terror.25 In sum, French preferences for strengthening the EU’s responsibilities for military planning were driven by the American signals sent from the start of the 1990s, and their bilateral relations. The problem was that the government had essentially no voice opportunity to encourage further American commitment and thereby reduce its risks of opportunism. This process remained overwhelmingly stable during the period of analysis and thus contributed to the continually high transaction costs of France’s cooperative exchanges for the provision of European security. The conclusion drawn was, in the words of President Chirac, that a credible Europe “means acquiring the military capabilities to be able to decide and act without relying on choices made elsewhere” (Chirac 2000, emphasis added). The ambivalent US position towards the ESDP As indicated above, the US administration swung between opposition to European autonomy and support for better transatlantic burden-sharing. Most of the time it was suspicious towards the French because the latter was regarded as a permanent problem for NATO’s unity (e.g. Sloan 2000: 6–9). Accordingly, the US also set certain conditions but focused less on France since its own influence could regularly be expected to be higher in London or in Berlin. As a consequence, France’s voice opportunities were limited. Furthermore, the militaries’ common experiences in NATO’s integrated command structures were lacking in the French case, which further complicated the signalling processes. Therefore, what primarily differentiated the French case from both of the previous cases was the conjunction of two aspects: while French non-participation in SHAPE increased its transaction costs with respect to ongoing multilateral crisis management, the shadow of a potential US withdrawal from Europe weighed significantly less for Paris. It is shown below how this configuration of differences had a major impact on the French government’s comparative institutional assessment. Firstly, the US administration of the 1990s allowed for some steps towards European autonomy in defence issues – or a greater say as long as it would remain within NATO structures. One of the main rationales was, in fact, to bring the militarily capable France back into the Alliance’s structures. Therefore, this period was characterised by increasing trust between the two long-standing antagonists (Grant 1996: 64; Hunter 2002: xvi).26 France indirectly strove for some sort of division of labour between NATO and Europe: the former for territorial defence and the latter for crisis management. In the

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words of French Foreign Minister, Hervé de Charette, the Petersberg Tasks were of “real importance because in practice they are the ones which, in future, have every chance of being carried out” (de Charette 1996, cited from Howorth 1997: 35). This sort of détente somewhat reduced French uncertainty about the superpower’s commitment, which had risen recently due to the experiences in Bosnia. When French rapprochement failed because of disagreements about NATO’s military command posts and enlargement, however, the mistrust re- emerged rapidly (e.g. Tiersky 1997). By the end of the 1990s, the two-fold French efforts for a European defence identity had proved futile: The EU-based approach had shown significant limitations, as France’s partners were reluctant to countenance the creation of a European security and defence stance independent of the United States. The alternative approach, working to construct such a position within the Alliance, had proved equally limited as French and US interests collided. (Utley 2001: 145) In terms of transaction costs, the French government was faced with high risks of opportunism in its attempts to provide European security. However, the threat of a potential US withdrawal if the Europeans did not comply with certain conditions did not affect the French government in the same way as some of its European partners. In other words, the worst case scenario of exponentially rising uncertainty of further American disengagement was largely absent because France expected enhanced efforts by the Europeans under this potential condition. Secondly, after the relatively surprising breakthrough of St Malo, the French government wanted to accommodate American concerns (Albright 1998). However, its status as the main proponent of the European autonomy approach frequently brought it into direct confrontation with Washington.27 That was particularly observable during the treaty negotiations in Nice in 2000. While the French President tried to strengthen the EU’s responsibility for military planning, the Americans pressured the UK and provoked serious tensions with Paris over these questions:28 By responding to US concerns, the Europeans moved away from France’s desire for a European defense identity separate from NATO, and not subservient to the United States. Just Thursday, French President Jacques Chirac seemed again to be pressing for a European military force separate from NATO. ‘Coordinated, but independent,’ Chirac said at a news conference.29 In contrast to its EU partners, the French government primarily wanted to reduce transaction costs among the EU members since its ‘choice’ of an

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institution was basically decided. After all, permanently adjusting to NATO procedures was inherently expensive for France in terms of transaction costs. In contrast, the threat of a potential withdrawal was assessed as clearly less relevant and thus costly – as one senior official stated after Nice: There were ‘different sensibilities’ between France, whose military forces are not integrated within the NATO command, and other allies. “some people want to do everything within NATO. We want to keep real autonomy for the EU,” he said.30 As a result, the principal difference lay with the question of NATO integration and thus transaction costs of how to provide European security in the future. That substantially differentiated France from Germany and the UK. Finally, these transaction costs did not fundamentally change during the last phase of the period covered by this study. While the terrorist attacks of 9/11 appeared at first to improve Franco-American relations, the military interventions in Afghanistan and particularly Iraq created severe tensions. Since EU facilities for military planning were continuously on the agenda, the bilateral relations rather worsened (U.S. Department of Defense 2003).31 Many officials in the new administration believed that France would actively seek to undermine NATO in order to reduce American influence in Europe. It was often seen to ‘punch above its weight’. These allegations were, however, strongly denied by French officials (Gallis 2006: 13–6). At the same time, American influence in Europe was, again, channelled through London and Berlin, when the headquarters issue threatened to escalate.32 In that sense, nothing had really changed since the previous phases. In sum, Franco-American interactions about European security arrangements did not affect French risks of opportunism as extensively as did the United States’ general security interests. Even though they did not decrease uncertainty, neither did they increase it. Despite some ambivalence, the French government always understood what was at stake. The withdrawal threat looming in the background, however, did not represent a comparable problem for France since it was not integrated into NATO’s military structures, except for its participation in the basically European NATO Response Force (NRF). Thus, withdrawal would not be a genuine worst case. To sum up, the process-tracing analysis demonstrated that the most important causal effect was the interaction between the perceived demand for a security institution linked to substantial risks of opportunism in the European security setting. In contrast to its partners, who were participating in NATO’s command structure, the French costs of transacting were considerably higher from the very beginning. That was reinforced by the French claim to play a leading role in the risky security environment. Hence, farreaching responsibilities for the EU in military planning would be an effective and thus desirable institution that would counter these high levels of

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Table 7.2 France and its ‘signalling’ with the United States Signals sent by the superpower? France, the United States and European Security US security interests US position on ESDP Amsterdam (1995–6)

Uncertainty about the American European pillar within commitment (e.g. Bosnia), NATO increasing isolationist concern and severe risks of opportunism

Cologne/Helsinki (1999)

Risks of opportunism at a high Conditional support for the but stable level ESDP (relatively negligible for France)

Convention (2003–4)

Risks of opportunism at a stable level: isolationist concern combined with new unilateralism

Still conditional support (despite increasing tensions, relatively negligible for France)

transaction costs for the provision of European security. The analysis of these signalling processes is summarised in Table 7.2. The French choice of the institutional context The previous sections have shown that French voice opportunities in the United States were limited. Nevertheless, a more complete exit from NATO than French non-integration into the military structures had never been considered. Instead, the Alliance was regarded as a kind of ‘dinosaur’33 that could remain useful for the unlikely task of large-scale territorial defence. This section’s point of departure is, again, the four specific options for institution-building in European security: I) NATO, as a whole; II) NATO, with strong ‘European pillar’ (that could act independently); III) The EU as an independent security institution highly compatible with NATO; and IV) The EU as security institution fully detached from NATO. In the mid-1990s, the starting point was NATO’s dominant position within the contemporary European security setting. Unlike Germany or the United Kingdom, the French government had never been a wholehearted supporter of option I), This was primarily because of its reduced voice opportunities within the Alliance. Option II), however, had been seriously considered in the mid-1990s, mainly because of French experiences in the Balkans. While the UK’s interpretation of the Bosnian crises

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mainly placed the emphasis on the fact that the United States ultimately intervened, the French reading drew a distinct conclusion: Washington had been reluctant for a considerable time to commit forces. Thus, the United States’ hesitations with respect to Europe’s security problems combined with the limited French voice opportunities in Washington contributed, as far as France was concerned, to much greater risks of opportunism in its attempts to provide European security. In addition, its military needed to permanently adjust to NATO’s procedures on the ground, which appeared increasingly problematic. In short, French transaction costs within the initial setting were relatively high. This made a European pillar within NATO, at least, attractive to the government. Furthermore, we saw that the American threat of disengagement, which had a strongly constraining impact on both Germany and the UK, was largely ineffective in the French case. Therefore, Paris was considerably less concerned about the exponentially rising risks of opportunism should the US withdraw from Europe. Put differently, France would have preferred an unambiguous American approach: either a full commitment to European security with a reliable engagement of (ground) forces or withdrawal, with the consequence of losing its veto position in all questions of European security. The process-tracing of the signalling, however, pointed into the opposite direction, namely a kind of built-in American ambiguity. As a result, there was a combination of a perceived demand for institutions in European security, severe doubts about the credibility of the American commitment and, at the same time, costly adjustments to the Alliance on the ground. This made both options I) and II) inherently expensive in terms of transaction costs. Based on the lesser impact of the American ‘threat of complete withdrawal’, the French government at least considered option IV). While the United Kingdom and Germany excluded this possibility above all for political reasons (that is, accommodation with the US), France distanced itself primarily for functional reasons (that is, because Europe was not capable of providing security). Despite permanent suspicions towards the Americans, Paris expected similar risks of opportunism if Europe took on all responsibility for the provision of European security. Thus, option IV) was also problematic for France in transaction costs terms. Hence, both options II) and IV) entailed significantly high risks of opportunism and thus increasingly suggested a focus on option III). The consequence was a preference for a European Security and Defence Policy that would remain compatible with NATO, while at the same time guaranteeing the ‘autonomous decision-making capacity of the EU’.34 This approach offered the opportunity of reducing transaction costs for the provision of European security on a sustainable basis. On the one hand, the dependence on the American willingness to participate and thus the expected opportunism would gradually decrease. Instead of waiting for

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American troops, Europe could act autonomously. On the other hand, the ESDP served as an instrument for reducing the French transaction costs of coordinating among the Europeans. It would help reduce the requirements of adjusting permanently to NATO procedures, which had largely emerged without French input. The mutual provision of information was to be applied to a wide range of military planning, from low-intensity peacekeeping over combat operations to collective defence. These results are illustrated by Table 7.3. The causal pathways of this study are clearly reflected by the processtracing of French preferences. The interaction between a demand for institution-building and the signals sent by the United States was the decisive driver of France’s approach towards the large substantive scope of the ESDP. Not only were the transaction costs of all other options higher, but, in particular, the actual arrangements of the 1990s were more costly to Paris than to Berlin or London. In short, the relative magnitude of French transaction costs for providing European security was significant. It was the main feature that differentiated the country from its partners, namely, its non-integration into multilateral military structures. With the noticeable exception of the Eurocorps, the French military traditionally operated at a national level of command, which clearly increased both problems and costs for multilateral crisis management operations, such as in the Gulf or

Table 7.3 French transaction costs for the provision of European security and its resulting choice of the institutional context France and transaction costs for the provision of European security

∆ Demand for a security institution

France’s resulting choice of institutional context

Amsterdam (1995–6)

Some increase

Preference for option II)

Cologne/Helsinki (1999)

Further increase

Preference for option III) Continuously severe risks of opportunism/ isolationist and unilateralist concerns

Convention (2003–4)

Constant increase Clear preference and strongest proponent of option III)

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∆ Signalling with the United States? Severe risks of opportunism (isolationism)

Severe risks of opportunism / isolationist and unilateralist concerns

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in the Balkans (e.g. Gloannec 1997: 86). As early as the mid-1990s, French transaction costs were thus significantly higher than those of their British and German partners. This was due primarily to the fact that France’s rapprochement with NATO had failed, so an active stance in European security was considerably more costly for Paris. After all, its military forces had to adjust to the Alliance, not vice versa.35 While the French government was thus faced with high risks of opportunism in European security, its transactions to provide the good were, nevertheless, more costly than for most of its partners. Finally, the high congruence between operational and defence planning that we can observe in the French case points to another crucial difference from Britain. Partly based on its non-integration into NATO’s command structure, the French government focused on shaping the EUonly option as comprehensively as possible. The ESDP should evolve as a genuine project of the Union. The overall approach was therefore also more consistent. So far, this study has exclusively focused on the question of why institutions for European security should be built. This is followed by the question of how to shape these institutions. In other words, the study turns to questions of institutional design and starts, again, with the process-tracing analysis of the German case.

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8 Germany – An Incrementally Decreasing Willingness to Bind the Country

This chapter’s guiding questions are: to what extent did the German government prefer a high degree of bindingness in the emerging ESDP? How demanding should the rules that would govern this issue-area be? Should there be a division of labour between the EU and its member states?

German preferences on institutional depth The most significant finding in what follows is Germany’s gradual and slight decrease in the institutional depth it desired for the EU. This suggests some convergence with the rest of the EU, as in the mid-1990s Germany was the strongest supporter of highly binding agreements. However, Germany was the only country that demonstrated a desire to gradually bind itself less over the period of the analysis. The government was increasingly reluctant to accept exceptions to unanimity in decision-making, which used to be the typical German strategy for making EU policies more efficient. Instead, the consensus principle was reinforced (for example in the European Defence Agency), and the government invested enhanced efforts to create the possibility of ‘flexible arrangements’. The exclusion of this option from military affairs was regarded as the main obstacle to an efficient ESDP. In addition, the government supported the build-up of an organisational structure for the ESDP within the Council, whereby the position of the supranational institutions was consequently weakened. Thus, the desired balance was gradually shifting towards the intergovernmental elements of the Union’s framework. Amsterdam and a strong EU defence pillar In the mid-1990s, Germany preferred a relatively high degree of ‘bindingness’ with respect to European security policy. This preference applied more strongly to functional differentiation than to demanding rules. Firstly, the 114

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government preferred to adjust the decision-making procedures because these had been regarded as the main weakness of the CFSP so far (Kinkel 1995, 1996a; Kohl and Chirac 1996). The rule was promoted to distinguish between decisions of principle (unanimity) and implementation (qualified majority voting – QMV) (Kinkel and de Charette 1996). While Germany was among the strongest supporters of extending QMV into CFSP matters, it made unambiguously clear that this did not apply to military issues (Kinkel 1996c). Here, the consensus model was to be broadly maintained, although there was a desire to facilitate flexible arrangements such as ‘constructive abstentions’ (CDU/CSU Group 1994).1 At the time of the IGC preparations, Germany supported the unification of the EU’s treaty structure (e.g. Lamers 1995). This implied a possibly incremental ‘communitarisation’ of the CFSP, whereby military issues would retain their special status and remain embedded in an intergovernmental structure. At the same time, Germany was not overly concerned about the Commission’s potential involvement in these issues (Kinkel 1996d; Aggestam 2000: 73). The German government formulated some clear demands with respect to ‘flexible arrangements’ in defence. German politicians had significantly contributed to initiating this debate (that is, Lamers and Schäuble). The most important aspect for Germany was to emphasise that the laggards must not be able to impair the EU’s ability to progress towards increased integration (CDU/CSU Group 1994; Lamers 1995; Kinkel 1995). Defence was, in fact, regarded as an appropriate issuearea for flexible arrangements, whereas Germany wanted to shape those arrangements to make them as inclusive as possible (Kinkel 1994, 1996c). Accordingly, no member that was willing and able to participate was to be excluded (Kinkel and de Charette 1996). Secondly, while Germany was slightly hesitant with respect to the desired decision-making procedures, it supported incorporating the European institutions and dividing labour with them. It was primarily the European Council that was to be responsible for dealing with defence questions on an intergovernmental basis. In instances of ‘structured cooperation’ or ‘variable geometry’, only the participants in the vanguard were to be entitled to make decisions (Kinkel 1995, 1996d; German Government 1996). Because Germany had always been one of the defenders of a strong Commission in terms of both its administrative and political functions, the government also wanted to strengthen the role of the Commission in security issues. Therefore, defence issues should remain located within the European Council, while the Commission would be granted (non- exclusive) agendasetting and implementation rights (CDU/CSU Group 1994; Hoyer and Barnier 1995; Kinkel 1996c). Nevertheless, after some serious opposition at the start, the German government ultimately supported a long-term effort to weaken the Commission: namely, the establishment of a new ‘Mr/Ms CFSP’ within the Council. S/he was meant to increase the Union’s visibility and continuity in security matters. Together with the reformed Presidency

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and the External Relations Commissioner, the new post would represent the EU on the international stage. It was to be supported by a new permanent analysis and planning unit (Hoyer 1996; Kinkel and de Charette 1996; Kohl and Chirac 1996).2 Germany also formulated quite far-reaching demands with respect to the European Parliament’s (EP) powers in security matters during the IGC-preparation phase (Kinkel 1996d). However, it backed away from these demands and instead promoted only consultation procedures. This implied, at least, a certain strengthening of the EP’s role (Kinkel 1996b). Overall, the German government’s objective was a more coherent and effective CFSP. This was to be achieved through flexible decision-making procedures and a strengthened division of labour. As a result, Germany showed itself to be a relatively ‘supranationalist’ member in the AmsterdamIGC, especially compared to the other states in this study. St Malo and the strengthening of a more intergovernmental ESDP As in the analysis of preferences on substantive scope, the British shift at St Malo fundamentally altered the landscape in terms of bindingness. In particular, the increased substantive scope had the potential to lead to stronger interference in sensitive areas of the member states’ sovereignty. The question of bindingness therefore gained new momentum. In short, the issue of more ‘intergovernmentalism’ in the EU versus a potential ‘communitarisation’ of the second pillar was at stake (Jopp 1999: 21; Aggestam 2000: 73). Firstly, the German government wanted to maintain the distinction between decisions of principle and implementation. It believed the ESDP should be based on unanimous agreement. This referred particularly to the use of force.3 The preferred decision-making procedure was thus a unanimously decided ‘common strategy’ that could be followed by implementation on the basis of QMV (Fischer 1999a, 1999b). Moreover, the German government gradually distanced itself from the idea of profoundly ‘communitarising’ security issues. Instead, the aim was ‘coherence’. In terms of orderings of possible outcomes, the debate, then, used to focus on whether to create a fourth pillar (the ESDP) rather than integrating the second into the first (Jopp 1999: 2, 17).4 Thus, the government accepted the status quo (Fischer 1999a), but opposed any attempts to further fragment the EU’s structure. The Germans continuously supported the introduction of flexible instruments into the ESDP (Fischer 2000a, 2001b). There was essentially no shift in this dimension. In contrast, Germany quite unexpectedly opposed peer-reviewed convergence criteria for the ‘force generation process’. This was initially proposed by the UK and Italy and was then re- confirmed by France.5 However, the German government was against binding measures and promoted, instead, a ‘catalogue system’ with non-binding (because self-reviewed) commitment conferences (Scharping 1999c; Knowles and Thomson-Pottebohm 2004: 597; Wagner 2005: 465).

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Secondly, Germany still supported – though rather less enthusiastically – the division of labour with the European institutions (Schröder 2001b). At a declaratory level, the government continued to promote a strong role for the Commission in the ESDP, while it ultimately reinforced the one-sided strengthening of the Council’s structures in essentially all military affairs (Jopp 1999: 22). The same could be observed for the rights of the Parliament (e.g. Schröder 2001b).6 As a consequence, the development of German preferences gradually pointed more strongly towards the intergovernmental elements for building up the ESDP. The Convention and a gradually less binding ESDP At the Convention-IGC, the German government ultimately favoured intergovernmental procedures in military matters. Now this was also applied to functional differentiation, where the Council was to be continuously strengthened. Firstly, Germany preferred unanimity in an expanded area of decisions with military implications (Fischer 2002; Fischer and de Villepin 2002). For example, the government strictly opposed QMV as a decisionmaking procedure for the European Defence Agency: “In a striking break with previous positions, Fischer tabled an amendment that argued for unanimous decision-making in specifying the agency’s statute. According to the German government qualified majority voting could lead to the assignation of competencies that included the coordination of armed forces” (Wagner 2006: 132). As long as the consensus model was sustained, however, Germany was much less concerned about ‘communitarising through the backdoor’ than was, for instance, Britain. Implementation decisions could thus be taken by QMV, and Germany was a strong supporter of expanding QMV into CFSP issues other than the military. For example, the ‘General Affairs Council’ was to become generally governed by QMV (Fischer 2001b, 2003a). Among the most critical issues of that time was the question of ‘flexible arrangements’. The status quo of the Nice Treaty prohibited the application of flexible rules to military issues. Germany was dissatisfied with this situation. The government therefore promoted ‘enhanced’ or ‘permanent structured cooperation’ since it seemed to represent the best available option for achieving more demanding and thus more efficient rules for the ESDP – despite the general consensus on unanimity (e.g. SPD Bundestag Group 2000; Fischer 2000a, 2001b). This introduction of structured cooperation was one of the German government’s central priorities (German Government 2002; Fischer 2004c, 2004b).7 In particular, Germany preferred to include the UK because a ‘core defence group’ would only make sense if the leading military power participated (e.g. Meiers 2005: 131–4).8 The more specific ‘orderings of outcomes in flexibility’ were the following. The Germans viewed the rule of how to initiate ‘structured cooperation’ in the ESDP as very important and clearly preferred that no EU member be

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given the opportunity to block those who wished to proceed (Fischer 2001b, 2003d; Schröder 2004). Thus, it should not be necessarily a unanimous agreement of the European Council, but decided by QMV (Schröder and Chirac 2003). Structured cooperation would be particularly useful for rules governing (1) multinational forces with integrated headquarters; (2) armaments cooperation and (3) mutual assistance clauses (German Government 2002; Fischer 2004a; Fischer and de Villepin 2002). This would not undermine NATO because the WEU had existed alongside the NATO obligations for several decades (Fischer 2003d; European Defence Meeting 2003). Finally, Germany had initially preferred a financing system similar to NATO’s: pooling the minimum spending financed by the Community budget and covering the other costs ‘where they fell’ (in other words, national financing). Ultimately, it could also agree to distinguish between two categories of common costs: (1) headquarters (EU), and (2) barracks and troop deployment (at the national level) (Fischer 2003a; German Government 2004).9 Secondly, the German government consistently supported a certain division of labour between the member states and the EU institutions. Nevertheless, it was still the European Council that was predominantly responsible for the ESDP. This also referred to increased armaments cooperation. Germany preferred to strengthen this institution by establishing a permanent President (German Government 2002; Schröder 2003a; Schröder and Chirac 2003).10 In contrast to Germany’s general willingness to extend the Commission’s powers, the External Relations Commissioner’s position was not to be significantly expanded in the ESDP (German Government 2002, 2004). The successor of Mr CFSP, namely the new EU foreign minister, was meant to have a generally strong position (Schröder 2003a). However, Germany was less enthusiastic about a complete merger of the High Representative for CFSP and the External Relations Commissioner, instead preferring ‘doublehatting’, that is to have the two functions exercised by one person working in two institutional roles (Fischer and de Villepin 2002). Nevertheless, the government was not concerned about a potential ‘communitarisation’ of the CFSP and ESDP (Fischer 2001b, 2003b).11 In addition, the Germans opposed potential European Court of Justice (ECJ) jurisdiction in security issues as well as formal EP oversight. Instead, it believed consultation would suffice (Schröder 2001a; Schröder and Chirac 2003; Schröder 2003a). Apart from ‘flexibility’, the Convention debate was very much dominated by the planned organisational resources of the EU institutions. The Union’s ambitions to be capable of conducting EU- only operations soon raised the issue of how to plan, command and control them. There were essentially two options: either a standing European operational headquarters (such as a strengthened EUMS) or national HQs. The political problem was that while the former might duplicate NATO’s SHAPE, the latter could lead to duplication among the EU members (see also German Government 2004).12 The extraordinary relevance of this topic was primarily based on the fact that

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the ambiguities produced so far within the ESDP could not be kept at bay: on the one hand, to reaffirm Atlanticist loyalty, while, on the other, to establish European facilities for autonomous action.13 To begin with, the government supported the creation of EU planning facilities, but backed away quite quickly when faced with harsh UK–US opposition.14 Germany, then, supported strengthening national HQs for EU-only operations and the establishment of both a civilian-military cell at EUMS and an EU cell at SHAPE. The shift also implied that Berlin Plus had re-evolved as some sort of official default position.15 Based on the documentary analysis and particularly the interviews, this study assesses German preferences as displaying overall support for equipping the EU with the standing capacity for operational planning. It should be decisively smaller than SHAPE for primarily functional – rather than political – reasons, since the purpose envisaged was the provision of planning for small-scale operations. It should not be about ‘moving armies’, such as within SHAPE. In some respects, this was a good illustration of Germany’s overall position: strengthening the EU should not automatically weaken NATO. Instead, wherever the government felt it was functionally sensible, it supported strengthening EU efforts (Fischer and de Villepin 2002).16 Furthermore, Germany was a strong supporter of the establishment of a European Defence Agency, which would make the procurement policies more efficient. However, the government supported a narrow mandate for the EDA (that is, it should be a purely intergovernmental agency), particularly with respect to decision-making, which should be based on the unanimous agreement of the steering board (German Government 2002).17 Finally, in the context of the planned European Security and Defence Union (ESDU), Germany preferred to create different multinational training centres (for strategic transport, for example), and it also supported the gradual establishment of a European Diplomatic Service. It was to consist of representatives of the member states and Commission officials (European Defence Meeting 2003; Schröder and Chirac 2003). Germany’s overall preferences were – though still relatively far-reaching – less supportive of bindingness in comparison to the mid-1990s. The government wanted to maintain the consensus principle but, at the same time, create opportunities for ‘structured cooperation’ in military matters. This should be initiated by QMV. No single member or group should be able to stop those who wished to proceed. However, each member would be entitled to join. Germany’s intergovernmental outlook was particularly reflected in the preference for a strengthened Council and no significant new responsibilities for the Commission. Neither the EP nor the ECJ was to be granted significant participation in military matters. Regarding new units under the Council, Germany had initially preferred standing operational headquarters. On the whole, its preferences regarding institutional depth were largely characterised by a ‘reform orientation’, particularly by a comprehensive application of ‘structured cooperation’ in security issues. As

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Table 8.1 Detailed overview of German preferences on institutional depth How demanding should the rules be governing security Germany and and defence? Preferences on DecisionInstitutional making ‘Flexible Depth procedures? arrangements’?

Desired division of labour with EU institutions? Strengthening of Strengthening of intergovernmental supranational institutions? institutions?

Amsterdam (1995–6)

Consensus (with some exceptions)

Yes, should be gradually considered

Yes, indirectly (for example, planning unit in the Council)

Concessions for the Commission due to the establishment of Mr CFSP

Cologne/ Helsinki (1999)

Consensus in questions of principle

Yes, should be considered

Increasingly yes

Merely in civilian aspects of the ESDP

Convention (2003–4)

Reinforcement Yes, a German of consensus priority principle in an expanded number of issues

Yes, directly (e.g. EU Foreign Minister, Presidency, EDA)

Basically exclusion of the Commission/ ECJ/ EP from military aspects of the ESDP

shown in Table 8.1, the quite far-reaching demands of the mid-1990s had been replaced by an ‘evolutionary’ approach to ESDP. The exploration above entails two challenges for a comprehensive explanation. Firstly, the relatively far-reaching German willingness to bind itself in the mid-1990s is puzzling from the perspective of most approaches to security cooperation in International Relations. Secondly, I need to explain why Germany wanted less rather than more binding arrangements over time. While this meant convergence at the European level, it went against the general trend.

Explaining German preferences on depth: uncertainty, asset specificity and the institutional path of the ESDP The following sections demonstrate how transaction costs within the ESDP largely drove the extent of the German government’s willingness to bind itself.18 The focus is, therefore, on the framework’s main analytical building blocks, namely uncertainty about the partners, the degree of specificity of the assets that the states jointly create and, finally, the institutional path. I show how the tradeoff between potential risks of opportunism and governance costs largely determined German preferences.

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France, the UK and uncertainty In this context, uncertainty refers to the German view on what to expect from its cooperation partners in the near future: were their commitments credible? Uncertainty, and thus the need to insist on highly binding agreements, gradually decreased in the German case. While the point of departure was some uncertainty about John Major’s UK in the mid-1990s,19 the process-tracing showed a notable increase of trust in Tony Blair’s Britain after St Malo. Despite numerous tensions, the German government maintained a close relationship with France, its other main partner, so that uncertainty about its western neighbour was consistently low. Therefore, this analytical building block pointed in the correct direction for tackling the explanatory challenge of Germany’s decreasing willingness, but on its own can only modestly explain why Germany wanted relatively binding arrangements in the mid-1990s. The subsequent development of German preferences was, therefore, partly attributable to greater certainty about the UK and other partners and thus a decreased need for credible commitments. In the following section, I trace in greater detail the German government’s reliance on its collaborators during the previous decade.20 Firstly, Germany was faced with a low level of uncertainty about its French partner. As indicated above, we need to examine France’s general security interests and its position towards the ESDP. The German government was certain about France’s interests as a world player and its wholehearted support for a genuinely European defence. While numerous channels of interaction between the two countries had existed, the Franco- German Security and Defence Council, in particular, had enhanced trust. It was founded in the context of the Elysee treaty framework in 1988 (e.g. Krotz 2002: 18; Schröder 2003a). Besides being integrated into NATO’s command structure, there was an additional close partner in military affairs, namely France through the ‘Eurocorps’. The latter was highly binding insofar as its headquarters could only be deployed as a single unit, which would be decided by a common committee (Pfeiffer 2006: 141–5). In terms of transaction costs, it was a highly specific asset. These close cooperative links did not imply a harmony of interests. In fact, there were severe tensions about, for example, the Eurocorps’ military functions (e.g. Genscher 1995; Gloannec 1997: 90; Pfeiffer 2006: 145–7), about the relationship with NATO (Grant 1996: 252–3; Howorth 1997; Lanxade 2001), and about possible interventions in the Balkans (Clark 2001: 98–106; Pfeiffer 2006). Nevertheless, the degree of uncertainty about each other’s position was extraordinarily low. In the mid-1990s, Germany’s view on France was dictated by the unexpectedly radical military reforms announced by Jacques Chirac, informing only the German Chancellor, and not the Defence Minister, in advance (Chirac 1996a; Kohl 1996b; Pfeiffer 2006: 177–84).21 The abandonment of the conscription, but also the exclusive focus on power projection, made it increasingly

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difficult for the German government to find overlapping interests (Sauder 1996: 586). For instance, the German government was concerned about whether France would hold its share of the front line in a major tank battle in Europe (Howorth 1997: 38). The preparations for the Amsterdam-IGC, however, brought both countries closer together, which resulted in common proposals (e.g. Barnier 1996; Kinkel and de Charette 1996). During the setup phase of the ESDP in 1998–9, the German government displayed only minor uncertainty about France. It even agreed to France’s wish to establish the ‘Eurocorps’ as the core of the future rapid reaction capability of the EU. Any potential uncertainties were resolved during the Franco-German Council of Potsdam in 1998, which came after London’s indications of support for an ESDP and immediately preceded St Malo (Pfeiffer 2006: 188–91).22 Again, there were also tensions, such as the French launching of an action plan unilaterally, instead of formulating it as a bilateral initiative (Chirac 1999b). This did not, however, increase uncertainty about future French behaviour since it largely corresponded to German expectations. Finally, the period preceding the Convention-IGC was possibly among the closest ever in Franco-German relations (e.g. Chirac 2002b). The transatlantic tensions over Iraq encouraged the two countries to cooperate closely at the Convention. This ultimately resulted in the foreign ministers’ common contribution (Fischer and de Villepin 2002), but also led to mutual adjustment during the preparation of the EU’s battlegroups (e.g. Kempin 2004). In conclusion, uncertainty about Paris can neither be said to be the ‘trigger’ of Germany’s approach in the mid1990s nor behind the more moderate German preferences at the Convention, since the expected risks of opportunism (e.g. abandonment and exploitation) were constantly low. Secondly, the German government anticipated some uncertainty about the UK in the mid-1990s – if there had in fact been a security and defence policy of the EU. After all, the UK exercised an effective veto of a structured link between the EU and European defence issues (George 1996; Howorth 2000: 2).23 Therefore, it was apparent to the German government that a hypothetical arrangement within the EU should be binding in order to enhance the credibility of the British commitment. In contrast, British– German cooperation in NATO was usually unproblematic. For example, collaboration was smooth when the UK initiated NATO’s European pillar and thus the Berlin Plus agreement on the Combined Joint Task Forces (Kinkel 1996a; Rees 2001: 62). On the whole, there was only a low level of uncertainty about London, and this had gradually decreased since the mid-1990s, after Labour entered office. In the UK, the phase preceding the Amsterdam-IGC was characterised by a weak Conservative government frequently struggling over Europe, and fairly strained bilateral relations (George 1996: 56–7).24 While the incoming New Labour government was obviously more supportive of the EU (Blair 1995; Smith 2005: 708–9), this did not yet include defence issues,

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which it believed should remain within NATO’s competences (Labour Party 1996; McInnes 1998). Moreover, the highly critical attitude of the British public, particularly the media, largely prevented politicians from siding too clearly with EU projects (Smith 2005: 704, 713).25 In contrast to most other EU members, the UK’s widespread ‘Euroscepticism’ also applied to issues of European defence (Kernic et al. 2002: 67, 69; Eichenberg 2003: 632). The Conservative media’s buzzword was the ‘Euro-Army’.26 After the centre-left takeovers in both countries, the relationship became closer and made the German government more certain about the UK’s position on the recently established ESDP. The necessity to bind the eternal laggard gradually decreased. The most influential factor, however, that made the German government increasingly certain about London was a shared interest in close coordination with NATO (see also Schäfer 2004). This became particularly apparent during the Cologne European Council in 1999 (Roper 2000: 15). Despite the bilateral tensions over Iraq during the Convention phase, this shared interest again became apparent when a compromise was required for the military headquarters issue at the end of 2003.27 In conclusion, uncertainty about the UK was higher than uncertainty about France. While this was particularly the case in the mid-1990s, it steadily decreased. This suggests that this factor may have contributed to the incremental reduction of German risks of opportunism and thus transaction costs within the ESDP, though on its own it appears insufficient as a comprehensive explanation. Before we turn to the dimension of asset specificity, we should briefly discuss the interrelationship between uncertainty and the institutional path as an additional explanatory factor for the German preferences (e.g. Pierson 2004: 44–8). After all, this study is based on the premise that the ESDP as an institution emerged for the purpose of reducing the uncertainties involved in European security policies. Although this does not suggest that the ESDP is efficient (North 1990b: 24), the process-tracing analysis demonstrates that it reduced, but did not eradicate, uncertainties among German politicians that emerged due to incomplete information about the future behaviour of its main cooperation partners (e.g. Schröder 2002).28 In other words, the German government was decreasingly concerned about being abandoned, entrapped or exploited in the context of the emerging ESDP. The risks of opportunism were low.29 For instance, Berlin often attempted to embed its crisis management in multilateral frameworks, such as the EU. Cooperation with London was thereby substantially simplified and ultimately made more efficient (e.g. Fischer 2000b; Straw 2002a). The same conclusion can be drawn from the ‘lessons learned processes’ of the EU’s first operations. They were ultimately a kind of trust-building measure among the ESDP members. Despite some problems, uncertainty about the UK and France undoubtedly decreased. Due to this strengthened credibility of commitment, we can observe sunk transaction costs, so the necessity for

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Table 8.2 German uncertainty within the ESDP Germany and uncertainty within the ESDP

Uncertainty about Institutional path Uncertainty about France and uncertainty ... the United Kingdom

Amsterdam (1995–6)

Absent

No impact

Present

Cologne/ Helsinki (1999)

Absent

No impact

Gradually decreasing

Convention (2003–4)

Absent

Gradually decreasing

Reduced uncertainty

binding agreements gradually lost importance from a German perspective. Table 8.2 summarises the section above. The problem of uncertainty examined above is, in fact, closely linked to the question of asset specificity. The combination of the two provides an explanation of preferences on institutional depth, because it sheds light on the risks of opportunism and governance costs that Germany faced. Political-Military structures, the institutional path and asset specificity For the process-tracing analysis of asset specificity, the framework of this study suggests two dimensions: first, the individual costs of investments, and second, the redeployability of those investments.30 We may, for instance, assume that, despite potential efficiency gains, it might be costly for a government to create a European Army. The population may largely oppose it, or the cooperation could impose substantial, and externally determined, financial burdens on the country. Moreover, a government can either use the investments of the cooperation for other purposes, or not. This study’s premise is that, in combination with uncertainty, these dimensions determine the risks of opportunism and governance costs that a country is confronted with. This affects, in turn, the government’s desired outcomes of negotiations on the institutional set-up of the ESDP.31 Two main kinds of assets are created within the ESDP: (1) political structures for responding jointly to a crisis; and, (2) military forces for potential interventions. Since their specificity differs significantly, they are analysed separately. Firstly, the process-tracing analysis suggests that the German government’s approach of striving for relatively specific political structures was based primarily on the interaction of transaction costs and beliefs among the elites about the role of the Commission in the European integration process. At this stage, we merely deal with (transaction costs).32 On the one hand, the financial and political costs that would be incurred by the German government in establishing political structures in the EU to deal

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with security and defence questions were low in the mid-1990s (e.g. German Government 1996; Fischer 2000b). The idea was to gradually integrate some of the WEU’s structures into the EU and to strengthen the Commission’s External Relations. This would not have led to significant costs (see also Hoyer 1996; Scharping 1999b). The financial costs slightly increased over time with the establishment of genuinely EU structures, such as the Political and Security Committee, but at no period of the analysis were they excessive (e.g. SPD Bundestag Group 2000; German Government 2004). Similarly, the political costs, that is, domestic opposition to increased cooperation within a multilateral framework, were low for the German government. Indeed, there was even a widespread willingness after the Constitutional Court’s ruling of 1994 to strictly embed the political supervision of crisis management within a multilateral framework like the EU (e.g. German Ministry of Defence 1994, 2003). In other words, the relatively low costs – in particular, political costs – of transacting with its EU partners allowed the German government to be flexible with respect to the specificity of the political structures. On the other hand, to what extent could the planned political assets be redeployed for other purposes? In a nutshell, the envisioned political structures of the ESDP were basically not redeployable at the national level or to other international organisations (e.g. German Bundestag 2002; German Government 2004). For example, the strengthened Council Secretariat could not be simply moved to another organisation. In short, the political structures were to a large extent ‘transaction-specific’. This first asset entailed consistently low costs for the German government, while at the same time it would not be redeployable. Therefore, asset specificity alone cannot persuasively explain why Germany wanted relatively binding rules in the mid-1990s. The primary problem was that the low costs allowed for some flexibility, which makes predictions indeterminate. The last section of this chapter shows how this lacuna may ultimately be filled. In contrast, the further evolution of German preferences and thus gradual convergence with other EU members can be traced back to transaction costs within the ESDP, because the common investments in specific assets reinforced the trend towards further investment in the same structures. In addition, most of the defence officials involved knew that their transatlantic partner, with whom they had to operate in the field, did not wish to give information to the EUMS. The Commission, however, would never receive any meaningful information from that source. Instead, the Council Secretariat served as the point of reference for them, as a bureaucratic organisation that was intended to help coordinate the defence policies of numerous states.33 In sum, the German government was not confronted with genuinely high risks of opportunism with respect to building political structures in the Council. This was primarily based on the low political and financial costs of those assets. At the same time, the specific nature of the political assets

