Created: 14.11.97 Updated: 03.12.1997
1. Introduction
In his Press Briefing of 28 May 1997 the Secretary of State for Defence, George Robertson, outlined the provisions for the Strategic Defence Review. I His statement established certain important limits to the scope of the Review, which included the exclusion of the Eurofighter Programme from the process. The Government maintains that its stated commitment to the Eurofighter does not in itself constrain its strategic options except in the obvious sense that the money to be spent on it could otherwise be used on programmes derived from other strategic choices. This is a matter of some contention.
A growing number of influential voices query the wisdom of continuing a programme that has been plagued by cost overruns and technical delays, particularly when the strategic environment for which the Eurofighter was designed has altered so fundamentally. An editorial in The Guardian in June this year, responding to George Robertson's decision to exclude the Eurofighter from the Review, argued that
Fifteen years after the R&D phase began, the polic ' v rationale./br the Eurqfighter is allogether unclear. We no longer.ffice an airborne superpower threat of the kind 1hal it was conceived to combat.
A scathing editorial in The European the following month stated that
"With scared cows like Eurofighter as fixed and unmoveable pieces, the money to buy things that the soldiers, sailors and airmen really need is hard or impossible to find. This makes nonsense >of the New Labour defence review in Britain which has Eurofighter, scandalously, excluded from its terms of reference, although it is Britain's biggest defence procurement since Trident.
Alan Clark, MP, (former Conservative Defence Minister) participating in a House of Commons debate on the Eurofighter in July 1997 stressed that
"The cost overruns are stupendous. Many sectors within its spec~fications are defective and will need huge expenditure to put right. This is the time to close down any idea producing the aircraft.
Summing up in the words of one forceful critic
"Eurofighter, a weapon that's too expensive, out of date before it enters service and designed for a mission that no longer exists, is a perfect metaphor for the sad state of the European political industrial complex that produced it.
In contrast to the above, proponents of the project in the UK have been quick to highlight the importance of the Eurofighter to the European aerospace industry, particularly, its technological and employment benefits. The 1992 Defence Select Committee Report on the Eurofighter stressed
"The significance of EFA to the UK high technology industrial base must feature in MoD's analysis of desirability of EFA proceeding to production. 6
In this vein it has tended to be the economic, rather than military benefits of the programme, that have been highlighted by the Eurofighter lobby. This raises some fundamental questions about the relationship between British defence procurement and industrial and employment policies. For even if the
general mood concurs with the idea that defence ministries should play a supportive role towards industry, the opportunity costs of such policies need to be examined in terms of both the economy and security.
2. Background
The specifications for the Eurofighter were defined during the Cold War in the expectation of meeting massive air attacks from the Warsaw Pact forces. The aircraft was designed to be remarkably agile, specialising in dog-fighting in order to counteract the highly effective Russian built MiG-29s and Sukhoi-27s. Although optimised for air-to-air combat it was also designed to have a secondary ground attack capability. The aircraft's specific technological features include a fly-by wire system which allows for maximum agility, a canard configuration and extensive use of new materials such as carbon fibre composites and aluminium lithium resulting in a 30% weight saving over previous construction methods.
The aircraft is designed to have a lifetime of 6,000 flight hours or a 25-year operating life. All the main features of the Eurofighter are driven by air-to-air considerations, which requires the plane to have both supersonic and subsonic capabilities for beyond visual range (BVR) and close combat. The main aerodynamics and thrust criteria for the EFA are determined by turning capability at supersonic speed at height and subsonic manoeuvre at sea level. It can also land and take-off from a 500 metre runway.9 It was designed to carry smart weapons including the advanced medium range airto-air missiles (AMRAAM) and advanced short-range air-to-air missiles (ASRAAM).
