Debates surrounding the Permanent Structured Cooperation (PESCO) and North Atlantic Treaty Organisation (NATO) tend to approach both as if they are in opposition. The dominant argument is that PESCO and NATO will produce significant strategic divergences on either side of the Atlantic, and ultimately weaken both US and EU military capabilities against potential rivals (such as Russia and China). Could these two arrangements be seen in a new light, i.e. as complementary to each other, rather than as opposing forces?

What Motivates PESCO?

The European integration process has always faced difficulties in addressing security and defence matters. As early as 1952, the idea to create a European Defence Community did not get off the ground. It was not until the signing of the 2007 Lisbon Treaty that the Common Security and Defence Policy (CSDP) was created, but this continued to face operational, capacity-based, and financial difficulties. Finally, in 2017, these shortcomings were addressed with the activation of PESCO.

PESCO's activation is justified through Russia’s destabilising actions, the arc of instability spanning the Middle East and North Africa, terrorist attacks, and lone actors or Islamic State (IS) fighters returning from Syria and Iraq. Adding to this is the lack of trust in the transatlantic alliance since US President Donald Trump came to power. As a consequence of these factors, the number of intra-EU summits on security and defence has increased significantly. This points to a seismic shift in the mood within the EU on military affairs, with most policymakers across the bloc finally agreeing that hard power is essential for their survival.

PESCO and the Future of NATO

PESCO also has the potential to be valuable for NATO from a transatlantic point of view. The best way to address misgivings about PESCO among non-European NATO states (Albania, Canada, Iceland, Montenegro, Norway, Turkey, and the US) is by further strengthening EU-NATO ties. This includes fostering symmetry between NATO’s Defence Planning Process and the European Defence Agency’s Capability Development Plan, and further implementing and advancing the 2016 joint EU-NATO declaration and its ensuing 42 action points, as well as the EU Council conclusions adopted by the EU and NATO in December 2017. Both the EU and NATO have a shared and vital interest (such as countering Russia and aiming for peace and stability in Europe) in enhancing European military capabilities, and this incentive should be enough to reach common ground on the issue.

NATO defines military capability targets for individual states, but in many areas, European allies have become too small (such as in terms of industrial size) to generate these capabilities by themselves. Collectively, however, Europeans are much better placed to address the capability question. That they choose to do this in a European framework is perfectly logical, more so because the European Commission can co-finance PESCO projects for up to 30 per cent from the EU budget. All additional capacity that Europe acquire thanks to PESCO can still be deployed for operations in all possible frameworks, including NATO. NATO will thus not necessarily be undermined by PESCO's creation. While certain cracks have indeed appeared in the EU-US relationship recently, such as regarding defence spending, PESCO's ability to increase EU member states' military capabilities will ultimately enable more collective territorial defence and expeditionary operations in the NATO framework.

In order to improve these capabilities, PESCO seeks to publish a common European call for tender that will be open to all manufacturers in Europe, and award one contract to build a single armament model (e.g. tank, aircraft, etc.). Manufacturers participating in PESCO projects will undertake them on a multinational basis (the project will be granted to several manufacturers from different countries). The aim to is have states whose companies participate in a PESCO project to share tendering costs and produce models that can be used by all PESCO member states, rather than each state manufacturing its own weapon model. Through this, the European Commission expects to address the current imbalance between member states' individual military expenditure and common military capabilities.

An area of concern for the US is how this call for tender is motivated by the need to make European defence industry more competitive vis-à-vis foreign industries. If this comes to pass, Europe will obviously buy cheaper and from within, rather than the US. Other concerns come from the potential degradation of US influence on European military affairs if the EU manages to become a truly autonomous strategic actor. The US has thus begun expressing its concerns about greater intra-EU cooperation, saying that all PESCO projects must be in close coordination with NATO, in which Washington has major sway.

Challenges to EU Integration in Defence and Security

Despite the significant momentum to establish PESCO, there is still no consensus on how to create, organise, or wield joint military power. The likelihood of the EU's ability to marshal the political will, technical capability, financial resources, and mutual trust that are essential to pose a credible military front ­­— that is independent of the US — to security threats is also uncertain. In addition, there is reluctance among some European leaders, such as Prime Minister Mark Rutte of the Netherlands, about ceding authority on national security, and, in some cases, concerns about undermining NATO.

The two main obstacles to further EU integration in security and defence are continuing political divisions with regard to the identification of threats and foreign policy priorities, and the Union's militarily weaknesses. Concerns over sovereignty, trust, technical, bureaucratic and financial hurdles, and defence industry issues complicate the scenario.

Conclusion

If implemented well, European defence initiatives such as PESCO will address the precise US ask of a stronger European pillar within NATO. The US will in fact welcome greater European defence spending, investments in military capabilities, and enhancement of operational readiness. Although there still remains a great deal of scepticism in Washington about European defence plans, their level of ambition, and practical applications, if integrated correctly, PESCO could be a net positive from a transatlantic perspective.