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suggested that a binding though not mandatory agreement could make sense. In other words, these results are indeterminate to a certain extent. In the course of the analysis, however, – when actual investments were made – not only these costs, but also the potential risks of opportunism increased slightly. This closely corresponds to Germany’s preferences because it suggested some safeguards against opportunistic actions, even though they were not particularly strong. Secondly, the initial high degree of the military forces’ desired specificity can be traced back primarily to the virtual non- existence of German power projection capabilities in the mid-1990s. On the one hand, the high costs of the military assets required a gradual transformation of the German forces that had so far only been capable of defending the Alliance’s territory. In times of budgetary pressures and political adherence to the draft (e.g. Longhurst 2003), the Bundeswehr was confronted with low defence expenditures. More specifically, it was two per cent of the Gross Domestic Product (GDP) in 1994, with a clearly falling trend (IISS 1995: 264–5). Even more problematic was, however, the significant gap relative to comparable states in research and development, which accelerated the difficult situation (IISS 1995: 38–9). The German government, building on politically ‘intended interdependencies’ with France (German Government 1996), strove for a cost- efficient solution to overcome, at least partly, its own shortcomings (e.g. German Ministry of Defence 1994; Rühe 1996a). Therefore, it was also willing to bind itself quite considerably. For instance, it supported to a certain extent “a centralised European Armaments Agency that would be ultimately responsible for the coordination and control of all European defence procurement and would exercise a preferential European purchasing policy” (IISS 1995: 38–9). Furthermore, political costs were also higher than with respect to the political assets because the mid-1990s had still been characterised by a relatively strong domestic consensus that the Bundeswehr should not really go out- of-area (e.g. Berger 1998; Harnisch 2001).34 The only opportunity to reduce these political costs for investments into German power projection at home was by integrating into multinational structures. On the other hand, the nature of the military structures which were envisioned for the ESDP was indisputably general. The European Rapid Reaction Force (ERRF) remained organised at the level of ‘independently deployable brigades’ (IISS 2001: 283). In other words, the military structures were earmarked for the ESDP by national governments, but could be redeployed for other purposes or operate under another flag (for example that of NATO or the UN). Based on a combination of its own military shortcomings35 and the hesitancy of the other EU members, the German government supported less specific military structures during the set-up phase of the ESDP. That was one of the main reasons why Germany promoted the more moderate

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design envisaged for the ERRF. Although its general nature made it more costly to the German government in financial and political terms, at the same time the design guaranteed its prominent participation. Moreover, Germany learned rapidly in the set-up phase of the ESDP in 1999 that redeployable military means would be the key to attaining American agreement to the project (Aggestam 2000).36 After all, the ERRF’s general outlook facilitated a burden-sharing interpretation of the ESDP, which the US preferred to European autonomy (Schröder 1998, 1999a). The general nature of the established assets made further steps towards increased bindingness less urgent, creating no new transaction costs within the ESDP (Meiers 2005: 125–8, 132; Schmalz 2005: 53–4). In sum, combining both dimensions of the second asset implied high costs at a constant level for the German government, while its general nature made the assets easily redeployable. Due to these high costs, the government supported a relatively high degree of bindingness in the mid-1990s. Specific assets constituted a relatively efficient solution to German military shortcomings. In other words, nontrivial investments in transactionspecific assets were increasingly required. The government was therefore less concerned about the potential governance costs of more binding agreements. It was, in fact, willing to give up some residual rights of control, since the German premise was necessarily to apply military force in a multilateral way. Instead, the potential risks of opportunism triggered German concerns (about abandonment) (e.g. German Ministry of Defence 1994). That became particularly clear in the approach that the then Minister of Defence, Volker Rühe, promoted in the mid-1990s (e.g. Rühe 1996a, 1996b, 1997). In 1999, however, the actual focus on general assets made the government prefer less binding agreements because the requirement for credible commitments or the risks of opportunism had decreased. After all, its own investments could be easily redeployed. This is a good illustration of the tradeoff governments faced within this context: relatively efficient solutions, but hardly any flexibility, or vice versa (Williamson 1985: 54–6; see also Wallander 2000). The German government began with the former but gradually moved to the latter. Thirdly, the institutional path is considered separately for both kinds of assets. The political structures within the Council were basically not redeployable and hence were the most specific assets of the ESDP. They represented high profile investments by the member states to the extent that they could not be used for other purposes. What would we therefore expect from a transaction costs perspective? Where investments in the specific assets of an institution are high, actors will find the cost of any institutional change that endangers these assets to be quite high; indeed, actors in this situation may be reluctant to run

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risks of any change at all. Where such investments are low, the costs of change are low. (Gourevitch 1999: 144) While the German government supported functional differentiation and more specifically a strong role for the Commission in the mid-1990s, the process-tracing analysis showed how this option incrementally lost importance with the actual set-up of the ESDP (e.g. Kinkel 1995; Rühe 1997; Scharping 1999a). Instead, the Council Secretariat and the High Representative had evolved as the default position to be strengthened. Germany’s adjustment of its preferences with respect to the Commission’s non-involvement can be inferred from the institutional path, which led to it continuing on this track and consequently profiting from the sunk costs. The government wanted less bindingness with respect to a division of labour with the Commission, since it had invested in specific assets of the intergovernmentally organised Council. In addition, it was the highest political level that had initially decided on the institutional design of the ESDP. However, the German defence officials who were involved in the daily practice of the ESDP had neither contact with nor knowledge about the Commission. Only in civilian-military issues did they sometimes need to interact with it. Thus when they formulated the national positions on institutional reforms, and wanted to improve the division of labour through delegated coordination, they did not even think of the Commission. Instead, the default option was the Council Secretariat.37 In other words, the institutional path of the ESDP had a deferred impact on the German formulation of preferences. The Commission’s relevance had vanished and it thus lost the German government as an otherwise constant supporter. This demonstrates the importance of the initial decision to largely exclude the Commission from defence affairs. In retrospect, it was a ‘critical juncture’. Although genuine delegation with exclusive agenda-setting rights would have not been desired in German defence circles, its potential function as a bureaucratic hub preparing and coordinating the ESDP’s activities was virtually replaced by the Council Secretariat. The decisions taken in Amsterdam, Cologne and Helsinki favoured some further specific options within the ESDP’s institutional development. The Council had gradually acquired nontrivial transaction-specific assets that would lower future costs, which made further investment in its organisational structure plausible. This corresponds precisely to what Paul Pierson meant with the crucial implication that the fact “that these investments will alter actors’ assessments of the benefits of institutional change” has often been missed (Pierson 2004: 149). In other words, we found positive feedback not only with institutional development, but also with the formulation of individual preferences. In contrast to these trends for the reinforcement of specific political structures, Peter Gourevitch pointed to the opportunities for institutional

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Germany and Preferences on Institutional Depth 129 Table 8.3 Germany and asset specificity in the ESDP Specific political structures Germany and Financial asset specificity and political in the ESDP costs?

General military structures

Redeployability?

Financial and political costs?

Redeployability? No (essentially nonexistent)

Amsterdam (1995–6)

Low

No

High (political and financial)

Cologne/ Helsinki (1999)

Low

No

High (financial) Increasingly yes Medium (political)

Convention (2003–4)

Slightly increased

No

High (financial) Yes Medium (political)

change when the assets created are general. Indeed, the German government supported the reform of military structures with the Headline Goal 2010. The latter significantly changed the EU’s outlook on military operations because it announced a shift of focus from deploying 20,000–60,000 forces for a year (the Helsinki Headline Goal) to the new primary objective of 1,500 for about two months (the battlegroup concept).38 After brief hesitation, the strong German support for this transformation was primarily based on the general nature of the ESDP’s military assets, which could easily be redeployed (for example, to contingents for NATO’s Response Force).39 The costs of change were low simply because the previous investment had been in general rather than specific assets. At the level of state preferences, this largely corresponds to what Celeste Wallander has discovered regarding international institutions: the general nature of assets may lead to decreased efficiency, but offers at the same time the opportunity to react more flexibly to a changing environment, since assets have remained redeployable (Wallander 2000). Table 8.3 summarises the results of the process-tracing of Germany and asset specificity. The last step of the analysis focuses on the interactions between uncertainty and asset specificity and thus on the magnitude of transaction costs within the ESDP that the German government faced. Transaction costs within the ESDP and German preferences for depth The premise of transaction costs economics is that “there are rational economic reasons for organizing some transactions one way and other transactions another” (Williamson 1985: 52). The comparative analysis of political (specific) and military (general) structures over time illustrated how uncertainty, asset specificity and thus transaction costs affected German

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Transaction Costs and Security Institutions

preferences for institutional depth. What we observe in the German case and similarly expect for the other case studies is that the parties to a transaction commonly have a choice between special purpose and general purpose investments. Assuming that contracts go to completion as intended, the former will often permit cost savings to be realized. But such investments are also risky, in that specialized assets cannot be redeployed without sacrifice of productive value if contracts should be interrupted or prematurely terminated. General purpose investments do not pose the same difficulties. ‘Problems’ that arise during contract execution can be solved in a general purpose asset regime by each party going his way. (Williamson 1985: 54) The evaluation of these opportunities and risks corresponds closely to large parts of Germany’s preferences on how to design the EU’s security and defence pillar. By combining uncertainty about the partners with the specificity of distinct assets and the institutional path, we gain access to the government’s tradeoffs and thus its desired ‘ordering of possible outcomes’. Investments in specific assets offered great opportunities to reduce political and financial costs, but included, at the same time, important dangers that could potentially increase future governance costs. The process-tracing emphasised that the German government was in the relatively comfortable position of being able to invest in specific but non- costly assets (political structures), on the one hand, and in costly but general assets (military structures) on the other. Firstly, German transaction costs within the ESDP go some way to explaining the government’s preferences with respect to political structures. From the framework’s perspective, the main problem is that several factors conjoin in the context of the German approach in the mid-1990s: non-costly investments in specific assets that cannot be redeployed, combined with moderate levels of uncertainty about the main partners. In such a situation, a government’s choice is relatively indeterminate from a transaction costs perspective: it may want to bind the partners because of the specific investments (risks of opportunism) or it may prefer flexibility due to the low costs of the investments (governance costs). Germany’s initial uncertainty about the UK’s commitment to a hypothetical EU defence pillar strongly suggested establishing some safeguards. The subsequent decrease of uncertainity, however, linked to the stable bilateral relations with France reduced this necessity over the course of the analysis. Therefore, both choices still appear plausible and we need to ask why the German government largely focused on the former. A brief review of the research on German foreign and security policy suffices at this stage to give a preliminary answer to the question. There is an overwhelming consensus that during the Cold War Germany was traditionally the strongest supporter of international institutions such as NATO or

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the EU (e.g. Anderson and Goodman 1993: 60; Berger 1998). These multilateralist tenets of Cold War times were deeply embedded and remained unquestioned by political elites after the fall of the Wall (Banchoff 1999: 171–4; Duffield 1998: 61–9; Fischer 2000b). A ‘Europe-Article’ replaced, for example, the Basic Law’s ‘Unification-Article’ after 1990 (e.g. Kohl 1994; Voigt 1996).40 Even though this was also a matter of symbolism, it clearly indicated how the German case differed from, for instance, the British, because it revealed some of the standards that are widely seen as appropriate for the German approach to European institutions. As a result, we may draw the conclusion that the elites’ belief systems became effective when transaction costs were indeterminate. The government preferred to grant the Commission a prominent role within the EU’s security policy for reasons of strongly held beliefs in genuinely European rather than national solutions. This demonstrates why the study’s argument is a mid-range theoretical explanation rather than a ‘covering law’ of preferences for institution-building within European security. Under certain conditions, transaction costs may also encounter problems of indeterminacy. For example, low costs, specific assets and moderate uncertainty do not dictate a particular choice. This limitation of the scope of the argument does not, however, make the bulk of its explanatory leverage invalid. It suggests, instead, that more empirical research needs to be done in order to gain better insights into the exact conditions of the framework’s applicability to study preferences and security cooperation. Secondly, German preferences with respect to the institutional depth of the military assets can be fully explained from a transaction costs perspective. The problematic shape of the German military in the mid-1990s implied that the government should focus on specific assets, since this appeared to be an efficient solution to its military weaknesses – because of both political and financial costs. For such a scenario, and due to the uncertainty about Britain, some safeguards would be required. Once the ESDP was established, however, general military assets and uncertainty about the main partners decreased, institutional safeguards lost urgency and, therefore, the German government, like others, insisted on some residual rights of control in the defence planning process. In other words, the assets’ general nature and decreased uncertainties accommodated the previous risks of opportunism, and more binding agreements would have entailed governance costs, without providing additional benefits. Thirdly, and this is of particular importance from a historicalinstitutionalist perspective, the framework improves its explanatory leverage over time. This is primarily due to the explicit incorporation of the institutional path and thus feedback effects and sunk costs. What we can observe in the German case is clearly what Oliver Williamson had in mind when he stated that “[t]ransactions that are supported by investments in durable, transaction-specific assets experience ‘lock-in’ effects”

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(Williamson 1985: 53). This was reflected in Germany’s position on the Commission’s participation in defence issues. The Council’s role was ‘locked in’ and that was reinforced in virtually all subsequent steps. Due to the fact that these were specific investments, the chosen path was resilient (Gourevitch 1999: 144). In contrast, the general set-up of military assets facilitated changes, such as the new design of the battlegroup concept. Consequently, the very costly assets were to be of a general nature that gave them much greater flexibility and did not require strongly binding agreements. In sum, the framework of this study explains the development of German preferences. In particular, the general design of military assets and thus their redeployability decreased the need for binding agreements within the emerging ESDP, although it increased the financial costs for Germany. In combination with the moderate level of uncertainty about the main partners, Germany’s risks of opportunism were at a tolerable level with respect to the military structures. More binding agreements would have granted an opportunity for efficiency gains, but would have led to rising governance costs. This was to be avoided. However, the empirical record with respect to political structures is indeterminate. Although we have seen German concerns about abandonment by Britain in the early stages, this does not fully explain the government’s approach towards political structures. The combination of low political and financial costs, moderate uncertainty and specific political structures, in particular, granted some flexibility to the German government with regard to whether to prefer a binding or a nonbinding agreement in this domain. Neither the risks of opportunism nor the governance costs unambiguously suggested the institutional choice. Under this condition, additional factors need to be integrated and more empirical research is required. Finally, the separate treatment of the institutional

Table 8.4 German transaction costs within the ESDP and institutional depth German transaction costs within the ESDP

Relative magnitude Uncertainty about of transaction costs the EU partners within the ESDP Asset Specificity

Amsterdam (1995–6)

Mixed (France ↓ vs. UK ↑)

Moderate starting point

Moderate to high

Cologne/Helsinki (1999)

Gradual decrease

Slow decrease

Mixed (political ↑ vs. military ↓)

Convention (2003–4)

Further decrease

Further gradual decrease

Mixed (with reinforcing trend)41

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path provided some further insights for the analysis of both assets. While the government adjusted its approach to the actual design of the relatively specific political assets, the general nature of the ESDP’s military assets facilitated some major reforms. Table 8.4 gives an overview of the interrelationship between transaction costs and preferences for institutional depth in the German case. The causal pathway builds on the general premise that the more costly a state assesses the transactions within the ESDP to be, the more it prefers to build binding institutions in this domain. More specifically, the previous section demonstrated how the combination of uncertainty about the partners and the corresponding asset specificity triggered the German formulation of preferences with respect to the desired bindingness of the ESDP. The decisive tradeoff was between concerns about opportunistic actions by France or the UK and the loss of control rights over the conduct of security policy in Europe (governance costs). In particular, the German approach to military assets and the development of its preferences over time could be explained using the transaction costs framework. The former was based on military shortcomings and thus the government’s willingness to establish a cost- efficient arrangement, which, however, required some safeguards. The general nature of the military assets actually established accounts, then, for more moderate German preferences regarding institutional depth. The development over time was closely linked to the sunk costs of the established arrangements and thus to the decreased necessity to bind the partners, since most assets remained redeployable for other purposes. The initial exclusion of the Commission appears to be the critical juncture for the German government because it subsequently equated an increased division of labour with a strengthening of the Council Secretariat and the High Representative. These sunk costs of further institutional development encouraged the government to continue to support the strengthening of the intergovernmental Council structures rather than the more supranationalist Commission. In contrast, the costly assets (military structures) were first viewed as requiring particularly binding rules but the German government increasingly profited from the general set-up and continued to support this. These rules were more flexible and thus easier to change as time went on. Germany therefore supported the shift in focus from the Helsinki Headline Goal to the ‘battlegroup’ concept. However, one caveat remains. The initial point of departure – how to build the EU’s political structures – was indeterminate, so additional factors had to be considered. Although we saw some indications of how to resolve this first puzzle, we need to acknowledge that uncertainty and asset specificity do not explain everything about institution-building in European security. Instead, it becomes clear that under certain conditions other factors intervene that ultimately determine preferences, when the causal pathway of

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transaction costs is indeterminate. In short, we could trace back the development of German preferences, if not all the way to their starting point. Nevertheless, the overall record points to a comprehensive explanation of the study’s research questions. This will be discussed in combination with the other results of the ‘structured, focused comparison’ in the study’s final chapter.

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9 Great Britain – From No EU Security Policy to a Purely Intergovernmental ESDP

British preferences on institutional depth The most remarkable finding of the following investigation is the relatively sudden increase in the desired institutional depth of the EU at the end of the 1990s. Great Britain made, however, that the ESDP should always remain an intergovernmentally organised policy. In short, enhanced coordination yes, genuine integration no! This approach was also to remain the default position for the Convention, whereas we can observe – parallel to the analysis of desired scope – that the British government was willing to bind itself in defence rather than in operational planning. Hence, the British case points towards some convergence in these questions among the Big Three, as we ultimately see in the study of France. Straightforward opposition in Amsterdam The Conservative government opposed all kinds of binding agreements with respect to a potential EU security policy until the mid-1990s. It wanted neither demanding rules in this issue-area nor any interference from the European institutions. Instead, defence was to be either a national or a NATO affair. In contrast to Germany, for example, it wanted to maintain a veto in essentially all areas of the CFSP. This position was not significantly changed by the incoming Blair administration (e.g. Labour Party 1995). Firstly, the British government would never give up national authority over defence questions and, therefore, abandoning unanimity was not to be considered (Major 1994). Furthermore, Great Britain wanted to rule out any form of potential communitarisation – also ‘through the back door’. The treaty’s pillar structure was therefore to be strictly maintained. The specific intergovernmental nature of the second pillar was, in fact, presented as a sine qua non for any further negotiation (Government of the UK 1995a; Rifkind 1996a). The UK government opposed both ‘enhanced cooperation’ 135

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in security and defence issues (Whitman 1999: 10) and also a ‘two-speed Europe’ of the ‘founding family’.1 Therefore, the British linked the establishment of ‘variable geometry’ to one crucial condition: a consensus of all members would be required for its initiation. Otherwise, this cooperation would have to remain outside the treaty framework, without recourse to the Union’s institutions and budget. Again, this approach was intended to preserve the national veto (Government of the UK 1995a, 1996; Rifkind 1996b). Secondly, the British preferred neither involvement from nor the division of labour with genuinely European institutions. It had to be exclusively the European Council (or a new WEU Summit) that dealt – on an intergovernmental basis – with security questions (Major 1994; House of Lords 1995; Rifkind 1996a; Government of the UK 1996). The UK had always been critical of the European institutions, especially when they claimed a political function. Therefore, the government wanted neither the involvement of the Commission and the EP nor the ECJ in defence issues (e.g. Labour Party 1995; Major 1996). However, London supported the establishment of the new High Representative for the CFSP, as long as (1) s/he would be exclusively responsible to the Council; and (2) the Commission’s influence was kept to a minimum. Ms/Mr CFSP was to execute the ministers’ will and could not be permitted to develop into an independent political force (EPBriefing 1997a, 1997b). In conclusion, the UK wanted neither demanding rules nor functional differentiation in security issues with military implications. In short, Great Britain represented an exclusively intergovernmentalist member in the Amsterdam-IGC. This position remained largely stable in this period, continuing under the new Labour government of Tony Blair. St Malo and improved coordination The analysis of British preferences with regard to substantive scope has already shown that London wanted the EU to gain responsibilities for military planning over the course of 1998. The question, then, was what form this should take. Firstly, the Blair administration made unambiguously clear that it would agree to the setting up of the ESDP solely under the condition of the consensus principle (e.g. Cook 2000).2 This referred to all questions with military implications and not only to the operational use of force. The notion of a potential ‘communitarisation’ was completely ruled out. Wherever it was reasonable to increase coherence with the rest of the Union’s external relations, there could be some coordination, but definitely no integration.3 On the contrary, the UK’s defence secretary even proposed the establishment of a fourth pillar, which would have resulted in an even stronger institutional fragmentation of the EU (Whitman 1999: 7; Missiroli 2000: 25). Interestingly enough, it was the UK – together with Italy – that proposed relatively binding ‘convergence criteria’ for the participating states in defence planning.4 This was meant to be a demanding review mechanism

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that would guarantee that the ESDP would acquire not merely institutions, but military hardware. The mechanism would not have been identical to the budgetary constraints of the European Monetary Union, but nonetheless was to be characterised by relatively direct interference in the nation states’ responsibilities: “Therefore the EU will need to agree a mechanism to ensure we achieve the goal, including for Ministerial-level review between now and 2003, so that the requisite improvements in capabilities are made and progress kept under review” (Cook 2000). However, Britain’s advance in military issues would have implied interference in countries such as Germany or smaller countries. There would have been essentially no consequences for France and the UK. Secondly, in contrast to this novel approach to rules governing the ESDP, the British government consistently preferred little involvement of the European institutions and thus no division of labour. The intergovernmental Council also should be somewhat strengthened to become capable of accomplishing coordinative – but not political – functions (Whitman 1999). Neither the European Parliament nor the Commission should be given a say in defence matters (e.g. Cook 2000). As one of the most influential figures of the first Blair administration, Lord Robertson, emphasised at the informal meeting of EU defence ministers in Vienna: We are not suggesting removing defence from the control of national governments; ( ...) it would not be right for the European Commission or the European Parliament to have a direct role in defence matters, as defence ‘must remain intergovernmental’, and decisions ‘must continue to be made by consensus’.5 In conclusion, the UK’s government had inaugurated the debate on institutional questions with its willingness to incorporate military planning into the European Union. The design was, however, to be overwhelmingly intergovernmental, both with respect to rules and functional differentiation. Wherever it appeared functionally necessary to give some competences to the Council, that was supported, but political control remained strictly with the national governments. The Convention and some gradual adjustments At the Convention-IGC, the United Kingdom continued to favour intergovernmental arrangements. It not only wanted to maintain its veto in all decisions with military implications, but it consistently preferred to exclude supranational institutions. Firstly, all issues with military implications had to be decided unanimously. No exception to this rule would be accepted (in other words, the British ‘red line’). The government was, however, aware that this consensus principle would hamper the Union’s activities in security issues. Thus, it wanted, at least, to strengthen the use of ‘constructive

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abstentions’ and, under clearly defined conditions, disclose this issue-area for flexible arrangements, mainly for the implementation stages. After severe doubts at the start, the UK supported the proposal to replace the pillar structure with a single Constitution. However, the distinctiveness of the ESDP had to be maintained and any ‘communitarisation through the back door’ was to be avoided. The ESDP represented an issue-area distinct from the rest of the EU’s policies (Blair 2001, 2002; Hain 2003a; Straw 2003b, 2004a; see also Menon 2003: 975). The UK had a highly differentiated approach to ‘flexible arrangements’ during the Convention. While the government welcomed the opportunities emerging from such an approach (Blair 2000), it was largely ‘status quo’oriented with respect to the ESDP (e.g. Menon 2003: 977). It argued that the range of available options would already provide effectiveness in an EU of 25: all EU members should decide; but then the agreement could be implemented in a flexible way (e.g. Straw 2002a; Government of the UK 2003a). Due to the fact that the IGC debated different new models, however, the British government needed to develop a position in this regard. The rule of how to initiate ‘structured cooperation’ in foreign and defence policy was absolutely crucial: it had to be a unanimous agreement of all EU member states (Straw 2003b, 2003c). The UK also wanted to prevent any sense of exclusivity of the new club. For example, the government opposed the idea of an added protocol to list in advance the ‘founding family’.6 Furthermore, also under ‘structured cooperation’, the UK supported a general solidarity clause, but nothing that could resemble NATO’s Art. V (Government of the UK 2004). The single issue-area where the government was a strong supporter of flexible arrangements, was – in accordance with its ‘capabilitiesfocused’ approach – defence planning and armaments cooperation. This also referred to the newly established Defence Agency (Straw 2004b).7 Finally, the British government wanted to orient the ESDP’s financial regulations towards the NATO model. It should therefore be the member states that would carry the costs in security issues (‘picking up the costs where they fell’). Only a minimum would be financed by the Community budget (Government of the UK 2004).8 Secondly, British preferences with regard to a division of labour were highly consistent with its desired rules for the governance of the ESDP, since London wanted to strengthen merely the intergovernmental bodies of the EU. Neither the Commission nor the EP was to gain competences in this sensitive issue-area. The European Council should remain the institution mainly responsible for the ESDP. Hence the UK supported the idea of a permanent President, who would be accountable only to the governments (Blair 2002; Blair and Schröder 2002).9 The government preferred a strengthening of the High Representative for the CFSP. For instance, s/he was to be granted an independent right of initiative, a larger budget and also overseas delegations. The optimal outcome for the UK would be to

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locate this post strictly under the Council, but to give it full access to the resources of the Commission. Thus, a merger of this office and the External Relations Commissioner was vehemently opposed by Peter Hain, the British representative (Menon 2003: 972–5). The government could ultimately accept ‘double-hatting’ – that is, to have the two functions exercised by one person working in two institutional roles, because the new foreign minister would not be a full Commission member with full collegial responsibility. The government insisted on a special status of the new post in the Commission and it opposed calling this strengthened position an EU foreign minister (Straw 2003b; Hain and Palacio 2003; Government of the UK 2004). Furthermore, Britain resisted both ECJ jurisdiction and formal EP oversight in ESDP. Due to the inherent intergovernmental nature of security and defence, exclusively national parliaments should have a say. This was also based on the deeply-rooted idea of ‘parliamentarian sovereignty’ (Blair 2000; Straw 2003a; Hain and Palacio 2003). Finally, there was one more salient issue in the Convention debates that provoked serious tensions among the members, namely the issue of the institutional underpinning of military planning.10 While the British acknowledged that this had been a major shortcoming of the ESDP, they did not want to participate in a project to build standing operational headquarters, which could compete with NATO’s SHAPE (Blair 2001; Straw 2003c).11 Therefore, the government favoured, first, ‘Berlin Plus’ operations with recourse to NATO assets. Second, the ‘lead nation concept’ implied recourse to national headquarters in EU- only operations. Lastly, they proposed a ‘virtual task force’ and ‘primary augmentees’ that could improve the coordination of the distinct national HQs (Government of the UK 2003a, 2004). The last option, however, was not pursued any further in the Convention debate. Accordingly, the UK did not want to substantively strengthen the newly established EU Military Staff with respect to operational planning. The actual compromise of a ‘civilian–military cell’ and close links between NATO’s SHAPE and the EU’s EUMS were, then, acceptable to the government.12 Finally, the UK clearly supported the establishment of a European Defence Agency, as long as it was unambiguously organised at the intergovernmental level. This closely corresponded to the main motivation for the UK’s initiation of a European security project: namely, an actual increase in military capabilities (Straw 2003c). This was also the preferred function of the EDA: more efficient defence, rather than operational, planning. In this issue-area, coordination was to be improved, while avoiding steps towards ‘real’ integration (Government of the UK 2004, 2005).13 Taken as a whole, British preferences were ‘status quo’ oriented during the Convention. While the blunt reality of the ESDP suggested some modifications of the Nice agreements of 2000, the UK government maintained its traditional position on organising the ESDP on a predominantly

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Table 9.1 Detailed overview of British preferences on institutional depth How demanding should the rules be governing security and defence?

Desired division of labour with EU Great institutions? Britain and Preferences on DecisionStrengthening of Strengthening of Institutional making ‘Flexible intergovernmental supranational Depth procedures? arrangements’? institutions? institutions? Amsterdam (1995–6)

Consensus (without exceptions)

Cologne/ Helsinki (1999)

Convention 2003–4)

No, not in security and defence

Reluctantly accepted (that is, planning unit in the Council)

No, not in security issues

Consensus Yes, should (with minor be considered exceptions) (esp. in implementation)

Increasingly yes

No, not in questions with military implications

Consensus Yes, but under (with minor some strict exceptions) conditions

Yes, directly (e.g. Council, EU Foreign Minister, Presidency, EDA)

Basically exclusion of the Commission/ ECJ/EP from military aspects of ESDP

intergovernmental basis. The overall results of this exploration are summarised in the overview of Table 9.1.

Explaining British preferences on depth: modest uncertainty and the opportunities of non-specific assets The next sections set out the key results of the process-tracing analysis, namely that transaction costs within the ESDP were the primary determinant of British preferences for institutional depth. Most importantly, the transaction costs approach sheds light on the explanatory challenge to account not merely for the fact that the UK wanted some sort of EU security and defence policy but, in particular, what kind of institutional arrangements the government ultimately preferred. France, Germany and uncertainty This section analyses what the UK government expected from its EU cooperation partners: could it rely on their commitments or not? The answer to this question in turn determined the degree of uncertainty the United

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Kingdom had at any given point in time. To begin with London exhibited essentially zero uncertainty. This was based not so much on strong trust, but simply on the fact that it did not expect any commitments at all. After all, the government opposed integrating military matters into the EU. When this changed with the shift at St Malo, Great Britain also had to assess the extent of uncertainty about its ESDP partners. The British preference for more binding agreements can be primarily inferred from its need to safeguard its investments in the ESDP. Starting from zero, uncertainty, and thus the risks of opportunism, increased slightly. While Germany could deliver fewer military capabilities: that is, fewer than it initially claimed and fewer than its economic power would suggest, France could use the ESDP to gradually compete with NATO. Therefore, we can observe a combination of concerns of ‘exploitation’ (Germany) and ‘entrapment’ (France). At the same time, the UK was in the comfortable position between a Germany that could do too little and a France that wanted to do more (e.g. Deighton 2002: 725; Baker 2005: 31). Also important was the fact that the permanent British option of alternative coalitions (with the US) limited the growth of uncertainty about the main EU partners during the whole period of the analysis. Against this background, the UK had never been confronted with genuinely high risks of opportunism and thus transaction costs within the ESDP. Firstly, the British government was not concerned about its German partner. Although the economic and monetary power of the reunified country caused some concerns among the British public, governments – after that of Margaret Thatcher – had never been uncertain about German security ambitions. While the American offer to the Germans of ‘leadership in partnership’ immediately after the end of the Cold War caused some anxiety in British circles, London’s prominent participation in the Gulf and later in the Balkans soon suggested that this would be unwarranted in the longer term (George 1996: 57; Rees 2001: 57). Thus, cooperation with Bonn in security affairs remained unproblematic. The Royal Air Force withdrew completely from Germany at the end of the 1990s, but the government continued to deploy one of its two Army divisions there. This enabled confident collaboration with the German military (Government of the UK 1998: 37–38, 50, 146). The only concern about Germany was whether it could meet its military obligations, with respect both to the deployment of troops in operations and the procurement of suitable military capabilities. The British view was that Germany should not hide behind history, but rather live up to its responsibilities. Accordingly, Britain played in the ESDP the part that the US played in NATO, namely demanding more military capabilities from Germany (Cohen 1999; Hain 2003b). That also ‘triggered’ the UK’s proposal for ‘convergence criteria in defence planning’ since the German commitment would have gained substantially in terms of credibility (e.g. Cook 2000).14 After some ‘Capabilities Commitment Conferences’ had demonstrated European and,

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in particular, German, weaknesses in expeditionary warfare, the UK initiated a more modern concept, that of the so- called battlegroups. For this, the British government even wanted to include explicit numbers and regions in the agreements in order to oblige members, such as Germany in particular, to deliver the promised assets.15 At the same time, numerous overlapping interests encouraged solid cooperation and decreased uncertainty to acceptable levels (e.g. Blair and Schröder 2002; see also Roper 2000: 15). British preferences for institutional depth corresponded closely to the uncertainty of its transactions since there were some but no grave concerns about being exploited by the German partner. Secondly, the United Kingdom also had no uncertainty about its French neighbour. While the Balkans demonstrated to Europe its powerlessness, at the same time it showed that a potential remedy would have to build on Franco-British cooperation. Therefore, it was particularly the British Ministry of Defence that invested major efforts in facilitating French ‘reentry’ into NATO’s military structures (George 1996: 57–8; Howorth 2000). After these attempts had failed for reasons independent of Franco-British relations, their collaboration on defence issues – for example, nuclear and air force cooperation –improved continuously (IISS 1995: 35). Despite many disagreements about the general future of the European Union, the United Kingdom felt certain about French intentions for European security at that time (Major 1996; Rifkind 1996a; Blair 1998a). The declaration of St Malo embodied, then, a fundamentally novel basis for Franco-British security cooperation. London consequently had to think more carefully about the credibility of French commitments within the ESDP, because British investments were now at stake. The agreements were based on a subtle compromise between European autonomy and NATO’s primacy. Britain’s risks of opportunism began to rise because the government could not be fully certain about the French commitment to accept NATO’s primacy in practice (e.g. Howorth 2000: 49, 57, 59). However, this did not become a major obstacle, since the British government was very much aware of the common interests in strengthened European capabilities.16 Although French advances towards more autonomy had to be checked, this did not increase the UK’s uncertainty to such an extent that more binding agreements would have been a suitable safeguard (Baker 2005: 31). In other words, the fear of entrapment in a ‘European autonomy project’ was moderate among British officials. Instead, intense coordination represented a sufficient assurance for the government. This did not change during the political frictions over Iraq between 2002 and 2004 (Miskimmon 2004: 291–3). The British government was constantly aware of the fact that France judged that the ESDP could be successful only if the UK participated.17 In other words, British ‘fears of abandonment’ were modest. This became particularly apparent in the two countries’ battlegroup initiative, which clearly demonstrated Franco-British insistence on ‘military effectiveness’ rather than political ambitions (Sawers

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2004; Webb 2004). Linked to its view of Germany, the UK’s preferences for institutional depth can clearly be traced back to uncertainty about its main partners: on the one hand, zero uncertainty and thus no bindingness in the mid-1990s; and on the other hand, a moderate increase in its risks of opportunism with the establishment of the ESDP after St Malo. Finally, British uncertainty about its European partners was mitigated by another condition that had a constant impact on its preferences for the ESDP’s bindingness. Especially in contrast to France, the United Kingdom always had an alternative option for its security policy, namely close cooperation with the United States (IISS 1995: 40; Blair 2001; Hoon 2003; see also Howorth 2000: 95). The institutional path therefore played a relatively less important role since the ‘special relationship’ overshadowed it to a significant extent. Clearly, the UK also profited from sunk costs and this precluded potential sources of new risks of opportunism. Nevertheless, the institutional path has to be subordinated in the British case. The credible alternative of US cooperation appeared even more plausible after the terrorist attacks of September 11, 2001. After all, the UK was the only European country that was militarily capable of collaborating with the United States on the battlefield: “In the short term, the UK is the only European nation to act on the requirement – identified through operations in Afghanistan – to develop a ‘network- centric’ capability and to reduce ‘sensor-to-shooter’ times” (IISS 2003: 28). This powerful alternative decreased British concerns of being possibly ‘abandoned, entrapped or exploited’ within the ESDP. Table 9.2. summarises the section above. In sum, the UK was faced with moderate uncertainty about its main partners. Three trends increased British risks of opportunism to some degree after 1998–9 and thus contributed to its rising transaction costs within the ESDP: (1) there were some doubts in British security circles about the credibility of Germany’s commitment to its ESDP obligations; (2) the government was aware of the fact that French ambitions for increased European

Table 9.2 British uncertainty within the ESDP Great Britain and uncertainty within the ESDP

United States as Uncertainty about an alternative France option ...