The Eurofighter programme is being built by a four nation consortium, the Eurofighter Consortium. involving British Aerospace (UK), DASA (Germany), Alenia (Italy) and CASA (Spain). The programme is supervised by the International Project Office of the NATO European Fighter Aircraft Management Agency. The workshare of each participating nation reflects the numbers of aircraft they have ordered and thus the total amount that each country is to invest in the programme. Initial orders involved a UK and German commitment to 250 aircraft, Italy to 165 and Spain to 100, a total of 765 aircraft.
Almost from its inception the project has been beset with controversy and threats of cancellation. Initial wrangles over specifications led the French to withdraw from the project in August 1985. The UK, Germany, Italy and Spain proceeded to develop the programme but by the latter half of the 1990s questions were being raised about the programme's rising costs, Defence budgetary cuts have led all the participating nations to revise their orders downwards with the orders trimmed to UK 232, Germany 180, Italy 130 and Spain 87, a total of 629 aircraft. These cuts have implications for the workshare arrangements and have led to disputes between the participants which in turn has contributed to delays in the commencement of the production stage.
The greatest uncertainties about the programme's future have arisen as a result of Germany's ambivalent position. Since the end of the Cold War, German budgetary problems and reservations about the strategic need for the Eurofighter plus growing political opposition to the aircraft have raised serious doubts about Germany's continuing participation in the programme. The cost of German re um ication has coincided with a severe
recession, which has frustrated the German government's attempts to meet the convergence criteria for European Monetary Union. Budgetary pressures have forced large-scale cuts in the defence budget resulting in funding problems for the Eurofighter project.
At the time of writing Bonn's funding difficulties for the Eurofighter had not been resolved. A cabinet meeting in October 1997 agreed in principal to support the programme into the production stage but this decision must be ratified by the Bundestag which will not address the issue until the last week of November. There is no guarantee that the Bundestag will support the programme as the Social Dernocrats and many of the Free Democrats are strongly opposed to it. German prevarications have caused serious delays to the start of the production stage which in turn is causing costs to escalate.
Serious technical difficulties have also slowed down the programme. The first development aircraft was scheduled to begiii flight trials in the summer of 1992 but problems with the engine control software resulted in a two-year delay of the maiden flight of the first prototype.' 0 At the time of the June 1997 Airshow in Le Bourget, Paris the Eurofighter Consortium claimed that its flight control problems had been solved, but the Eurofighter's dogged performance at the show led observers to suggest that technical problems were still very much in evidence. 11 Such speculation was justified by announcements in September 1997 that continuing technical problems might add a further f350 million to the cost of the system. 12 In turn this has affected the production schedule. Production was planned to begin at the end of 1993 with the first aircraft coming off the line in 1997. At the time of writing production still has not commenced and the in-service date has been put back to 2002.
Time delays caused by the technical difficulties, budgetary constraints and bureaucratic wrangles have led to the cost of the programme spiraling dramatically. The initial estimates for the four-nation programme were put at E20bn, with development costs accounting for f5bn (1992 prices). Total programme estimates are now put at between E42-45bn of which development costs amount to f7bn. 13 The UK's financial commitment to the programme has risen from an initial estimate of f7bn to f I 5bn in 1997.
3. Budgetary Implications
In the UK the rising cost of the programme has added strength to those opponents of Eurofighter who would rather see more money being spent on other areas of public expenditure, such as hospitals or schools.
More pertinent to the defence review process, however, is the fact that the huge allocations for the Eurofighter programme have created problems for the management of the defence procurement budget overall and more particularly other RAF procurement requirements. At L15bn the Eurofighter programme is the single largest procurement programme that the MoD has ever committed itself too. At the peak of production at the beginning of the next century it will take the lion's share of the overall procurement budget, placing pressure on many other procurement programmes.
