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<title>Center for Strategic Decision Research, Peter Struck, Michele Alliot-Marie, General George Joulwan, SACEUR, General James L. Jones, SHAPE, NATO, EU, BDLI, ILA, EADS, Northrop Grumman, Under Secretary Michael Wynne, Assistant Secretary Linton Wells, Ambassador William Burns, NATO Military Committee Chairman General Harald Kujat, General Dynamics, Boeing, Global Security Terrorism, Iraq, Afghanistan, Rainer Hertrich, David Stafford</title>
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<td width="66" height="68"><p><img src="../2004book/logo-kevin-web.jpg" width="60" height="66"></p> </td>
<td width="538"><div align="center"><span class="style5">22nd International Workshop on Global Security<br>
<em>Chantilly/Paris, 10-12 June 2005 </em><br>
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<p align="center" class="style17"><strong>Table of Contents</strong></p>
<p align="left" class="style17"><span class="style18"><span class="style219"> </span><span class="style219"><a href="preface.htm">Preface</a></span></span></p>
<p align="center" class="style17">Part 1 </p>
<p align="left" class="style17"><a href="alliotmarie.htm">French Defense Minister Michele Alliot-Marie (English version) </a><span class="style217"><strong></strong></span><span class="style217"><strong><a href="alliotmarie-french.htm">French Defense Minister Michele Alliot-Marie (French version) </a><a href="reid.htm">UK Defense Minister John Reid</a></strong></span><span class="style217"><strong><a href="graham.htm">Canadian Defense Minister Bill Graham </a></strong></span><span class="style219"><a href="weissingerbaylon.htm">Workshop Chairman Dr. Roger Weissinger-Baylon </a></span><span class="style219"> </span><span class="style219"><a href="liska.htm">Slovak Defense Minister Juraj Liska </a></span><span class="style219"><a href="erjavec.htm">Slovenian Defense Minister Karl Erjavec </a></span><span class="style219"> </span><span class="style219"><a href="svinarov.htm">Bulgarian Defense Minister Nikolay Svinarov </a></span><span class="style219"><a href="kujat.htm">NATO Military Committee Chair Gen Harald Kujat </a></span><span class="style219"> </span><span class="style219"><a href="koenig.htm">Acting US Ambassador to NATO John Koenig </a></span><span class="style219"><a href="schuwirth.htm">SHAPE Chief of Staff Gen Rainer Schuwirth </a></span><span class="style219"> </span><span class="style219"><a href="back.htm">Allied Joint Force Command Brunssum Cmdr Gen Gerhard Back </a></span></p>
<p align="center" class="style17">Part 2 </p>
<p align="left" class="style17"><span class="style219"><a href="perrindebrichambaut.htm">French MOD Dir for Strat Affairs Amb Marc Perrin de Brichambaut </a></span><span class="style219"> </span><span class="style219"><a href="dipaola.htm">Italian Chief of Defense Adm Giampaolo Di Paola </a></span><span class="style219"><a href="naumann.htm">fmr German Chief of Defense Gen Klaus Naumann </a></span><span class="style219"> </span><span class="style219"><a href="perruche.htm">EU Military Staff Director Gen Jean-Paul Perruche </a></span><span class="style219"><a href="klein.htm">US Assist to Secretary of Defense Dale Klein </a></span><span class="style219"> </span><span class="style219"><a href="gergorin.htm">EADS Exec Vice President Jean-Louis Gergorin </a></span><span class="style219"><a href="george.htm">UK Parliament Member Bruce George </a></span><span class="style219"> </span><span class="style219"><a href="ranque.htm">Thales Chairman & CEO Denis Ranque</a></span><span class="style219"><a href="tarasyuk.htm">Ukranian Foreign Minister Borys Tarasyuk </a></span><span class="style219"> </span><span class="style219"><a href="fasslabend.htm">Austrian Natl Assembly Member Minister Werner Fasslabend</a></span><span class="style219"><a href="pickering.htm">Boeing Sr Vice President Amb Thomas Pickering</a></span><a href="rooseveltinstitution.htm">Roosevelt Institution </a></p>
<p align="center" class="style17">Part 3 </p>
<p align="left" class="style17"><span class="style219"> </span><span class="style219"><a href="auroy.htm">French MOD DGA Force Systems & Cooperation Director Patrick Auroy </a></span><span class="style219"><a href="lind.htm">Swedish Natl Armaments Director Jan-Olof Lind </a></span><span class="style219"> </span><span class="style219"><a href="weise.htm">German Armaments Dir Hans-Heinrich Weise </a></span><span class="style219"><a href="volkman.htm">US Under Secretary of Defense Office Intl Coop Director Alfred Volkman </a></span><span class="style219"> </span><span class="style219"><a href="stanhope.htm">Dep Supreme Allied Cmdr Transformation Admiral Sir Mark Stanhope </a></span><span class="style219"><a href="lahoud.htm">MBDA President & CEO Marwan Lahoud </a></span><span class="style219"> </span><span class="style219"><a href="courtot.htm">SAFRAN Sr Vice President Francois Courtot </a></span><span class="style219"><a href="bertolone.htm">Alenia Aeronautica CEO Giovanni Bertolone </a></span><span class="style219"> </span><span class="style219"><a href="harris.htm">Lockheed Martin President Scott Harris </a></span><span class="style219"><a href="schneider.htm">Northrop Grumman President Kent Schneider </a></span><span class="style219"> </span><span class="style219"><a href="wells.htm">US Assist Secretary of Defense Linton Wells </a></span><span class="style219"><a href="vice.htm">Northrop Grumman Vice President Thomas Vice</a></span></p>
<p align="center" class="style17">Part 4 </p>
<p align="left" class="style17"><span class="style219"> </span><span class="style219"><a href="novotny.htm">Czech Ambassador to India Jaromir Novotny </a></span><span class="style219"><a href="rinkevics.htm">Latvian MOD State Secretary Edgars Rinkevics</a></span><span class="style219"><a href="plangu.htm">Romanian MOD State Secretary for Policy Ion Mircea Plangu </a></span><span class="style219"> </span><span class="style219"><a href="kouts.htm">Estonian Defense Forces Cmdr Adm Tarmo Kouts </a></span><br>
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<h1 align="center"><span class="style40">Can Transatlantic Relations Be Open and Balanced?<br>
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<td width="206"><div align="center"><span class="style37">Mr. Marwan Lahoud<br>
President and CEO,<br>
MBDA Missile Systems</span></div></td>