Uncertainty about Germany

Amsterdam (1995–6)

Absent

Present

Absent

Cologne/ Helsinki (1999)

Moderate increase

Present

Moderate increase

Convention (2003–4)

Constantly moderate

Present

Constantly moderate

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autonomy needed to be checked; and (3), the ‘special relationship’ with the United States represented a formidable fallback option if the ESDP were to fail. As in the preceding German case study, the next section analyses asset specificity. The combination of both dimensions ultimately explains British preferences for institutional depth between the mid-1990s and the Convention. Political-Military structures, the institutional path and asset specificity As indicated above, the two sorts of assets in the ESDP were: (1) political structures; and (2) military forces. This section, again, examines each kind of asset along two dimensions: on the one hand, the costs of investments; and on the other hand, the issue of redeployability. Firstly, the hesitant British approach to political structures can be largely inferred from the transaction costs that the government faced within the ESDP. More specifically, it can be traced back to the combination of potential costs and the question of redeployability. The major trigger was to avoid ex ante governance costs, that is, giving up control rights by subscribing to the ESDP (e.g. Government of the UK 2004). Although the EU’s political structures were essentially nonredeployable and thus specific, the requirement for safeguarding them was not particularly strong. At no time would the financial costs for specific political structures have been particularly high for the United Kingdom. These costs increased incrementally when the ESDP was set up, beginning in 1999 but remained, nevertheless, modest. From this perspective alone, preferences for more binding agreements would at least have been conceivable, as we observed in the German case. However, the UK government was confronted with substantial political costs: a significant level of domestic opposition to the creation of a European-based multilateral framework (e.g. Eichenberg 2003: 638; Dover 2005: 518). To illustrate this with a single anecdote from the final stages of the Convention-IGC, the highly influential tabloid The Sun ‘printed a photo of Tony Blair in an undertaker’s hat on the front page of its issue of 10 September 2003 beneath the headline’ “Last rites: Blundertaker Blair is set to bury our nation” (cited from Menon 2003: 963).18 The two main issues constantly at stake were the duplication of NATO and British defence autonomy. This further encouraged the government to preserve its veto position within these quite specific political structures. Otherwise, the anticipated political costs would have increased dramatically. This condition remained stable during the whole period of analysis and thus accounts for the limited British support for strengthening the Council – and under no circumstances the Commission (e.g. House of Commons 1998/9a, 1998/9b; Government of the UK 2003a). In conclusion, the anticipation of the high governance costs of more binding political assets was critical. The British government wanted to make coordination easier by, for instance, establishing the Political and

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Security Committee. The idea was to provide information, but avoid a loss of control (e.g. Cook 2000; Government of the UK 2003b; Straw 2003b).19 Secondly, the British government’s strong opposition to an independent EU defence policy in the mid-1990s suggests – as in the question of uncertainty – omitting the question of asset specificity at that time. Unlike Germany, however, the United Kingdom was well equipped with power projection capabilities that had so far been deployed within NATO or in close collaboration with the US at a bilateral level. Hence the additional investments that resulted from the establishment of the ESDP remained at a modest level as long as the military assets were redeployable to NATO or to national forces (e.g. House of Commons 1998/9a; Government of the UK 1998; Hoon 2003). As a consequence, the existence of a strong expeditionary force offered highly efficient solutions and thus a strong division of labour less urgent than, for example, in the German case (e.g. IISS 2001). In addition, the option of establishing military structures at a non-specific level created the two-fold advantage of (1) more easily overcoming domestic opposition – since the forces remained redeployable – and (2) simultaneously setting up military forces that could ultimately be deployed by NATO. In the words of a policy director in the UK’s Ministry of Defence: “Everything we can do to make the EU more usable actually provides a capacity that is available also to NATO” (Webb 2004). The British government was thus not concerned about potential opportunism as long as it could redeploy its investments. At the same time, more binding arrangements would have not added any benefits for the British, but merely entailed governance costs, which were to be avoided. On the one hand, defence expenditure in the UK was clearly higher than on the Continent (e.g. 1994 = 3.4 % of GDP; IISS 1995: 39, 264–5; IISS 2002: 35). The British military did not need to be substantially transformed since Labour’s Strategic Defence Review of 1998 corresponded closely to the ESDP initiative (McInnes 1998; Howorth 2000: 4). While the latter also consumed resources, these were not really additional resources with respect to the military. At the same time, the UK now had a mechanism at its disposal for encouraging its European partners to invest more in their projection forces, which were to resemble the British ones. In particular, the reformed ‘Headline Goal 2010’ – linked to the planned rules of ‘structured cooperation’ – pointed in this direction: This initiative has attracted a high level of political support throughout Europe, not least as it is closely linked to the protocol for structured cooperation in the new European Constitutional Treaty. Structured cooperation is a treaty mechanism to allow some Member States to make more binding commitments to each other in defence matters. The UK ensured that the Treaty set out participation in battlegroups as the principal entry criterion for membership of structured cooperation. This has two

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welcome effects: first, it prevents structured cooperation becoming a closed or exclusive club (...); second, it has provided a strong political incentive for all Member States to make real investment in deployable, high readiness forces, so that they can contribute to a battlegroup and hence be included in structured cooperation. (Hoon 2005) While financial costs were, accordingly, moderate, Geoff Hoon’s clarifications also show the sensitivity of the ESDP from a political perspective. Even in 2005, a British government had still to justify domestically its commitment to European defence, whereas this problematique had been significantly more salient at the end of the 1990s (House of Commons 1998/9a, 1998/9b). On the other hand, the process-tracing analysis highlighted, in particular, that the issue of redeployability was central to an understanding of British preferences. The results were in some sense paradoxical. While asset specificity normally points towards more bindingness as the key mechanism of transaction costs, it was precisely the prevention of the latter that determined British preferences for institutional depth: as long as the ESDP’s military assets remained redeployable to other purposes, and to NATO in particular, the UK welcomed the idea of strengthening Europe militarily.20 Therefore, the interrelationship between the ESDP and NATO was to remain one in which “in the areas of security and defence the European Union is, at the very best, second fiddle to NATO” (Sawers 2004). In the post- Cold War period, the UK was probably the strongest supporter of the building of a capable European pillar within NATO. After its failure, there was still a need to provide European security, if possible without recourse to the Americans. The substantive core of the European Rapid Reaction Forces would indirectly contribute to NATO’s ability to project force, since all countries had only ‘a single set of forces’ at their disposal. Although the EU had now entered into the defence business, two of the British red lines guaranteed that the ESDP would, in fact, come close to the initial ideal of a European Alliance pillar: Berlin Plus secured NATO’s political and operational primacy in dealing with a crisis, and the general nature of the ESDP’s military assets strengthened non-American power projection capabilities. This explanation of British preferences was well reflected by the Defence Secretary himself, Geoff Hoon: [T]he Battlegroup initiative will be mutually reinforcing with the larger NATO Response Force (NRF), each providing a positive impetus for military capability improvement. Wherever possible and applicable, standards, practical methods and procedures for Battlegroups are analogous to those defined within the NRF. Correctly managed, there is considerable potential for synergy between the two initiatives. ( ...) [T]he EU Battlegroups have the potential to act as a useful stepping-stone for

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countries who want to contribute to the NRF, by developing their high readiness forces to the required standard and integrating small countries’ contributions into multinational units. The key will be to ensure transparency in the development of these initiatives so that we avoid duplication and enable those Member States contributing to both to harmonise their commitments. (Hoon 2005) Taken together, the combination of high political with relatively low financial costs and the opportunities provided by non-specific and thus redeployable military structures pushed British preferences in the direction that was explored in the previous section. In particular, the general nature of the military assets sustainably reduced the risks of opportunism and suggested that governance costs should not be increased through a more binding arrangement. Finally, the role of the institutional path is considered separately. On the one hand, the UK took the exact opposite position to Germany in that the government had always opposed the Commission’s participation in security issues. This was reinforced by its experience with the Commission in other issue-areas. The institutional path of the integration process as a whole therefore had an impact on British preferences, namely, to continue to exclude the Commission from the ESDP (e.g. Government of the UK 2004). The UK’s then Minister for Europe and representative at the Convention explained his country’s insistence on excluding the new foreign minister from the ‘collegiality principle’ of the EU Commission: So you could find the Commission through the back door, in a kind of gradual process, exerting more and more influence, so that the centre of gravity moves away from governments keeping a tight hold on the common foreign and security policy, to the Commission. So that’s where we need to get the details right. (Hain 2003b: 953) In a counterintuitive way, we witness here some sort of anti-Europeanisation. The governments have learned how to exclude future supranational influence. Accordingly, the European Union’s institutional path reinforced British opposition to the Commission and thus implied the embedding of the ESDP’s political structures strictly within the Council. On the other hand, one can observe some sort of Europeanisation in terms of the EU’s military structures. This recalls the German case more strongly (e.g. Irondelle 2003; Bulmer and Burch 2005: 886). The adjustment of British preferences during the Convention to smaller-scale, but rapidly deployable troops was facilitated by the general nature of the initial Helsinki Headline Goal arrangements. The institutional path of the ESDP in shaping general military structures facilitated their reform at a later stage when the government perceived a change in external demands. A feedback effect

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became operative. The UK consequently promoted the battlegroup concept that largely drew upon the EU’s experiences in DR Congo in 2003. Smaller, rapidly deployable troops were required. This ultimately led to an adjustment of the British ordering of possible institutional outcomes (e.g. Hoon 2005; Lindstrom 2007: 9–12).21 Accordingly, the institutional path of general military assets did not cause the UK’s ordering of its preferences in a strict sense but, instead, enabled them to be modified in a relatively unproblematic way. In sum, these examinations reveal the logic of transaction costs and, in particular, Oliver Williamson’s discussion of special vs. general purpose investments (Williamson 1985: 54). British preferences were inspired by this tradeoff, whereas the flexibility of general assets usually outweighed the efficiency gains of specialised investments. This applied primarily to the ESDP’s military assets, while the British government was keen to at least maintain its veto position within the more specific political structures. Before we move on to a summary of British preferences regarding institutional depth, Table 9.3 gives a broad overview of the previous analysis. Finally, the different dimensions of the above analysis are combined in terms of the study’s transaction costs framework. Transaction costs within the ESDP and British preferences with regard to depth The interaction between the different dimensions accounts for the magnitude of transaction costs within the ESDP that the British government was confronted with. On the whole, it was the combination of increased – though only moderate – uncertainty with costs of the ESDP’s assets, political and financial, rising only modestly, that determined British transaction

Table 9.3 Great Britain and asset specificity in the ESDP Great Britain and asset specificity in the ESDP

Specific political structures

General military structures

Financial and Redepolitical costs? ployability?

Financial and Redepolitical costs? ployability?

Amsterdam (1995–6)

High (political) No Low (financial)

High (political) No Low (financial) (essentially non–existent)

Cologne/ Helsinki (1999)

High (political) No Medium (financial)

High (political) Yes Low (financial)

Convention (2003–4)

High (political) No Medium (financial)

Medium Yes (political) (even Low (financial) increasingly so!)

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costs between the mid-1990s and the Convention. This general trend was reinforced – rather than triggered – by the institutional path. Furthermore, the slightly increased willingness of the UK to bind itself after St Malo was based on the need to safeguard its investments, whereas, again, high political costs prohibited more demanding rules. In short, British preferences with regard to institutional depth clearly reflected a tradeoff between the risks of opportunism and rising governance costs, while the ultimate trigger for the United Kingdom’s shift in the end of the 1990s was the opportunities provided by redeployable military assets. This was illustrated, for instance, by the British Secretary of State for Defence in his account of the Headline Goal 2010 in 2005: The EU Battlegroup concept was conceived primarily as a means of encouraging continued improvements in deployable European capabilities, thus widening the scope for burden sharing with our European partners. This will in turn broaden the pool of European high readiness capabilities available not only to the EU but also to NATO and, specifically, the NATO Response Force. (Hoon 2005) The reasoning was the following: let us create assets that are as general as possible, because the option of redeploying them for other purposes makes ‘bindingness’ unnecessary. British preferences for high- quality but less specific military assets can thus be traced back to two factors: first, the anticipated high governance costs of any more binding agreement and, second, the significant advantages of more redeployable, general assets that could become closely linked to NATO. These advantages far outweighed any potential efficiency gains achieved through more binding arrangements. In the mid-1990s, the United Kingdom opposed the incorporation of security and defence into the European Union. Hence neither the risk of opportunism nor governance costs was on the UK’s agenda. Asset specificity played no role. When the ESDP was set up, the government made clear its willingness to preserve residual rights of control in essentially all respects. Firstly, the political costs of both political and military structures were appreciably higher than in other European states since the idea of a genuinely European defence was not accepted within the domestic debate (e.g. Kernic et al. 2002: 25–65, 70–106; Eichenberg 2003: 638).22 This concern was particularly dramatic for military and less so for political structures of the ESDP. Secondly, the supreme condition of the British military – in particular, with respect to the new tasks of expeditionary warfare – made highly specific assets unnecessary for the UK. This distinguished it from Germany, in particular, which had strong incentives, at least, to seek the most efficient possible solutions to military shortfalls. The UK’s concerns about potential governance costs permanently outweighed the problem of opportunism, since the general nature of the military assets accommodated for the latter.

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It was precisely the interaction between uncertainty about the partners, on the one hand, and asset specificity, on the other, that explains the subtle tradeoff of the British government’s approach. While it shared with the French the ambition for a militarily strengthened Europe, it compelled the Germans towards a European commitment, which was expected to be more credible than a commitment to the Alliance. At the same time, it shared with the Germans a willingness to keep the United States within European security, which was a safeguard against the French ambition for autonomy. The key to this subtle approach was the opportunity to limit the establishment of specific military assets. As long as these assets remained redeployable (to NATO), the United Kingdom could minimise its transaction costs within the ESDP. This was described by, for instance, a Commission of the French National Assembly that elaborated on transatlantic relations in 2005: “According to the British perspective, the ESDP has one purpose: to strengthen NATO, so as to satisfy the American desire for a functioning and effective military instrument” (French National Assembly 2005: 24 of 60). Though crudely formulated, it was exactly this tradeoff that inspired the British shift at St Malo and evolved afterwards as a sort of equilibrium that might be adjusted, but not significantly changed. Table 9.4. gives an overview of the interrelationship between British transaction costs and its preferences for institutional depth. Finally, the causal pathway proposed by the transaction costs framework builds on the premise that a government may prefer more binding agreements if the assets of the cooperation are costly and non-redeployable and the government is uncertain about the partners’ commitment. These conditions did not come together in the British case. Not only was uncertainty about France and Germany relatively low, but London also always had a fallback option, namely its special relationship with the United States.

Table 9.4 British transaction costs within the ESDP and institutional depth British transaction Relative magnitude costs within the Uncertainty about of transaction costs ESDP the EU partners within the ESDP Asset Specificity Amsterdam (1995–6)

Basically no uncertainty

Cologne/Helsinki (1999)

Gradual increase Gradual increase (Germany could do too little; and France too much.)

Low (political vs. military)

Convention (2003–4)

Relatively stable and only modest increase

Low (political vs. military)

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Very low starting point

Relatively stable

Basically zero

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Although entering a European defence agreement was a politically costly step for the British government, the general nature of most assets did not clearly imply that it should bind itself. Indeed, the opposite was the case: the relatively low risks of opportunism shifted the focus of the government to possibly rising governance costs. It wanted to maintain residual rights of control and thus preferred relatively low degrees of bindingness within the emerging ESDP. To sum up, the study’s framework fully accounts for British preferences on institutional depth. It is applicable to London’s approach towards both the political and the military structures of the EU. Transaction costs within the ESDP increased slightly at the very moment when the UK had decided to invest in a security and defence pillar of the EU. After all, costly information about the partners’ future actions had now become indispensable. The government’s initial unwillingness to bind itself was overcome, but consequently required some modest safeguards. While Germany was persuaded to invest more into its power projection, France had to be checked with respect to its autonomy plans for the ESDP. At the same time, the opportunity to create general military assets that remained redeployable to other purposes decisively decreased the UK’s risks of opportunism. In other words, both the initial low level of transaction costs within the ESDP and the deliberate prevention of further governance costs ultimately triggered the United Kingdom’s preferences for institutional depth.

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10 France – A Consistently Intergovernmental Approach towards ESDP

French preferences on institutional depth The most important finding of this chapter is that a gradual, but slight increase of the EU’s desired institutional depth has taken place since the mid-1990s. The French government left no doubt that the ESDP remained an intergovernmentally organised domain. Thus, its two parameters were (1) to maintain unanimity of any decisions that had military implications and (2) to limit the influence of the European Commission. As in the British approach, information was to be provided to enhance coordination, but genuine integration was still to be restricted. The major difference, however, was France’s constant support for ‘flexible’ institutional arrangements. In a certain sense, this placed France between Germany and the UK. France’s point of departure was relatively overt opposition to most of the more binding proposals during the preparation phase of Amsterdam in the mid-1990s. When the ESDP was, in fact, set-up after 1998, the French maintained its intergovernmental outlook, but wanted at the same time to improve the EU’s institutional capacity. This led to a few modifications towards more binding arrangements. A basically intergovernmental approach with some gradual modifications represented France’s ordering of possible outcomes during the Convention on the Future of Europe. An intergovernmental EU defence pillar in Amsterdam At that time, the French government consistently promoted an intergovernmental approach (Gloannec 1997: 97). Firstly, the consensus principle was to be applied to all issues with military implications. While the French government supported arrangements such as ‘constructive abstentions’ and ‘flexibility clauses’ in military issues, at the same time it emphasised the permanent relevance of the ‘Luxembourg compromise’ (French Government 1996a; Chirac 1996b; EP-Briefing 1997b). France did not want to unify the EU’s treaty structure. The pillars were to be maintained. The government even preferred a clear division of labour between the distinct 152

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pillars and a distinction between the CFSP and the EU’s External Relations competences. The objective was not so much coherence, but rather a clear separation of responsibilities. The underlying objective was to exclude the supranational institutions and to create a fully intergovernmental regime (French Government 1996b; de Charette 1997).1 France was among the strongest supporters of introducing flexibility – especially in security issues with military implications. The proposals focused on the notion of a “hard core founding family” (Chirac and Kohl 1995; Juppé 1996), whereas in the course of the deliberations, this was formulated more inclusively. For the French government, it was of particular importance that those arrangements could be initiated without severe obstacles – that is, without giving veto rights to non-participating states (particularly Britain) (Balladur 1994; de Charette and Kinkel 1996). Secondly, in terms of functional differentiation, the French government preferred neither the strong involvement of, nor a division of labour with, genuinely European institutions. Only the European Council, and thus the governments, should be strengthened. For that purpose, France wanted not only to prolong the Presidencies, but also to guarantee the large states’ permanent representation there (in other words, a ‘European Security Council’). The French government had traditionally been hesitant to delegate competences to the European institutions. Consequently, it wanted to strengthen the role of neither the Commission nor the European Parliament in security and defence. ‘Brussels’ was to confine itself to administrative, rather than political, tasks. Instead, the national parliaments and the Council should be strengthened (French Government 1996b; Chirac and Kohl 1996). In this context, France was the initiator of the new High Representative post, which answered exclusively to the Council and the member states. This new function was to be supported by an augmented Council Secretariat, thereby strengthening the EU’s external representation, while at the same time, limiting the role of the Commission (French Government 1996a; see also EP-Briefing 1997a, 1997b).2 In conclusion, French preferences on institutional depth were overwhelmingly characterised by their intergovernmental nature. While the preceding chapter on substantive scope noted the willingness of the French government to enhance the Union’s capacity to act in security issues, it wanted to maintain strictly national control. This sort of dilemma inspired support for flexible arrangements – without abandoning the French veto. St Malo and the ‘French Action Plan’ Like Germany, the French government adjusted its approach only slightly when Tony Blair first raised the idea of creating an EU security and defence policy in Pörtschach in 1998. The plan was still to gradually integrate the WEU. In the further course of events, however, the French President submitted novel proposals for the establishment of the ESDP (Chirac 1999b).3

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Firstly, France supported the strictly intergovernmental outlook of the EU’s security and defence policy from the outset.4 Therefore, all issues with military implications were to be decided on the basis of unanimous agreement and the pillar structure should be maintained. The latter ultimately expressed the distinctiveness of this policy domain and was by no means to be altered. The government completely rejected the idea of improving the coherence of the CFSP by a gradual ‘communitarisation’ (Chirac 1999b; Jospin 1999; Goulard 2000). France therefore welcomed proposals to integrate ‘flexibility’ into the ESDP because it offered opportunities to circumvent problematic situations with both the neutrals and the Atlanticists. This referred primarily to operational planning (Chirac 1999a, 2000), but also to overcoming some of the EU’s weaknesses in defence planning (Richard 2000b). For instance, the President adopted the British–Italian proposals of ‘convergence criteria’ (Chirac 1999b: 50). In this context, the participating – though militarily weak – states would bind themselves in a relatively far-reaching way. As in the British reasoning, however, it was clear that this would not lead to serious interference in French defence planning processes. After all, the country was in the midst of defence reforms that pointed precisely into the direction that the ESDP was moving, namely an improvement of power projection capabilities at the expense of large-scale territorial defence (and nuclear deterrence) (Chirac 1999c; see also Howorth 1997: 37–40; Rynning 1999; Irondelle 2003). Secondly, the actual establishment of the ESDP in this period also put the prospective involvement of the European institutions on the agenda. The EU treaty emphasised the role of the European Council in ‘framing the future defence policy of the Union’. This corresponded precisely to French preferences. Security and defence policy was to be conducted by governments within the Council, whose organisational capacities were consequently to be strengthened. The objective was clearly improved coordination rather than integration. Neither the European Parliament nor the Commission, in particular, should be granted a prominent role in military planning (Chirac 1999b; Richard 2000b). Taken as a whole, France’s approach to the institutional depth of the ESDP was overwhelmingly stable. The consensus principle in decision-making remained – like that of the UK and most others – a sine qua non. While the French government acknowledged that this would weaken the effectiveness of the ESDP in the long term, it supported ‘flexible arrangements’, but still wanted to exclude the European institutions. Thereby, the French political class frequently indicated that this was the ‘lesson learned’ from the market integration of the previous decade. Some minor adjustments at the Convention For the deliberations of the Convention, the French government consistently preferred intergovernmental procedures in military issues. Except for fullscale support for flexible arrangements, all institutional innovations were

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to strengthen the intergovernmental bodies of the Council (for example, the new foreign minister, a standing HQ). Firstly, France mainly opposed QMV in security issues, while it was, nonetheless, amenable to extending it to some other foreign policy areas. In the case of a potential pioneer group, France even considered making some implementation decisions with military implications on the basis of QMV, but not an actual decision to send troops (Moscovici 2001b; Chirac 2002a; de Villepin and Fischer 2002). Despite initial concerns, then, the French government fully supported the Convention’s proposal to unify the EU’s structure for the purpose of greater coherence. After all, it was evident that (1) unanimity provisions in the ESDP would be maintained; (2) that the Luxembourg compromise would continue to exist; and (3) that Community institutions would play only a marginal role (European Defence Meeting 2003; de Villepin 2003). In addition, the government was among the strongest supporters of flexible arrangements within the ESDP. It thus promoted a highly differentiated approach that provided an alternative to the notion of a general ‘Two-Speed Europe’. The message was instead that those who wish to proceed should not be held back by those who do not (whilst keeping the door open for the latter to join up later on and respect the existing Community rules). The model that France envisaged was militarily capable and politically willing ‘pioneer groups’ – similar to the evolution of the Euro or Schengen (Jospin 2001; Moscovici 2001a; Chirac 2001a, 2001b). According to that model, the French approach was highly reform- oriented because the Nice Treaty did not provide for ‘enhanced cooperation’ in security issues with military implications (Schröder and Chirac 2003; European Defence Meeting 2003). France’s point of departure was that only the participants themselves should establish pioneer groups. Therefore, it preferred to abandon the option of initiating ‘structured cooperation’ by a consensus of the entire European Council. QMV, for example, rather than consensus, should suffice for the establishment of EU operational headquarters. The ‘pioneers’ could then decide important issues on the basis of QMV, whereas France would always retain the sovereign right to send troops (Chirac 2002a; de Villepin 2003). Furthermore, France had always preferred some form of collective defence within the Union. Due to the existence of neutral members, it was clear that a mutual assistance clause could only be introduced under some form of structured cooperation. France preferred such a clause for the pioneer group to be as comprehensive and explicit as possible (de Villepin and Fischer 2002; Chirac 2003b). The French government was also a strong supporter of flexible arrangements in defence planning and armaments cooperation. This corresponded closely to its preference for a substantial capability buildup by the EU member states to pursue a more credible security policy on the world stage (European Defence Meeting 2003; Franco- German Defence and Security Council 2003).5 Finally, France preferred to finance the ESDP’s operations by charging common costs to the Union’s budget. According to

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Art. 28 (TEU), this would imply pooling all expenditures proportionate to the Gross National Product (de Villepin 2003).6 Secondly, France consistently opposed a division of labour between the member states and the EU institutions. Therefore, neither the Commission nor the EP was to gain extensive new powers in the ESDP. Instead, the European Council should retain responsibility for all defence matters. In this context, the French repeated their demand to create a permanent President of the EU – not only of the European Council. S/he was to be elected by the governments, which would demonstrate continuity and visibility to the rest of the world. Ultimately, the government also supported the establishment of a President of the European Council (Franco- German Defence and Security Council 2003; de Villepin and Lenoir 2003). France preferred to strengthen the High Representative for the CFSP, transforming the post into an EU foreign minister. However, it opposed a complete merger of this office and the External Relations Commissioner. Instead, France also supported the double-hatting arrangement in order to limit potential influence from the supranational institutions (Chirac 2002a; Schröder and Chirac 2003). Furthermore, security issues were not to fall under ECJ jurisdiction nor was the EP to have formal oversight. Due to the intergovernmental nature of the ESDP, exclusively national parliaments should have a say. The latter’s role was to be strengthened in the EU, for instance, by a sort of ‘Congress’ (de Villepin 2002; de Villepin and Lenoir 2003). Finally, France was unambiguously the strongest supporter for the creation of a standing operational headquarters at the EU level. It had already attempted to promote this idea in Nice in 2000.7 The main reason for this was to decrease dependence on NATO assets and thus American influence in crisis situations. However, France did not propose establishing a sophisticated structure, such as NATO’s SHAPE. It rather supported a staff of up to forty people, who could meet the minimum need for planning and command. Since the government did not expect a Europe-wide consensus on these plans, it preferred to initiate this under structured cooperation. However, no member was to be given a veto position for such an initiative (Chirac 2001b; de Villepin and Fischer 2002; European Defence Meeting 2003; Chirac and Blair 2003).8 In addition, France clearly preferred the establishment of a European Defence Agency at the intergovernmental level if feasible among all EU members; if not, under structured cooperation. It even wanted the EDA to take charge of defining the EU’s armament and equipment programmes. In the course of the Convention debate, the previously proposed ‘convergence criteria’ were gradually replaced by the more moderate demand for ‘coherence indicators’ (de Villepin 2002; de Villepin and Fischer 2002; Schröder and Chirac 2003).9 In conclusion, the French government advanced an intergovernmental approach to the ESDP. The rules to be agreed on were primarily to provide information to all member states. However, in order to improve the

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Table 10.1 Detailed overview of French preferences on institutional depth How demanding should the rules be governing security and defence?

Desired division of labour with EU institutions?

France and Preferences on DecisionInstitutional making ‘Flexible Depth procedures? arrangements’?

Strengthening of inter governmental institutions?

Amsterdam (1995–6)

Consensus (without exceptions)

Yes, (e.g. ‘founding family’)

Yes, support (e.g. planning unit in the Council)

No, not in security issues!

Cologne/ Helsinki (1999)

Consensus (with minor exceptions)

Yes, should be the key to more effective ESDP

Yes, increasing support

No, at least, not in questions with military implications!

Convention 2003–4)

Consensus (with some exceptions)

Yes, should be applied to numerous aspects of ESDP

Yes, continuous support, (e.g. EU President, EU Foreign Minister, EDA)

No, continuous exclusion of the Commission/ECJ/ EP from military aspects of ESDP

Strengthening of supranational institutions?

EU’s institutional capacity, France strongly supported the introduction of flexible arrangements in numerous issue-areas. In these cases, it would also accept relatively far-reaching rules. At the same time, the government did not strive for a substantially enhanced division of labour with the EU institutions: the intergovernmental branches alone should be strengthened. Again, the objective was to improve coordination between, rather than integration of the member states. The results of the account above are summarised in the overview of Table 10.1.

Explaining French preferences on depth: maintaining residual rights of control The following exploration needs to focus on the limited bindingness that France wanted for the ESDP and the gradual emergence of a preference for stronger institutional depth in the course of the process itself. The next section demonstrates that, in general, the moderate extent of transaction costs faced by France accounted for its reluctance to allow more binding agreements in the ESDP. In particular, the combination of low uncertainty

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about its main partners and mostly general assets made highly credible commitments unnecessary. The minor increase of transaction costs within the ESDP, then, implied that it should safeguard its own investments to a certain extent. Like the United Kingdom, it was limiting rising governance costs rather than the risks of opportunism that was reflected by the French approach. Germany, Great Britain and uncertainty The French government was slightly concerned about potential exploitation by Germany and occasionally uncertain about being abandoned by the UK. Neither form of uncertainty, however, had ever grown to such an extent that the resulting risks of opportunism would have entailed France to promote highly binding agreements for the ESDP. Firstly, the French reform of the military made defence cooperation with Germany more difficult (e.g. de Charette 1996; Sauder 1996: 586–594; Pfeiffer 2006: 163–184). This entailed German complaints that France would like to transform the ‘Eurocorps’ into an ‘Africacorps’ (Gloannec 1997: 89–91).10 The highly integrated nature of the Eurocorps made it difficult when the two partners disagreed on its basic military purpose – territorial defence and/or crisis management abroad (e.g. Genscher 1995). After all, its headquarters could only be deployed as a single unit, which would be decided by a common committee (Pfeiffer 2006: 141– 5). These tensions also had a negative impact on establishing the otherwise obligatory common approach to the Amsterdam negotiations. The French government was, in particular, stunned by Germany’s opposition to power projection as the contemporary challenge for the militaries (e.g. Howorth 1997: 37; Heisbourg 2000b: 36). Given the well- developed channels of interaction between the two countries, however, mutual trust was strengthened in the course of the 1990s.11 In particular, the Franco- German Security and Defence Council enabled new commonalities. The joint security concept represented a compromise between crisis management and territorial defence (French Government 1996c; see also Krotz 2002: 14–18). Through this development, France was reconciled and thus relatively confident about Germany’s commitment to European security (Barnier 1996). This mutual trust constituted a strong foundation for the upcoming challenges in the context of the establishment of the ESDP. The French government was informed in advance about the German position because high-level consultations in Potsdam immediately preceded the FrancoBritish declaration of St Malo (Rutten 2001: 4–7). This considerably reduced uncertainty and implied – from the French perspective – that there was merely one obstacle left: what if the German government was politically unwilling or unable, due to budgetary constraints, to engage seriously in the build-up of power projection capabilities? The consequence was that French government officials were continually confronted with these risks of opportunism (e.g. Howorth 1997: 39; Lanxade 2001).12 The explicit expressions

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‘bandwagoning’ or ‘free-riding’ were used in order to warn the Germans to keep to their commitments (e.g. Heisbourg 2000b; Andreani 2000; see also Richard 2000b). This combination of concerns about Germany’s willingness to engage itself militarily linked to an otherwise high degree of certainty remained largely stable during the subsequent phase. On the one hand, the Convention period was characterised by strengthened bilateral relations in security and defence. The two countries created common proposals with respect to all important questions, thereby reinventing the traditional engine (e.g. Raffarin 2004).13 This reduced the risks of opportunism within the bilateral relationship. On the other hand, France had remained hesitant in three regards: (1) the German reluctance to use force as a sometimes necessary means of foreign policy (e.g. Heisbourg 2004); (2) its ambivalent attitude towards NATO (e.g. French National Assembly 2005: 20–24 of 60); and (3) the concern that had already been important in the previous phases: “it [Germany] will definitely have to increase its budget investment in the military field. The imbalance between its role in Europe and its defence funding is too striking today” (French National Assembly 2005: 50 of 60). In conclusion, the generally low level of uncertainty about Germany did not entail high risks of opportunism. Among other factors, this implied little need to create more binding agreements in the ESDP. The concerns that created fears of potentially being ‘exploited’, explained, for instance, France’s willingness to propose ‘convergence criteria’ or ‘coherence indicators’ (see also Weiss 2010). In the words of the Minister of Defence, Michèle Alliot-Marie: “One cannot say that the essential element in the construction of Europe is a common foreign and defense policy, and then not fund it.”14 The safeguards preferred by the French government were to make the mutual commitments more credible. Others were simply not required at this stage. This situation served as an important background for promoting flexible arrangements, since it would allow for more substantive cooperation among the members France did not need to be uncertain about.15 Secondly, the bilateral relationship with the United Kingdom differed from the relationship with Germany. France had never been uncertain about the British willingness to build power projection forces. The two countries had common experience as colonial powers.16 In addition, the post- Cold War era witnessed increasingly close Franco-British cooperation at the military level that had begun under the UK’s Conservative governments. Against the important background of their common experience in the Balkans, the two countries announced at their meeting in November 1994 the formation of the ‘Combined Air Forces Group’ whose objective was to improve the air forces’ capacity to conduct humanitarian interventions. The group included a small planning cell, but did not have permanently allocated forces such as the ‘Eurocorps’ (IISS 1995: 35). This close cooperation culminated with the French attempts at rapprochement with NATO in the mid1990s. For that reason, the French government would have also expected

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some British moderation with respect to the security and defence negotiations in Amsterdam: “Plus la France normalise en effet sa situation avec les structures militaires de l’Alliance, plus la Grande-Bretagne raidit sa position d’hostilité envers une défense commune dans le cadre de l’Union européenne” (Gnesotto 1996: 114; see also Grant 1996; Rees 2001: 62).17 The British government, however, did not meet these expectations – not even under Tony Blair. Due to the fundamental British opposition, it was clear to the French government that a potential arrangement within the EU needed to include binding elements in order to enhance the credibility of the British commitment (de Charette 1996; Rifkind 1996a). In this respect, the French assessment strongly resembles the German one. While the latter’s uncertainty about the UK was then accommodated by a similar position on NATO, French concerns were mitigated by the developments in increased cooperation at the operative military level. In short, Paris was faced with a low level of opportunistic risks. Against that background, the shift of the Blair initiative came as a great surprise: the French government was ‘perplexed’.18 After St Malo, the French government’s assessment of the credibility of the British commitment gained considerably in importance, since real investments were now at stake. France had never been one hundred per cent certain about the motivation behind the UK’s shift: to what extent should the ESDP be instrumentalised as a pure ‘force generator’ for NATO?19 This concern, however, did not lead to a dramatic increase in French risks of opportunism, which more binding safeguards would have required. The French fear of abandonment by the UK was moderate due to the general nature of the military assets. This assessment largely remained stable during the study’s last phase. Despite recurring frictions over the American missile shield (IISS 2002: 32) and, in particular, Iraq, the governments of both countries cooperated closely within the ESDP (for example, the ARTEMIS mission and the battlegroup concept) (e.g. Sawers 2004).20 The process-tracing shows that French uncertainty about the UK remained by and large modest during these periods of frictions as well. The Prime Minister, Dominique de Villepin, made crystal clear that it wanted the UK to participate in the ESDP: “There can be no Europe without European defence and no European defence without Britain.”21 In other words, there were still fears about potential abandonment (French National Assembly 2005: 53 of 60). Table 10.2. gives an overview of the section above. In sum, uncertainty about the UK was higher than uncertainty about Germany. These moderate risks of opportunism persisted when the ESDP was launched and accelerated somewhat during the Convention phase. Nevertheless, it had never dominated to the extent that France would have urgently preferred to bind Great Britain more strongly, thereby giving up its own rights of residual control. While the creation of flexible arrangements constituted one suitable instrument, the effect of uncertainties was

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Table 10.2 French uncertainty within the ESDP France and uncertainty within the ESDP

Uncertainty about Institutional path Uncertainty about Germany and uncertainty ... the United Kingdom

Amsterdam (1995–6)

Absent

No impact

Moderate

Cologne/ Helsinki (1999)

Small increase

No observable impact

Moderate increase

Convention (2003–4)

Constantly moderate

No observable impact

Constantly moderate

simultaneously mitigated by the general nature of the ESDP’s military assets. Political-military structures, the institutional path and asset specificity This section demonstrates that the modest extent of asset specificity involved also contributed to keeping French transaction costs within the ESDP relatively low. Firstly, France’s opposition to more binding political structures in the EU’s security and defence policy was – in combination with low uncertainty – reinforced by the relatively low costs of the EU’s political structures. Hence the French government made no serious attempts to introduce stronger safeguards. Only in the set-up phase was the government closely engaged, in order to exclude NATO’s impact as far as possible and thereby strengthen EU policy-making. It forcefully insisted on creating new structures, which might in some ways resemble the Alliance, but were to function according to a genuinely European logic. The latter was to be substantially shaped by France (Chirac 1999b; Richard 2000a; see also Howorth 2000: 56). Moreover, its financial costs had basically never been high, even though they increased modestly with the establishment of the ESDP after 1998 (e.g. French Ministry of Defence 2002). Similarly, the political costs of strengthening the political structures of the EU in security and defence were low. Except for the extremes of the political spectrum, there was a strong domestic consensus, so that the politicians in charge did not have to expect political opposition when they promoted the ESDP (e.g. French Ministry of Defence 1996; see also Irondelle 2003). As long as the French veto position was guaranteed, the government supported strengthening these structures in order to generate information and thus improve coordination. The underlying aim was to be neither abandoned by members, such as Britain, nor exploited by, for instance, Germany (Weiss 2010). The problem of entrapment played a much less important role for France than, for instance, the UK. In conclusion, France regarded the potential

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governance costs of more hierarchical forms as more problematic than the continuous risks of opportunism, which the actual arrangement entailed. Since the political structures did not incur particularly high costs, their specific nature was acceptable to the government.22 Secondly, when we examine the military structures, we see a different picture evolving. In order to better understand the French approach to military affairs and thus explain its preferences for institutional depth, we need to take into account two crucial developments. The post- Cold War era saw not only a shift in France related to what to do with military force, but also, in particular, how to do it. Until 1990 there was unwavering “consensus on the Gaullist precepts of national independence and non-integration into multilateral defence structures” (Howorth 1997: 27–8; see also Gregory 2000: 33–65). However, this was about to change drastically. On the one hand, the ‘Livre Blanc’ represented at the strategic level a break with the past by replacing the ‘sanctuarisation‘ of French territory through nuclear deterrence with the repeated use of conventional force (French Government 1994: 94). Therefore, the French forces needed to be transformed into military units that were specialised in expeditionary warfare (Chirac 1996a, 1996b; French Ministry of Defence 1996). However, the reforms were fully compatible with both the Helsinki Headline Goal and then the Headline Goal 2010.23 In this respect, the case of France strongly resembled the developments in the UK, but must be differentiated from those in Germany. On the other hand, it was also the question of how to use force that was answered in novel ways: national independence and non-integration of French forces were gradually adjusted. President Mitterrand had agreed for the first time to put French forces directly under American command in the Gulf War in 1991 (e.g. Gloannec 1997: 86; Treacher 2003: 64–69). In the course of the 1990s, France had increasingly become a supporter of multilateral peacekeeping operations mainly by the United Nations (French Government 1994: 31),24 whereas the Bosnian experience demonstrated that high-intensity operations still had to be performed by NATO (Treacher 2003: 56). This implied that the French should gradually improve their interoperability with the Alliance’s forces, with respect to command and control, communications, and the composition and projection of forces (e.g. Gregory 2000: 110; Grégoire 2002: 7–16; see also Rynning 1999). Based on the novel premise that French military forces would usually operate out- of-area with allied troops, significant transaction costs were expected in the future. As indicated by the in- depth analysis of substantive scope, that was also the driving force behind French rapprochement with NATO in the mid-1990s (e.g. Grant 1996: 61–3). When this failed, however, it was clear that France would be compelled nonetheless to orient its defence planning towards NATO procedures, without having a say. The only alternative left was the (W)EU – for example, through flexible arrangements. Establishing a European variant from the ground up would entail fewer

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adjustment costs, since France would be actively involved in its setting up (Howorth 2000: 56). This constellation served as the basis of its approach to the institutional depth of the ESDP. At the level of the financial and political costs of military assets, the French government could build on a relatively strong consensus in France that security and defence cooperation was accepted as long as it did not interfere too strongly with national sovereignty. That could be applied to both the general public and the political class (e.g. Eichenberg 2003: 645–6, 655–6; Kernic et al. 2002: 63–4; see also Vennesson 2003).25 At the same time, France was confronted with some financial costs since it needed to create new forces and adjust the existing ones in order to improve interoperability. Those necessary investments, however, would fit neatly into the defence reforms under way since 1996. Nevertheless, it was a difficult process, since the French government simultaneously cut defence expenditures due to budgetary constraints (from 3.3% of GDP in 1995 to 2.6% in 2001). In particular, it gradually invested less in procurement and research and development than the United Kingdom. This was the clearest indication of the problems faced by the French military. At the same time, the situation was clearly more advantageous than in Germany (IISS 1995: 39; 2002: 35). As the transformation of the French military became effective over time, the additional financial costs gradually decreased (IISS 2002: 36). In short, the French government was confronted with neither extremely high political nor with unbearable financial costs with respect to the military structures of the ESDP. Since the EU’s defence pillar did not entail additional costs, France’s risks of opportunism were relatively low. Nevertheless, we should mention one of the few cases when the French government did promote more binding arrangements. It was telling that France preferred to create strategic lift capabilities on a relatively binding basis (e.g. Common Air Command, A- 400M) because that was precisely the area where its forces were severely lacking (IISS 2002: 36–7, 286–294). Thus, as in Germany in the mid-1990s, efficient solutions had to be found (Gregory 2000: 180–3): Rapidly projecting more, with hundreds of pieces of heavy equipment, is beyond France’s actual capabilities. France lacks lift capability and France is not accompanying its expansion of projection forces with parallel expansion of airlift or sealift, refuelling, and logistics support capabilities. ( ...) France lacks funding for lift capacity to deploy military forces in external theatres using national means exclusively. (Grégoire 2002: 15–17) In other words, when financial costs rose drastically, the French government also preferred more efficient solutions to the shortfalls and thus wanted some safeguards against the risks of opportunism. This corresponds

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precisely to transaction costs reasoning. Therefore, the option of creating flexible arrangements was extremely important for the French government since it provided some safeguards without significantly increasing governance costs (e.g. French Government 1996c; French Government and German Government 2001). However, this condition of additional high costs was often not met, so the French government did not perceive a general necessity to make the mutual commitments more credible and thus more binding. This brings us directly to the question of redeployability. The non-specific nature of virtually all military assets removed all French impetus to create more binding agreements for them. The French government would have been the only proponent of a kind of ‘Euro-Army’ in the long term.26 Since this study, however, has focused on the orderings of possible outcomes, such an arrangement was out of reach and has thus played no role here. When the French government supported the non-specific assets that were, in fact, created under the ESDP, it was clear that higher degrees of bindingness would be unnecessary. Since the opportunities to redeploy the forces were given, the potential governance costs clearly outweighed the potentially reduced risks of opportunism. Based on the impossibility of a ‘Euro-Army’, French preferences for high- quality, but non-specific military assets can be primarily traced back to two factors: first, to the fact that redeployable military assets decreased the risks of opportunism to such an extent that binding became increasingly irrelevant; and second, to the increasingly good shape of the French military that meant that it did not focus on the most efficient arrangement from a purely financial and political costs perspective (e.g. Chirac 1999b, 1999c; Richard 2000b; see also Alliot-Marie 2005). While for the UK the option to create military forces at a general and thus redeployable level was the trigger for creating any ESDP, France preferred nonbinding agreements since the assets would be redeployable anyway. Greater institutional depth would not have added any value. This dimension is crucial for a comprehensive understanding of preference formation in the ESDP since it offers a perspective for understanding the underlying reasoning behind both the different and the similar orderings of possible outcomes: In short, where Great Britain sees the ESDP as a means to strengthen the Alliance, France calculates differently, it sees in the Alliance a means to reinforce the ESDP, in particular thanks to the growth of interoperability between Europeans and to the common military culture created in its midst. This policy of constructive ambiguity consolidates the French position as much as the ESDP. This is precisely its objective. (French National Assembly 2005: 53–60, emphasis added) Accordingly, the analytical dimension of asset specificity could account for the ‘constructive ambiguity’ that has constantly been present in the

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ESDP since its very inception. In short, the emerging transaction costs within the ESDP determined French preferences for its institutional depth. Moreover, when we take into account the French support of and involvement in NATO’s Response Force, which was created at the Prague Summit in 2002 (e.g. Rynning 2005),27 we observe precisely the same approach as that usually taken by the UK with respect to the ESDP. France actively participated since the forces would be redeployable, but was critical towards more binding proposals from other NATO members (IISS 2003: 27–8; French National Assembly 2005: 26 of 60). Finally, the institutional path had a very similar impact on French preferences, as we showed in the British case study. A closer examination of the reasoning behind the strict exclusion of the European Commission highlighted the by now deeply-seated suspicion of delegating powers and making military planning more binding within the EU. In particular, this was based on the French view of how market integration had evolved, and became apparent from the government’s efforts to exclude the Commission not only from military, but also from political affairs in the ESDP (e.g. Chirac 1999b, 2002a). At the same time, French preferences with respect to the reform of the military aspects of the ESDP clearly reflected the impact of the path chosen so far. Since the military assets were of a general nature, they could be changed more easily than political assets. The ‘lessons learned’ from the French- dominated operation ARTEMIS encouraged the government to increasingly invest in the ESDP (e.g. Alliot-Marie 2004).28 On that basis, it initiated more small-scale but rapid deployment troops. That shift was, after all, facilitated by the general character of the Helsinki Headline Goal and culminated in the battlegroup concept. In short, the ESDP affected the French government to the extent that it indicated modified orderings of possible outcomes of how the EU should conduct its policies at a military level in the future.29 In sum, France was the member state that faced the lowest level of both financial and political costs, which further decreased over time. On the one hand, the defence reforms of the mid-1990s became increasingly effective and were largely compatible with the ESDP’s objectives; and on the other hand, the former principle of not integrating its own military forces was constantly weakened within the domestic debate. This situation clearly decreased incentives for the French government to seek highly efficient and thus binding agreements. Accordingly, it was not so much concerned about its partners’ opportunism, as about the possibility of giving up residual rights of control. However, the investments that France had actually made were to be safeguarded to a certain extent. The overview below (Table 10.3) illustrates the most important findings. The last stage of this examination combines these different dimensions of transaction costs within the ESDP and shows how they shaped French preferences.