A report produced in March 1997 by the Defence Select Committee gave a warning that major equipment programmes were vulnerable to delay or cancellation because of the glut in pro jects in the early years of the next century. 14 For instance, in the financial year 20034 the New Horizon Frigate, the Nimrod upgrade programme
and the RAF anti-armour weapon, as well as Eurofighter, will all be at peak years of expenditure. The Report also disclosed that there were 116 other outstanding equipment requirements, many of which were expensive and due to be in service early next century. They include the RAF's requirements for an anti-armour weapon, air transport aircraft, a medium-range air defence missile, a replacement or upgrade for its maritime patrol craft and several different kinds of helicopters. There is also a need to procure a range of stand-off conventional smart weapons. Several of these proj ects are billion pound procurements in their own right. With Eurofighter placing increasing pressures on the procurement budget and with orders converging, there are likely to be serious cuts and slippages in the RAF's procurement list.
The previous Government's Treasuryinspired cuts led to equipment programmes being pared down, stocks and spares cut, ammunition holdings trimmed and maintenance reduced. The net effect of these cost cutting measures has been to reduce the operational effectiveness of the armed forces, undermine morale and in some cases put the lives of service personnel at risk. 15 The failure to include the Eurofighter in the defence review process suggests that the Labour government has opted for a "business as usual" approach to procurement issues, at least where the RAF is concerned. If correct, this would imply that the nuts and bolts of airforce operations will continue to be sacrificed in order to retain prestigious big-ticket items.
4. Strategic implications for the RAF
Eurofighter 2000 was in the early development phase when the whole strategic environment, which gave rise to its specifications, was transformed, yet so far no attempt has been made to review the need for such an aircraft. Supporters of the programme insist that the aircraft's exacting air-superiority features are no less relevant to today's air power doctrine in meeting the security challenges of the post-Cold War era.
Since the end of the Cold War the RAF has been conducting an internal review of its Air Power Doctrine. The crux of the matter has been whether it should be structured for counter-air operations (in effect, air superiority) rather than its traditional role of anti-surface operations (air interdiction, reconnaissance and offensive air support -which itself encompasses both battlefield air interdiction and close air support).
The RAF's traditional land/air operations have always beell unpopular with the airforce for a number of doctrinal and operational reasons. 16 Air superiority that proved so successful in the Gulf War is the RAF's preferred option and reinforces its decision to purchase the Eurofighter. The significance of this emphasis on air superiority is, however, being tested by the operations that the RAF is actually engaged in. In its recent operations in Bosnia air support has hardly been required. In general, ground support in all its aspects - and in particular close ground support - has proved to be the most common and valuable role in multilateral peacekeeping operations. Air superiority is more appropriate to Gulf-style wars. However, Britain has long since accepted that it would only engage in such scenarios as part of a multi-national force, in which case others could provide air superiority.
In this context there are a number of potential dangers for the RAF if it puts all its eggs into the Eurofighter basket. Firstly, there may be more Bosnia-type crises than Gulf Wars to face, with the
consequence that such an investment of scarce air assets into air superiority may prove inappropriate. Low intensity peace support or humanitarian operations are far less likely to require the high intensity capability epitomised by the Eurofighter, and even when they are required they could be provided by allies.
Secondly, even if Bosnian- and Gulf-style operations were to occur in equal measure over the next twenty years there is the danger that in air superiority operations the RAF would be dwarfed by US capability, whilst also leaving few assets for ground attack missions. This would risk diminishing the overall effectiveness of the RAF's contribution to any coalition force.
Thirdly, the decision to continue with the Fl'uro1-1 oliter purchase raises the question of the extent to which the RAF's future roles are being circumscribed by existing procurement commitments rather than by a fUndarnental strategic reappraisal of the RAF's future. Originally the Eurofighter ,was desioned to replace the Phantom and the .1agUar, but as its costs have risen so
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has its "substitutability" for other aircraft. The phasing Out Of the Tornado F') air defence fighter and probably in the longer term, the Harrier GR7 and elements of the Tornado bomber force, will make the RAF almost wholly dependent on the Eurofighter for its all-round combat operations. A senior RAF officer is reported to have said that the prospect of the RAF becoming a one-aircraft force was not welcome but recognised that this could become the reality "well into the next century". 17 Despite these reservations the RAF outwardly appears resolutely committed to the Eurofighter.
