BERLIN/MUMBAI–The announcement last week that India was entering into exclusive negotiations with Dassault for its Rafale fighter jet represents a major coup for the French defense contractor and for Nicolas Sarkozy. The embattled French president was evidently relieved by the prospect of the Rafale’s first ever foreign sale in a deal worth over US$10 billion, telling reporters, “we have been waiting for this day for 30 years.” The announcement is also a blow for the Eurofighter consortium, consisting of the leading aerospace manufacturers in Germany, Britain, Italy, and Spain, whose Typhoon had been the Rafale’s chief competitor. Two other recent decisions have gone against the Eurofighter group, with Switzerland opting instead for Saab’s Gripen and Japan for Lockheed Martin’s F-35. However, Eurofighter had thought itself better positioned in the Indian competition. It believed it was offering the technically superior aircraft and, indeed, the Typhoon had performed better in competitive trials in 2010.

Of course, defense sales are about much more than technical specifications, with considerations related to costs, technological transfers, joint production opportunities, and political relations playing vitally important roles. Indian observers had long discussed the higher up-front costs of the Eurofighter, but calculated over the total life cycle, the relative differences would not have been too significant. Cost is therefore unlikely to have been the sole rationale for the decision. One can only imagine that Dassault’s offers on technology transfers and joint production must have been generous. Yet Cassidian, the EADS subsidiary that led on the Eurofighter bid, had only last year signaled its commitment to India by opening the country’s first foreign-operated defense-oriented engineering center. Politically, the prospect of a sole partner in France should have been outweighed by relations with the four Eurofighter partner nations, although Indian officials may have calculated that a single partner would be easier to hold accountable than a coalition.

Where there was a real difference between the Dassault and Eurofighter bids was in the nature and scale of political support each received. The French government is comfortable with providing support for its arms export industries in ways that Germany—the lead nation on this Eurofighter bid—is not. In Germany, the idea of coordinating one’s defense, finance, and foreign ministries to support a major defense bid through the establishment of a “war room,” as Sarkozy did, is simply unimaginable. If nothing else, such top-down political support makes it easier to bundle incentives. The sale was also a clear priority for the French president, and given the Rafale’s non-existent record of exports and uncertain future, finding a foreign buyer for the aircraft had become a declared world-wide mission for Sarkozy.

These are trying times for Europe’s defense aerospace companies, with European spending on defense falling by about €24 billion in the past three years alone whilst the global marketplace is also becoming increasingly crowded. The sight of Eurofighter and Dassault competing for overseas sales is a further reminder of the complexities surrounding the ongoing attempt to pool and share Europe’s defense-industrial capabilities, efforts that should be finding new momentum in these times of austerity. Europe’s governments and industries know that between the Rafale, Typhoon, and Gripen, they have produced two more variants of fighter aircraft than they actually need. Such legacy programs  place a further  unnecessary burden on Europe’s shrinking defense budgets and constrain European militaries from effectively configuring their resources to meet evolving requirements. Worse, it is entirely unclear whether any lessons have been learned. The same national imperatives and industrial concerns are now in danger of driving the expensive development of two medium-altitude long-endurance unmanned aerial vehicles (MALE UAVs), Talarion and Telemos. The development of unmanned capabilities may well be the future for defense aerospace, but few in Europe think that two versions of a MALE UAV are really necessary. Fewer still think that Europe won’t end up with two anyway.

Sarah Raine is a non-resident fellow with the German Marshall Fund of the United States (GMF) in Berlin and a consulting research fellow with IISS. Dhruva Jaishankar is a program officer with GMF’s Asia Program in Washington.

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BERLIN — When President Barack Obama unveiled a new national defense strategy last week, which confirmed the United States’ intent to play a sustained role in shaping a rising Asia, he noted that “the tide of war is receding.” This observation will have done little to reassure a skeptical Beijing that the strategy is aimed at managing, as opposed to containing, the rise of China. Beijing will note with ire its bracketing, in one part of the strategic review, with Iran: a country with whom the United States has had no diplomatic relations for three decades and with whom the risk of conflict (even if by proxy), remains all too real. Nor will it be pleased by the U.S. commitment to “invest in a long-term strategic partnership with India,” a country whose potential Beijing would prefer to see checked. Seen from Beijing, the administration’s repeated assurances that the United States does not view China as an adversary will be even harder to believe now.