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Table 10.3 France and asset specificity in the ESDP France and asset specificity in the ESDP

Specific political structures

General military structures

Financial and Redepolitical costs? ployability?

Financial and Redepolitical costs? ployability?

Amsterdam (1995–6)

Medium No (political) Low (financial)

Medium (political) Medium (financial)

No (essentially non–existent)

Cologne/ Helsinki (1999)

Medium No (political) Low (financial)

Low (political) Medium (financial)

Yes

Convention (2003–4)

Medium No (political) Low (financial)

Low (political) Yes Low (financial)

Transaction costs within the ESDP and French preferences on depth In the mid-1990s, France’s transaction costs were relatively low. This was primarily based on the modest uncertainty about its main partners and the low degree of asset specificity. In the course of the analysis, this combination increased incrementally but also unevenly with respect to the political vs. military assets of the ESDP. This growth, in turn, accounts for the slightly greater French willingness to bind itself with respect to the EU’s military planning. On the whole, however, the government was confronted with a moderate scale of transaction costs and thus preferred a consistently intergovernmental ESDP. Firstly, despite the fact that the potential political structures were basically not redeployable, their moderate costs did not lead the French government to establish more binding safeguards. In combination with the low extent of uncertainty about its main partners, the risks of opportunism were not particularly high. The question of credible commitments became vital, however, when the ESDP was actually established in 1998–9. The French reassessment pointed towards a gradual increase in uncertainty since the government was sometimes sceptical about the British ‘special relationship’ with the United States. Accordingly, there were at least some concerns about being abandoned.30 Moreover, German credibility also suffered, since budgetary constraints entailed delays and cancellations in numerous common procurement projects. Also Germany’s maintenance of the draft caused numerous practical problems in bilateral relations. In other words, France was slightly concerned about potential exploitation by Germany and sudden abandonment by a Britain that would in the end side with the Americans rather than Europe. These developments encouraged

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the French government to create some safeguards for its investments in the ESDP and has thus inspired it to prefer more binding agreements since the end of the 1990s. In particular, flexible arrangements could reduce some of these opportunistic risks, so they were strongly promoted by the French government. The objective was to gradually improve the mutual provision of information, but without delegating genuine competences. Secondly, France’s transaction costs in contributing to the potential military structures were moderate. Three factors were of particular importance. First, the defence reforms were underway, with objectives that were highly compatible with all ESDP projects. The increasingly good shape of the French military forces made highly efficient and thus binding arrangements for the establishment of military structures unnecessary. Only a few additional costs emerged. Exceptions to this overall trend precisely indicate transaction costs considerations at work: the French government preferred more binding arrangements – for instance, under flexibility, if it was dependent on finding the most efficient solutions possible (for example, due to budgetary constraints). Second, the general nature of the military assets made them redeployable to other purposes. This considerably decreased French risks of opportunism within the ESDP. Third, the moderate levels of uncertainty about the main partners kept these risks at acceptable levels, while more binding arrangements would not create additional benefits for France. Only governance costs would rise and this was to be avoided. Finally, the French approach was characterised by the greatest degree of continuity and the sections above have demonstrated why France preferred not to bind itself too strongly within the EU’s military planning. On the one hand, the German government was faced with significant financial costs that were due to the bad shape of its military. It therefore promoted proposals for the EU’s military structures that, due to their greater efficiency, were more ambitious. On the other hand, the UK had the lowest financial costs, but was highly vulnerable politically since its position marked a significant departure from a deep-seated tradition. Hence, the British government was even more resistant to the EU’s institutional depth in military planning. In contrast, France’s desired outcomes were neither triggered by the concept of general military assets nor by the necessity of establishing primarily efficient solutions to military shortfalls. Based on this relatively low scale of transaction costs within the ESDP, it was relatively immune to opportunism and wanted thus to retain permanent control over military affairs. French concerns about exploitation or abandonment were modest. In short, Paris wanted the provision of information to enhance coordination, but no actual integration. By this standard, French preferences regarding institutional depth were much closer to those of the United Kingdom than Germany, which can be persuasively traced back to transaction costs within the ESDP. Table 10.4 encapsulates the interrelationship between transaction costs and France’s preference formation.

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Table 10.4 French transaction costs within the ESDP and institutional depth French transaction Relative magnitude costs within the Uncertainty about of transaction costs ESDP the EU partners within the ESDP Asset Specificity Amsterdam (1995–6)

Mixed (Germany ↓ vs. UK ↑)

Moderate to low starting point

Basically zero

Cologne/Helsinki (1999)

Gradual increase (Germany could do too little at the military level, and the UK too little at the political one)

Gradual increase

Low (political vs. military)

Convention (2003–4)

Relatively stable and only modest increase

Relatively stable

Low (political vs. military)

This chapter has illustrated the framework’s causal pathway at work. While the modest extent of uncertainty about its cooperation partners did not entail particularly strong concerns about opportunistic behaviour, this trend was reinforced by the ESDP’s largely general nature concerning most military assets. We have thereby arrived at the interesting result that French transaction costs for the provision of European security were substantial, while those that emerged from transacting within the ESDP were modest. In particular, we did not witness the materialisation of a mutually reinforcing interaction effect between uncertainty about Germany and the UK, on the one hand, and high asset specificity, on the other. Furthermore, the combination of uncertainty and asset specificity, which both increased modestly over time, gave us a strong explanation for why the French government actually wanted what it wanted during the period of analysis. Both France’s greater willingness to bind itself in military planning since 1999 and its support for flexible arrangements can be traced back to the requirement of safeguarding some of its investments in the ESDP. In contrast, highly binding rules were only promoted when the government had a real need to create the most efficient possible solutions to military shortfalls. In this regard, the commitments of the partners were to be made more credible because the risks of opportunism would have increased correspondingly. In most of the other issues, however, the French government was more concerned about rising governance costs and thus about giving up residual rights of control. To conclude, the transaction costs framework comprehensively accounts for French preferences regarding the institutional depth of both political and military structures of the emerging ESDP. Transaction costs were

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moderate from the beginning and merely increased to some extent when the ESDP was actually established. Similar to Great Britain, the French government was sometimes concerned about Germany’s inability to fully meet its commitments. Thus, it also supported ambitious rules for the ESDP’s defence planning. In contrast, this problematique was largely irrelevant for its transactions with the United Kingdom. Instead, the government sometimes feared abandonment and thus British disengagement from the EU’s security and defence policy. This was not, however, to be realistically mitigated by highly binding agreements. Thus, it was also the general nature of most military assets that served as the major safeguard for Paris rather than a potentially more hierarchical arrangement with London. The difference was mainly that general military assets represented a kind of assurance rather than the initial trigger, as in the UK. As a result, we have arrived at the end of the study’s structured, focused comparison of Germany, Great Britain and France. Before we summarise the main arguments and conclude with the implications of the previous theoretical and empirical investigations, the next chapter discusses, first, alternative explanations of the empirical record, and then the theoretical scope of this study’s argument.

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Part III Transaction Costs and Security Institutions: ESDP Unravelled

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11 Alternative Explanations and Theoretical Scope of the Transaction Costs Framework

This chapter pursues four objectives, which are addressed in the two following sections. First, it closes the circle left open in Chapter 2, where I critically reviewed the internal consistency of standard IR programmes, by completing the ‘Lakatosian check’ in terms of external consistency (Lakatos 1970: 116–22, 133–4). Second, alternative explanations are indispensable for strengthening the plausibility of a novel approach, such as the transaction costs framework promoted here. In short, they are an integral step in “case studies and theory development” (George and Bennett 2005: 117–9). Third, while the study’s transaction costs framework explained most preference formation of the ESDP, it could not account for every single aspect. Crucially, the empirical analysis revealed a few indeterminacies which need to be dealt with. Finally, the case selection was primarily based on the requirement to achieve variation in the dependent variable (George and Bennett 2005: 23). The result was, however, that we examined only large and allied states. For a better assessment of the theoretical scope of the argument, I will conduct a brief ‘plausibility probe’ of a small and neutral country, Ireland (Eckstein 1975: 118–23). When we finally achieve these four objectives, the transaction costs framework will have gained substantial explanatory leverage and plausibility as a mid-range theoretical approach to the study of preference formation regarding security institutions.

Testing the plausibility of a transaction costs framework Chapter 2 consulted standard IR research programmes for their potential contribution to the study’s puzzles. The following sections confront these three explanations with empirical evidence from the structured, focused comparison and, if necessary, from additionally generated data. The objective is to assess the explanatory power of the transaction costs framework from competing perspectives. 173

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Realism and the challenges of variances, timing and binding Germany? A (structural) Realist explanation of preference formation is first and foremost based on anarchy and the distribution of material capabilities, which determine the polarity of the international system. In turn, the relative position of an individual state in this system is expected to induce its security preferences (e.g. Koenig-Archibugi 2004: 144–5). Confronted with empirical evidence from the ESDP, however, Realism suffers from three main shortcomings. First, almost identically positioned states, such as France and Britain, have different, sometimes even opposite, preferences. Second, changes of preferences were not preceded by shifts in the regional or international distribution of power (Wolforth 1999; see also Weiss 2009: 328). This is particularly striking in the case of Britain. Third, the empirical evidence that the institutionalisation of ESDP may be related to the purpose of ‘binding’ Germany is more than fragile. Putting it bluntly, the empirical analysis of this study indicates that the ESDP might be neither a ‘response to unipolarity’ nor a ‘moderate balancing effort’ (Posen 2004: 10–2; 2006: 150–1; Jones 2007: 24–32).1 Even though Realists had never argued that the distribution of capabilities might explain everything in world politics, these findings are nonetheless challenging, because unipolarity should at least tell us some important things about security cooperation, such as the ESDP, among the great powers (Waltz 1979; Wolforth 1999; Mearsheimer 2001; Posen 2006). To begin with, Realists argue that the observable convergence among the EU members can be inferred from unipolarity (e.g. Jones 2007: 81–96). From a more differentiated perspective, however, this study has revealed significant differences between, for instance, French and British preferences for the substantive scope of the ESDP. While the former consistently preferred a military solidarity clause for the EU, the latter strongly opposed such an expansion of the Union’s scope. Furthermore, there were significant differences between the two countries with respect to the projection of power. While the French government wanted to build the ESDP for the full spectrum of the Petersberg Tasks, the UK had envisaged low-intensity combat operations for EU troops. Thus, three states – two of them in particular – in highly similar or almost identical relative positions, had unambiguously distinct, even opposite, preferences. Thus, eventual agreement was facilitated by the fact that preferences were not mutually exclusive in all respects, rather than by the common purpose of, for instance, achieving a ‘soft balance’ with the US (e.g. Art et al. 2005/6: 184). This indicates that neither unipolarity nor the relative position of France, Germany and the UK can explain the important differences between the member states. Although these structural conditions may have contributed to the European perception of investment in power projection (e.g. Jones 2007: 24–32), they cannot

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account for the fact that the European pillar was built within the EU rather than within the Alliance, as the mid-1990s had clearly suggested. In other words, unipolarity does not precisely determine certain choices, but leaves substantial room for manoeuvre. Thus, it seems more appropriate to understand unipolarity as kind of background condition rather than as the ultimate cause or starting point of the causal chain. In addition, Seth Jones has argued that the EU member states wanted to increase their power to project force and decrease their dependence on the hegemon (Jones 2007: 181–219; see also Posen 2004, 2006). In this context, this does not represent a major difference from the argument put forward in this study. In particular, Jones’ emphasis on the motivation behind the ESDP is similar, in that this study also highlighted Europe’s doubts about the credibility of the American commitment. This was also treated as one of the main triggers. Hence, not all parts of the Realist explanation are competing with this study, and thereby mutually exclusive. Instead, the consequences of decreasing credibility of commitments are essentially identical within the Realist and the transaction costs logic. However, analysis made in this study could support the view, to a lesser degree, that the preferences of the Big Three were related to the objective of increasing global power. This is primarily based on the fact that the transaction costs perspective directs our attention to different factors, such as the opportunities provided by the general nature of the EU’s military assets. Except for some French rhetoric, however, the empirical evidence for the objective of increasing global power among the Europeans appears rather weak. The second, smaller, problem for a Realist explanation is to do with timing (e.g. Moravcsik 1998: 28, 34). When we consider the three member states’ preferences with respect to institution-building in security issues since the end of the Cold War, we are confronted with strong continuities, such as in France and partly in Germany, but simultaneously with significant changes, such as in Britain. From a Realist perspective, we would expect some sort of noteworthy shift in the balance of power, either world-wide or in the regional European system (Jones 2007: 19–24). However, in fact we can observe no significant changes between the mid-1990s and the Convention phase (Weiss 2009). Admittedly, the end of the Cold War resulted in a shift from bipolarity to unipolarity, but this in no way explains the timing of the change to the ESDP in 1998–9. While we saw no trend that culminated in St Malo, the preceding trend clearly seemed to favour a European pillar within NATO. In fact, the shift appeared as a change in preference of the new Labour government under Tony Blair. However, what does this shift have to do with unipolarity or the UK’s relative position in Europe? Why in 1998–9, and not in 1996–7? In fact, Realism remains largely silent about these developments. Thus, a power explanation cannot comprehensively explain the changes in preferences, but only the continuities of, for example, France. However, the apparent counter- example of the British case suggests that the

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confirming Realist explanation of France’s preferences may emerge for the wrong reasons (see also George and Bennett 2005: 161–2, 207). Finally, the empirical analysis could undoubtedly refute Seth Jones’ hypothesis based on Realist thought that security cooperation has occurred, and it is caused by a desire both to enmesh Germany in an international security institution and to prevent future security competition among European powers – what I call an ‘institutionalizing’ strategy. (Jones 2003: 115) In contrast, this study identifies an opposite concern with respect to Germany which was formulated by Great Britain, France and the United States respectively, namely, exploitation. The fear was, in fact, that the reunified country would not live up to its responsibilities of providing power projection capabilities. In other words, the partners were concerned about a militarily weakened rather than dominant Germany.2 Indeed, the concerns about a hegemonic Germany played a role in the beginning of the 1990s, when the ESDP, or something similar, failed to be established. In contrast, when the ESDP actually emerged, the situation was the opposite: Germany was to contribute more strongly to the provision of European security. At the same time, Seth Jones was right in emphasising European concerns about a potential American withdrawal (Jones 2003: 143–6). These concerns were, however, largely independent of fears about Germany and were instead based on rising transaction costs for the provision of European security, as was experienced painfully in the Balkans. In sum, and closely corresponding to the second chapter’s conclusion about Realism’s internal consistency, the results with respect to external consistency are not signficantly more supportive. Again, we observe severe weaknesses. In particular, the notion of balancing appears to be highly problematic for explaining the emergence of the ESDP. Thus, this study concludes that the ‘built-in ambiguity’ of the EU’s security and defence policy – that is, the inherent tension between European autonomy and the primacy of NATO – cannot simply be ‘seen through a Realist lens’. In contrast, the transaction costs framework used in this study seems more innovative, and more capable than Realist thought, of explaining the complex institutional arrangements made in European security. This applies, in particular, to preference formation. Liberal Intergovernmentalism and the challenges of preference formation without a clearly identifiable market of interest groups? The absence of a clearly identifiable market of competing interest groups makes it inherently difficult to examine LI’s hard core and to discuss its external consistency (see also Moravcsik 1998: 50; 428). Despite this fact, three modifications to explain the emergence of the ESDP are discussed in

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the following section: first, the attempt to replace the market of domestic interest groups with party politics; second, the recourse to dramatic-political actors and the core executive; and third, differentiating between the economic and political aspects of the ESDP and its implications for evaluating LI’s explanatory leverage. To begin with, it is not only interest groups which compete for influence with the national government, but also political parties (see also Rathbun 2004). Even if interest-group competition is low in the ESDP, party competition may still be strong and have a major impact on the shape of a government’s security preferences. While this focus on party politics constitutes an extension of Andrew Moravcsik’s original research programme (Moravcsik 1993a; 1997; 1998), it nonetheless supports his core idea, namely that national policy preferences can be inferred from the dynamics of domestic political contestation. At first glance, this modification appears persuasive. On a simple and co-relational basis, we observed two changes of governments in the UK (1997) and in Germany (1998), which largely corresponded to changes in preferences: highly pronounced in the former and more gradual in the latter. Simultaneously, France experienced no change of government and its preferences were characterised by a strong degree of continuity. Despite this initial plausibility, additional empirical evidence raises serious doubts about the explanatory leverage of this factor. First of all, the UK’s government did not change its approach towards the ESDP in Amsterdam in 1997. While this is precisely what we would expect from a party politics explanation, Pörtschach and St Malo came later. More importantly, the integration of party programmes and election manifestos as indispensable sources (Jachtenfuchs 2002) do not support this kind of explanation. No indications can be found for why the newly elected British or German governments introduced major changes after entering power (Labour Party 1995, 1996; CDU/CSU Group 1994; SPD Bundestag Group 2000). While British Labour was obviously much closer to Europe than the Tories of the mid-1990s, this did not explicitly apply to security and defence affairs (House of Commons 1998; McInnes 1998). In Germany, sources from party politics even point in opposite directions. Some of the key party proponents (such as Karl Lamers) and the majority of manifestos of the CDU were consistently closer to EU defence cooperation than was the government’s approach. Nevertheless, these party preferences were not translated into governmental preferences. This only happened in the course of the Nice and Convention deliberations, under the initially more critical centre-left government. Finally, there is a theoretical objection. Liberal Intergovernmentalism’s interest groups focus on relatively transparent allocation rules. Farmers prefer certain subsidies, exporters free trade, and so on. These groups can anticipate what certain decisions imply for them in the future. This is what makes Andrew Moravcsik’s argument so powerful,

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yet parsimonious. But what about allocation rules for institution-building in security (Zürn 1997: 300). Who knows what their consequences will be? How is political pressure to be organised in order to represent particularistic interests? Who are the winners? Who will lose? Obviously, one could replace this problem by returning to a simple assumption. Politicians want to win elections. However, I argue that no party in Europe will win or lose elections because of institution-building in the ESDP. The issue is simply not sufficiently salient (see also Mérand 2008: 150). In short, replacing the market mechanism by party politics seems a worthwhile, but ultimately unsatisfactory, endeavour. Secondly, the British shift of St Malo was judged to be an example for which Liberal Intergovernmentalism may contribute to our understanding of the emergence of the ESDP (Dover 2005). In the period preceding St Malo, the UK’s Ministry of Defence (MoD) was basically detached from the EU and it certainly made no efforts towards the establishment of the ESDP (Bulmer and Burch 2005: 882). There was some debate between the MoD and the Foreign Ministry about a European defence initiative, but it was ultimately unresolved. Thus, no significant inputs came from the military establishment (Dover 2005: 511). If this is the case, a Liberal Intergovernmentalist focuses on Tony Blair’s Cabinet Office and searches for the ‘dramaticpolitical actor’ who pushed forward the shift (e.g. Howorth 2004: 221–223; Dover 2005: 512–513). There is some empirical evidence, though not uncontested, that Tony Blair asked his closest advisors to suggest how Britain could take a leadership role in Europe – as long as it did not involve joining the Monetary Union. The result was security and defence (Dover 2005: 513–515; see also Mérand 2008: 114–118).3 Accordingly, the dramatic-political actor, Tony Blair, took the initiative and launched the ESDP. Due to Blair’s suspicions towards the UK’s own Europe- critical bureaucracy, he even integrated some of his Cabinet officials into the policy unit of No. 10, Downing Street. One would expect this to consolidate his personal power and authority over EU policy-making (Bulmer and Burch 2005: 877). Does this provide us with a satisfying LI- explanation? To put the question in a different way, to what extent does this correspond to the research programme’s causal hypotheses? [T]he decision to adopt a pro-European defence policy was principally taken by the PM in the absence of domestic interest-group pressure. Moreover, domestic interest groups merely provided support for this policy after the decision had been taken. (Dover 2005: 521) This attempt to save LI’s hard core tends to degenerate into an ad hoc explanation. While this may increase the research programme’s consistency with the external real world, it makes it basically non-falsifiable. After all, the remarks suggest that, in contrast to what we would expect from a Liberal

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Intergovernmentalist perspective, the major domestic stake-holders, namely the military establishments, were often neglected during the member states’ preference formation processes. Instead, the modified LI-approaches apply ad hoc assumptions, such as the key importance of dramatic-political actors or the core executive. Finally, despite the fact that this evidence overwhelmingly questions a Liberal Intergovernmentalist explanation of the study’s research subject, it offers an opportunity of distinguishing the more political from the more economic aspects of the ESDP. This differentiated approach has always been the main strength of this research programme. When defence planning or the institutionalisation of a common armaments policy is to be the focus, it definitely makes sense to incorporate the large armaments corporations and their influence on governments (Moravcsik 1993b; Jones 2006). For example, the often hesitant position of the UK on these issues can clearly be traced back to the companies’ fears of getting into direct conflict with the United States and consequently losing ground in the much more relevant American market (especially BAe Systems) (Government of the UK 2005).4 Similarly, the relatively protectionist position of the French is related to its desire to further support the ‘national defence champions’, such as Dassault Aviation (IISS 1995: 38–9; Bulmer and Burch 2005; see also DeVore and Weiss 2010).5 In sum, this section has presented three modifications of the original research programme which should strengthen its external consistency when faced with the empirical record of this study. The results are ambivalent. While party politics seems to represent a heuristically promising – though not fully comprehensive – view, a focus on the core executive seems rather misleading and is strongly reminiscent of an auxiliary hypothesis in a Lakatosian sense. Being fully compatible with the research programme’s origins, it became also apparent that there is a greater potential for explaining economic – rather than political – issues. Taken as a whole, however, it was also demonstrated that none of these modified explanations represent a more persuasive approach than the study’s transaction costs framework. Constructivism and the challenge of non-incremental preference changes? For Constructivism’s check of external consistency, one of the greatest challenges is to account for preference changes. Chapter 2 has already shown that most (moderate) Constructivists (e.g. Katzenstein 1996) argue that culture – in the form of belief systems held by elites – has a significant impact on what governments promote in security issues at an Intergovernmental Conference.6 While the abrupt change in the British case study would definitely represent the hardest test for such an explanation, Germany represents the most likely case, according to most of the literature (Duffield 1998; Banchoff 1999; Maull 2000; Longhurst 2003; see also Weiss 2009). There is

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a widespread consensus that its ‘culture of restraint’ allegedly determines its foreign and security policy. Therefore, it should also have major explanatory leverage to account for preferences for institution-building in security. If the explanation of Germany’s case were faced with severe difficulties, there would be sufficient reasons to question more generally the external consistency of this approach (Eckstein 1975: 118–23). The structured, focused comparison has demonstrated that the German government’s preferences were characterised by relatively far-reaching ambitions. Germany wanted both the EU’s substantive scope and the institutional depth of the ESDP to be far-reaching compared to both of the other large states. At first glance, this need not be puzzling from a culturalist perspective. Germany was often willing to bind itself, despite its great power status. Its culture of restraint and its deep-seated tradition as a mediator between Paris and Washington fits neatly into that picture (Duffield 1998; Haftendorn 1999). Rather than simply pointing to the compatibility between beliefs and preferences, however, it is necessary to show that changes in the German belief systems preceded changes in preferences. Otherwise, the assumed causal pathway between both analytical building blocks appears to be questionable. For this purpose, I will consider data from both domestic discourse and opinion polls (Pye 1991: 498–502; see also Weiss 2009). At the level of discourse, we see that the beliefs about the question of when and why to use force did not change substantially between 1996 and 2003. Preventive (civilian) actions were consistently regarded as both more effective and more appropriate (German Ministry of Defence 1994: 45; 2003: 7–10). When comparing this aspect of the German political-military culture in Amsterdam with the time before the Convention, we observe a high degree of continuity. Obviously, there were adjustments, such as after 9/11, when ‘harbouring terrorists’ was included as a legitimate reason to use force (Scharping 2002), but the general position remained highly stable, even after the Kosovo intervention in 1999 (Hyde-Price 2001: 29–32). The question of Atlanticist vs. Europeanist orientations can be answered in a similar vein (e.g. German Ministry of Defence 2003). NATO and the EU are both regarded as indispensable. From the perspective of opinion polls as a means of measuring belief systems, the Germans ‘want to have it both ways’; this means widespread support for NATO and, at the same time, for the EU in security issues (Eichenberg 2003: 628; see also Collmer 2004). Given this brief overview of German beliefs, it is inherently difficult to predict preferences for institution-building in the ESDP. Crucially, however, the empirical record does not reveal that preference changes were preceded by belief changes (e.g. Kernic et al. 2002; Eichenberg 2003). Instead, there are strong indications that Germany’s shifts in beliefs largely follow policy changes (Weiss 2009: 323–6). This closely corresponds to the results from a longer time series of Eurobarometer surveys (Lutz 2002). We may conclude that

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Germany initiated some remarkable changes between the mid-1990s and the Convention, but at the level of policy, not of belief systems or culture. Non-incremental shifts in preferences did not follow the changes of the elites’ (or mass) belief systems. While an explanation based on culture does demonstrate that Germany favours pursuing security policy via institutions, it does not tell us whether NATO or the EU would be the preferred option. In other words, it provides a similar degree of persuasiveness as the exclusive demand perspective presented in Chapter 4; yes, these factors might play a role, but do not provide a comprehensive explanation. Nevertheless, this study also demonstrated that transaction costs did not dictate particular preferences but left some space for qualified assessments of the respective governments. Thus, it would clearly be too extreme as position to exclude cultural variables completely from the empirical analysis. After all, a country’s strategic culture may serve as an important context for its government’s assessment of transaction costs and thus its formulation of preferences for institution-building. In short, belief systems seem more suitable as a ‘track’ of preferences rather than as a genuine ‘trigger’. It is, therefore, a question of parsimony and theoretical coherence rather than a statement of truth as to whether to incorporate cultural variables into an explanation of preferences for institution-building in European security. In sum, these three alternative explanations clearly show that a transaction costs approach is not the only story that we can tell about the ESDP. Nevertheless, it has also become clear that neither of the standard IR approaches – Realism, Liberal Intergovernmentalism and Constructivism – really provides a comprehensive explanation for similarities and differences, or continuities and changes, respectively. Even though the study’s transaction costs framework cannot explain everything about the ESDP, it represents an innovative point of departure for future research. In particular, it may be a contribution to liberal IR-theory, since it offers an approach to accounting for preferences in issue-areas other than economic. Not only from an International Relations perspective, but also for European studies, this progressive nature may become even more important when we consider the growing relevance of the ESDP for the European political project as a whole (Scharpf 2001: 50–1).

Defining the scope of the transaction costs argument After having systematically addressed the explanatory leverage of the transaction costs framework compared to standard IR approaches, two additional challenges arise for any potential generalisation from the study’s argument: first, the latent bias of the case selection; and, second, some indeterminacies of the German case, in particular. Before I confront the latter, I first discuss to what extent the choice of big states as cases affected the answers I obtained (Geddes 1990).

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A small and neutral country, Ireland, as a ‘plausibility probe’ This study chose to analyse different cases from the perspective of the expected outcomes of the dependent variable (George and Bennett 2005: 153–60). The basis for the selection was Andrew Moravcsik’s three groups of the CFSP in Maastricht (Moravcsik 1998: 451). However, two potentially relevant factors were excluded by this. The study focused exclusively not only on allied, but also on the most powerful states in the ESDP. For that reason, in the following section I conduct a ‘plausibility probe’ (Eckstein 1975: 108–13) of a small and neutral country, Ireland, in which variance within both dimensions is established. This will allow me to determine more thoroughly how widely the arguments put forward in this study apply. To what extent did transaction costs apply to Ireland’s preferences for institutionbuilding in European security? Firstly, we need to determine the Irish government’s preferences over time with respect to substantive scope: what responsibilities for military planning should the EU acquire? For Ireland, the United Nations was the dominant institution for all questions of international peace and security. In the mid-1990s, the reference point of Ireland’s approach to European security was military neutrality (e.g. Doherty 2002). Thus, the government fiercely opposed the introduction of mutual defence guarantees (in other words, merger with the WEU),7 but at the same time, supported the incorporation of the Petersberg Tasks for crisis management (e.g. Spring 1995; Irish Government 1996). For the Irish government, the latter functional task was the domain which had to be strengthened by increased cooperation, even, in part, institutionalisation. A genuine ‘militarisation’ of the EU, however, should be clearly ruled out. Instead, the Union should increasingly adopt a “comprehensive approach to security” (Irish Government 1996; Townsend 1996). Hence, the focus was undoubtedly on Petersberg’s lower end. Despite the Irish position of supporting operational crisis management tasks for the EU, it was not particularly inclined to extend this support to defence planning. Here, the government largely stood for an ‘ad hoc approach’ rather than institutionalisation (e.g. Mitchell 1995; Townsend 1996). In short, the EU should acquire, at most, a limited amount of responsibility for lowintensity crisis management. Interestingly enough, it was precisely the relatively non-ambitious agreements of the Nice Treaty that the Irish people rejected via a referendum. While the country thus joined NATO’s ‘Partnership for Peace’ (PfP) in 1999, it simultaneously rejected, to some degree, the Union’s ESDP. The possibility of breaking with their own tradition of military neutrality was among the most contested issues within the domestic debate on ratifying Nice (Gilland 2002; Hayward 2002). Subsequently, the constitution was amended to add an explicit clause requiring that accession to a military alignment must be decided by the people via a referendum.8

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At the time of the Convention, Ireland’s main frame of reference for questions of peace and security remained the UN, rather than the EU or NATO (Irish Department of Defence 2000: 19 of 99). The purpose it preferred for the ESDP was mainly to improve UN peacekeeping. While Ireland was involved in practical terms and participated in the ESDP, it was still concerned about a potential ‘militarisation of the EU’. Based on this approach, Ireland opposed mutual defence assistance. However, those members who wish to adopt that strategy should not be hindered. Moreover, Ireland supported a solidarity clause with respect to terrorist attacks and natural disasters, whereby all decisions with military implications were required to be unanimous. Consequently, it supported the updating of the Petersberg Tasks and the European Security Strategy, because both approached the problem of security in a ‘holistic’ way (European Council 2003). In sum, the Irish ‘orderings of possible outcomes’ remained largely stable: no collective defence, but merely crisis management, with an emphasis on Petersberg’s lower end. Thus, we have to ask how far we can trace this approach back to the study’s framework. In simple terms, transaction costs for the provision of European security were relatively low from an Irish perspective. This was partly based on an assessment of the security environment that was essentially analogous to the perception of the ‘Big Three’: The external security environment does not contain any specific threats to the overall security of the State. ( ...) The new security environment in greater Europe, however, is marked by a lower degree of risk of large scale military conflict, but also by new challenges and uncertainties. (Irish Department of Defence 2000: 12, 13 of 99) In short, the demand for a security institution was perceived to be a given. In addition, and this was something new for Dublin, they were confronted with demands from Europe’s major powers to participate in crisis management (e.g. Hoon 2005).9 Hence the Irish government primarily focused on the transaction costs of (low-intensity) peacekeeping tasks in Europe, since world-wide combat missions were beyond the capacity of a small state (Irish Department of Defence 2000: 25 of 99). When we then consider Ireland’s comparative institutional assessment, it becomes clear that the Irish perspective is rather narrowly concentrated on regional arrangements, so we need to consider the government’s reasoning about joining NATO’s PfP: Considerable benefits will accrue to the Defence Forces from participation in PfP, allowing them to enhance their capability for multi-national peacekeeping operations in the future through the medium of interoperability development, training and exercises. PfP will be of value to Ireland in cooperation and planning for Petersberg Tasks. Ireland’s participation

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in NATO-led UN mandated forces in Bosnia and Herzegovina and in Kosovo are examples of the type of situations in which Ireland can benefit from participation in PfP because much of the preparation and training for these new style missions is undertaken by countries under the auspices of PfP. (Irish Department of Defence 2000: 68 of 99) Given that statement, Dublin’s turn towards more active forms of participation in European security activities is strongly reminiscent of the French case examined in earlier chapters. The costs of adjustment had meanwhile reached substantial levels, so that joining the security institution became a conceivable option. After all, this would help to reduce the transaction costs for the provision of European security that also affected small and neutral Ireland (e.g. Irish Department of Foreign Affairs 1999; Doherty 2000).10 Therefore, the government also preferred the provision of information and thus enhanced cooperation at the EU level with respect to responsibilities in which it faced substantial transaction costs.11 This meant primarily peacekeeping tasks, whose institutionalisation could contribute to a reduction of Irish transaction costs, and was thus supported (Irish Department of Foreign Affairs 1999; Keohane 2001). Finally, how may we link Irish opposition to a collective defence function to transaction costs? In other words, why did the government not want the EU to evolve as an all- encompassing security institution? Any answer to this question that omitted the Irish tradition of military neutrality would be incomplete (e.g. Doherty 2002). At the same time, however, the actual implementation of this principle was put under increasing pressure by the developments of the post- Cold War era (e.g. Fine Gael 2000; Keohane 2001).12 What we did, indeed, observe was the tension between an integral part of Irish identity and the new demands of a changing security environment. The former remained the more powerful, so collective defence continued to be opposed by the government. Nevertheless, Irish moves to first accept and then actively promote low-intensity crisis management at the EU level can be derived from the perceived demand. This became particularly visible in its position towards the Constitutional Treaty. The Government’s approach to security and defence matters was to ensure an outcome which would enable the Union to develop its capabilities for conflict prevention and crisis management whilst ensuring that any new arrangements were fully consistent with Ireland’s traditional policy of military neutrality. (Irish Government 2005: 89) In sum, this initial examination suggests that a transaction costs framework can indeed sharpen our understanding of actors other than the Big Three. To apply the framework to Irish preferences on substantive scope, its analytical concepts would need to be adjusted, in that the role of the United