Former Conservative Defence Minister, Alan Clark, MP, hinted that the RAF's defence of the Eurofighter is linked to the survival of the Service itself.
"The services are always keen to lobbyfor items q1'equipment and in this instance the Royal Ai~force undoubtedly believes its entire career structure to depend on the Eurofighter aircrqft. Indeed, some argue that its survival as a service depends upon it, because there is tin argument - which has much to be said./br it - that the Royal Air/brce should he dispensed with, and that an Army air corps should support the Army, the Fleet Air Arms should support the Navy, and there should be a transport command to arrange back-up services. I am not arguing that, but the RAF is well aware qf1hal argument, so its advocacy of EFA has an edge to it. " 18
5. Technical Limitations
In recognition of the limitations of the strategic role of the Eurofighter in any future low intensity operations, the MOD has decided to enhance its secondary ground attack function by adding on a new anti-armour missile, low-level laser-guided bomb and stand-off air-to-surface missiles. The likely net effect of these a4justments will be to impair its agility in its air-to-air combat role, due to the extra payload, whilst elevating the aircraft to at best a second class workhorse in antisurface operations. Such compromise undermines the claim that Eurofighter represents the best that money can buy for the British airforce.
For all the hype attached to the Eurofighter's "edge of the envelope" characteristics, when the project final comes off the production run in 2002 its specifications will be over 20 years old. This is reflected in the fact that it has limited stealth capability, no thrust vectoring - an important feature for evading incoming missiles - and an inability to cruise at supersonic speeds without its afterburners on (a feature which reduces fuel consumption and enhances stealthiness). Such technical limitations raise fundamental questions about its claim to be a "state of the art" aircraft.
6. Industry and Jobs
Why then, given all the problems and limitations, have successive UK governments stuck so resolutely to the Eurofighter programme? The answer lies in the perception of the importance of the programme to the UK aerospace and engineering sectors, its contribution to the UK's high technology base and to the maintenance of skilled employment. 20
The development phase of the Eurofighter programme has sustained some 34,000 direct jobs and a further 5,000 indirect jobs. Industry estimates that at the peak of production 20,000 jobs will be directly dependent on the project with a further 20,000 jobs sustained indirectly through the provision of goods and services. 21 These jobs are largely highly skilled, hightech manufacturing jobs, with a high value added contribution to the UK economy.
Cancellation of Eurofighter would mean the loss of 15%-20% of the aerospace industry workforce. At a macro-economics level the loss of 20,000 jobs in the aerospace industry would make little real impact on the national rate of unemployment, particularly, at present when the general rate of unemployment is in decline. At a local and regional level the losses would be devastating given the concentration of employment in two regions, Warton in Lancashire and around the Bristol area.
Cancellation would also cause the loss of core technical skills from the national defence and aerospace industry. Of thethousands of aerospace workers who have already been displaced from the defence industry there is little evidence that they have been able to find alternative uses for their engineering and technical skills. 22 Thus the displacement of the Eurofighter workforce could well represent a permanent loss of technical skills to the economy.
Critics of the Eurofighter programme, however point out that maintaining the programme in order to save employment, at EO.75m per job, is an extremely expensive job creation scheme.? 3 Alan Clark, MP, while not averse to Keynesian employment schemes, suggests
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11 >ive must find a less extrai,agant it,,a ' y ol paying people to make buckets v0th holes in them. -24
In addressing the need ['or alternative employment and investment schemes in the wake of the downsizing of the British defence industry, trade unions have been advocating the formation of a Defence Diversification Aoency (DDA) empowered to help defence companies and local economies ad just to defence industrial cutbacks. Althou,h the idea of the DDA was championed by the Labour Party while in opposition, it has yet to be established by the Labour Government. Yet the intimate and costly links between economics, procurement and defence policy which is so apparent in the Eurofighter case, suggest that a properly empowered DDA needs to be established to redress the MoD's unsuitable role as an agent of national employment and technology strategies.