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<p class="style21">Global security will achieve a lasting foundation only if we manage to establish an open and balanced transatlantic relationship. I will talk about how to do that from an industry point of view. It was said earlier, and I agree, that other players such as China are getting stronger and stronger. This implies that the European Security and Defense Policy must contribute to global security in a united and credible way. To do this we must do three things: Transform European industry, understand the differences between defense industry business models on the two sides of the Atlantic, and understand the obstacles and impediments to achieving not just a transatlantic relationship for industry but to consolidating and transforming European industry. </p>
<p align="center" class="style38">TRANSFORMING EUROPEAN INDUSTRY</p>
<p class="style21">In Europe, there have been two main phases of industry transformation: One that started in the late 1960s and lasted until the mid-1990s, and was mainly based on small joint programs between European nations or between European nations and the U.S.; and one that followed this successful period starting in the mid-1990s, when the geostrategic field changed and became bigger and military spending was reduced. Hard as it is to remember, we have now been living through 10 years of industry transformation, which for companies is ages. </p>
<p class="style21">The radical change in the 1990s led to mergers between European players both outside borders as well as within. Those that I had the opportunity to be involved in were the creation of Aerospatiale Matra, EADS, and the company I am running now, MBDA, which is a three-billion-dollar world player that was created by merging six different entities that existed in Europe. </p>
<p class="style21">Such restructuring was inevitable, and it has delivered results. What was expected in terms of synergies, efficiency improvement, and growth can now be seen. And, as Patrick Auroy said, this industry transformation is far from complete. Important areas, including naval systems, still have to be restructured. So we need to take care of this second layer—transformation is an ongoing, permanent situation, and we need to move on to the next step. That step is going beyond what has already been achieved in the areas of structure and streamlining, and making sure that we lift the remaining obstacles, sociological, technical, and legal. We must continue our efforts if we want to prevent European defense production from becoming just pointless labor. </p>
<p class="style21">As far as building transatlantic partnerships goes, several successful cooperative programs are already in place, most of which my company is involved in, including MEADS and GMLRS. There have been some failures, however, including the ASRAAM/AMRAAM initiative that began in the 1980s between the U.K. and the United States, and there are still not enough successful cooperative programs for taking the next step. If that is to happen, we must explore, develop, and promote all cooperative opportunities and remove all the obstacles, which I’ll talk about later. </p>
<p align="center" class="style38">COMPARING DEFENSE INDUSTRY BUSINESS MODELS</p>
<p class="style21">We could comment at length about the difference in defense spending between the U.S. and Europe; we could ask how the U.S. manages to spare enough of its budget to spend on defense; we could ask where the money comes from, and we could compare the budget policies of European countries and the U.S. but it would all be pointless. It is a fact that while 3.7% of the GDP is spent on defense on one side, around 1%, depending on how we consolidate, is spent on defense on the other side. Therefore, if we want to be a successful defense industry, and we have been successful up to now, we must rely on different streams of revenues, which are related to export. Export is a U.S. policy tool and it is in Europe as well, but it is also a necessity for the sustainability of the European defense industry business model. This is not an easy matter. As an industry representative, as the chief executive of a company, I am fully aware of the responsibilities I have and of the gravity of the statements I am making. But we must take into account the fact that export is a key component of our business model as well as make sure that control systems are enforced everywhere. Every hole in a control system takes away from the credibility of the entire system. </p>
<p align="center" class="style38">OVERCOMING OBSTACLES</p>
<p class="style21">There are three possible obstacles to transatlantic cooperation. The first is the transformation of the demand side of the market. From an industry point of view I would say that we are expecting transformation soon and that it will go in the right direction if it happens quickly enough to match our timetables. </p>
<p class="style21">The second area is what I would call the legal framework within which companies operate in Europe compared to how they operate in the United States. A European defense company remains a national company on a day-to-day basis and it can be difficult for U.S. executives who come to Europe to discuss cooperation within our day-to-day life. For example, each time I fly to London I have to file to run my company in London. My colleagues from Italy have to file each time they are called to a management meeting in France. European defense companies must harmonize the rules as well as the framework within which they can operate. We urgently ask that LoI principles be transformed into regulations. </p>
<p class="style21">The third area is exports. As industry people we are fully aware of the importance of the control system and contribute to it. It is part of our company ethics and part of our role as companies to contribute to the enforcement of the technology transfer rules. However, we need to be able to circulate technologies and skills inside those nations in which we operate. We understand that it is important to prevent transferring technologies to third parties, but we need to have free circulation of technologies and goods inside those countries in which we are authorized to operate. I am talking for MBDA about the European Union and our U.S. operations in California. </p>
<p class="style21">I believe that all three obstacles to transatlantic cooperation can be lifted and taken away. We are putting a lot of hope in the development of the European Defense Agency and are looking forward to establishing a transatlantic partnership. This is the only way to achieve global security. </p>
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