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States and grand strategic considerations would be largely replaced by an explicit focus on more regional arrangements in Europe. In addition, the study’s framework would probably be supplemented by an identity- concept, such as military neutrality, which could serve as a kind of intervening variable, as in the German case on institutional depth. In general, however, the plausibility probe indicates that Irish preferences for the provision of security were also determined by functionalist considerations and transaction costs. This ‘explanans’ was mediated by a deeply-rooted belief in military neutrality and, therefore, did not straightforwardly translate into preferences for substantive scope. Nevertheless, it represented a strong predictor. Thus, we have seen why the Irish government supported selected functional aspects of the EU’s defence pillar, and I now turn to the question of how it wanted to design the institutional arrangement. Secondly, Ireland clearly opposed specific and demanding rules for the EU’s security policy in the mid-1990s. Nevertheless, it was relatively open-minded with respect to some division of labour with the European institutions (e.g. Irish Government 1996; Townsend 1996). Even though its neutrality prohibited its abandoning of the unanimity model in decision-making (that is, a ‘red line’), Ireland always supported the strengthening rather than the weakening of supranationalist institutions such as the Commission (e.g. Irish Government 1996, 2003). At the Amsterdam IGC-negotiations, the government was largely oriented toward the status quo, supporting only some minor reforms to increase the EU’s coherence on the international stage.13 Because the Nice referendum had subsequently also failed because of the ESDP provisions (e.g. Gilland 2002; Hayward 2002), Irish hesitancy with respect to greater bindingness was decisively reinforced. Because of these difficult experiences and the constitutional change that would be required, the government entered the Convention-IGC with socalled red lines, which were expected to preserve the country’s military neutrality. The central concern was how to accommodate this Irish tradition within the ESDP, in which it wanted to participate to a certain extent (e.g. Cowen 2003a, 2003b, 2003c). Therefore, the government supported the maintenance of both the Treaty’s ‘safeguard clause’ and the ‘emergency brake’. Flexible arrangements in security policy should become facilitated, while some political control of the EU as a whole had to be ensured; this applied also to military operations involving only a few member states. This opportunity for ‘structured cooperation’ should also refer to collective defence, although in that domain Ireland itself would not participate (Irish Government 2005: 89). In short, the government clearly preferred intergovernmental procedures. While this referred particularly to the consensus model of decision-making, the government also rejected – contrary to the Irish tradition – an increasing division of labour between the member states and EU institutions, such as the Commission. In conclusion, Ireland’s preferences with regard to institutional depth were largely characterised by a

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hesitant orientation towards the status quo. The ‘Nice rules’ should not be made more ambitious, so the government wished to preserve a veto position in ESDP matters. Again, the question arises to what extent we may trace back this generally reluctant Irish approach towards bindingness to transaction costs within the ESDP? When we refer to the framework’s main dimensions, we see how a transaction costs perspective may contribute to our understanding of Irish preferences on institutional depth. While uncertainty about the partners appears to be generally moderate, a focus on asset specificity seems heuristically interesting. Ireland’s insistence on unanimity and the preservation of its neutrality can be derived straightforwardly from the substantial political costs of more specific military assets. After the Nice referenda, these costs were prohibitive (e.g. Keohane 2001; Hayward 2002). Recalling Douglass North’s statement that “[n]onspecialization is a form of insurance when the costs and uncertainties of transacting are high” (North 1990b: 34), we may directly apply this to the Irish case. The government’s uncertainty about the partners was relatively low (Cowen 2003a, 2003b). In contrast, however, the political and financial costs were significant for Ireland. Under such conditions, a government may either support specific assets and build correspondingly strong safeguards, or pull back from increased cooperation and support more general assets. The latter strategy was, in fact, chosen since it preserved the neutrality provisions of the Irish constitution. In terms of transaction costs, Ireland wanted to limit the risks of ‘entrapment’ in a European security project that could create severe problems for its militarily neutral status. In a nutshell, the interaction of modest uncertainty and the high political costs of defence integration implied either a support for specific structures with strong safeguards or greater moderation in its demands, so that binding agreements would not be necessary. The Irish government chose the latter course. The modest level of transaction costs did not dictate a particular choice, but nonetheless strongly suggested the approach that was ultimately selected. In sum, we may tentatively conclude that – without establishing clear causal pathways – this plausibility probe suggests some heuristic value in expanding the scope of the argument to smaller states within the EU. The emphasis was thereby on suggesting, rather than proving, since more empirical work is required. Similar to some stages of the study’s process-tracing, the Irish case indicates that it might be necessary to supplement the transaction costs framework with some cultural variables if, in fact, we were to expand the scope of the argument to additional cases. Finally, this section turns to some of the indeterminacies of the structured, focused comparison. Indeterminacies of a transaction costs framework Significantly, the German case study on institutional depth revealed that under certain conditions the causal pathway of transaction costs may be

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indeterminate. How is a government expected to formulate its preferences, if non- costly investments into specific assets are at stake? In such a situation, a government’s choice is relatively indeterminate from the perspective of the study’s framework: it may want to bind the partners because of the specific investments ( risk of opportunism), or it may prefer flexibility due to the low costs of the investments (governance costs). As a result, it is reasonable to prefer either a binding or a non- binding agreement. The German government ultimately preferred the participation of the European institutions and thus a more binding agreement for primarily ideational reasons: it was the domestically appropriate position to support a division of labour. It corresponded more closely to the country’s multilateralist tenet and its ‘culture of reticence’. As in the plausibility probe of Ireland, we see that the study’s framework would gain explanatory leverage if it added more variables: culture or belief systems appear particularly suitable to complement the framework. Nevertheless, such an expansion would not be cost-free. More specifically, the argument would not only become less parsimonious, but would also require us to derive the variables from partly contradictory research programmes. This is mainly problematic for reasons of theoretical coherence. Therefore, this study chose the approach of focusing on the ‘triggers’ of security preferences, namely transaction costs, and accordingly ran the risk of not being able to explaining everything with respect to institution- building in ESDP. Put differently, the study’s objective was to establish a coherent mid-range theoretical explanation, rather than a covering law. The transaction costs framework was capable of explaining some of the most important things in the ESDP. It offered a comprehensive approach to the main players’ preferences and explained why they wanted what they wanted. Certain conditions, such as a strong identity or some other national uniqueness, may intervene and thus determine more precisely the ‘tracks’ chosen by a government. The ‘trigger’, however, was transaction costs, whether for the provision of European security or within the ESDP itself. In conclusion, this chapter has strengthened the view that the transaction costs framework provides the most comprehensive approach to explaining preference formation in the ESDP. Despite different degrees of plausibility, none of the standard IR research programmes were fully – or even – more persuasive when confronted with empirical evidence from the structured, focused comparison. At the same time, however, explanatory factors building on Constructivist thought provide useful supplements to the study’s framework. However, they cannot replace transaction costs as initial triggers of preference formation. Closely related to this result, the plausibility probe of a small and neutral country re- confirmed the basic tenet of the first part of this chapter. Despite the fact that some modifications would be necessary, the transaction costs framework fulfils its objectives and provides

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plausible mid-range explanations of institutional preferences. As indicated above, by meeting the four objectives defined in the beginning of this chapter, the study’s framework has gained substantial explanatory leverage. The concluding chapter will summarise the most important results of this study, and finally, discuss what this might imply for the transformations of the state.

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12 Conclusion – Theory-Development in the European Security and Defence Policy

Before this chapter recapitulates the argument of this study step-bystep, I first discuss the importance of resolving the puzzles raised in the Introduction and the value added to International Relations as a discipline. The primary relevance was given by the simple existence of the ESDP, combined with the discipline’s failure to explain this in a theoretically coherent, rather than ad hoc, manner. A European defence pillar was established at the end of the 1990s, albeit not within NATO, as most indicators had initially suggested. Therefore, the member states’ preferences represented a highly suitable point of departure for analysing the emergence of this security institution. In particular, the empirical analysis of preferences on substantive scope provided an answer to the puzzle of why the ESDP emerged. Because this had corresponded closely to France’s initial position, I focus on Germany and Britain and on the factors that triggered their preferences towards the establishment of an EU defence pillar rather than a European one within NATO. Given the failure of France’s rapprochement with the Alliance, both governments needed to re-consider the institutional basis of the European security architecture. The study demonstrated that it was primarily the rising uncertainty about whether the United States was fully committed to each serious crisis that increased the risks of opportunism and thus transaction costs for Berlin and London. These crises at the borders of Europe, particularly in the Balkans, played an increasingly prominent role in the debate on the future of European security. While NATO in many regards remained the two countries’ organisation of choice, its ability to provide European security continuously and effectively lost credibility. Crucially, isolationist voices from Capitol Hill were heard with great concern in both Berlin and London. A capable EU-only option represented a promising point of departure towards the gradual provision of security for Europe. Information on future military planning was to be shared between the European countries, enabling the 189

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transaction costs of these cooperative exchanges to be kept down. At the same time, compatibility with NATO was still required, as high-intensity combat missions would not be feasible without the US for a considerable time. Therefore, incompatibility had the potential to produce new uncertainties. The comparative institutional assessment of NATO and the EU and their capacities to reduce in the medium- to longer-term the transaction costs for the provision of European security encouraged both countries to promote, though to different degrees, the creation of the ESDP. However, it would be simplistic to understand the emergence of a security arrangement as merely meeting a demand or a market failure within European security. Instead, the study’s transaction costs perspective on preferences sheds light on the important differences between the member states. France, which consistently faced high costs of adjustment in military affairs, wanted to build the ESDP much earlier than, for instance, Britain, who had a formidable fallback option in the US. Germany fell somewhere in between and mainly needed efficient solutions to military shortfalls. In other words, the transaction costs framework has a two-fold advantage over a purely market failure explanation: it does not only explain the individual preferences of EU members, but also the timing of the emergence of the ESDP by identifying the thresholds of the governments’ comparative institutional assessments. In addition, the explicit integration of the notion of asset specificity permitted us to make sense of the ‘built-in ambiguity’ of the EU’s defence pillar, while going beyond a supposed objective demand. The key was rather the ESDP’s largely general and thus redeployable assets, which have enabled a reconciliation between the two opposing principles of European autonomy and the primacy of NATO. Having briefly shown the relevance and the value added by the study, I will now provide a chapter-by- chapter summary. Following that, I draw the principal conclusions from the study, which respectively refer to theory, analytical concepts and substantive matters. Finally, the last section will explicitly address the implications of this analysis for the transformations of the state.

Transaction costs, security institutions and unravelling the ESDP While the emergence of the ESDP as one of the most recent transformations in world politics served as the study’s point of departure, the primary research objective was to systematically answer the allegedly trivial question of why the EU member states wanted what they wanted when entering negotiations over institution-building in European security. The simple answer is that they sought the reduction of current and the limitation of future transaction costs. These costs emerge from cooperative exchanges between the main actors within Europe’s security setting and represent the main trigger

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behind the EU member states’ preference formation. This explanatory pathway not only turned out to be the most progressive approach in comparison to the main alternative explanations, but also contributes the only account of both ‘continuities–changes’ and ‘similarities–differences’. Finally, it provides a differentiated perspective on a highly complex institutional arrangement. Nevertheless, it must be emphasised that this study developed a mid-range theoretical explanation rather than a covering law of preferences for institution-building in European security. As indicated above, the empirical objective of this study was to explain the preferences of Germany, Britain, and France with respect to the common build-up of political-military structures within the ESDP since the mid1990s. Following the introductory chapter, I first consulted the three main research programmes within International Relations (Chapter 2). Building on Imre Lakatos’ ‘sophisticated falsificationism’ (Lakatos 1970: 116), I reviewed Realist, Liberal Intergovernmentalist and Constructivist ideas in terms of their internal consistency. The results were mixed, at best. Preferences are derived by specific mechanisms that respectively refer to power, plenty or interactions (Zürn 1997: 299; Weiss 2005). While Realism’s anarchy as the sole determinant of security preferences gave rise to numerous problems, Liberal Intergovernmentalism was confronted with the absence of a clearly identifiable market of domestic interest groups. Thus, it frequently transferred the explanatory burden to variables outside its hard core. Finally, Constructivism’s socialisation also failed to provide a full explanation of what triggers preference formation. Given these preliminary results, I was confronted with the question of where to go from here: whether to build a synthesis out of these existing approaches or look at other schools of political science. The latter option was chosen and I therefore addressed the ‘new institutionalisms’ and, in particular, their historical form as an analytical toolkit for an improved understanding of and explanation for the emergence of security institutions (Hall and Taylor 1996; Lake 1999; Pierson 2004). The basic framework started out from general propositions about actors with preferences, interactions between them in the sense of security cooperation and institution-building (Frieden 1999; Morrow 1999), moving step-by-step towards more specific processes and mechanisms in the emergence of the ESDP. In addition, the envisaged mid-range theoretical explanation built on theories of political economy and some previous applications of the latter to security problems. The idea of introducing transaction costs as an explanatory building block was ultimately due to a simple observation: if scholars of political economy are correct when they observe that institutions matter under the condition of costly transactions, I expect to find that it is precisely those transaction costs that trigger the EU member states’ preferences on whether and how to build these institutions in the first place. In a functionalist sense, the EU members may prefer to build institutions for the

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resolution of perceived problems and to structure their future interactions. While this study assumed that the member states’ preferences are primarily determined by cost–benefit calculations, this does not imply that all solutions of collective action problems are functional. Indeed, some systematic modifications were integrated into the transaction costs framework. Most crucially, both the supposed costs and benefits of institution-building heavily draw on cognitivist and interpretative notions (Carlsnaes 2002: 341–4; Rathbun 2007: 541–9). Chapter 3 theoretically derived a transaction costs framework applicable to cooperation and institution-building in European security. At this stage of the analysis, I introduced one major feature of the ‘explanandum’ that had to be reflected within the explanatory building blocks and consequently, structured the complete empirical analysis. On the one hand, preferences on substantive scope refer to problems that the governments wanted to subsume under an institutional arrangement. The underlying question of this dimension was why the EU members wanted to build the ESDP, or why not? On the other hand, this study followed the assumption that it was insufficient merely to answer this question. Instead, the analytical concepts that explain the governments’ willingness or otherwise to cooperate might, at the same time, be applicable to the question of how these institutions were to be designed. As a result, a typology of preferences for institution-building in European security was developed.1 The transaction costs framework for the study of preferences for institution-building in European security builds on four basic assumptions. First, the actors, namely governments, are subject to ‘bounded rationality’. Second, human behaviour is opportunistic and may thus give rise to problems with regard to credible commitments. Third, transactions between the actors are organised along a continuum between anarchy and hierarchy. However, most of the time international politics is dominated by hybrid forms. Finally, these institutional settings may allocate values in an inefficient way and thus be subject to change by the actors involved (e.g. Keohane 1984; Williamson 1985; North 1990a). The next step focused on the costs and benefits that the EU member states want to acquire through cooperation and institution-building, namely greater security from threats and risks at an acceptable cost (Lake 1999; Weber 2000). It is assumed that the pooling of resources shapes the essential incentives for the EU governments to even consider cooperation in this domain. Their underlying objective is to reduce the production costs of security. When we compare the unilateral with the multilateral provision of this good, we identify three main mechanisms behind institution-building in European security. Economies of scale, functional differentiation and positive externalities may all reduce the costs of providing security through institutions. These efficiency gains achieved through cooperation, however, require transactions, and thus also incur costs the ‘risk of opportunistic behaviour’ refers

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to the problem of credible commitments, whereas increased hierarchy may reduce these risks, but states must, instead, give up residual rights of control (‘governance costs’) (Lake 1999: 52–71). In short, this study understands security cooperation primarily through the lens of a tradeoff between costs and benefits. A transaction costs analysis focuses on the “comparative costs of planning, adapting, and monitoring task completion under alternative governance structures” (Williamson 1985: 2). The size of transaction costs depends primarily on the attributes of the transactions at stake: asset specificity on the one hand, and uncertainty on the other. The former refers to the nature of the object of cooperation. If it is specific, it cannot be easily redeployed to other purposes, but at the same time promises significant gains (e.g. economies of scale). If the asset is rather general, however, it may be redeployed to other settings and thus increases flexibility for the exchange partners. In this case, the potential gains from cooperation are normally lower. In contrast, uncertainty emerges from incomplete information about the expected preferences and behaviour of other actors in the course of future interactions. It is thus about the assessed credibility of the partners’ commitments. The interaction between these dimensions gives rise to the risks of opportunism and governance costs, whose tradeoff determines the member states’ relative magnitude of transaction costs. This, in turn, triggers their preferences for institution-building in European security because each government ultimately strives to adjusting the ESDP to its ex post and ex ante transactions in terms of uncertainty and asset specificity. At a more specific level, the framework distinguished between two kinds of transaction costs for the analysis of preferences on substantive scope and institutional depth. Both were inferred from the research programme’s hard core, while they were, at the same time, sufficiently specific to meet the challenges of an empirical study. Hence I started from some general propositions about preferences, security cooperation and institution-building and moved to more specific processes and mechanisms of institutional choice and development in political-military issues. Crucially, I distinguished between comparative costs that emerge from the general provision of European security (including the US) and transaction costs that materialise within the ESDP (EU- only). While the former drive preferences on scope, the latter determine the desired outcomes of institutional depth. Firstly, an analysis of transaction costs for the provision of European security must examine different institutional contexts from a comparative perspective. The primary determinants of transaction costs are uncertainty and opportunism and thus the issue of credible commitments. To discover why the EU member states suddenly wanted to establish the ESDP, “comparative institutional assessments of the adaptive attributes of alternative governance structures must necessarily be made” (Williamson 1985: 57). Building on the framework’s cost–benefit perspective, a member state would

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not assess transaction costs for the provision of European security in absolute terms, but would instead compare it to another institution’s ability to reduce the costs. This other institution was primarily NATO. The focus of the analysis was thus on uncertainty about the credible commitments of how to provide the good of European security and, therefore, the risks of opportunism. On that basis, a government may engage or disengage from a security institution.2 This step of the analysis explained the member states’ preferences on the substantive scope of the ESDP. Secondly, the next step focused more specifically on the question of how the EU governments wanted to design the new institution. Transaction costs within the ESDP refer to the assessment of credible commitments of the other EU members alone and to the actual assets that were to be established within the ESDP. In this respect, the individual costs for a member and the question of redeployability were crucial. The interaction between uncertainty and asset specificity was, then, reflected within the risks of opportunism and (anticipated) governance costs among the governments. The tradeoff between these dimensions ultimately constituted the magnitude of transaction costs that an EU member state faced, and thus determined its desired extent of bindingness for the new agreements. At this stage, however, it is crucial to emphasise that high risks of opportunism can be avoided by two opposing strategies determining governmental preferences on institutional depth: one can either establish binding mechanisms, which prevent (anticipated) cheating, or build general, non-specific assets, which decreases the potential losses in the event of cheating. In other words, the anticipated limitation of future transaction costs may lead to preferences for general, rather than specific, assets. Finally, the study’s causal pathway primarily built on a rational–functionalist logic. It thus explained preferences for institution-building in terms of the expected effects of the arrangement. The underlying motivation for the governments was to reduce uncertainty in the provision of European security and to safeguard investments that it had already made in the ESDP. Based on these theoretical considerations, the study expected that the more costly a state judges the transactions to be with respect to the provision of European security, the more it will prefer to build institutions in this domain. This general path could be further specified for preferences on both substantive scope and institutional depth. The study went on to apply this framework to an empirical examination of German, British and French preferences for institution-building in European security since the mid-1990s. The key concepts were defined and operationalised in order to confront them with the empirical evidence. The study’s origins in historical-institutionalist thought suggested focusing not only on the governments’ institutional choice, but also on development over time. In other words, the in-depth analysis was confronted with the challenge of tracing back the preferences of the Big Three over a period of about ten years. This comprised the bulk of the subsequent seven chapters.

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Before the book could proceed with the individual country studies, however, I needed to examine the perceived demand for a security institution on a comparative basis. For that purpose, the Big Three’s perceptions of the security environment since the end of the Cold War were analysed. The result pointed towards convergence, although there were some differences in terms of timing. From the Big Three’s point of view, the primary demand referred to increased risks and instabilities in the security environment. As a consequence, there was the common perception of a need for cooperation and engagement to intervene on a multilateral basis, while the demand for institutions to deal with large-scale invasions had significantly decreased. This preliminary examination provides a plausible approach to the explanatory task of explaining changes in preferences. In a functionalist sense, increased problems entail preferences for building institutions that tackle these challenges: form follows function. This was not, however, the end of the story. A functionalist explanation of this nature might explain neither the differences between the three states nor why the EU rather than NATO was the desired institution for a European defence pillar. In other words, although demand alone might be a necessary condition, it is not sufficient to explain preferences for institution-building in European security. The next six chapters met this challenge by combining the perceived demand for a security institution with specific transaction costs of the individual states. Before we discuss the explanatory power of the study’s approach stepby-step, I refer back to Table 3.1 in order to give a brief overview of what actually the explanatory challenge was for the transaction costs framework. Figure 12.1 visualises the development of the three countries’ preferences for institution-building in European security. The primary task for the structured, focused comparison was, therefore, to trace back the developmental path that a state chose between the mid-1990s and the Convention: from I) towards II). This overview suggests why the ESDP was not established in the mid1990s. The British veto simply prevented such an arrangement (UK I), although Germany, and more especially France, was already promoting a common defence policy at the Amsterdam-IGC. Furthermore, the United Kingdom’s preferences changed significantly, whereas those of France’s were largely unchanged. The former moved from the position of tentatively accepting that the EU might take responsibility for some crisis management tasks, towards support for a capable ESDP based on intergovernmental procedures. In other words, the UK preferred the EU to evolve from a secondary to a primary security institution, with increasing relevance to the government. In contrast, France had supported granting the EU some responsibilities for military planning in the mid-1990s and was willing to bind itself more strongly, when the ESDP was actually set-up. Nevertheless, the French approach remained basically intergovernmental with respect to

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Maximal military planning at the EU-level

France I

France II Germany II

UK II Non-binding agreements

Germany I

Highly binding agreements

UK I

Minimal military planning at the EU-level

Figure 12.1 Overview of German, British and French preferences on the institutionalisation of European security from the I) Amsterdam-IGC towards the II) Convention-IGC

institutional depth. Germany was somewhat in between these two positions, and the only country that became increasingly reluctant to bind itself. The more important change, however, was the gradually increasing support for an expansion of the EU’s responsibilities in military planning. In other words, the EU evolved as an important security institution for the provision of European security, on an equal footing with NATO. The task of the structured, focused comparison was thus to explain these developments. The enormous challenge was that of simultaneously not only explaining similarities and differences, but also changes and continuities. What was the trigger behind these developments? Firstly, the member states’ preferences on substantive scope could be explained by the relative magnitude of transaction costs for the provision of European security. To begin with, the case study of Germany showed that the most effective driver of its approach towards military planning was the mutually reinforcing interaction between the perception of new security risks and increased uncertainties about how to provide security in Europe. In short, its risks of opportunism within NATO were rising. Thus, the government gradually disengaged from NATO as the primary security institution – without giving it up altogether – and turned towards the ESDP. The German perception of new risks in the environment represented the demand for institutions that might tackle these challenges, and therefore, the functional task of building them. The key to the increasing investment in the ESDP, rather than NATO, was that the United States’ commitment to European security had gradually lost credibility. The government’s perception of both

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isolationist and unilateralist trends in US foreign policy prompted increasing uncertainty about its future willingness to provide the public good of European security. At the same time, the signals sent by the superpower suggested that ambitious responsibilities for the EU in military planning could ultimately encourage Washington to withdraw completely from Europe. This was definitely not a favourable scenario for German decision-makers, since the risks of opportunism would increase exponentially. This tradeoff constituted the transaction costs for the German government in this context. Based on these transaction costs assessments, Germany preferred increasing the responsibilities of the EU, while at the same time promoting compatibility with NATO. Therefore, the establishment of the ESDP should function in the medium to long term as a sort of alternative for the US’s previous provision of European stability. It should not, however, replace the American contribution. In short, Germany wanted to reduce the risks of opportunism in such a way as not to prompt too many new risks. In terms of transaction costs, it wanted to provide European security at an acceptable cost. Great Britain’s preferences were similar to those of Germany, insofar as it wanted to strengthen the EU’s responsibilities for military planning, while at the same time preserving the ESDP’s compatibility with NATO as a top priority. Back in the mid-1990s, the UK’s transaction costs for the provision of European security had not yet reached a genuinely high level. The UK interpretation of the Bosnian crises differed from that of France to the extent that London insisted more strongly on the fact that the United States had ultimately intervened, while France emphasised, first and foremost, the long period of waiting before America was willing to deploy forces, and its simultaneous demand for the lifting of the arms embargo. In terms of this study, the American commitment to European security crises was more credible in London’s eyes, so its risks of opportunism were significantly lower than for Paris. This British assessment was about to change when isolationist voices became gradually more influential in Washington. This development of British preferences represented a particular challenge for the transaction costs framework. The shift of St Malo was not only the most drastic change, but also the most consequential, since it opened the road to Cologne and Helsinki in 1999. Furthermore, we could observe minor but nonetheless important differences between the UK’s willingness to grant the EU more responsibilities in defence planning at the expense of operational planning. Like the German government, Great Britain perceived a general growth of security risks., It therefore recognised the need for improved coordination and thus for a political-military instrument to tackle these risks in Europe on a multilateral basis. This kind of demand, however, did not tell us where such an arrangement should be set-up. The next step of process-tracing therefore focused on the signalling process between the United States and Britain. On

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the one hand, it could be demonstrated that the latter was increasingly concerned about US isolationism because the former’s full-scale commitment was partly questioned in London. On the other hand, the American ‘red lines’ were taken seriously and constrained British support for any increase in scope of the EU’s responsibilities in military planning. Accordingly, the ESDP represented, among other things, a British attempt to strengthen its voice through a militarily capable Europe, because this was the most promising way to be heard in Washington. While Germany and France regarded this as a welcome side- effect, so to speak, it represented an important driver for the Blair administration. This also became apparent through the stronger support for expanding the EU’s responsibilities in defence rather than operational planning. The latter was not only vehemently opposed by the American administration, but even enhanced defence planning was strongly supported. The primary trigger for the British approach was, however, the increase of transaction costs in the course of the 1990s. This was ultimately rooted in the interrelationship between a growth in perceived security risks linked to the British government’s concerns about isolationism: how should security be provided in the European security architecture, if the United States were reluctant to take on this role? There should therefore be a viable EU- only option, which also had to be compatible with NATO. This was aimed at reducing the existing risks of opportunism without producing new ones. Consequently, the tradeoff between making functionally reasonable investments in the ESDP without exiting from the special partnership with the US represents the key to a comprehensive explanation of the development of British preferences on substantive scope. Among the Big Three, France was the member state which consistently supported the most far-reaching responsibilities for the EU in military planning. It basically wanted to create an all- encompassing security institution, which could deal with the whole spectrum of military tasks from collective defence to humanitarian relief assistance. In terms of the study’s transaction costs framework, the interaction between increased risks, on the one hand, and consistently high risks of opportunism combined with significant costs of adjustment within NATO, on the other, was the key to French preferences on substantive scope. The government’s concerns about isolationist – and partly unilateralist – trends within the US were built primarily on experiences on the ground, such as in the Balkans. The fact that Europe had to wait for the superpower, as well as Washington’s simultaneous insistence on maintaining a say, made the American commitment questionable. In France, however, in contrast to Germany and Britain, these risks of opportunism were not constrained by the threat of American disengagement, which represented less of a problem to Paris. The government’s voice in Washington to encourage further American commitment had been persistently weak in any case. However, France did

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not go as far as to abandon the Alliance.3 In addition, and this differentiated France’s transaction costs from those of Germany and the UK, the French regularly had to adjust to NATO’s military planning processes, which made transactions with the partners in European security inherently costly, as France had not really participated in establishing these rules in the first place. In short, the costs of transacting within the European security setting were consistently highest for France. The corollary was to promote the ESDP in a way that remained compatible with NATO’s territorial defence of the Continent. At the same time, the autonomous decision-making capacity of the EU should be guaranteed. This approach offered an opportunity to reduce France’s transaction costs for the provision of European security. On the one hand, dependence on the American commitment and thus the risks of opportunism within NATO would gradually decrease. Instead of waiting for American troops, Europe could act autonomously. On the other hand, the ESDP served as an instrument for reducing the transaction costs for France of adjusting to the Europeans in military operations. The mutual provision of information would gradually decrease this necessity and should therefore be applied to a wide range of military planning, from low-intensity peacekeeping, through combat operations, to collective defence. In sum, the process-tracing analysis of the Big Three over time suggested one main trigger behind preference formation on substantive scope. The comparative assessment of how to provide European security in an increasingly risky environment was the key. Transaction costs in NATO were increasing, although to different degrees. At the same, the signals sent by the United States strongly suggested creating an arrangement compatible with NATO; otherwise, it could, and might further, disengage. This scenario, linked to traditional bilateral relations, accounted for the different magnitudes of transaction costs faced by the Big Three. When we apply the reasoning of this study, the process-tracing analysis basically corroborated the idea that the more a state regards the EU as a relatively effective institution for the provision of European security, the larger the substantive scope that it prefers for it in military planning (given the state’s membership in both NATO and the EU). The emergence of the ESDP might ultimately be seen as a joint answer to a market failure of European security in the end of the 1990s. This is, however, incomplete and applicable only at the level of systemic outcomes. In contrast, the study’s transaction costs perspective on state preferences was capable of explaining not only development over time, but also the differences in the governments’ approaches. In short, it offers a more differentiated view of the emergence of a complex institutional arrangement. Secondly, preferences on institutional depth could also be largely traced back to transaction costs within the ESDP. As we saw in the German case study, the government promoted relatively binding agreements in the mid-

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1990s. It supported the active participation of EU institutions within a potential security and defence pillar, but it was rather hesitant with respect to the rules of decision-making. This initial willingness, however, gradually decreased with the actual establishment of the ESDP at the end of the decade. Instead, the focus was increasingly on ‘flexible arrangements’ and the intergovernmental Council structures, both of which were intended to strengthen the institutional capacity of the ESDP. The study subsequently demonstrated that it was primarily the interaction of uncertainty about the partners and the respective asset specificity that had a strong impact on the formation of German preference for how to design the ESDP. In the mid-1990s, the government was moderately uncertain about Great Britain, but this uncertainty gradually decreased over time. The low political and financial costs of creating political structures at the EU level provided the government with some flexibility with regard to whether to bind itself or not. However, the initial German support for active participation in EU institutions cannot be derived solely from a transaction costs logic. Instead, other factors needed to be integrated. This weakness of the study’s framework was discussed in more detail above. In contrast, increasing support for the intergovernmental Council could be persuasively traced back to ‘positive feedbacks and sunk costs’ of the institutional path of the ESDP and thus to the willingness to invest further in these specific assets. The same mechanism, but in the opposite direction, could be traced back with respect to the general nature of the ESDP’s military assets. Their institutional path did not suggest further expansion of the initial investments, thus facilitating a smooth transition of the ‘Helsinki Headline Goal’ into the ‘Headline Goal 2010’. Back in the mid-1990s, however, Germany’s military shortcomings, linked to budgetary constraints and critical domestic voices, had triggered the initial high degree of specificity desired for the EU’s military forces. In terms of transaction costs, specific assets could represent a relatively efficient remedy for these shortcomings, since Germany would benefit from economies of scale, division of labour, and so on. This indicated the governments’ tradeoff: relatively efficient solutions, but hardly any flexibility, or vice versa. Germany started preferring the former solution, but then had to gradually turn towards the latter. This was first of all due to the practice of the ESDP, which allowed merely for general military assets. In addition, it became rapidly clear that rules which were too demanding could exclude Germany from participation, because of its severe military shortcomings. As a result, the general nature of the ESDP’s military assets made more binding agreements less urgent and thus encouraged the German government to redirect its focus onto the limitation of governance costs. The risks of opportunism had simply lost prominence under the condition of general military assets. In contrast, British preferences on institutional depth started from zero in the mid-1990s. The government essentially wanted no EU interference in

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its military affairs. When the ESDP was eventually established, it was made clear from the very beginning that defence would not become a Community affair, but should remain intergovernmental. Whenever it appeared functionally necessary, the Council would be the Council Secretariat. Political control, however, would remain the responsibility of the national governments. This approach remained largely stable until the Convention, reflecting the combination of modestly increased risks of opportunism with the gradually rising political and financial costs of the political-military assets that accounted for British transaction costs within the ESDP. At the end of the 1990s, the UK government became concerned that Germany could provide fewer power projection forces than it had expected. In addition, it feared that France might instrumentalise the ESDP in competition with NATO. The process-tracing could thus indicate a combination of British concerns: exploitation by Germany and entrapment by France. At the same time, the UK was the member state within the ESDP that had a permanent alternative option, namely, bilateral relations with Washington. On the whole, the risks of opportunism and thus transaction costs within the ESDP remained low. Nonetheless, the UK government’s increased willingness to bind itself after the end of the 1990s could be primarily traced back to the need to safeguard some of its actual investments. The study’s causal pathway was based on the premise that a government might prefer more binding agreements, if the assets of cooperation were costly and non-redeployable and linked to uncertainty about the partners’ commitment. These conditions were not present in the British case. Not only was uncertainty about France and Germany relatively low, but London always had a fallback option. Although the Blair government’s subscription to the ESDP was politically costly, the general nature of most assets did not suggest binding itself and the partners. High political costs suggested rather less demanding rules. Hence, the relatively low risks of opportunism shifted the attention of the government onto a possible rise in governance costs. It therefore preferred preserving residual rights of control. Hence the tradeoff for the British government over whether to invest in specific or general assets consistently suggested that the flexibility of general assets usually outweighed the cost-saving of specialised investments. In addition, redeployable military assets provided a most welcome opportunity to accommodate the antagonistic principles of NATO’s primacy vs. European defence autonomy. The French government initially promoted a similar approach with respect to questions of institutional depth, but in the course of the analysis it moved gradually closer to Germany. This, however, did not imply that France had given up its consistently intergovernmental approach to the ESDP. In particular, it opposed interference by EU institutions and therefore wanted to enhance institutional capacity through ‘flexible arrangements’ with governments taking a dominant position. In short, the objective was

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improved coordination rather than integration. Chapter 10 was able to trace back these preferences to the modest size of French transaction costs within the ESDP. In the mid-1990s, this could be inferred from its relative certainty about Germany and the low extent of asset specificity. Both dimensions gradually increased and thus accounted for France’s slightly greater willingness to bind itself since the end of the 1990s. In contrast to Great Britain and Germany, however, France’s desired outcomes were neither triggered by the concept of general military assets nor by the necessity of establishing primarily efficient solutions to military shortfalls. Not only were its military forces in good shape, but also the general nature of these assets served mainly as a kind of assurance rather than an initial trigger. After all, the French government was confronted neither with extremely high political nor with unbearable financial costs with respect to the ESDP. When it was, in fact, launched, the government was moderately uncertain about the dangers of being exploited by Germany4 and abandoned by the UK, which would ultimately rally around the Americans rather than Europe. Like London, the French therefore wanted to create some safeguards for their investments in the ESDP. Aside from the general nature of most military assets, ‘flexible arrangements’ could reduce some of these risks of opportunism in the future and were thus strongly promoted by the French government. In terms of transaction costs, both safeguards should make the mutual commitments more credible. Others were simply not required. Hence, France was relatively immune from opportunism and primarily wanted to maintain permanent control in military affairs. It consequently judged the anticipated governance costs of more hierarchical forms to be more costly relative to the modest, but permanent, risks of opportunism. In sum, it was not only demonstrated that transaction costs triggered the member states’ preferences for institution-building, but also how. The study’s structured, focused comparison of the Big Three was able to trace back their preferences on institutional depth primarily to transaction costs within the ESDP. Hence, several attributes of past and future transactions were decisive. The extent of uncertainty about the partners’ commitments, the political and financial costs of the political-military assets and the question of redeployability of those assets determined the individual tradeoffs made between risks of opportunism and governance costs and thereby the magnitude of the transaction costs that governments were facing. The indepth analysis of the three countries largely confirmed that the higher the combination of uncertainty and involved asset specificity within the ESDP for a state, the more depth and thus bindingness it will prefer with respect to the institutional arrangement. In other words, the member states assessed their risks of opportunism and the (frequently anticipated) governance costs that emerged from more hierarchical forms of cooperation, and formulated their preferences accordingly. At the same time, we also saw that strong

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uncertainty and high costs might encourage a state to prefer general rather than specific assets. This can be understood as a preventive limitation of future transaction costs and is thus fully compatible with the study’s logic. In Robert Keohane’s words, causes were explained in terms of their effects. After having theoretically developed and empirically examined preference formation in the ESDP from the perspective of a combination of historical-institutionalist and political economy approaches, it was nonetheless evident that this could not be the last word on the ESDP. Because a theoretical explanation cannot really be tested against the real world, but must be tested against alternative theoretical explanations, the systematic integration of the latter became an integral step of this study. Again following Imre Lakatos, Chapter 11 pursued the check of external consistency and therefore consulted the three standard IR research programmes again. Despite some plausibility, none of these approaches was fully – or even more – persuasive than the study’s transaction costs framework. Only explanatory factors from Constructivist thought might represent heuristically interesting supplements, while not replacing transaction costs as the initial triggers of preference formation. This became clear when they were confronted with the majority of empirical evidence from the structured, focused comparison. In addition, the plausibility probe of Ireland, as a small and neutral country, re- confirmed the overall evaluation. Although some minor modifications would be necessary, the transaction costs framework provides a plausible mid-range explanation of institutional preferences. In conclusion, this section has not only summarised the main theoretical and empirical results, but has also given an account of the explanatory strategies undertaken by the study. The primary objective appears to have been reached, namely, to explain an empirically complex arrangement by a theoretically parsimonious argument. Against this background, the chapter’s next section draws the principal conclusions from this study, before I ultimately elaborate on today’s deliberate – though functionally driven – internationalisation of the monopoly of the use of force and its implications for modern statehood.

The principal conclusions: filling the gap with a new conceptual lens Firstly, international political economy conventionally applied transaction costs to explain the design of institutions. This may be traced back to the history of the research programme (e.g. Williamson 1985: 2–14). The New Institutional Economics started out by asking why some economic exchanges were pursued within the firm (hierarchy), and others within the market (anarchy). Their answer obviously referred to transaction costs in one way or another (e.g. Milgrom and Roberts 1990; North 1990b). They explained the degree of hierarchy of different organisational arrangements.