The inordinate concern about aerospace jobs, which stands in marked contrast to recent British governments' general approach to industrial restructuring and job loss, can partly be explained by the special
relationship that the aerospace industry has with the state. Throughout the last forty years the UK government has provided a high level of support for the aerospace industry in the belief that it is strategically important for both commercial and military reasons and that Britain is, and should remain, a major player in the international aerospace market. Although in a weaker market position than ever before, this belief remains strong. It is reinforced by arguments that, against a background of general decline in its civil manufacturing base, the UK is relatively successful in areas of high technology and must therefore keep these going, despite the high levels of government subsidisation required. In seeking to retain the industry in the face of mounting equipment costs and declining defence budgets the government has sought to collaborate with other European states, in an attempt to share costs and extend economies of scale.
The Eurofighter is the largest collaborative programme that the UK aerospace industry is involved in. Indeed, according to the defence minister at the time when development formally began it was
"the largest industrial contract into which this country has ever ventured, and the most ambitious co-operative venture Europe has achieved ,
However, collaborative programmes such as Eurofighter are increasingly seen as major obstacles to the consolidation of the European industry. An Economist survey of the European military aerospace industry argued that
"Eurofighter symbolises all that is wrong with European collaboration. "
This, it goes on to argue, is because European governments seek to protect national defence production capabilities
through collaborative agreements, insisting on development and production shares that match the size of their orders. This has the effect of retaining European industrial over-capacities through the duplication of R&D and production. One eminent aerospace analyst has calculated that the inefficiencies produced through European collaboration adds 10%-15% on the unit price of production, thereby undermining the purported advantages of the greater economies of scale in collaborative ventures. 27 In the same vein, the Economist notes that
"Moving components between the various sites increases the aircrqfPs costs by 15%20%. Duplicating tool production lines adds as much again, and makes 28 it impossible to reap economies oJ'scale. "
In common with most collaborative programmes. Eurofighter suffers from quality control problems, delays and cost escalation. The inefficient production arrangement earned condemnation from the National Audit Office in 1995, which characterised the programme as "cumbersome and bureaucratic ". 29
Eurofighter competitors such as Lockheed and Boeing make aircraft at one production site to the specification of one major customer - the Pentagon. The resulting products - like the F-16 - prove affordable and reliable, which is why the aircraft has customers all over the world. 30 The latest version of the F- 16, while not as technologically advanced as the Eurofighter, flies faster, burns less fuel, manoeuvres better and carries more advanced weapons than most combat aircraft it is likely to encounter in battle. Moreover it is almost a third the price of a Eurofighter. 31 Such observations raise serious questions about the economic advantages of the Eurofighter programme.
7. Export Markets
Representatives of the UK aerospace industry claim that one way in which the unit costs of the Eurofighter can be brought down is by securing foreign sales. Representatives of the Eurofighter Consortium claim that the Eurofighter will be a highly exportable commodity. However, trends in the market for combat aircraft cast doubt on this claim. A market survey conducted by the Teal Group estimated that over the next ten years, given the trend for mid-life updates and the cascading of second-hand equipment, there are likely to be orders for only 2,500),000 new combat aircraft world-wide. This works out at roughly 300 sales per annum.
Given the likely domination of the market by Lockheed and Boeing, which the Teal group estimate will supply at least 38% of global demand, and with Sukhol commanding 16% of the global market and Dassault 10%-20% , the remaining 25% to 35% has to be divided between suppliers such as BAe, Saab, Mikoyan, DASA not forgetting new market entrants from China, Israel and possibly South Korea. If these projections are fulfilled the export market for the Eurofighter is limited, and likely to fall short of the Eurofighter Consortiums projected overseas sales of between 700 - 1,000 aircraft.
It is unlikely that traditional UK customers from the Gulf States, such as Saudi Arabia or Kuwait will be able or willing to procure the Eurofighter. Debt and the low price of oil have contributed to a slowing down of their procurement patterns. So far, only the United Arab Emirates and Norway have expressed an open interest in the aircraft, although it is also thought that South Korea is a target market for UK marketing teams. However, continuing reports of technical difficulties and costescalations are likely to discourage these potential customers.
