Examination of Witnesses (Questions 100
WEDNESDAY 10 JANUARY 2001
(Mr Gould) We cannot afford to behave like that any
more, I think, is the main constraint. If you like, there is competition
on the demand side as well. There are things which people want.
We cannot afford to do everything we want to do all in one go
and that implies a discipline on the demand side as much as on
the supply side.
101. Can I ask a general question. Defence procurement
is only part of defence. We are in the business of producing or
trying to promote a safer and more secure world.
(Mr Gould) Yes.
102. Looking at this from the point of view
of Russia and Ukraine, bearing in mind the former Soviet Union
had the defence industrial combines as a very important part of
its industrial structure and looking at this from the point of
view of Russia where it sees NATO expanding currently with three
countries being admitted into NATOand part of the procedure
of joining NATO is the countries will modernise their armed forces
which effectively means having armed forces compatible with Western
armed forcesRussia not only sees that it is losing its
military industrial combines, it is losing its customers as well
and it can see that it has outstandingly good arms manufacturersthe
Antonov is a leader in its field and has a transport vehicle,
the Sukoi is probably the most aerially dextrous aircraft there
iswhat is in this for Russia and the former Soviet Union?
Can we offer any hopes at all or do they just see this as a Western
closed shop which really is making life difficult for them?
(Mr Gould) I had not really thought about that, it
is a fascinating question. What was the old Soviet defence industry
of course fragmented with the fragmentation of the old Soviet
Union so that, as you have quite rightly pointed out, large parts
of the aircraft industry ended up in Ukraine, which is a sovereign
country of its own at the moment. They are also having tremendous
difficulty, although they have still very good research and technology
and can develop very spectacular prototypes for the SU27 and improved
versions of it and so forth, they have quite a lot of difficulty
actually productionising that now and turning it into saleable
commodities. I do not think the Framework Treaty and the letter
of intent really addresses, or was intended to address, that particular
point. In terms of the development of a European industry, we
have not excluded, as a matter of principle, participation by
non EU countries in projects. The possibility is there. It obviously
is very difficult for companies like Antonov in the Ukraine and
they have found it very difficult to bid into European competitions.
They have certainly shown an interest and they have certainly
tried. As a general rule I would say they have a lot more industrial
restructuring and improvement of their own to do before the companies
are of a quality to bid into European programmes. I think that
is what it boils down to. I think the short answer to your question
is not much, I do not think it changes much I think that was the
103. I will keep asking the question in different
(Mr Gould) No, indeed, please do, it is a fascinating
104. We are coming to the end. Could you elaborate
on Article 48, part 2. This looks a little vague. It looks like
a classic compromise. After hours of negotiations the smart civil
servants came up with this: "The parties shall seek the ways
and means to task and fund an organisation with legal personality
to manage programmes and proceed to common equipment programmes".
(Mr Gould) Yes.
105. This seems as though "we could not
work anything out so we will put this in as an aspiration".
It that a bit unfair?
(Mr Gould) Perhaps you should call my predecessor
back to ask him more about the negotiating history. It sounds
to me rather like somebody did not want to say OCCAR.
(Mr Gould) If you read this "legal personality
to manage programmes and proceed with common equipment",
that is OCCAR.
(Mr Gould) Obviously we do not have commonality between
the OCCAR nations and the six nations here which is probably why
it has got that rather Civil Service type drafting in there.
108. If you have any thoughts on it.
(Mr Gould) OCCAR is really the only act in town at
the moment that meets that definition. There has been talk about
the European Armaments Agency but not much more than that, quite
109. My last question, before Peter Viggers
asks the last question, could you have a look through your files
to find if there are any really good up-to-date articles on what
has happened by way of restructuring?
(Mr Gould) Sure.
110. We know the big picture. There may be some
market analysis which would be really helpful.
(Mr Gould) There is. I can find you something.
111. Thank you. Lastly, Mr Viggers.
(Mr Gould) If not we will write it ourselves.
112. This is a very grand inception, there are
lots of fuzzy edges but of course nearly a year ago the United
Kingdom signed a Declaration of Principles with the United States
which in many ways covers similar ground to the Framework Agreement
we are considering today.
(Mr Gould) Yes.
113. In what areas does the Declaration of Principles
with the United States differ from the Framework Agreement? Is
there a strategic difference in approach or are they very similar?
(Mr Gould) They do, as you have noticed, cover very,
very similar categories. That is actually deliberate. That is
what it is intended to do. The Declaration of Principles is more
like the 1998 Declaration of the six nations that we have talked
about than a Framework Agreement. If I characterise it, the Declaration
of Principles work is running behind the Framework Agreement,
it is not nearly as mature as what you have seen here. I would
say that the difference, obviously, is first of all it is bilateral
not multilateral. I do not think that is the result of anything
in the United States other than the fact of the history of co-operation
with the UK. If they are going to start doing this kind of thing
they thought they had better start with us because historically
they might find it easier. They see it as being a more broadly
based approach, ultimately. The real difference is in the area
of technology transfer, export control. The DoP addresses both
of those things but, of course, the US has an awful lot more technology
to transfer, quite a lot of it, quite rightly, it wants to protect
which means that the nature of the negotiations on those sorts
of subjects is, I think, materially different from what we have
done here in the Framework Agreement.
114. Are the two concepts completely compatible?
(Mr Gould) No, they are not. They cannot be because
one is multilateral and the other is bilateral so they cannot
be compatible, there are bound to be some differences.
115. By compatible, if they were not compatible
we could not enter into both.
(Mr Pawson) They both seek to improve the co-operative
framework within which to enhance defence industrial co-operation
so in that strategic sense they are compatible. Mr Gould has said
that the similarities are not coincidental. They are compatible
because there are the same problems in globalising industry.
116. Did the United States have reservations
about us entering into the Framework Agreement?
(Mr Gould) No.
117. What about the European allies, do they
have reservations about our special relationship with the United
(Mr Gould) No. They do not. They ask us how the DoP
is going and the US ask us how the Framework Treaty is going and
we are quite happy to share that information with both of them.
118. I imagine the United States is most likely
to be sensitive in this area. Has either side expressed concerns
about sharing information?
(Mr Gould) No, they have not, because it is quite
clear in the Framework Agreement and quite clear in our work with
the US that we will not share US information which they have given
us under those terms. The European nations do not expect us to
do that either. We have made that quite clear.
119. Do you envisage that there will be a wider
agreement which evolves from both of these agreements?
(Mr Gould) It may not be a single agreement but I
do envisage the agenda getting broader, yes, I do. As I said,
the United States on the DoP have made a start with us. We know
they have talked to other countries about the similar approach
as well so I do see the agenda broadening, yes.