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Many IR scholars who researched the problem of cooperation eventually turned to these ideas and thus explained (non-)cooperation or (non-)institutionalisation (e.g. Keohane 1984; Weber 2000; Koremnos et al. 2001). This implied at the same time that questions of substance were largely excluded from these analyses, but if they were in fact tackled, it was normally by building on other approaches, such as an “endogenous policy theory of economic interest” (e.g. Moravcsik 1998: 35–50). In contrast, this study began to build on, but subsequently departed from, this tradition to the extent that it applied the theoretical concept of transaction costs to both substantive scope and institutional depth. Based strongly on the work of Oliver Williamson, this study has suggested the central importance of comparative institutional arrangements and the relative magnitude of transaction costs. This decisively expanded the range of possible research questions to be answered by a transaction costs framework. The study argued that the governments not only preferred a certain degree of hierarchy with respect to international institutions, but also comparatively assessed how different organisations may reduce the costs of the provision of the public good. Consequently, I was able to not only ask why the governments preferred a specific design for the ESDP, but also how far-reaching its substantive scope with respect to military planning should be. In short, familiar issues were analysed from an unfamiliar perspective. Secondly, Renate Mayntz once reminded the audience at a presentation of her seminal discussion of ‘governance and steering’ (e.g. Mayntz 2004) that “as social scientists, analytical concepts are our eyes.”5 From this perspective, transaction costs may indeed represent heuristically interesting ‘eyes’ for the study of preferences, security cooperation and institutionbuilding. In particular, they contribute to overcoming simplistic concepts that require a decision as to whether ESDP is ultimately a ‘balancing act against US power’ or ‘bandwagoning with the hegemon’. Instead, the analysis demonstrated that it is, in fact, both – and to different degrees for different countries. The key to a comprehensive understanding of the ESDP lies in the fact that its institutional set-up reconciled two mutually opposing principles within a single political project: it was about both European autonomy and NATO’s primacy. Realism’s binary logic at the level of analytical concepts, however, blinds us to these complex ambiguities that politics is ultimately all about. This is primarily because of its conceptual legacy from alliance politics, which represents the exclusive way of understanding security cooperation from a Realist point of view. In contrast, a transaction costs framework emphasises two aspects. First of all, it enables us to see the impact of isolationist trends within the US that made its commitment less credible and thus increased the risks of opportunism and transaction costs for the Europeans. This was, however, not the end of the story, since we observed countervailing signals from Washington. The threat of withdrawal represented a highly uncertain scenario for some governments and

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thus constrained a purely functional formulation of preferences (especially in the UK). Instead, compatibility with NATO was the key to reconciling the ambiguities. In short, the ESDP was both against and for the United States. Thus, the study’s analytical lenses enable us to understand at a conceptual level the US influence on Europe that goes beyond the futile balancing vs. bandwagoning debate. Second, the concept of asset specificity draws our attention to the crucial opportunities of redeployable military assets. Power projection forces were built within the ESDP, but could in general be redeployed to NATO or other purposes. Ultimately, this represents the key to an understanding of the UK’s change of position at St Malo. In other words, the analytical concept of asset specificity functions as a kind of hinge between European autonomy and NATO’s primacy. Taken as a whole, transaction costs shed light on some aspects that other approaches exclude at the conceptual level, thus making them ‘blind’ to important features for their theoretical explanations. Finally, and inherently linked to this debate, a transaction costs perspective facilitates a qualified statement on the actual scope of the ESDP as a political project. This had been widely contested by scholars. There are those that claim that the “Europeanisation of security has been the great political revolution of the late twentieth and early twenty-first centuries” (Webber et al. 2004: 19; see also Smith 2004; Jones 2006). Others emphasise, instead, the continuing dependence on the United States and argue merely that “tactics may have changed” (Howorth 2000c; see also Lieber and Alexander 2005). Indeed, both camps are right in their assessment, although their claims appear incompatible at first glance. The study’s emphasis on asset specificity can reconcile these two views. The ESDP has in fact made tremendous progress within a relatively short time. Today, there are a Rapid Reaction Force and Battlegroups that can be deployed under the EU flag. Based on the member states’ single set of forces, however, the same troops may also be deployed under NATO command. This became, for instance, evident during the support mission to the African Union in Darfur in 2005. While some European airplanes were under the EU flag, others operated under NATO command. Consequently, the concept of general rather than specific assets that has played such a prominent role in this study provides a persuasive approach to understanding and explaining these ambivalent trends, thereby reconciling the contradictory interpretations. In addition, the study has contributed not only to a better understanding of the ESDP, but also, more generally, of security and defence after the end of the Cold War. National security still represents an ‘ambiguous symbol’ (Wolfers 1962), but it has evolved in one specific direction with important consequences: the impossibility of a war between the major powers (Jervis 2005: 26–9). While Robert Jervis principally examined the impact of this condition on American foreign policy, another conclusion may be drawn: contemporary security policy is not exclusively – or even primarily – about

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survival. This was also the reasoning behind this study’s conceptualisation: security policy is based on the protection from threats and risks, but at the same time and on an equal footing, on the desire to achieve this ‘at acceptable costs’. The corollary is that we do not necessarily have to differentiate economic from security cooperation in all respects. There are still important differences, but when we examine why states want to build power projection forces at a multilateral level, we can employ theoretical and analytical concepts from other domains. In many ways, the ESDP can be understood as a ‘coordination game with distributive consequences’ rather than a ‘prisoner’s dilemma’ that so strongly characterised strategic thinking during the Cold War. Britain and France were concerned much more about a Germany that might contribute too little to the common enterprise than about a rising hegemon that may threaten them in the future. This suggests, at the same time, that a heuristically interesting answer to the new security agenda is not first and foremost based on the question of whether to expand or narrow down the notion of security. The provision of security still represents a central problem for present- day governments. It should, however, be increasingly understood as a kind of good that is ultimately comparable to economic stability or a clean environment. If that is the case, it seems worthwhile to think more often of borrowing theoretical tools from other disciplines, such as transaction costs. After all, this study strongly suggested that they might indeed have triggered preferences for institution-building in European security. With these conclusions in mind, the final section refers back to debates on the transformations of the state and addresses to what extent this study has improved our understanding of this fundamental puzzle in political science.

Transforming Europe’s governance of defence without replacing the state By examining both the issue-area of military planning and the Big Three as main actors, this study has investigated a hard case of internationalising sensitive state activities from the perspective of mainstream political science. Additionally, in the absence of one single manifest ‘raison d’être’, such as a threatening Soviet Union, the emergence of the ESDP was even more puzzling for students of modern statehood. As Frédéric Mérand has argued: “ESDP redefines the nature of European integration and the way we think about the state in the twenty-first century” (Mérand 2008: 3). The apparent lack of a simple explanation led to disagreement among scholars of why and how the EU’s defence pillar has been established from 1998 onwards. Why have today’s governments been deliberately willing to internationalise their means of coercion in the form of military planning, although they individually possess substantial military capacity and are not struggling for survival? Against this background and based on the results of the study, this

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final section specifies the changes in the monopoly of force and addresses implications for the transformations of the state. In contrast to widespread assumptions, the study has shown that there is no single linear trend in the process of dismantling the European nation state. Instead, the development is mostly uneven. Therefore, the analysis could not validate the widespread notion of globalization, which puts pressure on all states to pool and delegate their competences. The German case study on institutional depth, for example, demonstrated that the government mostly welcomed the participation of the European institutions, but strictly opposed pooling in terms of convergence criteria for the building of military capabilities. In contrast, although facing very similar stimuli, France and the UK’s preferences were the opposite. In other words, analysing unit-level preferences, rather than exclusively system-level outcomes, enables a more differentiated lens to understand and explain the mechanisms behind today’s trend towards internationalising the use of force. In a nutshell, the study shows how military planning is increasingly embedded in international institutions, such as the EU’s defence pillar, while all actors vehemently oppose genuine delegation. In other words, the monopoly of the use of force is not to be transferred to the European level (see also Mérand 2008: 148). The internationalisation of the defence function through the ESDP therefore changes the role of the government, but does not replace the state. The Big Three’s governments prefer to provide each other with information on military planning and, therefore, create some institutional safeguards against the risks of opportunism, such as exploitation or entrapment. The fear of exploitation was particularly salient in the British and French cases, both of which have formidable power projection forces at their disposal. They were consistently concerned about having granted other EU members a say in defence issues without obtaining improved military capabilities. Both the general nature of most military assets and institutional rules, such as, for example, the battlegroup concept, served as safeguards for their investments in the ESDP. In contrast, Germany needed to guarantee its ability to participate and was, therefore, rather hesitant in the establishment phase of the EU’s military forces. Potential governance costs – the loss of national control over military planning (and procurement decisions) – weighed too heavily. As a result of these countervailing trends, the governance of Europe’s defence is increasingly pursued within a coordinated – though not integrated – context. We may speak of ‘governance with governments’ in the sense that the unilateral provision of security is being gradually replaced by a multilateral mode of governance. Direct control over the use of force and the organisation of the military, however, remains located at the national level. Indeed, there is no better example to illustrate this differentiated result than the struggle for the EU Headquarters.

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Apart from having Berlin Plus options (that is, NATO’s SHAPE) at their disposal, Europe’s governments deliberated on the headquarters issue basically in terms of two options: the framework lead nation concept with planning facilities from national resources delegated on a case-by- case basis, or a standing EU organisation. In terms of transaction costs, the specificity of the asset to be created was at stake: nationally earmarked and thus general assets, or a European body that cannot be easily redeployed for other purposes.6 Germany, and even more, France, preferred to strengthen the EU’s Military Staff by ultimately transforming it into an operational headquarters to prepare, plan and implement small-scale military missions. This was strongly opposed by the UK government, although it broadly recognised the functional necessity of such an institution. The ultimate compromise, the so-called Civil-Military Cell and the subsequent Hampton Court formula, has come close to being an HQ for civilian operations and providing some links to military aspects of operations. It is, however, not a genuinely military HQ. While it is a relatively specific asset, its scope explicitly omits the most sensitive domain, namely, concrete operational planning. The actual consequence, nonetheless, is that the EU governments face a severe obstacle when they decide to initiate the creation of military options in a political crisis. Ultimately, they need to coordinate among themselves and with the EU’s Military Staff. While they still have the national capacity and resources to plan unilaterally for these military operations, there is – apart from greater legitimacy – a strong incentive to pursue this planning via the institutions of the ESDP, because national devices always involve the risk of ultimately carrying the burden of command and control in any operations that take place. This is frequently not desired by most governments. In other words, this study shows that, as a response to functional demands, governments do not simply delegate military planning as an integral part of their monopoly of force to the EU level. Instead, this is a politically contested process, whereby preferences are formed and institutional outcomes negotiated. Because this study regarded the monopoly of force as a means of resolving the functional problem of protecting a state’s territory from external military threats, state preferences were first of all examined from such a perspective. Although a simple functional argument might not be sufficient for a complete explanation of the internationalisation of the use of force, this study demonstrated that a transaction costs framework, which builds on functionalist, cognitivist and historical sources of preferences, is heuristically suitable for understanding the extent of the governments’ willingness to internationalise their defence function. It was empirically demonstrated that the primary determinant of preferences was, indeed, to reduce current and anticipated transaction costs for the provision of European security. As a result, information is shared among the EU members and governments change their security governance by increasing

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coordination at the European level. At the same time, however, they maintain national resources and capabilities, which will continue to make the nation state irreplaceable in European security (see also Mérand 2008: 148). This fully confirms what Philipp Genschel and Bernhard Zangl have argued for in a broader context (Genschel and Zangl 2008: 430–1; see also Genschel and Leibfried 2008). The modern state is transformed from an exclusive holder of the monopoly of force towards a sovereignty manager, initiating and coordinating the governance of European security. Finally, building on the works of Pierre Bourdieu, Frédéric Mérand has established a theoretically powerful and empirically rich argument on the emergence of the ESDP and the transformation of the state. In contrast to this study’s primary determinant of transaction costs, Mérand argues from a much broader historical perspective that the emergence of the ESDP as a transgovernmental field (...) is a by-product of two parallel developments that have been unfolding since the end of World War II and are peculiar to Europe: the internationalization of European defence structures and the Europeanization of foreign policymaking. (...) Certain individuals or groups of actors were instrumental in shaping ESDP, but without those structural conditions already in place, there would be no talk of ESDP today. (Mérand 2008: 4–5) Based on this structural framework, Mérand draws the conclusion that “European defence is a symptom, but not a cause, of a broader transformation of the state in Europe, one in which the state is moving away from its core functions” (Mérand 2008: 137). In contrast, this study’s stronger focus on actors and thus on preference formation (in the same states examined by Mérand) leads to a more hesitant conclusion: while today’s governments partly want to internationalise military planning, the state is not moving away from its core functions. Instead, it has increasingly developed a new role for itself in the governance of defence in Europe. In other words, the ESDP is also a cause of – or perhaps better, a reason for – a broader transformation of the state. Today, governments manage the provision of security in close collaboration with their EU partners (and the US). However, this does not appear to “amount to a partial surrender on the part of state actors of their monopoly over legitimate violence” (Mérand 2008: 148). This study has traced back the great importance governments assign to potential governance costs in the defence field. While they are willing to provide some information on military planning, they strongly insist on preserving the control of the military and, in particular, over the use of force. While the governance of the defence function is gradually changing by being increasingly internationalised, the military has not simply become a ‘service’ like any other, as Frédéric Mérand has argued (2008: 152). On the contrary, it remains a key attribute of the state, although, from the perspective of the

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golden-age nation state, the defence function is now executed in distinct – that is, more internationalised – ways. In conclusion, building on the logic developed by this study, we can expect that Europe’s future of governing defence via security institutions depends primarily on one crucial constellation of drivers: the individual reduction of existing and anticipated transaction costs on the part of the European states.

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Notes 1 Introduction 1. The French President pushed strongly for the building of a European defence pillar within NATO: ‘Chirac talked philosophically and with assurance on a broad range of foreign policy topics, including his plans for closer military cooperation with the United States in NATO. ( ...)’ Chirac continued ‘NATO must make internal changes that will permit European countries to have more autonomy and take more responsibility in European defense. “The reforms we have proposed must lead to a European identity in defense, within NATO” ’.’ Chirac at Cruising Speed’ by Jim Hoagland, The Washington Post, 21 April, 1996. 2. This chapter’s last section explains the reasoning behind the selection of the ‘Big Three’. However, it should be noted that in the final part of the book I will conduct a brief ‘plausibility probe’ of Ireland as a ‘small’ (and neutral) country in order to enable a more qualified statement about the argument’s scope in this regard (for example Eckstein 1975: 108–113). 3. In this sense, the study’s objective is similar to that of ‘The Choice for Europe’. In Helen Wallace’s words, Moravcsik’s book ‘contributes to international relations theory, by removing the study of west European integration from its idiosyncratic corner and locating it in the mainstream of theorizing about the relationship between the state and the international system’ (Wallace 1999: 156). That is exactly what this study also aims to do. It differs, however, insofar as it modestly restricts itself to one single issue-area, namely security and defence. 4. While all components of Weber’s seminal conceptualisation are important for analysing recent transformations of the state, this study focuses on the monopoly of external force (in other words, military) rather than on the interrelated issues of legitimacy and internal pacification (in other words, police). 5. I decided to use David Lake’s term ‘governance costs’ rather than ‘influence costs’, as used by Paul Milgrom and John Roberts (Milgrom and Roberts 1990: 72–86). The main reasons are its similarity to Oliver Williamson’s term ‘governance structures’ and its greater applicability to ongoing debates in political science (for example Gourevitch 1999). The underlying concepts, however, are essentially identical. 6. For instance, France’s fears of exploitation by Germany accounted for the French willingness to support ‘convergence criteria’ or ‘coherence indicators’ in defence planning. 7. The ‘plausibility probe’ of Ireland as a small and neutral country also suggests that a transaction costs framework will sharpen our understanding of these cases too. Some of the concepts need to be adjusted to the extent that the role of the United States and grand strategic considerations would be largely replaced by an explicit focus on the European security architecture. Furthermore, the framework would probably be supplemented by an identity concept, such as military neutrality, which could serve as a kind of intervening variable. Nevertheless, the plausibility probe demonstrates the general applicability of the study’s approach to small and non-allied states.

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8. In this way, the approach can shed light on the numerous ambiguities of ESDP – for instance, that it was neither ‘balancing’ nor ‘bandwagoning’ with the United States (for example Posen 2004: 10–12; Art et al. 2005/6: 184). Instead, it was simultaneously about ‘European autonomy’ and the Alliance’s primacy. This ‘squaring of the circle’ was primarily facilitated by the general nature of the EU’s military forces. 9. Some authors even refer to these countries as an informal directorate in the ESDP (Freedman 2004). However, I admit that when it comes to the explanation of preferences, the exclusion of ‘small’ or ‘medium’ states cannot be fully justified. It may in fact be wrong to do this because at least in principle this might be one of the reasons for varying preferences. For that reason, the book conducts a ‘plausibility probe’ (but not a ‘case study’) of Ireland as a small and neutral country because this represents the greatest possible contrast to the ‘Big Three’. On that basis, the scope of the book’s argument will be specified in the concluding chapter. 10. It is structured because I will ask in each case the same theoretically relevant questions that guide my analysis. It is focused because I selectively limit the analysis to those aspects that are particularly relevant for the study’s research objectives (George and McKeown 1985: 41). 11. However, there is one major obstacle with respect to official sources: as an expert at the leading institute on European security wrote: ‘It should be noted here that, as European defence becomes a reality, the more documents issued by military authorities or defence ministries are classified, and therefore the unclassified texts reproduced here are not as numerous as might have been desirable’ (Haine 2003: 12). 12. ‘It has been our experience, at any rate, that generally the data that can be obtained relatively easily from public records and qualified newspaper reports correspond remarkably well with inside information that could only have been gained through access to operative documents, confidential interviews, or participant observation’ (Scharpf 1997: 63). 13. Most of the interviews were face-to-face, but a few used e-mail and/or telephone. All were conducted under Chatham House Rules.

2 Theorising Preference Formation for Institution-Building in European Security 1. Imre Lakatos’ ideas are applied as a heuristic tool. This should not be understood as a partisan statement on a certain epistemological perspective (for example in opposition to Thomas Kuhn’s “paradigms” or Steve Fuller’s “social epistemology”). After all, most parts of the study are fully compatible with Kuhn’s conception of “normal science as puzzle-solving” (Kuhn 1996: 35–42). 2. “For the sophisticated falsificationist a theory is ‘acceptable’ or ‘scientific’ only if it has corroborated excess empirical content over its predecessor (or rival), that is, only if it leads to the discovery of novel facts. This condition can be analysed into two clauses: that the new theory has excess empirical content (‘acceptability 1’) and that some of this excess content is verified (‘acceptability 2’). The first clause can be checked instantly by a priori logical analysis; the second can be checked only empirically and this may take an indefinite time” (Lakatos 1970: 116).

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Notes 213 3. A brief look at the editorial boards of the two most important scholarly journals that deal primarily with security questions (International Security and Security Studies) seems sufficient to confirm this statement. 4. Power is understood as a sort of currency of structurally determined constraints and opportunities. For critical treatments, see Baldwin (1979) and Hill (2003). 5. For an illustrative overview of ‘neoclassical realism’, see Rose (1998). Nevertheless, the ‘cause of last resort’ or the ‘causal chain’s starting point’ will always be the relative position of that state in the international system. This represents the ‘hard core’ of the Realist research programme. 6. The worst corollary, however, was to engage in “conceptual stretching” (e.g. Collier and Mahoney 1993) and to supplement the initial theory with terms such as ‘soft’. This adds neither conceptual clarity nor empirical leverage and can be thus described as degenerative. 7. According to Harald Müller, for example, a “utilitarian theory of action cannot explain the logical gap between a plausible motivation for inter-state coordination and the actual cooperative efforts under the constraining conditions of anarchy and existential risks” (Müller 1994: 15). This argument represented one of the starting points for the so- called ‘ZIB-Debatte’ in Germany in the mid1990s. 8. One of the main weaknesses is the implicit ‘evolutionary logic’ of Europeanisation approaches. They often assume some convergence and/or harmonisation of EU interests (Meyer 2006: 39–42). For example, Michael E. Smith traces the development of CFSP back as a history from “bargaining to problem-solving” and from a “logic of consequences towards a logic of appropriateness” (e.g. Smith 2004). At a closer look, this is inherently normative and problematic since it is merely implicitly so. 9. The book limits the empirical analysis (and comparison) to some sort of moderate Constructivism (e.g. Katzenstein 1996). This is, firstly, for resource reasons, since it was not feasible to conduct in- depth “meaning-making processes” in three countries (e.g. Jackson 2006). The second reason is that these moderate approaches (still) largely dominate the scholarly debates (e.g. Duffield 1998; Smith 2004; Meyer 2006). They therefore represent the main competitor to this book’s approach and serve as the main frame of reference. 10. The most far-reaching proposition from the perspective of a socialising and culturalist argument would be undoubtedly that the vast amount of iterated interactions between the EU member states should lead – via socialisation – to overall preferences that slowly converge. The national self-interest will be slowly replaced by a genuinely European self-interest because the self- definition of “we” increasingly refers to Europe (e.g. Adler and Barnett 1998; Meyer 2006: 11). This line of argumentative will, however, not be addressed at great depth because the period of analysis is simply too short. 11. However, we need to keep in mind that Kenneth Waltz had already argued that a “theory of international politics ( ...) can tell us what pressures are exerted and what possibilities are posed by systems of different structure, but it cannot tell us just how, and how effectively, the units of a system will respond to those pressures and possibilities” (Waltz 1979: 71). 12. Although arguing from another perspective and for other purposes, Robert Jervis pushed, in fact, very similar ideas forward. See, in particular, Jervis 1997: 146–55.

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3 Transaction Costs and Security Institutions 1. This procedure is also intended to fill the gap left by Andrew Moravcsik’s Liberal Intergovernmentalism (Moravcsik 1998), when the EU turned to security and defence. The ESDP had been characterised neither by intense lobbying by domestic interest groups nor by a simple cost-benefit relationship, as in the Common Agricultural Policy (Zürn 1997: 299). This otherwise successful approach therefore ran out of comprehensive explanations when faced with an issue-area not strictly corresponding to the logic of a pluralist market of interest groups. 2. Without this assumption, the contractual process would be merely a problem of ‘promise’ (Williamson 1985: 31). 3. From the level-of-analysis perspective, a market failure represents a system-level outcome that may have an impact on the units. The breakdown of a multi-polar balance of power is an example of market failure. Stability is gone. In contrast, high transaction costs would, for example, correspond to a situation in which the balance of power may be upheld, but at very high costs for one or more members of the system. In such a situation, the individual states may prefer cooperative agreements in order to decrease their costs (in other words, external balancing). In other words, transaction costs can be regarded as a unit-level problem. 4. “As it is one of several primary goods, however, individuals and polities never desire security to the exclusion of all other goods. This implies that a greater or lesser tradeoff always exists between security and other valued goods – a ‘guns/ butter’ tradeoff in common parlance. This tradeoff is central to the implication ( ...) that polities will seek to minimize the costs of producing their desired level of security” (Lake 1999: 24). 5. It is precisely this understanding of security that facilitates the application of a transaction costs framework. If contemporary security policy was exclusively about their own survival, this would prohibit the use of these concepts that build strongly on equilibrium and efficiency concepts. I appreciated the comments by Dieter Wolf, who directed my attention towards this problematique. 6. This study mainly applies the terminology of Oliver Williamson, who conceptualised asset specificity and uncertainty as attributes or dimensions of transactions (Williamson 1985: 52–61). This author had initially included frequency, but this was excluded from the study’s framework since it did not promise additional heuristic value (Weber 2000: 141, note 61). Firstly, the members have sufficiently frequent contact in the European security setting. Secondly, membership of the EU more or less guarantees that this will remain stable. Therefore, it would only make sense within a cybernetic framework à la Karl Deutsch, which is different from the approach chosen here. 7. The major challenge of a transaction costs approach is a persuasive procedure of how to operationalise these costs. It is a truism that it always makes sense to rationalise ex post actors’ preferences by reference to costs. However, this must be determined ex ante as this problematique was exactly responsible for the former ‘tautological reputation’ of transaction costs economics (Williamson 1985: 4). 8. “Voice is here defined as any attempt at all to change, rather than to escape from, an objectionable state of affairs” (Hirschman 1970: 30). 9. The dimension of asset specificity plays a lesser role in this context since governments are first and foremost assumed to assess the others’ engagement within an institution. The analysis of substantive scope requires, so to speak, a broader point of view, so the question is whether to cooperate at all. For the more specific

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10.

11.

12.

13.

14.

issue of how the EU members want to cooperate, it is necessary to narrow down the focus on both uncertainty and asset specificity. In Rathbun’s very useful categorisation, this book can be located between ‘rationalism’ and ‘cognitivism’. While the overall logic behind the study’s argument is most closely related to the former, focusing on perception and interpretation and emphasising “lacking information about others’ intention” (Rathbun, 2007: 534), the analytical framework also incorporates the problems of subjective interpretations and ambiguity. “[A]sset specificity is the big locomotive to which transaction cost economics owes much of its predictive content. Absent this condition, the world of contract is vastly simplified; enter asset specificity, and nonstandard contracting practices quickly appear” (Williamson 1985: 56). These two strategies are based on Paul Pierson’s discussion of rational–functionalism. He proposed that “(1) functionalist premises about institutional origins and change should be replaced by carefully specified functionalist hypotheses; and (2) functionalist hypotheses should be supplemented and contrasted with hypotheses stressing the possible nonfunctionalist roots of institutions” (Pierson 2004: 130). The former is more strongly reflected with respect to substantive scope, whereas the latter could essentially be applied to the issue of institutional depth. The understanding of ‘possible outcomes of an interaction’ required adjusting the concept to what was really going on in the real world of political practices in European security. Otherwise, an empirical analysis would hardly have been feasible. As a researcher, however, I intended not to be dominated by the political rhetoric but, instead, to develop ‘distinctions that make a difference’. The result is thus a compromise. The best (and ‘hardest’) source would obviously be records of internal discussions of a government’s decision-makers preceding certain EU meetings (e.g. Zürn 1997: 300–1). Unfortunately, they are unavailable. However, this appears not particularly problematic for this kind of analysis (e.g. Jachtenfuchs 2002: 220–4). Why should, for instance, the United Kingdom publicly oppose ‘collective defence’ within the EU, but secretly support it?

4 The Demand for a Security Institution: German, British and French Perceptions of the Environment in the 1990s 1. As explained above, in the following sections I analyse documentary sources to find out what the government in question judged to be the main challenges to its security. The easier procedure at this stage of analysis would have been to rely exclusively on objective data, such as conflict barometers. According to historical-institutionalist thought, however, the intersubjective process of interpretation and assessment is the primary determinant of the uncertainty. Hence, the respective perceptions are empirically analysed and compared. 2. We should keep in mind one unusual feature of France. Hardly any public statements are made about far-reaching defence issues. This feature is due to the fact that a small circle of elites, who usually discuss behind closed doors, almost exclusively conducts security and defence policy in France. Hence, what is often regarded as a national consensus in question of security and defence is often more indicative of an absence of a public debate (Becker and Kempin 2005: 6).

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3. See also ‘France Says It Is Willing to Discuss Its Nuclear Role in NATO’ by Craig R. Whitney, The New York Times, 18 January 1996; and, ‘Chirac Ends France’s Nuclear Test Program; Paris to Take “Active” Role in Disarmament’ by William Drozdiak, The Washington Post, 30 January 1996. 4. Another ‘lesson learnt’ was the abandonment of conscription. It was not only militarily, but also politically infeasible to send conscripts regularly into crisis management operations abroad. For instance, the French government had been politically unable to send conscripts into the Gulf in 1991, where numerous casualties were expected. Therefore, it created one light division of professionals out of fifty regiments. This was a considerable problem at the time because it was costly (Heisbourg 2000b: 37). 5. In the beginning, there was disagreement within French political opinion about potential reconciliation with NATO. While the left opposed such a step or made almost unacceptable demands, the right was, at least, open-minded to accommodating the US in order to achieve further objectives (see, in particular, Menon 2000: 127–134, 279). 6. See, in particular, ‘In Shift, France Vows To Modernize Military’ by Keith B. Richburg, The Washington Post, 16 October 2004. 7. Between 1994 and 1996, the NATO allies agreed on the so- called Berlin Plus arrangements: its ‘Combined Joint Task Forces’ Concept was not only to establish a European pillar, but also confirmed – though indirectly – NATO’s right of first refusal in any crisis. Europe may only act alone if NATO chooses not to do so (Hunter 2002).

5 Germany – From Defending the Alliance’s Territory to Crisis Management for the Union 1. This trend was later re- confirmed by the German ‘White Paper’ of 2006 (German Ministry of Defence 2006: 17–24). 2. See also ‘EU pact rules should exclude defence spend – Struck’ Reuters News, 1 December 2003. 3. ‘EU-WEU: Text of the Document of France, Germany, Italy, Spain, Belgium and Luxembourg on the Gradual Integration of the WEU into the European Union’ No. 2906, Atlantic News, 3 April 1997. 4. ‘EU/Defence/France/Germany’ Agence Europe, 28 January 1997. ‘UK “To Veto” EU Defence Bid – France and Germany Push for Closer Ties’ by Caroline Southey and Lionel Barber, Financial Times, 24 March 1997. Some (influential) German politicians even proposed that the EU play a role in future territorial defence (e.g. CDU/CSU Bundestag Group 1994; Lamers 1995). However, this never developed into an official government preference. 5. We need to keep in mind that Germany was a whole-hearted supporter of NATO’s ‘Berlin Plus’ arrangements, which implicitly made high-intensity operations dependent on the US because of NATO’s right of first refusal (e.g. Hunter 2002: 23–4). 6. The ‘Eurocorps’, for example, was to represent the nucleus of further European integration in this hardware provision for military tasks. In the mid-1990s, however, the primary function was still territorial defence (German Government 1996). 7. This problematique was re- confirmed in numerous interviews by both German and French officials.

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Notes 217 8. Interview with a senior French official of the Ministry of Defence. See also ‘Tiptoeing Toward the Euro’ by Jim Hoagland, The Washington Post, 30 January 1997. 9. ‘Informal Reflection at WEU on Europe’s Security and Defence’, (German Presidency Paper: Bonn, 24 February 1999); ‘Strengthening the Common Policy on Security and Defence’ (Informal Meeting of EU Foreign Ministers: Eltville, 13–14 March 1999; German Proposal), cited from Rutten 2001: 14–16 and 17–19. 10. See also Franco- German Security and Defence Council (1999): Declaration, (Toulouse: 29 May 1999), cited from Rutten 2001: 40. 11. Interviews with two senior officials of the German Ministry of Defence (ESDP Unit), (Berlin: April/May 2007). 12. ‘German leader says EU defence initiative “not competing” with NATO’ BBC Monitoring European, 4 November 2003. 13. See also ‘German minister calls on US to give up reservations against EU defence policy’ BBC Monitoring European, 9 December 2003. 14. ‘Ein Hauptquartier, das nicht so heißen darf’ by Martin Winter, Süddeutsche Zeitung, 31 May 2007. 15. ‘Berlin to join UK and France in “battle groups” ’ by Judy Dempsey, Financial Times, 11 February 2004. 16. This decision is reprinted in: EU-ISS 2005: 10–16. 17. ‘EU/Defence’ Agence Europe, 11 February 2004. ‘EU/Defence – Germany joins Franco-British rapid reaction force initiative’ Agence Europe, 12 February 2004. 18. Interviews with two senior officials of the MoD’s ESDP unit (April/May 2007). 19. The full transformation in thinking occurred between the publication of two strategic documents: the Defence Policy Guidelines (2003) and the new White Paper (2006). However, the actual transformation process is still underway. 20. The following analysis is also a contribution to one of the main challenges in the domestic politics research agenda formulated by Peter Gourevitch: “The great challenge confronting the domestic politics research agenda is to model the interaction of countries with each other and with the system. We have developed strong research traditions that hold either system or country constant. We do not have very good theories to handle what happens when both are in play, when each influences the other, when the domestic politics of one country interacts with the domestic politics of another, an interaction which itself helps define a system that reverberates back on the parts” (Gourevitch 2002: 321). 21. This part of the analysis is illustrated in detail in the German case. The chapters on Britain and France merely refer to the broad results and therefore focus on the perceptions of the signals sent by the United States. 22. This trend was reflected in the reorganisation of the US Foreign Ministry after 1990. For instance, one could observe an American withdrawal from those areas where the US had no vital interests (such as Africa). ‘National Security Directive 75: American Policy Toward Sub- Saharan Africa in the 1990s’ (23 December 23 1992), cited from http://www.fas.org/irp/offdocs/direct.htm (last access: 3 January 2006). 23. The first instance of this new policy was the civil war in Rwanda in 1994, in which a military intervention had never been seriously considered. ‘US Troop Withdrawal Ends Frustrating Mission To Save Rwandan Lives’ by Thomas W. Lippman, The Washington Post, 3 October 1994. 24. ‘US, Europe: The Gap is Widening’ by Rick Atkinson, The Washington Post, 8 February 1995. ‘Leading NATO on Bosnia; Rebuffed Once, US Takes a Forceful

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218

25.

26.

27.

28.

29.

30.

31. 32. 33. 34.

35.

36. 37.

38. 39.

Notes Tack Toward Allies on Approach to Balkan War’ by Michael R. Gordon, The New York Times, 3 August 1993. ‘As Europe Seeks Wider NATO Role, Its Armies Shrink’ by Rick Atkinson and Bradley Graham, The Washington Post, 29 July 1996. See also ‘Crisis in the Balkans: The Continent; Europe’s Aim: Arms Parity’ by Roger Cohen, The New York Times, 15 June 1999. For an opposite view see, ‘Europe and America Aren’t Divorcing’ by Ivo H. Daalder, The Wall Street Journal Europe, 10 December 1999. ‘Nervous Looks Among Allies’ by Jim Hoagland, The Washington Post, 19 December 1999. ‘Weathering the Storm’ The Economist, (US edition), 9 September 2000. ‘Our Champion of Continuity’ by Jackson Diehl, The Washington Post, 19 March 2001. This interpretation is also based on interview material with two senior officials at the German Ministry of Defence who were involved in these issues after the mid-1990s. The interviews were conducted in April/May 2007. Here, for example, the German Minister of Defence, Rudolf Scharping, cited from ‘US and NATO Allies Divided Over Defense Needs’ by Craig R. Whitney, The New York Times, 3 December 1999. From the perspective of the National Security Strategies issued since July 1994 by President Clinton, his multilateralism appears to have been a choice rather than a firm belief. He always made clear that the “decision on whether and when to use force is therefore dictated first and foremost by our national interests. In those specific areas where our vital or survival interests are at stake, our use of force will be decisive and, if necessary, unilateral” (White House 1996). “Likewise, Germany is a crucial partner of the United States and, since its reunification, has been a key player in bringing the emerging democracies of the East closer to the West” (U.S. Department of Defense 1995). ‘NATO Calms US Fears of European Defence HQ’ by Stephen Castle, The Independent, 21 October 2003. ‘The Transatlantic Rift Is Getting Serious’ by David Ignatius, The Washington Post, 15 February 2002. ‘4 European Leaders Form Pact To Boost Defense Cooperation’ by Robert J. McCartney, The Washington Post, 30 April 2003. This interpretation was, moreover, confirmed by interviews with two senior officials of the German Ministry of Defence, who were involved in these issues at that time. The interviews were conducted in Berlin in April/May 2007. ‘In the transatlantic alliance, we don’t. have too much America, we have too little Europe,’ the [Minister of Defence, Rudolf Scharping] said’. Cited from ‘Europe Says Its Strike Force Won’t Impair Role of NATO’ by Craig R. Whitney, The New York Times, 2 December 1999. ‘US, Bonn Clash Over Pact with France’ by Frederick Kempe, The Wall Street Journal, 27 May 1992. The US administration had made unambiguously clear in the so- called Bartholomew letter that ‘European- only’ experiments could put American engagement (and thus NATO) at risk. These assessments were confirmed by an American policy expert with whom I conducted an interview (Berlin: April 2006). ‘EU Force Could Spell NATO’s End, Cohen Says’ by Douglas Hamilton and Charles Aldinger, The Washington Post, 6 December 2000. ‘EU force “puts NATO at risk of becoming relic” ’ by Michael Evans, The Times, 6 December 2000. ‘US urges EU to keep link with NATO Military Capability’ by Alexander Nicoll, Financial Times, 6 December 2000.

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Notes 219 40. For the reaction on the Helsinki European Council see, for example, ‘Europeans Envisioning Strike Force Without US’ by Craig R. Whitney, The New York Times, 26 November 1999. ‘US and NATO Allies Divided Over Defense Needs’ by Craig R. Whitney, The New York Times, 3 December 1999. ‘Eurodefense’ (editorial) The Washington Post, 10 December 1999. ‘Nervous Looks Among Allies’ by Jim Hoagland, The Washington Post, 19 December 1999. ‘US Tepid on European Defense Plan; American Stance Vexes EU Leaders’ by William Drozdiak, The Washington Post, 7 March 2000. ‘Defence row looms at EU summit’ by Robin Oakley, CNN, 5 December 2000. 41. ‘US tries to persuade Turkey not to veto EU defence plans’ Agence France-Presse, 12 December 2000. ‘Albright, Cem meet at NATO to discuss EU defence’ Agence France-Press, 14 December 2000. ‘Turkey presses on NATO force’ by Alexander Nicoll, Financial Times, 14 December 2000. ‘In Accord, Turkey Tentatively Agrees European Union Force May Use NATO Bases’ by Michael R. Gordon, The New York Times, 5 June 2001. 42. ‘US Tepid on European Defense Plan; American Stance Vexes EU Leaders’ by William Drozdiak, The Washington Post, 7 March 2000. 43. Interview with senior MoD officials, who also allowed me to see some of the confidential documents from that period (Berlin: April/May 2007). 44. The former had been the driving force behind a ‘defence planning guidance draft’ under the Bush Sr. administration, which led to significant transatlantic tensions because it designated Western Europe – more or less explicitly – as a future global competitor. It stated, ‘it is of fundamental importance to preserve NATO as the primary instrument of Western defense and security, as well as the channel for US influence and participation in European security affairs. While the United States supports the goal of European integration, we must seek to prevent the emergence of European- only security arrangements which would undermine NATO, particularly the alliance’s integrated command structure.’ U.S. Department of Defense (1992): ‘Draft of the Defense Planning Guidance for the Fiscal Years 1994–1999’, cited from: ‘Excerpts From Pentagon’s Plan: “Prevent the Re-Emergence of a New Rival” ’ The New York Times, 8 March 1992. The ‘Nuclear Posture Review’ (2002) recalled significantly the approach taken by parts of the Pentagon in 1992. Apparently, the competitive character of the transatlantic relationship had regained significance in US strategic thinking (U.S. Department of Defense 2002a). 45. ‘But whatever the causes, the rift between the United States and its European “allies” is getting serious. You could hear the NATO alliance tearing at the seams on Tuesday as Germany’s foreign minister, Joschka Fischer, denounced the Bush administration’s anti-terrorism policy and warned that Europeans will refuse to be treated like “satellite” states.’ Cited from ‘The Transatlantic Rift Is Getting Serious’ by David Ignatius, The Washington Post, 15 February 2002. See also ‘Herr Rumsfeld’s Warning’ by Fred Hiatt, The Washington Post, 9 February 2003. ‘The Great Divide: The US and Europe Stretch to Close It’ by Elaine Sciolino, The New York Times, 8 December 2003. For a comprehensive overview of (un)contested issues in the transatlantic relationship from a US perspective see Wayne 2003; Jones 2004. 46. ‘US calls Nato meeting on EU defence’ by Judy Dempsey, Financial Times, 17 October 2003. ‘Crossed Wires on European defense’ Financial Times, 18–19 October 2003. ‘EU/Defence – United States fiercely opposed to European “headquarters” outside NATO’ Agence Europe, 2 October 2003. ‘NATO Calms US Fears of European Defence HQ’ by Stephen Castle, The Independent, 21 October 2003.