8. Is there an alternative?
If the Eurofighter were to be canceled what would be the implication for the RAF? Without an off-the-shelf replacement the RAF would be left with the mid-life updated Tornado GR4s, backed up by a residual Harrier GR5/GR7 to provide a capacity for offensive roles (the Tornado F3 and Jaguar ground attack aircraft are being phased out, rather than being given mid-life updates). This would leave a very considerable hole in the RAF's strike attack capabilities, potentially taking it out of the world-class fighter business. However, in the not too distant future the Joint Strike Fighter (JSF) built by Lockheed Martin with BAe as a collaborator is likely to offer an affordable strike attack aircraft with many of the features that Eurofighter falls short on, such as stealth and thrust vectoring.
The JSF will be the most advanced strike aircraft in the world. It will be able to operate in the dark with switched-off radar and will have short take-off and vertical landing (STOVL) ability, thereby allowing it to operate from limited airfields and aircraft carriers around the world, and hence making it suitable for rapid deployment forces. It is a multi-role aircraft, adaptable to the different roles and functions expected of air-power in the 21 st Century. Moreover, its most attractive feature will be its affordability. The Pentagon has insisted that the JSF's flyaway price should be no more than $20 million - a third ofthe estimated unit price of the Eurofighter. The JSF is seen as the definitive aircraft for the beginning of the 21st Century and in technologica l and performance terms will be a generation ahead of the Eurofighter.
So far, the MoD only plans to purchase 80 of the aircraft for the Royal Navy to replace the ageing Sea Harriers. British industry will benefit from being involved in the programme, but would stand to gain far more from technology transfer and economies of scale if the MoD placed a larger order.
If the RAF procured JSF instead of the Eurofighter what would it do in the interim period between the phasing out of Jaguars and F-3)s and the in-service date of the JSF, estimated in 2007? One option would be to follow through a suggestion made by Mr. Portillo, during his Ministerial tenure at the Treasury, namely to lease F-16s from the US. Although not a popular suggestion at the time, given Portillo's hostility to the Eurofighter, 32 leasing has proved a successful option for the Italians as a stop gap measure between the retirement of their Starfighters and the introduction of the Eurofighter.
For industry, the production gap created by the cancellation of the Eurofighter would eventually be filled by the JSF which would be procured in larger numbers than at present envisaged. Eurofighter could then be written off as a prototype that has enabled the British Aerospace industry to stay abreast with advances in aerospace technologies, albeit that they are fast becoming outdated by the next generation of fighter aircraft such as the F-22 and the JSF.
Failing the procurement of an alternative combat aircraft, the RAF would have to consolidate its capability as a force which specialises in ground attack and other aspects of combat-support air operations (transport, reconnaissance, AEW, AWACS, Search and Rescue, air-to-air refueling), for which it has a good reputation and which provides an ever
growing and important role in international peace-keeping operations. Ground attack and logistical support roles may not be as glamorous as air combat roles for the RAF, but it may provide greater assurance that the Service will continue to play a key and indispensable role in any future international coalition force.
9. Conclusion
As an international co-operative programme of unparalleled magnitude the future of the Eurofighter has major consequences for the UK defence and aerospace industry. If it were to be canceled there would be serious industrial and employment repercussions, but this fact should not discourage the UK government from addressing the dilemmas that the Eurofighter programme raises. There must be a point where the programme's spiraling costs have to be addressed in terms of value for money for the British taxpayer. Is this type of aircraft still the most appropriate one to equip Britain's armed forces in the new strategic environment? And if the answer is yes, is this particular aircraft the most costeffective option? By excluding Eurofighter from the remit of the existing Defence Review, MoD is signaling that it has already decided upon the answers to these questions. But a major procurement programme of this magnitude deserves a thorough national debate before being embarked upon, not least because there is a danger that the hardware is determining the future roles and functions of the RAF rather than the other way around. Such a debate is now urgently required.