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47. “But when the ink was barely dry [on the EU–NATO Strategic Partnership], you had this summit on April 29 of France, Germany, Belgium, and Luxembourg [Tervuren] and they said let’s create an independent EU military headquarters, let’s think about an Article 5-like clause for the EU constitution, let’s think about our own SHAPE. All those issues are being debated now in the Inter-governmental Conference as they look at finalizing the EU constitution. And what Secretary Rumsfeld has been putting forth at this meeting – in individual meetings, but also in the larger gathering – is we need to go back to the roots of Berlin Plus and preserve a cooperative, but not competitive relationship. The US is opposed to attempts to split Europe off – rather the EU off – from NATO. That’s a major challenge” (U.S. Department of Defense 2003). 48. ‘Europe Warms to Idea of Unified Military Agency’ by Heather Timmons, The New York Times, 22 July 2004. Another instance of initial US opposition was the question of an independent European satellite system that might be extremely relevant in future military operations. ‘US and EU poised to agree on satellite navigation networks’ by Judy Dempsey, Financial Times, 3 February 2004. ‘US backs EU development of military satellite system’ by Judy Dempsey, Financial Times, 27 February 2004. 49. For the initial German position, see the previous exploration of German preferences. For the gradual shift, see the development: ‘Defying US, Germany stands firm on EU defence HQ’ Reuters News, 11 September 2003. ‘EU/Defence – United States fiercely opposed to European “headquarters” outside NATO’ Agence Europe, 2 October 2003. ‘EU/Defence’ Agence Europe, 8 October 2003. ‘US calls Nato meeting on EU defence’ by Judy Dempsey, Financial Times, 17 October 2003. ‘Crossed Wires on European defense’ Financial Times, 18/19 October 2003. ‘Germany’s Struck sees EU defence planning at NATO’ by Markus Krah, Reuters News, 24 October 2003. ‘German leader says EU defence initiative “not competing” with NATO’ BBC Monitoring European, 4 November 2003. ‘EU/Defence’ Agence Europe, 25 November 2003; ‘EU/IGC/NATO – Donald Rumsfeld denies criticising EU Naples plans’ Agence Europe, 2 December 2003. ‘German minister says no EU, NATO internal opposition on defence’ BBC Monitoring European, 4 December 2003. ‘Fischer sees US support for EU defence plans’ Reuters News, 5 December 2003. ‘The Great Divide: The US and Europe Stretch to Close It’ by Elaine Sciolino, The New York Times, 8 December 2003. 50. See also ‘Let’s talk – but where?’ The Economist, 24 February 2005. 51. Under certain circumstances, it could even strengthen the ‘voice opportunities’ in Washington, though this was not the decisive aspect. The idea was that a capable Europe might have a greater say at the White House and on Capitol Hill. I will come back to this aspect in the British case study below.

6 Great Britain – From Opposing the Union towards a Subordinated ESDP 1. While the UK played a major role in all of these summits, the St Malo and Sintra documents are particularly relevant for understanding the genuinely British approach to ESDP.

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Notes 221

2.

3.

4. 5. 6. 7.

8.

9.

10.

11. 12.

13. 14.

15.

16. 17.

Joint Declaration by the French and British Government, (St Malo: 3/4 December 1998). Meeting of European Union Defence Ministers (including ‘Food for Thought Paper’ going back to the UK’s Ministry of Defence) (Sintra: 28 February 2000), cited from Rutten 2001: 8–9, 94–107. ‘EU Defence’ Financial Times, 25 March 1997. ‘Rifkind attack widens EU gulf’ The Herald, 26 March 1997. ‘UK “To Veto” EU Defence Bid – France and Germany Push for Closer Ties’ by Caroline Southey and Lionel Barber, Financial Times, 24 March 1997. ‘Major Wins Test of Policy On Europe; Ruling Party Divided Over Britain’s Role’ by Fred Barbash, The Washington Post, 2 March 1995. ‘Major Warns on EU Defence Role’ by Bruce Clark, Financial Times, 24 February 1996. ‘EU Leaders, With Eye Toward Expansion, Revamp Rules of Operation’ by Anne Swardson, The Washington Post, 18 June 1997. ‘EU Defence’, Financial Times, 25 March 1997. ‘EU Defence’, Financial Times, 10 December 1997. Joint Declaration by the French and British Government (St Malo: 3–4 December 1998), cited from Rutten 2001: 8–9. ‘EU/Portschach Summit’ Agence Europe, 27 October 1998. ‘Cooperation Talks Aim at Giving EU a Military Role Within NATO: Blair and Chirac Sketch Defense Pact’ by Joseph Fitchett, International Herald Tribune, 4 December 1998. Cited from ‘UK – Blair backs EU defence arm’ BBC News, 21 October 1998, cited from: http://news.bbc.co.uk/1/hi/uk/197887.stm (last access: 20 August 2007). See also ‘Blair to back creation of EU defence arm’ by Andrew Parker, Financial Times, 21 October 1998. See, in particular, Meeting of European Union Defence Ministers (including ‘Food for Thought Paper’ going back to the UK’s Ministry of Defence), (Sintra: 28 February 2000), cited from Rutten 2001: 94–107. Tony Blair explicitly refused to follow the German minister of defence in terms of the merger proposal. ‘EU/Defence/United Kingdom’ Agence Europe, 10 March 1999. British–Italian Summit (1999): Joint Declaration Launching European Defence Capabilities Initiative (London: 19–20 July 1999) cited from: Rutten 2001: 46–7. See also ‘EU/Defence – At London summit, UK and France offer European-led forces use of headquarters’ Agence Europe, 27 November 1999. ‘EU/Defence– Eurocorps’, Agence Europe, 4 December 1999. Cited from: ‘WEU – Before the Assembly, Mr. Robertson stresses that debate on institutional options remains open’ Agence Europe, 3 December 1998. The question, then, of why the new administration had not significantly changed the Conservatives’ approach by the time of Amsterdam is often answered by reference to time. It simply came too early (e.g. Howorth, 2000c: 381, footnote 18). An identical account was (independently) given by a British policy expert I interviewed in Berlin in 2006. ‘New EU arms agency should avoid “buy European” approach – Hoon’ Agence France Press, 17 November 2003. ‘France, Britain, Germany said near EU defence deal’ by Mark John and Marie-Louise Moller, Reuters News, 28 November 2003. ‘UK and France disagree on role of arms agency’ by Judy Dempsey, Financial Times, 18 May 2004. See, in particular, UK/France/Germany (2004): ‘Food for Thought Paper’ (Brussels: 10 February 2004), cited from EU-ISS 2005: 10–16. ‘London and Paris push ahead on common EU defence goals’ by Judy Dempsey, Financial Times, 14 March 2003.

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18. ‘UK and France plan joint force’ by James Blitz and Judy Dempsey, Financial Times, 10 February 2004. 19. ‘UK and France disagree on role of arms agency’ by Judy Dempsey, Financial Times, 18 May 2004. 20. Cited from: Blair 1998c. 21. See for the Conservatives’ criticisms, ‘Thatcher Launches Attack on Euro Army’ The Times, 8 December 1999. ‘The Nation’s New Nuclear Peril’ by Ian Duncan Smith, Daily Telegraph, 11 April 2000. 22. The following sections build on some of the results of the German case, whereas differences arise from British–American interactions. The study’s theoretical framework argues not on the basis of a simple market failure that might have confronted all European states in the same way. Instead, the premise is that the EU member states are faced with transaction costs when they provide European security: if these increase, the governments start to consider creating alternative governance structures to make gains or to save on costs. 23. ‘US Senator Dole in London for icy talks on Bosnia’ Agence France-Presse, 30 November 1994. ‘US, Europe: The Gap is Widening’ by Rick Atkinson, The Washington Post, 8 February 1995. ‘Emergency Meeting on Ex-Yugoslavia on Saturday in Paris’ Agence Europe, 3 June 1995. 24. ‘Major Wins Test of Policy On Europe’ by Fred Barbash, The Washington Post, 2 March 1995. ‘Major Warns on EU Defence Role’ by Bruce Clark, Financial Times, 24 February 1996. 25. Cited from: ‘Tarnished? The Spreading War in Kosovo Reveals Europe’s Unreadiness to Act on Its Own’ by Peter Riddell, The Washington Post, 4 April 1999. 26. Cited from: ‘NATO Appoints British Defense Chief to Its Top Civilian Post’ by Craig R. Whitney, The New York Times, 5 August 1999. See also ‘One Foot in Washington; Britain’s in Europe; Sort of’ by Alan Cowell, The New York Times, 28 February 1999. 27. See, in particular, ‘NATO Nations Balk at Paying Large Share of Expansion; Defense Ministers Oppose US’ by William Drozdiak, The Washington Post, 3 October 1997. 28. ‘Pentagon Chief Sends for Tory’ by Ben Fenton, The Daily Telegraph, 17 February 2001. See also statements of the influential US official John Bolton about the UK’s policies in 1999, ‘Risking NATO’s future?’ by John Bolton, The Washington Times, 15 December 1999. This was perceived as a severe problem by the UK. See, for example, ‘Bush aides launch assault on Euro army’ by Matthew Campbell and Stephen Grey, The Sunday Times, 17 December 2000. ‘We’ve Lost That Allied Feeling; Bush’s First Moves Aren’t Winning Europe’s Heart’ by Hugo Young, The Washington Post, 1 April 2001. 29. ‘US Strikes – The Aftermath – World Outrage – and support – Soundbites’ Financial Times, 22 August 1998. 30. See also ‘Blair in the Middle’ by Jim Hoagland, The Washington Post, 16 April 2000. 31. ‘Blair Offers to Be “Bridge” Between US, Europe’ by T. R. Reid, The Washington Post, 18 July 2001. 32. ‘Blair says UK will aid US military reprisals’ by Patrick Wintour, The Guardian, 14 September 2001. ‘Blair in diplomatic efforts to ensure European support for USled action’ by Brian Groom, Financial Times, 17 September 2001. ‘Blair explores

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33.

34.

35. 36.

37.

38.

39.

40. 41. 42.

the grey areas of compromise’ by Brian Groom, Financial Times, 8 October 2001. ‘Blair diplomacy effort angers EU leaders’ by Robert Shrimsley and Judy Dempsey, Financial Times, 5 November 2001. See, for instance, ‘Government is ready to resist move to extend action to Iraq’ by Brian Groom, Financial Times, 10 October 2001; and ‘Attack on Afghanistan: divisions’ by Ewen MacAskill, Richard Norton-Taylor, Julian Borger and Ian Black, The Guardian, 9 November 2001. ‘Reports Insist on Independence of WEU’ Agence Europe, 10 June 1995. ‘WEU Assembly to Focus on New World Order for Peace and Security’ Agence Europe, 20 June 1995. ‘Major Warns on EU Defence Role’ by Bruce Clark, Financial Times, 24 February 1996. ‘EU Leaders, With Eye Toward Expansion, Revamp Rules of Operation’ by Anne Swardson, The Washington Post, 18 June 1997. ‘Britain Joins France’s Call for European Force’ by Craig R. Whitney, The New York Times, 5 December 1998. ‘Blair Backs Clinton’s Call for Iraqi Opposition Groups to Topple Hussein’ by Warren Hoge, The New York Times, 18 November 1998. Another factor that might have contributed to the moderate US response to St Malo was the fact that President Clinton was dramatically weakened in the fall of 1998 (‘Lewinsky Affair’). ‘Deep Concern in the World Over Weakened Clinton’ by R. W. Apple, The New York Times, 25 September 1998. This interpretation is, however, not uncontested: “British officials argue that they did apprise the United States in advance of what was going to be agreed upon at St Malo; but certainly it was not well known, and particularly not among those Americans – especially in Congress – who proved to be most concerned about what was agreed upon” (Hunter 2002: 32, footnote 6). At about the same time, the two governments made clear that a ‘Fortress Europe’ should be prevented with respect to defence procurements. The bilateral ‘Declaration of Principles’ for defence equipment and industrial cooperation did send a strong signal to other EU members in this regard. See, US-UK Declaration of Principles (for defence equipment and industrial cooperation), (Munich: February 2000), cited from Schmitt 2003: 60–7. See, in particular, ‘US Raises Objections to New Force in Europe’ by Craig R. Whitney, The New York Times, 11 October 1999. ‘US Tepid on European Defense Plan; American Stance Vexes EU Leaders’ by William Drozdiak, The Washington Post, 7 March 2000. ‘EU Force Could Spell NATO’s End, Cohen Says’ by Douglas Hamilton and Charles Aldinger, The Washington Post, 6 December 2000. ‘EU/ Defence – European Council approves report on ESDP, but renounces – after British request’ Agence Europe, 9 December 2000. ‘European Military Force To Cooperate With NATO’ by Keith B. Richburg, The Washington Post, 9 December 2000. ‘Pentagon Chief Sends for Tory’ by Ben Fenton, The Daily Telegraph, 17 February 2001. ‘US dismay over Blair’s stance on EU defence’ by James Blitz and Peter Spiegel, Financial Times, 16 October 2003. ‘NATO Calms US Fears of European Defence HQ’ by Stephen Castle, The Independent, 21 October 2003.

7 France – From Gradual WEU Integration to Full-Scale ESDP 1. ‘M. Chirac S’Exprimera Deux Fois sur la Politique Européene – Les Principaux Points de la Position Francaise’ Le Monde, 21 February 1996. ‘EU/Defence/France/

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2.

3. 4.

5. 6.

7.

8.

9. 10.

11.

12. 13.

14.

Notes Germany’ Agence Europe, 28 January 1997. ‘UK “To Veto” EU Defence Bid – France and Germany Push for Closer Ties’ by Caroline Southey and Lionel Barber, Financial Times, 24 March 1997. ‘France Says It Is Willing to Discuss Its Nuclear Role in NATO’ by Craig R. Whitney, The New York Times, 18 January 1996. ‘France and Germany to Discuss Joint Nuclear Deterrent’ by Craig R. Whitney, The New York Times, 25 January 1997. See also ‘EU/Defence – Proposals by Pierre Lellouche’ Agence Europe, 9 May 1996. Due to the far-reaching proposals made by the French government at the IGC, the ultimate – fairly moderate – results of security and defence issues in Amsterdam were not regarded as a success. See, in particular, ‘Les Quinze ont échoué a réformer les institutions de l’Union’ by Henri de Bresson and Alain Franco, Le Monde, 19 June 1997. Joint Declaration by the French and British Government (St Malo: 3–4 December 1998), cited from Rutten 2001: 8. Final Declaration of the Franco- German Summit (Potsdam: 1 December 1998), cited from Rutten 2001: 4–7. The view that France wanted the EU to evolve into an all- encompassing security organisation was also emphasised by a senior French defence official, with whom I conducted interviews in May 2007 in Berlin. The reasoning was that crisis management might require a solidaristic response in emergencies. Hence collective defence should not be excluded from the EU’s functional scope, so NATO’s primacy in territorial defence would not be questioned. ‘EU Force Takes Shape With Pledge of Troops: A Crucial Step in Fielding 60,000 by 2003’ by Joseph Fitchett, International Herald Tribune, 20 November 2000. ‘EU/ Defence – European Council approves report on ESDP, but renounces – after British request’ Agence Europe, 9 December 2000. See also ‘EU/Defence – Michel Barnier thinks NATO “must not be, cannot be only response” from EU in defence’ Agence Europe, 25 April 2003. ‘EU/Defence – “Mini summit of the four” on defence presents seven concrete initiatives’ Agence Europe, 30 April 2003. ‘Chirac says EU defence plans will respect NATO’ Agence France Presse, 17 October 2003. ‘EU/Defence/France’ Agence Europe, 10 January 2004. ‘EU/Defence: Industry calls for caution when opening up defence markets’ Agence Europe, 27 October 2004. ‘EU/Defence: Michèle Alliot-Marie calls for strengthened EU military capabilities, larger national defence budgets and creation of European defence market’ Agence Europe, 26 November 2004. ‘France’s Villepin on EU defence talks with Britain, Germany’ BBC Monitoring European, 29 November 2003. ‘French defence minister on Libya, Iraq, relations with USA, EU defence’ BBC Monitoring European, 23 December 2003. ‘EU/Defence – Informal Meeting of Defence Ministers in Brussels on 6 April’ Agence Europe, 30 March 2001. ‘Britain and France try to project unity on defence’ The Irish Times, 25 November 2003. ‘EU/Defence – France and United Kingdom in support of EU rapid reaction force deployable in two weeks’ Agence Europe, 26 November 2003. This is an illustrative example of the study’s mixed approach towards transaction costs. On the one hand, they affect the government like an ‘objective force’. France must deal with Washington’s commitment if it wants to provide European security. On the other hand, the French government may perceive similar ‘forces’

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15.

16.

17. 18. 19.

20. 21. 22. 23. 24. 25. 26. 27. 28.

29. 30. 31. 32.

33. 34.

in a different way from, for example, Germany. Therefore, it is ultimately about the ‘subjective interpretations of objective forces’. The following sections will also adopt some of the results from the case study on Germany and merely discuss French perceptions, which partly differed from and partly resembled the German ones. ‘Des Frappes Aériennes Défensives?’ by Jacques Isnard, Le Monde, 10 May 1993. ‘French Successfully Bluff Their Allies on Bosnia’ by Alan Riding, The New York Times, 13 December 1994. ‘Chirac’s attack on Congress has a bigger target’ by Joseph Fichett, International Herald Tribune, 9 November 1999. That was also emphasised by a senior official of the French ministry of defence, with whom I conducted an interview (Berlin: May 2007). ‘France may pose long-term challenge to US defense policy, Perle says’ Aerospace Daily & Defense Report, by Nick Jonson, 13 February 2003. ‘Nice Summit: Euro-force still cause of division’ by Anton LaGuardia, The Daily Telegraph, 9 December 2000. ‘Chirac’s attack on Congress has a bigger target’ by Joseph Fichett, International Herald Tribune, 9 November 1999. Cited from ‘Chirac’s attack on Congress has a bigger target’ by Joseph Fichett, International Herald Tribune, 9 November 1999. “France as an heir to a prestigious history may potentially be threatened by this development [that is, unipolarity].” (author’s translation). ‘EU/Defence – Explanations by the “Four” on European defence are welcomed in Kastellorizo’ Agence Europe, 6 May 2003. ‘French Defense Minister, Visiting US, Hopes to Improve Ties’ by Keith Richburg, The Washington Post, 16 January 2004. These conclusions were largely re- confirmed by an interview that I conducted with a senior official of the French ministry of defence (Berlin: May 2007). ‘France goes on the defence offensive’ by David Buchan, Financial Times, 24 January 1994. ‘US Raises Objections to New Force in Europe’ by Craig R. Whitney, The New York Times, 11 October 1999. ‘US urges EU to keep link with NATO Military Capability’ by Alexander Nicoll, Financial Times, 6 December 2000. ‘France snubs America over Euro-army’ by Anton LaGuardia, The Daily Telegraph, 7 December 2000. ‘French trigger NATO furore’ by Philip Webster, Richard Beeston and Martin Fletcher, The Times, 8 December 2000. Cited from: ‘European Military Forces To Cooperate With NATO’ by Keith B. Richburg, The Washington Post, 9 December 2000. Cited from ‘Nato deadlock over EU reaction force’ by Anton LaGuardia, The Daily Telegraph, 15 December 2000. ‘4 European Leaders Form Pact To Boost Defense Cooperation’ by Robert J. McCartney, The Washington Post, 30 April 2003. ‘NATO Calms US Fears of European Defence HQ’ by Stephen Castle, The Independent, 21 October 2003. ‘EU/IGC/NATO – Donald Rumsfeld denies criticising EU Naples plans’ Agence Europe, 2 December 2003. This term stems from an interview with a French senior official from the Ministry of Defence (Berlin: April 2007). France’s fundamental insistence on this latter point was emphasised by numerous participants at a Conference on ‘ESDP and the German Presidency in 2007’ in Berlin.

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35. While France’s active participation in NATO’s Response Force after 2002 could have led to an incremental decrease of transaction costs and thus to more moderate preferences with respect to the EU’s substantive scope at that time, the institutional path and ‘sunk costs’ affected the French formulation of preferences. The government voluntarily stayed on the track once chosen out of some sort of necessity. Moreover, the success of the NRF was increasingly questioned and, therefore, pure reliance on this institutional arrangement would also have been short-sighted.

8 Germany – An Incrementally Decreasing Willingness to Bind the Country 1. The general option of invoking the ‘Luxembourg compromise’ was to be weakened by, for instance, asserting ‘vital national interests’ in advance. 2. The latter should comprise staff from Member States, the Commission and the EU Secretariat. Germany supported strengthening the Council’s organisational structure in defence issues, while avoiding fragmentation of the EU’s overall structure. Therefore, the Commission should participate in the strategy and planning unit yet to be established. 3. According to German constitutional law, the use of force is decided by the national parliament, rather than the government. However, both the expansion of ‘constructive abstentions’ and QMV in as many areas as possible were generally welcomed by the new German government. 4. The fourth pillar was initially proposed by the British Secretary of Defence, Lord Robertson (Missiroli 2000: 25). Accordingly, the contemporary agenda focused on a potential change of the status quo, but in a direction opposite to the one Germany had initially favoured. 5. British-Italian Summit (1999): Joint Declaration Launching European Defence Capabilities Initiative, (London: 19–20 July 1999); and, French Action Plan (1999): Letter from the French President Jacques Chirac to the Finish Presidency of the European Union, (Paris: 22 July 1999), cited from Rutten 2001: 46–53. 6. Two German rationales, in particular, back the relatively benevolent view: the Commission should improve efficiency, whereas the Parliament increases legitimacy. In addition, there were debates to establish a ‘Council of Defence Ministers’ because up to that point only the General Affairs Council had discussed questions with defence implications. The German presidency in 1999 had proposed the formal establishment of such a Council in its draft report (Rutten 2001: 17–19; see also German Bundestag 2002: 20–21). 7. This arrangement should be open to join later and should be related to the rest of the EU’s policies. Thus, a protocol should be added to the treaty, explicitly stating which states wish to do what. 8. ‘Belgian plan is “sign of a multi-speed Europe” European defence cooperation’ by Judy Dempsey, Daniel Dombey and George Parker, Financial Times, 26 March 2003. ‘EU/Defence – George Papandreou says Costas Simitis may be observer at four country Summit’ Agence Europe, 12 April 2003. 9. ‘EU/Defence – Council assesses three solutions for defence financing’ Agence Europe, 12 November 2001. 10. At the start of the deliberations, the German government (and the Foreign Ministry, in particular) had been critical towards this strengthening of the Council, which was regarded as effectively weakening the Commission’s execu-

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11.

12.

13.

14.

15.

16. 17. 18.

tive powers. However, Germany did not want double-hatting for the roles of the Commission President and the Council President. A potential strengthening of the supranational bodies (especially the Commission) was to be avoided, but not at all costs. If it increased the EU’s effectiveness in, for example, implementation procedures, the German government would have an open-minded approach. It was not concerned about the stigmatised ‘communitarisation through the back door’. For the most important steps of the process, after Germany, together with France, Belgium and Luxembourg, had presented its proposals in Brussels in April 2003 (European Defence Meeting 2003), see: ‘Defying U.S., Germany stands firm on EU defence HQ’ Reuters News, 11 September 2003. ‘EU/Defence – Spokesman for the German government confirms opposition of his country to creation of...’ Agence Europe, 8 October 2003. ‘Germany’s Struck sees EU defence planning at NATO’ by Markus Krah, Reuters News, 24 October 2003. ‘German leader says EU defence initiative “not competing” with NATO’ BBC Monitoring European, 4 November 2003. ‘German minister says no EU, NATO internal opposition on defence’ BBC Monitoring European, 4 December 2003. ‘Fischer sees US support for EU defence plans’ Reuters News, 5 December 2003. This is among the most difficult issues because one can observe a shift of the German position in the course of the Convention deliberations. I therefore supplemented the documentary analysis with interviews with senior officials in the German Ministry of Defence (April/May 2007). In this context, I was also allowed to examine confidential documents that were crucial in this context but which will not be directly quoted. This whole procedure is based on and congruent with Michael Zürn’s propositions on how to assess preferences (Zürn 1997: 298–302). While this opposition was implicit, the US (and later the UK) became highly active to prevent EU operational headquarters, especially after October 2003. For the decisive negotiations in particular, see ‘Crossed Wires on European defence’ Financial Times, 18–19 October 2003. ‘NATO and EU try to defuse defence dispute’ by Judy Dempsey, Financial Times, 20 October 2003. ‘NATO’s European allies offer reassurance to US’ Financial Times, 21 October 2003. There are always two ways to interpret such a development: either the establishment of EU operational headquarters represented the real German preference, and the new position is only a result of the interactions (pressure from the US and UK); or it represented a maximal demand in order to achieve the real preference of a slightly strengthened EUMS. In retrospect, the first interpretation is more plausible because the necessity and preference for an independent, standing operational HQ had already been formulated by the Social Democratic Party Group of the Bundestag in 2000. It seems rather that the tensions arising from the Iraq crisis in 2003 facilitated the German government’s decision to state its preferences publicly for the first time. ‘Ein Hauptquartier, das nicht so heißen darf’ by Martin Winter, Süddeutsche Zeitung, 31 May 2007. Interview with senior official responsible for ‘capability building in ESDP’ within the Ministry of Defence (Berlin: April 2007). The initial motivation of Germany, however, has to be more closely linked to factors outside the framework’s variables, namely some traditional beliefs: the potential ESDP was to be part of the EU’s integrative project. This limitation of the study’s argument will be discussed below.

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19. Due to the virtual certainty about the UK’s position, namely one that was critical of Europe, it was clear that if security policy were to be integrated into the EU, London would be required to be locked in, or its commitment would never become credible. Again, we see the argument’s functionalist legacy since it is ultimately anticipated costs and benefits that carry the main explanatory burden. 20. Because it is neither feasible nor reasonable to examine German relations to all EU members, I will focus on the ones that are particularly relevant for the creation of the ESDP – namely, the UK and France. Some authors have even referred to the ‘Big Three’ as an informal directorate in the ESDP (Freedman 2004). 21. First the Germans were ‘duly miffed’ about the French President not discussing his reform plans in advance. ‘The Helmut-and-Jacques show’, The Economist, 6 April 1996. 22. Final Declaration of the Franco- German Summit (Potsdam: 1 December 1998), cited from: Rutten 2001: 4–7. 23. ‘Major Wins Test of Policy on Europe; Ruling Party Divided Over Britain’s Role’ by Fred Barbash, The Washington Post, 2 March 1995. 24. ‘Major Resigns as Party Leader’ Agence Europe, 24 June 1995. 25. “Blair’s announcement at Pörtschach was deliberately underplayed to the UK media by the Prime Minister’s communications officers, a strategy that ensured that the subtle change in the official emphasis in UK defence policy was not subject to a wider debate in the UK media and thus potential revisions” (Dover 2005: 518). 26. ‘Euro army is a threat to NATO, says US’ by Anton La Guardia, The Daily Telegraph, 6 December 2000. ‘France fires fresh salvo at Britain over Euro army’ by Robert Locke, The Sunday Times, 10 December 2000. 27. ‘Straw sets limits to EU military plan’ by Ian Black and Patrick Wintour, The Guardian, 21 October 2003. ‘Britain renews its opposition to EU defence headquarters’ Agence France Presse, 5 November 2003. ‘German minister calls on US to give up reservations against EU defence policy’ BBC Monitoring European, 9 December 2003. 28. Because this is difficult to trace back solely on the basis of documentary sources, I have invested some efforts into a ‘structured questionnaire’ focusing on this question. The results from the interviews conducted in the Ministry of Defence’s ESDP unit were unambiguous (Berlin: April/May 2007). The German government by now had a stronger level of trust in the commitment of its partners. In this context, it is interesting to point out that the German military has a much more favourable position towards the UK than most of the Foreign Ministry staff. This stems primarily from good cooperation in NATO. These officials are basically unfamiliar with problems with the UK. 29. This was emphasised by numerous officials of the German, French, and British ministries of defence that I was allowed to talk to at a conference on the ESDP in Berlin in January 2007. 30. Asset specificity is not so much about existing, as about planned assets. Again, the anticipated effects of the institutions account for the preferences of a government to create them. 31. At this stage, it is useful to remember Oliver Williamson’s quote from the beginning: “Empirical research on transaction cost matters almost never attempts to measure such costs directly. Instead, the question is whether organizational relations (contracting practices; governance structures) line up with the attributes

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32.

33.

34.

35.

36. 37.

38. 39. 40. 41.

of transaction costs predicted by transaction cost reasoning or not” (Williamson 1985: 22). The author is aware of the fact that the latter factors are largely outside the study’s framework. This is, so to speak, a weakness of the framework and will be discussed in more detail below. This paragraph is almost completely based on assessments stemming from interview sources. Unfortunately, it was not possible to find publicly available information on these issues. Nevertheless, this was an important aspect for essentially all my interviewees in this context. This aspect increased the political costs to the extent that there was a domestic consensus to send exclusively non- conscripts out- of-area. The possibility for this sort of power projection was only created by a ruling of the Constitutional Court in 1994. Therefore, Germany could behave largely as an observer during the Bosnia crisis, since constitutional problems were understood to prevent it sending forces abroad. The seriously bad shape of the German forces eventually became apparent in 1999, when then Minister of Defence Scharping admitted that the Bundeswehr would not qualify for the ESDP, if convergence criteria were set like those for Economic and Monetary Union (Scharping 1999c). This was also emphasised in numerous talks with senior officials of the German MoD. I had the opportunity to study the German background and position papers on these issues. The study’s overall assessments are also based on them, though I have tried to refer as often as possible to publicly available sources. ‘EU/Defence – Germany joins Franco-British rapid reaction force initiative’ Agence Europe, 12 February 2004. Again, these results are mainly based on German background and position papers. See also Eurobarometers No. 43.1 (1995), 53 (2000) and 56.2 (2001) with a large amount of primary data on this trend. ‘Reinforcing trend’ implies here that specific assets become increasingly specific; and general assets remain general or become increasingly so.

9 Great Britain – From No EU Security Policy to a Purely Intergovernmental ESDP 1. ‘Rifkind attack widens EU gulf’ The Herald, 26 March 1997. Only Labour allowed for some expansion of ‘flexible arrangements’, which did not, however, refer to security and defence questions. 2. ‘WEU – Before the Assembly, Mr. Robertson stresses that debate on institutional options remains open’ Agence Europe, 3 December 1998. ‘Cooperation Talks Aim at Giving EU a Military Role Within NATO: Blair and Chirac Sketch Defense Pact’ by Joseph Fitchett, International Herald Tribune, 4 December 1998. 3. This approach to institutional questions had already been indicated by the St Malo declaration, but finally became clear in the ‘food for thought paper’ in 2000. See Joint Declaration by the French and British Government (St Malo: 3/4 December 1998). Meeting of European Union Defence Ministers (including ‘Food for Thought Paper’ going back to the UK’s Ministry of Defence) (Sintra: 28 February 2000), both cited from Rutten 2001: 8–9, 94–107. See also ‘Blair to back creation of EU defence arm’ by Andrew Parker, Financial Times, 21 October 1998.

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4. British–Italian Summit (1999): Joint Declaration Launching European Defence Capabilities Initiative (London: 19–20 July 1999), cited from Rutten 2001: 46–7. For the repeated insistence on these defence planning proposals by Minister of Defence, Lord Robertson, see ‘EU/Defence’ Agence Europe, 11 September 1999. 5. Cited from ‘WEU – Before the Assembly, Mr. Robertson stresses that debate on institutional options remains open’ Agence Europe, 3 December 1998. 6. ‘Belgian plan is “sign of a multi-speed Europe” ’ by Judy Dempsey, Daniel Dombey and George Parker, Financial Times, 26 March 2003. ‘Blair heals rift by agreeing to EU defence missions’ by Stephen Castle, The Independent, 23 September 2003. ‘EU/Defence – Structured cooperation in defence possible if open to all Member States’ Agence Europe, 18 October 2003. 7. ‘States look to Blair to take stand on EU defence’ by Judy Dempsey, Financial Times, 18 September 2003. ‘Blair heals rift by agreeing to EU defence missions’ by Stephen Castle, The Independent, 23 September 2003. ‘France, Britain, Germany said near EU defence deal’ by Mark John and Marie-Louise Moller, Reuters News, 28 November 2003. ‘US retreat allows EU to clinch deal on defence force’ by Stephen Castle, The Independent, 12 December 2003. 8. ‘EU/Defence – Council assesses three solutions for defence financing’ Agence Europe, 12 November 2001. 9. Initially, the UK proposed so- called Team Presidencies that were to guarantee continuity (2.5 years) and the representation of at least one of the big member states (UK, Germany, France, Italy and perhaps Spain). This would lend them a higher degree of credibility on the international stage. In the course of the deliberations, however, the government became increasingly familiar with the new position of a Council President. Nevertheless, it did not want a double-hatting role of the Commission President and the Council President (Hain 2002; Hain and Palacio 2003; see also Menon 2003: 973). 10. The UK wanted to avoid the creation of a military EU headquarters – either by the whole EU or by some form of ‘structured cooperation’. Thus, the UK could not allow for the possibility that a ‘core of countries’ going forward and establishing an operational HQ under ‘structured cooperation’. Some form of veto had to be maintained in this respect because this would not only represent ‘unnecessary duplication’ of NATO, but would also be an instrument for potentially excluding the UK from decision-making in sensitive areas. Therefore, it was one of the UK’s most important ‘red lines’ before and during the IGC since France, Germany, Luxembourg and Belgium had just proposed this in their ‘European Defence Meeting’ in April 2003. 11. This British dilemma – acknowledging functional necessities, on the one hand; while avoiding competition with the US, on the other – has been a constant feature of the UK’s policies for the ESDP. Some years later, there was a compromise, namely the so- called Hampton Court Formula but this merely mitigated some of the problems. A solution has not been found yet at the time of writing (2010). This assessment is based on documents that I was allowed to read, but not to quote, in the German Ministry of Defence (Berlin: May 2007). See also ‘Ein Hauptquartier, das nicht so heißen soll’ by Martin Winter, Süddeutsche Zeitung, 31 May 2007. 12. Jack Straw reiterated at most appearances before the House of Commons Committee on the IGC that flexible arrangements are only about (increased) capabilities, not operations. See, for the British position in the headquarters bargaining, ‘EU/Defence – At London summit, UK and France offer European-led forces use of headquarters’

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13. 14.

15.

16.

17.

18.

19. 20.

21.

22.

Agence Europe, 27 November 1999; ‘Blair heals rift by agreeing to EU defence missions’ by Stephen Castle, The Independent, 23 September 2003; ‘US diplomat sparks EU defence row – sources’ Agence France Presse, 16 October 2003; ‘US clashes with Europeans on EU defence ambitions’ by John Chalmers, Reuters News, 16 October 2003; ‘Straw sets limits to EU military plan’ by Ian Black and Patrick Wintour, The Guardian, 21 October 2003; ‘Nato calms US fears of European defence HQ’ by Stephen Castle, The Independent, 21 October 2003; ‘Britain renews its opposition to EU defence headquarters’ Agence France Presse, 5 November 2003; ‘France, Britain, Germany said near EU defence deal’ by Mark John/Marie-Louise Moller, Reuters News, 28 November 2003; and ‘US retreat allows EU to clinch deal on defence force’ by Stephen Castle, The Independent, 12 December 2003. ‘UK and France disagree on role of arms agency’ by Judy Dempsey, Financial Times, 18 May 2004. ‘Cooperation Talks Aim at Giving EU a Military Role Within NATO: Blair and Chirac Sketch Defense Pact’ by Joseph Fitchett, International Herald Tribune, 4 December 1998. ‘France, Britain, Germany said near EU defence deal’ by Mark John and Marie-Louise Moller, Reuters News, 28 November 2003. The demand for explicit numbers in the ‘battlegroup agreement’ was explicitly directed against ‘capabilities laggards’, such as Germany. This was repeatedly mentioned by UK officials (Interview with a German MoD official, Berlin: April 2007). ‘New EU arms agency should avoid “buy European” approach – Hoon’ Agence France Press, 17 November 2003. ‘Blair deal on EU defence may offend Bush’ by Ben Hall, George Parker and Judy Dempsey, Financial Times, 28 November 2003. ‘Britain has to give up sovereignty say French’ by Graeme Wilson, Daily Mail, 20 October 2003. ‘France’s Villepin on EU defence talks with Britain, Germany’ BBC Monitoring European, 29 November 2003. At the same time, there were also Conservatives who supported the establishment of the ESDP. ‘Tory grandees attack Hague over EU force’ by Severin Carrell and Andrew Grice, The Independent, 25 November 2000. This concern was also emphasised by a British policy expert, with whom I conducted an interview in Berlin in late 2006. This was also the main reason for maintaining the distinction of operational vs. defence planning during this study, because it provides us with significant explanatory leverage for the British case as a whole. After all, British support for increased defence planning, but a certain reluctance with respect to operations, clearly demonstrates the ‘triggers’ behind its preferences. This is one of the main contributions that a transaction costs perspective may provide. “Recent examples in Africa (such as the UK’s operational experience in Sierra Leone, the French in Côte d’Ivoire, and the EU’s operation in the Democratic Republic of the Congo) have not only illustrated the need for such a capability, but demonstrated how a relatively small number of forces can have a significant effect in a short period of time, provided they can be deployed rapidly with the appropriate support. ( ...) The Battlegroup initiative sets a new level of ambition for the EU, alongside the existing 1999 Helsinki Headline Goal. It will form a part of the new 2010 Headline Goal which adds to the original aims a clearer focus on the quality of the capability, such as the ability to deploy forces rapidly, sustain them at distance and operate multi nationally” (Hoon 2005). See also Eurobarometers No. 43.1 (1995), 53 (2000) and 56.2 (2001) with a large amount of primary data on this trend.

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10 France – A Consistently Intergovernmental Approach towards ESDP 1. ‘EU/Defence – Mr. Juppe places emphasis on strengthening the role of the European Council’ Agence Europe, 11 September 1996. 2. ‘EU/Defence – Proposals by Pierre Lellouche’ Agence Europe, 9 May 1996. 3. ‘Richard announces intensive programme for EU defence ministers during coming semester’ Agence Europe, 1 July 2000. 4. Joint Declaration by the French and British Government (St Malo: 3–4 December 1998), cited from Rutten 2001: 8. 5. ‘EU/Defence: Richard Wilmot-Roussel believes constitutional treaty will allow Defence Europe to make progress under EU’s watchful eye’ Agence Europe, 13 July 2004. 6. ‘EU/Defence – Council assesses three solutions for defence financing’ Agence Europe, 12 November 2001. 7. ‘Richard announces intensive programme for EU defence ministers during coming semester’ Agence Europe, 1 July 2000. ‘EU Force Takes Shape With Pledge of Troops: A Crucial Step in Fielding 60,000 by 2003’ by Joseph Fitchett, International Herald Tribune, 20 November 2000. ‘EU/Defence – European Council approves report on ESDP, but renounces – after British request’ Agence Europe, 9 December 2000. 8. Furthermore, I conducted a semi-structured interview with a senior official of the French Ministry of Defence, who largely confirmed the publicly available statements and documents in this regard (Interview in Berlin; May 2007). See also ‘Italy floats compromise as EU defence HQ plan fades’ Reuters News, 3 October 2003. ‘Chirac says EU defence plans will respect NATO’ Agence France Presse, 17 October 2003. ‘France insists EU defence plans not against NATO’ Agence France Presse, 17 November 2003. 9. ‘EU/ESDP – Barrau Report Recommends “Coherence Indicators” ’ Agence Europe, 18 April 2000. 10. ‘Les ministres français et allemands ont du mal à dissiper les malentendus’ by Lucas Delattre and Daniel Vernet, Le Monde, 6 March 1996. 11. ‘The Helmut-and-Jacques show’ The Economist, 6 April 1996. ‘MM. Chirac et Kohl tentent de remettre sur les rails la coopération en matière de défense’ by Lucas Delattre, Le Monde, 11 May 1996. 12. ‘EU/ESDP – Barrau Report Recommends “Coherence Indicators” ’ Agence Europe, 18 April 2000. ‘Richard announces intensive programme for EU defence ministers during coming semester’ Agence Europe, 1 July 2000. See also the last paragraph of the Franco- German Declaration of Mainz in 2000 that emphasises French support for German transformative efforts (Franco- German Defence and Security Council 2000). 13. “L’exigence d’une constitution pour l’Europe est historique, ce n’est pas une question de semaines. Nous croyons l’accord possible, nous y travaillons et nous comptons sur la présidence irlandaise après les avancées de la présidence italienne. Dans l’hypothèse contraire, les pays qui ont l’ambition de cette constitution travailleront ensemble pour, dans l’action, convaincre les autres. Les groupes pionniers construiront l’avenir dans le respect de l’acquis communautaire. La relation germano-française, authentiquement dense, pourra server de pôle d’accueil pour ceux qui souhaiteront renforcer leur coopération: par exemple le Royaume Uni pour les questions de défense, la Pologne pour stimuler le

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14. 15.

16.

17.

18. 19. 20.

21. 22. 23. 24.

25.

26.

triangle de Weimar ou l’Eurogroupe pour mieux lier stabilité et croissance au sein du Pacte de l’Euro” (Raffarin 2004). See also ‘Paris et Berlin réfléchissent à une “union franco-allemande” ’ by Henri de Bresson and Arnaud Leparmentier, Le Monde, 12 November 2003. ‘Germany and France exploring an alliance’ by Thomas Fuller, International Herald Tribune, 13 November 2003. Cited from ‘In Shift, France Vows To Modernize Military’ by Keith B. Richburg, The Washington Post, 16 October 2002. Except for the quoted documentary and secondary sources, the previous section substantially built on interviews that I conducted with two French senior officials of the French ministry of defence (Berlin: April/May 2007). They also had common experience as nuclear powers. In this respect, the United Kingdom was the only European country that did not strongly criticise the incoming French government for its nuclear tests. ‘Chirac Ends France’s Nuclear Test Program; Paris to Take “Active” Role in Disarmament’ by William Drozdiak, The Washington Post, 30 January 1996. See also ‘Des Frappes Aériennes Défensives?’ by Jacques Isnard, Le Monde, 10 May 1993. ‘French Successfully Bluff Their Allies on Bosnia’ by Alan Riding, The New York Times, 13 December 1994. ‘Paris accueille avec perplexité l’initiative de Tony Blair sur la défense européenne’ Le Monde, 22 October 1998. ‘EU/Defence – At London summit, UK and France offer European-led forces use of headquarters’ Agence Europe, 27 November 1999. ‘UK and France plan joint force’ by James Blitz and Judy Dempsey, Financial Times, 10 February 2004. ‘Anglo-French defence drive to EU foreign policy’ by Daniel Dombey, Financial Times, 23 June 2005. ‘London and Paris push ahead on common EU defence goals’ by Judy Dempsey, Financial Times, 14 March 2003. Cited from: ‘Britain has to give up sovereignty say French’ by Graeme Wilson, Daily Mail, 20 October 2003. This was also re- confirmed in an interview with a senior official of the French Ministry of Defence in April 2007 in Berlin. This was particularly emphasised by a senior official of the French Ministry of Defence, with whom I conducted an interview in May 2007 in Berlin. This even went so far that France preferred to intervene under the EU flag in its traditional sphere of influence, even though the bulk of the operation was carried out by French troops. That was the case in the EU’s Operation ARTEMIS in the DR Congo in June 2003 (Ulriksen et al. 2004: 514). See also Eurobarometers No. 43.1 (1995), 53 (2000) and 56.2 (2001) with a multitude of primary data on this tendency. There, you can integrate a so- called opinion leader index that can be applied as a proxy for ‘elite opinion’ or in this case ‘the political class’. The prospective development of a ‘European Army’ (under French leadership) has clearly been preferred by the French government. It has come close to something like the French vision of the ‘finalité’ of the ESDP. However, the French president’s ‘freedom of decision’ at both the political and the military levels was to be maintained. In particular, flexibility at the operative level was to be secured. These assessments stem from a conversation with three senior officials of the French ministry of defence, with whom I conducted interviews in April 2007 in Berlin.

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27. France’s support for the NRF is similarly pragmatic, like that of the UK with respect to the ESDP. At the same time, the emphasis was clearly on the general nature of these military assets, so that they could potentially be employed in the context of the EU, too. This assessment is based on an interview source (with senior official of French Ministry of Defence, Berlin: May 2007). 28. ‘Für Frankreich sind die Europäer mittlerweile das Rückgrat der NATO- Einsätze’ Frankfurter Allgemeine Zeitung, 15 September 2004. ‘Eurokorps Waves EU Flag in Afghanistan’ by Craig Smith, International Herald Tribune, 23 September 2004. 29. This was indirectly re- confirmed by a senior official of the French Ministry of Defence with whom I conducted an interview in May 2007 (Berlin). 30. This was particularly emphasised by the French Prime Minister, Dominique de Villepin, when he visited the United Kingdom in the autumn of 2003. ‘Britain has to give up sovereignty say French’ by Graeme Wilson, Daily Mail, 20 October 2003.

11 Alternative Explanations and Theoretical Scope of the Transaction Costs Framework 1. This study intentionally distances itself from Realism’s binary logic of cooperation of ‘for or against someone’ that primarily dates back to its intellectual roots in alliance politics (e.g. Mearsheimer 2001). Instead, I argue that contemporary security cooperation corresponds rather to ‘coordination problems with distributive consequences’ and, therefore, states’ security preferences were not primarily driven by concerns about physical survival, but rather by tradeoffs in terms of costs. 2. For the purpose of generating data for this section on alternative explanations, the study seriously attempted to find empirical evidence for the ‘binding hypothesis’ that went beyond some biographical notes of Margaret Thatcher and Francois Mitterrand in 1990, which were wholeheartedly critical towards German re-unification. Nothing was found for the period since the outbreak of the crises in the Balkans. Therefore, I developed indicators and asked several French and British officials and policy experts for the underlying motivation behind the ESDP. I simply found no indication for the study’s period of analysis. Germany should not be ‘enmeshed’ because other countries were afraid of its newly powerful position. Instead, it should be integrated in order to live up to its responsibilities. 3. This assessment was also shared by a British policy expert with whom I conducted an interview in the winter of 2006. 4. This was also emphasised by numerous policy experts with whom I discussed these topics. See also ‘New EU arms agency should avoid “buy European” approach – Hoon’ Agence France Press, 17 November 2003. ‘France, Britain, Germany said near EU defence deal’ by Mark John and Marie-Louise Moller, Reuters News, 28 November 2003. ‘UK and France disagree on role of arms agency’ by Judy Dempsey, Financial Times, 18 May 2004. 5. ‘EU/Defence: Industry calls for caution when opening up defence markets’ Agence Europe, 27 October 2004. This position was re- confirmed by a French MoD official, interviewed in May 2007 in Berlin.

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Notes 235 6. For the ESDP, Christoph Meyer has argued from a (moderate) Constructivist perspective that the ‘strategic cultures in Europe have become more similar’ – despite remaining important differences (Meyer 2006: 11). This convergence is ‘triggered’ by three main mechanisms: (1) learning through changing threat perceptions; (2) mediatised crisis learning; (3) social influence through the ESDP (Meyer 2006: 31–9). Meyer’s analysis is undoubtedly helpful in understanding the ESDP and its underlying cultural basis. As indicated above, a transaction costs framework may profit from integrating beliefs embedded in a country’s strategic culture for its own explanation. For this study, this seems to apply more to Germany (and Ireland, as will be shown below) than to the UK and France. 7. See, however, ‘Spring raises question of involvement with WEU’ The Irish Times, 10 April 1995. 8. ‘Smith ducks and weaves presenting defence truce’ by Denis Coughlan, The Irish Times, 1 March 2000. ‘Debate needed on role in EU defence’ by Lt.- Gen. Gerry McMahon (Former Chief of Staff), The Irish Times, 21 June 2000. ‘Cowen Defence Line Criticized’ The Irish Times, 4 July 2000. ‘Ireland to resist dilution of defence policy powers’ The Irish Times, 13 July 2002. 9. ‘Debate needed on role in EU defence’ by Lt.- Gen. Gerry McMahon (Former Chief of Staff), The Irish Times, 21 June 2000. 10. ‘Ireland has stepped off the neutrality fence’ by Patrick Smyth, The Irish Times, 14 April 1999. 11. ‘White Paper sets out challenging vision for the Defence Forces’ by Michael Smith, Irish Minister of Defence, The Irish Times, 26 April 2000. 12. ‘Spring raises question of involvement with WEU’, The Irish Times, 10 April 1995. ‘Should we back a pledge to defend others if they come under attack? Yes/No’ The Irish Times, 3 April 2003. ‘Byrne and Cowen divided on collective defence’ by Denis Staunton, The Irish Times, 9 December 2003. 13. See also EP-Briefing 1997a, 1997b.

12 Conclusion – Theory-Development in the European Security and Defence Policy 1. While this analytical device drew our attention to the question of how much the governments preferred certain outcomes for the EU defence pillar, the concluding sections of the respective empirical chapters on substantive scope gave more emphasis to the ordering nature of preferences by confronting NATO options with EU options. 2. In Albert Hirschman’s terminology, governments may employ either ‘voice opportunities’ within an arrangement or (threaten to) ‘exit’ the institution (Hirschman 1970). 3. The French armed forces had even argued once in their strategy that “French doctrines must be compatible with those of NATO” (cited from Rynning 2002: 140). After France had failed to create a new chain of command within the Alliance, however, it retreated from active participation in NATO. Nevertheless, this did not result in French ignorance about NATO. For instance, it has remained highly active in the newly established NATO Response Forces since 2002. Moreover, Anand Menon has persuasively argued that France never wanted to fully replace NATO by genuinely European structures, and that, instead, it favoured a division of labour (Menon 2000: 125–7).

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4. For instance, concerns that prompted fears of possible exploitation by Germany accounted for the French willingness to support ‘convergence criteria’ or ‘coherence indicators’ in defence planning. 5. The presentation was at a ‘young scholars’ conference’ in Bremen in 2006. She was in fact speaking in German, and said: ‘Konzepte sind unsere Augen.’ 6. This modest proposal was to be an intergovernmental, rather than a supranational body and, therefore, the internationalisation at stake was not particularly significant (Mayer and Weinlich 2007).

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References 261 Webber, Mark, Stuart Croft, Howorth Jolyon, Terry Terriff and Elke Krahmann. 2004. ‘The Governance of European Security.’ Review of International Studies 30 (1): 3–26. Weber, Katja. 1997. ‘Hierarchy Amidst Anarchy: A Transaction Costs Approach to International Security Cooperation.’ International Studies Quarterly 41 (2): 321–40. ——— 2000. Hierarchy Amidst Anarchy: Transaction Costs and Institutional Choice. Albany: State University of New York Press. Weber, Max. 1978. Economy and Society. An Outline of Interpretive Sociology. Berkeley/ CA: University of California Press. Weiss, Moritz. 2005. ‘Preference Formation in the Absence of Structural Mechanisms: The Case of European Security Policy.’ CFSP-Forum. 3 (4): 5–8. ——— 2009. ‘Power and Signals: Explaining the German Approach to European Security.’ Journal of International Relations and Development 12 (3): 317–348. ——— 2010. ‘Designing Security Institutions: How Transaction Costs Trigger Institutional Preferences.’ Paper presented to the Annual Convention of the International Studies Association (ISA). New Orleans. 17–20 February 2010. Wendt, Alexander. 1987. ‘The Agent- Structure Problem in International Relations Theory.’ International Organization 41 (3): 335–70. ——— 1999. Social Theory of International Politics. Cambridge: Cambridge University Press. White House. 1991. ‘National Security Strategy of the United States.’ Washington D.C. http://www.fas.org/man/docs/918015-nss.htm (last access: 1 June 2008). ——— 1996. ‘A National Security Strategy of Engagement and Enlargement.’ Washington D.C. http://www.fas.org/spp/military/docops/national/1996stra.htm (last access: 1 June 2008). ——— 2002. ‘The National Security Strategy of the United States of America.’ Washington D.C. http://www.whitehouse.gov/nsc/nss.pdf (last access: 4 April 2008). Whitman, Richard G. 1999. ‘Amsterdam’s Unfinished Business? The Blair government’s initiative and the future of the Western European Union.’ In Occasional Paper. No. 7. WEU Institute of Security Studies. Paris. Williamson, Oliver E. 1985. The Economic Institutions of Capitalism. New York: Free Press. ——— 1996. The Mechanisms of Governance. Oxford: Oxford University Press. Wolfers, Arnold. 1962. Discord and Collaboration. Essays on International Politics. Baltimore: The Johns Hopkins University Press. Wolforth, William C. 1999. ‘The Stability of a Unipolar World.’ International Security 24 (1): 5–41. Wörner, Manfred. 1992. ‘A Vigorous Alliance: A Motor for Peaceful Change in Europe.’ NATO Review 40 (6): Web-Edition. Zakaria, Fareed. 1998. From Wealth to Power: The Unusual Origins of America’s World Role. Princeton: Princeton University Press. Zangl, Bernhard and Michael Zürn. 2003. Frieden und Krieg. Sicherheit in der nationalen und postnationalen Konstellation. Frankfurt a.M.: Suhrkamp. Zoellick, Robert B. 2000. ‘A Republican Foreign Policy.’ Foreign Affairs 79 (1): 63–78. Zürn, Michael. 1997. ‘Assessing State Preferences and Explaining Institutional Choice: The Case of Intra- German Trade.’ International Studies Quarterly 41 (2): 295–320.ens Steffek, Claudia Kissling and Patrizia Nanz (editors)

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Series page continued Jens Steffek, Claudia Kissling and Patrizia Nanz (editors) CIVIL SOCIETY PARTICIPATION IN EUROPEAN AND GLOBAL GOVERNANCE A Cure for the Democratic Deficit? Klaus Dingwerth THE NEW TRANSNATIONALISM Transnational Governance and Democratic Legitimacy Kerstin Martens, Alessandra Rusconi and Kathrin Leuze (editors) NEW ARENAS OF EDUCATION GOVERNANCE The Impact of International Organizations and Markets on Educational Policy Making Achim Hurrelmann, Steffen Schneider and Jens Steffek (editors) LEGITIMACY IN AN AGE OF GLOBAL POLITICS Joan DeBardeleben and Achim Hurrelmann (editors) DEMOCRATIC DILEMMAS OF MULTILEVEL GOVERNANCE Legitimacy, Representation and Accountability in the European Union

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Index A-400M transport aircraft, 64, 66, 101, 163 Afghanistan, 71, 89, 92, 106, 109, 143 Africa, 56, 66, 77, 85, 89, 101, 158, 205, 217 (note 22), 231 (note 21) Albright, Madeleine, 72, 91, 108 Alliance, see North Atlantic Treaty Organization (NATO) anarchy, anarchical arrangement, 15, 20, 26–7, 32, 174, 191–2, 203 ARTEMIS, 66, 148, 160, 165, 231 (note 21), 233 (note 24) asset specificity, definition and conceptualisation, 9, 36, 40, 49–50, 190, 205, 214 (note 6), 215 (note 11), 228 (note 30) assets general or redeployable, 40–1, 127–30, 141, 148, 165–6, 194, 202–3, 205, 208, 229 (note 41) political-military, 47–8, 229 (note 41) specific or non-redeployable, 14, 40–1, 42, 50, 121, 125, 127–30, 131, 148, 164–6, 186–7, 194, 200, 229 (note 41) autonomy, 9–10, 11, 16, 20, 21, 37, 49 see also European autonomy BAe Systems, 179 Balkans, 54, 69–70, 87, 91, 93, 103, 104, 107, 110, 113, 121, 141–2, 159, 176, 189, 198, 234 (note 2) See also Bosnia, Kosovo Bennett, Andrew, 15–16, 27, 43, 53, 173, 176, 182 bindingness, 3, 13, 21, 30, 36, 42, 45–6, 50, 114, 116, 119, 127–8, 133, 143, 146, 149, 151, 157, 164, 185–6, 194, 202 Blair, Tony, 13, 63, 79–84, 87–92, 94, 96, 121–2, 135–9, 142–4, 153, 160, 175, 178, 198, 201, 221 (note 10), 228 (note 25) Bolton, John, 73, 222 (note 28)

Bosnia, 5, 54, 55, 69–70, 88, 89, 93, 103–4, 108, 110, 162, 184, 197, 229 (note 34) See also Balkans bounded rationality, 31, 33, 37, 192 Bourdieu, Pierre, 209 Britain, see United Kingdom burden-sharing, 69–74, 88, 90, 93, 107, 127, 149, 208 Bush, George W., 69, 71, 73, 89, 92, 103, 105–6, 219 (note 45) Bush Sr., George, 72, 219 (note 44) capabilities commitment conference, 116, 141, 154, 164 catalogue system, 49, 64, 116 causal mechanism, 20, 25, 178 causal path(way), 11, 15–16, 28, 41–2, 55, 75, 77, 87, 109, 112, 133, 150, 168, 175, 180, 186, 194, 201, 213 (note 5) Charette de, Hervé, 97–8, 108, 153 Chirac, Jacques, 5, 56–7, 98–101, 105–8, 121–2, 152–6, 161, 162, 164–5, 211 (note 1) Clinton, Bill, 69–70, 72, 89–91, 218 (note 29), 223 (note 36) Coase, Ronald, 7 Cohen, William, 72–3, 91, 141 constructive abstention, 45, 115, 137–8, 152, 226 (note 3) Constructivism, 6, 20, 24–6, 179–81, 187, 191, 203, 213 (note 9), 235 (note 6) cultural approaches, 24, 180–1, 186, 213 (note 10), 235 (note 6) preference formation, 24–6, 179–81, 187, 191, 203 Convention on the Future of Europe, 16, 18, 48, 53–4, 60, 63, 64–7, 71, 73, 77, 80, 84–6, 92, 94, 96, 97, 100–1, 117–20, 122–3, 137–40, 144, 147, 154–7, 159–60, 175, 177, 180–3, 195–6, 201, 227 (note 13)

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264 Index convergence criteria, 116, 136, 141, 154, 156, 159, 207, 211 (note 6), 229 (note 35), 236 (note 4) coordination game (with distributive consequences), 206 credible commitments, 8, 9, 10, 12, 14, 32, 36, 38–9, 48, 50, 76, 94, 121, 127, 150, 158–9, 164, 166, 168, 192–4, 197, 202, 204, 228 (note 19) Dassault Aviation, 179 delegation, 7, 15, 45, 128, 153, 165, 167, 207–8 demand (for institutions), 12, 17–18, 47–8, 53–9, 67, 78, 87, 95, 102, 109, 111–12, 181–4, 190, 195, 208 see also functionalism Eckstein, Harry, 18, 173, 180, 182 efficiency gains, 35, 40–1, 48, 62, 66, 84, 124, 129, 132, 148–9, 167, 192, 214 (note 5), 226 (note 6) Enforcement, 40 enhanced cooperation, see flexibility, flexible arrangements Eurocorps, 64, 98–9, 112, 121–2, 158–9, 216 (note 6) European autonomy, 71–4, 90, 107–9, 127, 142–4, 150–1, 176, 190, 201, 204–5, 211 (note 1), 212 (note 8) European Defence Agency, 48, 66, 73, 84–5, 114, 117, 119–20, 126, 138–40, 156–7 European Rapid Reaction Force (ERRF), 48, 64–5, 92, 126–7, 146 see also catalogue system, capabilities commitment conference European Security Strategy, 56, 65, 183 European Union Communitarisation/ supranationalisation, 115, 116, 118, 135–6, 138, 154, 227 (note 11) Council of the EU, 48, 63, 81, 98–9, 114–20, 123, 127–8, 132–3, 136–40, 144, 147, 153–7, 200–1, 226 (notes 2, 6, 10), 230 (note 9) Council Secretariat, 48, 125, 128, 133, 153, 226 (note 2) EU Battlegroups, 10, 34, 48, 50, 64, 66, 85–6, 100–1, 122, 129, 132–3,

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142, 145–6, 148–9, 160, 165, 205, 207, 231 (notes 15, 21) EU Commission, 45, 100, 115–16, 117, 118–19, 120, 124–5, 128, 131–2, 133, 136, 137, 138, 139, 140, 144, 147, 150, 152, 153, 154, 156, 157, 165, 185, 226–7 (notes 2, 6, 10, 11), 230 (note 9) EU Headquarters, EU Military Staff, Civil-Military Cell, 45, 48, 64, 65, 73, 74, 85, 91–2, 100, 109, 118, 119, 121, 123, 125, 139, 155, 156, 207–8, 220 (notes 47, 49), 227 (notes 14, 15), 230 (notes 10, 12); see also Hampton Court European Court of Justice, 118, 119, 120, 136, 139, 140, 156, 157 European Parliament, 116, 118, 119, 120, 136, 137, 139, 140, 153, 154, 156, 157 General Affairs Council, 117, 226 (note 6) High Representative for the CFSP or Mr CFSP, 118, 120, 128, 133, 136, 138, 153, 156 Political and Security Committee, 48, 125, 144–5 exit, 38–40, 49, 68, 75–6, 78, 87, 94–5, 104, 110, 198, 235 (note 2) Fischer, Joschka, 61, 63, 65, 70–4, 116–19, 123, 219 (note 45) flexibility, flexible arrangements, 9, 14, 46, 62, 65, 97, 114–18, 120, 138, 140, 152–7, 159–60, 162, 164, 167–8, 185, 200, 201–2, 229 (note 1), 230 (note 12) France, 5, 13–14, 56–8, 62, 73, 82, 97–113, 121–2, 126, 142–3, 151, 152–69, 176–7, 189, 195, 197, 198–9, 201–2, 211 (note 6), 215 (note 2), 224 (notes 4, 6, 14), 225 (notes 33, 34), 226 (note 35), 232 (note 8), 233 (notes 15, 16, 26), 234 (notes 27, 30), 235 (note 3) defence expenditure, 163 perceptions, 56–8, 103, 183, 195–6 rapprochement with NATO, 5, 57, 88, 91, 104, 108, 113, 159–60, 162, 189 see also governance costs, French government costs

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Index Franco-German Security and Defence Council, 121, 158 Frieden, Jeffry, 8, 26, 29, 83 functionalism, 4, 11, 15–17, 40, 41, 47, 58, 76, 185, 191–2, 194–5, 208, 215 (note 12), 228 (note 19) functionalist fallacy, 43, 53 Galileo System, 64, 66 Genschel, Philipp, 15, 31, 209 George, Alexander, 15–16, 27, 43, 53, 173, 176, 182 Germany, 4, 13–14, 21–3, 60–78, 82, 99, 114–34, 140–3, 150–1, 158–61, 166, 174–7, 179–81, 189–91, 196–7, 200, 206, 211 (note 6), 213 (note 7), 216 (notes 4, 5), 218 (notes 27, 29, 30), 220 (note 49), 225 (note 34), 226 (notes 2, 3, 4, 6, 10), 227 (notes 11–15, 18), 228 (notes 19–21, 28–29), 229 (notes 34–37) Bundeswehr, 54, 61, 63–4, 126, 229 (note 35) culture of reticence (culture of restraint), 23, 180, 187 defence expenditure, 126 perceptions, 53–5, 58, 70–1, 183, 195–6 see also governance costs, German governance costs Gourevitch, Peter, 31, 47, 127–9, 132, 217 (note 20) governance costs, 3, 9–10, 12, 13–14, 31, 36–7, 39, 41, 42, 187, 193–4, 200, 202, 209, 211 (note 5) British governance costs, 144, 145, 147, 149, 151, 201 French government costs, 158, 162, 164, 167, 168, 202 German governance costs, 120, 124, 127, 130–3, 207 see also Transaction costs governance structures, 9, 32, 36, 39, 40, 47, 193, 211 (note 5), 222 (note 22), 228–9 (note 31) hybrid governance structures, 32, 33, 37, 192 Gulf War, 5, 55, 57, 112–13, 141, 162, 216 (note 4) Hain, Peter, 90, 139, 141, 147

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Hampton Court, 208, 230 (note 11) see also EU Headquarters, EU Military Staff, Civil-Military Cell Headline Goal 2010, 85, 145, 101, 129, 145, 149, 162, 200 see also EU Battlegroups hegemon, 12, 21, 68, 71, 74, 76–7, 87, 91, 93, 94, 96, 102, 103, 106, 108, 175, 176, 197–8, 204, 206 Helsinki Headline Goal, 64, 65, 85, 101, 129, 133, 147, 162, 165, 200, 231 (note 21) hierarchy, hierarchical arrangement, 9–10, 14, 15, 32, 36–8, 40, 162, 169, 192–3, 202–4 Hirschman, Albert, 33, 38, 40, 75, 214 (note 8), 235 (note 2) Historical-institutionalism, 3, 17, 27, 29, 53, 131, 191, 194, 203, 208, 215 (note 1) Hobbes, Thomas, 7 Hoon, Geoff, 85, 89, 145–7, 149, 231 (note 21) Hunter, Robert, 69, 72, 81, 216 (notes 7, 5), 223 (note 37) hypothesis, 42, 176, 178, 179, 215 (note 12), 234 (note 2) indeterminacy, 25, 47, 125–6, 130–1, 132, 133–4, 181, 186–7 institution, institutional arrangement, 4, 11, 13–14, 22, 29, 31, 38–9, 42–3, 47, 50, 71, 74, 76, 91, 95, 140, 152, 176, 185, 191–2, 199, 202, 204, 226 (note 35) feedback effect, 128, 131, 147–8, 200 institutional path, 68, 120, 123, 124, 127–8, 130, 131, 143–4, 147–9, 161, 165, 200, 226 (note 35) institutional rules, 207 International Relations, or IR (as a discipline), 4, 6, 17–18, 19–20, 26, 27, 43, 53, 106, 120, 181, 189, 191, 211 (note 3) internationalisation of security/ defence/use of force, 3–4, 6–7, 11, 15, 30, 58–9, 69, 203, 206–10, 236 (note 6) Iraq, 71, 73, 89, 90, 91, 92, 106, 109, 122, 123, 142, 160, 227 (note 15)

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266 Index Ireland, Republic of, 18, 173, 182–8, 203, 211 (notes 2, 7), 212 (note 9), 235 (note 6) isolationism, 12, 68–71, 76–8, 87–90, 93–6, 102–3, 105–7, 110, 112, 189, 197–8, 204 Italy, 116, 136, 154, 230 (note 9) Jervis, Robert, 20, 34, 70–1, 205, 213 (note 12) joint production economies, 34–5 Keohane, Robert, 11, 16, 32–4, 40–1, 53, 203–4 Kissinger, Henry, 5 Kohl, Helmut, 60–1, 64, 121–2, 131 Kosovo, 54–5, 57, 69–70, 76, 88, 89, 94, 103–4, 180, 184 see also Balkans Kydd, Andrew, 20, 48–9 Lakatos, Imre, 19, 21, 23, 25, 173, 179, 191, 203, 212 (notes 1, 2) Lake, David, 3, 9–10, 33–9, 48, 193, 211 (note 5), 214 (note 4) lead nation concept, 64, 139, 208 see also EU Headquarters, EU Military Staff, Civil-Military Cell Liberal Intergovernmentalism, 19, 22–4, 176–9, 191, 214 (note 1) Preference formation, 22–4, 176–9, 191 Major, John, 121, 135 market failure, 32–3, 190, 199, 214 (note 3), 222 (note 22) Mayntz, Renate, 43, 204 Mérand, Frédéric, 206–7, 209 military planning, 3, 4, 7, 12, 15, 18, 30, 44–6, 50, 67–8, 75, 79, 86–7, 94–5, 101–3, 110–13, 182, 195–9, 206–7 Millon, Charles, 98, 104 Moravcsik, Andrew, 4, 6, 8, 16–17, 22–3, 45, 46, 176–7, 182, 204, 211 (note 3), 214 (note 1) neutrality (neutral), 9, 63, 97, 154, 155, 173, 182, 184–7, 203, 211 (notes 2, 7), 212 (note 9) North, Douglass, 7–8, 31–2, 36–7, 41, 186

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North Atlantic Treaty Organization (NATO), 5, 7, 11–14, 38–9, 42, 49, 180–1, 183–4, 189–90, 195, 196–9, 205, 211 (note 1), 216 (note 5), 218 (note 37), 219 (notes 44, 45), 228 (note 28), 230 (note 10), 235 (note 3) Article V, 54, 55, 56, 61, 80, 99, 199, 220 (note 47), 224 (note 6) Berlin Plus Agreement, 58, 61, 72–3, 81, 82, 90, 94, 97, 99, 119, 122, 139, 146, 208, 216 (notes 7, 5), 220 (note 47) European caucus, 72, 76 Prague Summit (2002), 65, 73–4, 165 primacy of, 61–2, 72, 80–1, 90, 98, 142, 146, 176, 190, 201, 204–5, 212 (note 8) 224 (note 6) Response Force (NRF), 65, 74, 101, 109, 129, 146–7, 149, 165, 226 (note 35), 234 (note 27), 235 (note 3) SHAPE (Supreme Headquarters Allied Powers Europe), 71, 73, 107, 118–19, 139, 156, 208, 220 (note 47) operations (military), 31, 44, 48, 56, 61, 62, 64, 65, 69, 79–84, 90–2, 96, 99, 100, 104, 112, 118–19, 123, 129, 139, 141, 143, 155, 162, 174, 183, 185, 199, 208, 216 (note 4), 220 (note 48), 230 (note 12), 231 (note 20) opinion polls, 17, 123, 149, 163, 180 parsimony, 177–8, 181, 187, 203 party politics, 177–9 Perle, Richard, 73 Petersberg Tasks, 48, 61–3, 65, 79–82, 84, 97, 100–1, 108, 174, 182–3 Pierson, Paul, 16, 27–8, 43, 123, 128, 215 (note 12) pioneer groups, 155 see also flexibility, flexible arrangements; two-speed Europe plausibility probe, 18, 173, 182, 185–7, 203, 211 (notes, 2, 7), 212 (note 9) pooling (of resources), 9, 15, 34–5, 45, 118, 156, 192, 207 Pörtschach (Austria), 81, 153, 177, 228 (note 25) Potsdam, 54, 64, 122, 158

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Index preferences definition, 8, 26, 29, 83 for institutional depth/design/form, 30, 40–3, 45–7, 120, 140, 157, 185–6, 193–4, 199–202, 215 (note 13) for substantive scope, 8, 13, 30, 38–40, 42, 44, 47, 67, 86, 101, 174, 180, 182–4, 192, 194, 196, 198, 199, 204, 214 (note 9), 215 (note 13), 226 (note 35), 235 (note 1) timing, 4, 5, 26, 175–6, 190, 195 typology, 8, 29–31, 192 prisoner’s dilemma, 206 process-tracing, 12, 16, 18, 71, 72, 75, 86, 95, 109, 111, 113, 121, 123–4, 128–30, 140, 146, 160, 186, 197, 199, 201 see also causal path(way); Structured, focused comparison qualified majority voting (QMV), 115– 19, 155, 226 (note 3) Rational-functionalism, see functionalism Realism, 6, 19, 20–2, 71, 174–6, 181, 191, 204, 213 (note 5), 234 (note 1) bandwagoning, 21–2, 158–9, 204–5, 212 (note 8) preference formation, 20–2, 174–6 soft balancing, 21–2, 71, 174–6, 204–5, 212 (note 8), 214 (note 3) referendum, 182, 185–6 (relational) contracting, 8–9, 31–2, 36–7, 41–2, 47, 130, 214 (note 2), 215 (note 11), 228 (note 31) Rice, Condoleezza, 69, 105 risks and threats, 4, 9, 20, 22, 33, 35, 47, 49, 53–9, 106, 183, 192, 206, 208, 235 (note 6) risks of opportunism, 9, 12–14, 31, 36–9, 41–2, 48–9, 75, 78, 93, 95, 110, 112, 132, 150, 168, 193–4, 197–204 abandonment, 9, 14, 36, 122–3, 127, 132, 142–3, 158, 160–1, 166, 167, 169, 202 entrapment, 9, 36–7, 123, 141–3, 161, 186, 201, 207

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exploitation, 9, 14, 36, 122–3, 141–3, 158, 159, 161, 166–7, 176, 201, 202, 207, 211 (note 6), 236 (note 4) see also Credible commitments; Transaction costs Robertson, Lord George, 81, 83, 137, 226 (note 4) Rühe, Volker, 61–2, 70–1, 127 Rumsfeld, Donald, 69, 73, 89, 92, 220 (note 47) Scharpf, Fritz, 27, 32, 181 Scharping, Rudolf, 63, 64, 70, 116, 218 (notes 28, 35), 229 (note 35) Schröder, Gerhard, 63, 64 security conceptualisation and definition, 8, 9, 34–5, 192, 197, 205–6 cooperation, 6, 11, 21, 27, 31, 35–41, 43, 92, 120, 131, 174, 176, 191, 193, 204, 206, 234 (note 1) institution, 3, 7–11, 17, 35–6, 40–3, 48, 53, 173, 176, 183–4, 191, 195, 198 September 11, 2001 (terrorist attacks of), 54, 56, 57, 71, 87, 89, 92, 109, 143, 180 signalling, 12, 48–9, 68, 74–5, 78, 87, 93, 95, 102, 107, 110, 111, 112, 197 Smith, Iain Duncan, 89, 92 Smith, Michael E. , 24, 213 (note 8) solidarity clause, 64–5, 84, 100, 138, 174, 183 Sophisticated falsificationism, see Lakatos, Imre Soviet Union, 55, 206 St Malo, 12, 16, 39, 63, 66, 72, 79, 80, 81, 95, 98, 100, 108, 116, 121, 122, 136, 141–3, 149, 150, 153, 158, 160, 175, 177–8, 197, 205, 220 (note 1), 223 (notes 36, 37), 229 (note 3) state defence function, 4, 15, 58, 207–10 monopoly on the legitimate use of force, 3–4, 6–7, 11, 15, 30–1, 203, 206–9, 211 (note 4) sovereignty, 15, 37, 45, 74, 116, 155, 163, 209 transformation of, 3–6, 15, 17–18, 190, 206–10, 211 (note 4) Struck, Hans-Peter, 61, 71

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268 Index Structured, focused comparison, 11, 16, 17, 18, 78, 134, 169, 173, 180, 186, 187, 195, 196, 202, 203 see also causal path(way); processtracing structured cooperation, see flexibility, flexible arrangements superpower, see hegemon territorial defence, 44–5, 54, 55, 56, 58, 60–5, 80, 82, 85, 99, 100, 107, 110, 154, 158, 199, 216 (notes 4, 6), 224 (note 6) terrorism, terrorist attack, 54, 56–7, 65, 71, 84, 89–90, 92, 100, 106–7, 109, 143, 180, 183, 219 (note 45) Thatcher, Margaret , 141, 234 (note 2) theory development, 11, 15, 27, 35–41, 173, 189, 203–6 threats and risks, 4, 9, 20, 22, 33, 35, 47, 49, 53–9, 106, 183, 192, 206, 208, 235 (note 6) Tilly, Charles, 7 transaction costs anticipation of, 4, 10, 13, 36, 38, 40–1, 75–6, 122, 144, 149, 194, 202, 208, 210, 228 (notes 19, 30) cheating, 41, 194 conceptualisation and definition, 7–11, 27, 31–5, 36–41, 42, 47–50, 204–7, 214 (notes 3, 7), 224 (note 14), 228–9 (note 31) framework, 9–10, 12, 14, 15–18, 26–7, 29–43, 47, 50, 53, 75, 77, 83, 102, 120, 124, 131–3, 151, 168, 173–88, 190–203, 204, 208, 211 (note 7), 214 (notes 5, 6), 215 (note 10), 222 (note 22), 227 (note 18), 229 (note 32), 235 (note 6) information, 8, 13–15, 31, 36, 42, 48–9, 62, 67, 76, 91, 94–5, 112, 123, 125, 145, 151, 156, 161, 167, 184, 189, 193, 199, 207, 208, 209, 212 (note 12), 215 (note 10) tradeoff, 37, 42, 120–1, 127, 130, 133, 148–50, 193–4, 197, 200–2, 234 (note 1) transactions, 4, 7–10, 29, 32, 36–8, 40–2, 113, 129, 133, 142, 192–4, 199, 202, 214 (note 6)

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Treaty of Amsterdam, 61–3, 80–1, 97–8, 114–16, 135–6, 152–3, 160, 185, 195 Maastricht, 16, 97, 182 Nice, 72, 80, 84, 108, 117, 155, 182 Turkey, 72–3 two-speed Europe,136, 155 see also flexibility, flexible arrangements unanimity, 45, 63, 114–19, 135–8, 152, 154, 155, 183, 186 uncertainty, 4, 8–10, 12–15, 23, 29, 31, 36–7, 39, 40–3, 48–50, 75, 93, 110, 124, 143, 161, 183, 186, 190, 193–4, 197, 200–4, 214 (note 6), 215 (note 1) unipolarity, 20, 22, 106, 174–5, 225 (note 22) United Kingdom, 5, 12–15, 50, 55–6, 79–96, 108–10, 116, 117, 122–3, 130, 135–51, 158–60, 164–5, 169, 174, 175–9, 197, 205, 208, 220 (note 1), 221 (notes 10, 14), 222 (notes 22, 28), 223 (notes 36–38), 229 (note 3), 230 (notes 9–12), 231 (notes 18–21), 232 Conservative party, 55, 79, 88, 92–3, 122, 135, 159, 177, 221 (note 14), 231 (note 18) defence expenditure, 145 Labour party, 55, 79–81, 88, 122–3, 135–6, 145, 175, 177, 229 (note 1) perceptions, 55–6, 58, 87, 89, 183, 195–6 special relationship (with the United States), 5, 13, 82, 88–92, 96, 102, 143–4, 150, 166, 198 Strategic Defence Review, 55–6, 82, 145 see also governance costs, British governance costs United Nations, 37, 45, 162, 182 Security Council, 105 United States of America, 10, 12–13, 20–1, 37, 38–40, 68–75, 87–94, 102–10, 190–202, 204–5 Congress, 12, 69, 88, 94, 105–6, 189, 220 (note 51), 223 (note 37)

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Index United States of America – continued unilateralism, 12, 68, 70–1, 76–8, 87, 89–90, 103, 105, 106–7, 197–8, 218 (note 29) US isolationism, see Isolationism

269

variable geometry, see flexibility, flexible arrangements Védrine, Hubert, 105, 106 Villepin, de Dominique, 100, 155–6, 160, 234 (note 30) voice, 38–40, 49, 68, 75, 87, 88, 94, 95, 104–7, 110, 111, 198, 214 (note 8), 220 (note 51), 235 (note 2)

Waltz, Kenneth, 15, 19, 20, 21, 33, 36–7, 174, 213 (note 11) Weber, Katja, 33, 45, 214 (note 6) Weber, Max, 6, 211 (note 4) Weizsäcker Commission, 63 Western European Union (WEU), 61, 63, 79, 80–2, 97, 99, 118, 125, 136, 153, 182 Williamson, Oliver, 3, 7, 8, 9, 31–2, 36–9, 40–3, 47, 76, 129–30, 131, 148, 193, 203–4, 211 (note 5), 214 (notes 2, 6, 7), 215 (note 11), 228–9 (note 31) Wolfowitz, Paul, 73

Wallander, Celeste, 35, 40, 47, 58, 129

Zangl, Bernhard, 15, 209 Zürn, Michael, 23, 26, 43, 227 (note 13)

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