Nevertheless, as Beijing waits to discover the full details of the U.S. realignment and to calibrate its reaction accordingly, a few ironies are already clear. Firstly, despite the fanfare with which the announcement was made, it should be no surprise that Washington plans to pay close attention to Asia. In fact, the realignment reinforces an underlying trend of increased U.S. engagement with the Asia-Pacific region, which has been quietly gathering momentum since the 1990s. The wars that followed the 9/11 attacks may have constrained some of this focus, but the ultimate direction of U.S. defense policy has been clear for a while. Likewise, the intention to cultivate India as a long-term strategic partner has roots stretching back across administrations long before Obama’s tenure.

Secondly, the perception of increasingly “assertive” behavior by China in recent years has played its part in crystallizing a stronger U.S. response. The danger is that this in turn bolsters the position of hard-liners in Beijing, including elements of the military, thereby further increasing their influence in foreign and security policymaking. Thirdly, China’s bracketing with Iran as nations pursuing asymmetric means to counter U.S. power projection capabilities is likely to encourage Beijing to mistakenly identify common cause with Tehran. Indeed, a Global Times editorial the day after Obama’s announcement argued, “The U.S. strategic adjustment highlights Iran’s importance to China. Iran’s existence and its stance form a strong check against the U.S.” And finally, as Washington complains about the pursuit of these asymmetric measures, its increased presence in the region is likely to make such activities even more attractive. China will continue to pour resources into access denial, focus on the development of longer-range capabilities, and continue their advances in electronic and cyber warfare.

Yet, for the United States to retain its primacy in Asia whilst ensuring the rise of China within a rules-based international environment, there is no alternative other than pouring more resources into Asia. Ultimately, anyone judging China’s strategic intentions purely by observing the nature of its military build-up would not likely be persuaded by Beijing’s commitment to rise peacefully. For the many U.S. allies and partners in Asia struggling to manage the security implications of their burgeoning trade relations with China, this demonstration of U.S. commitment to the region provides significant reassurance. At the same time, the strategy will also generate tensions with U.S. partners in Asia. More will be demanded of them, which will have financial implications and might require deft political handling domestically. Equally, as South Korea’s Chosun Ilbo has been quick to point out, the United States’ decreased appetite for boots on the ground does not sit easily with a military strategy that presently envisions the deployment of 690,000 American soldiers on the Korean Peninsula in the event of war.

In the struggle to manage the consequences of China’s rise, U.S. military might and strategy will be crucial, but these will not be the only tools required. While a more coherent diplomatic strategy for Asia appears to be emerging with, for example, U.S. participation in the East Asian Summit, U.S. trade policy in Asia remains woefully underdeveloped, the administration’s recent push on the Trans-Pacific Partnership notwithstanding. Ultimately, as intriguing as the consequences of this strategy may be for the broader region, for the moment at least, the Pentagon review remains just a paper. Even once key details are made clear, a lot can happen on the road between intent and reality.

Sarah Raine is a Non-Resident Transatlantic Fellow with the Asia Program of the German Marshall Fund of the United States in Berlin

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BERLIN – British Prime Minister David Cameron came to Brussels expecting a Europe of 17 and 10.  He left behind a Europe of 26 and 1.  His veto of a treaty intended for all of Europe’s 27 member states, promoting greater fiscal union within the eurozone’s present 17 members, was certainly historic. But this was not the sort of history that anyone should feel proud of making.  This was a victory of short-term tactical considerations over long-term strategic interests.

At the end of ten long hours of fractious negotiations, the only winners were Cameron’s Euroskeptic Members of Parliament.  For them, this is the first salvo in their war for a fundamental renegotiation of the United Kingdom’s relations with Brussels.  Cameron certainly did not win; his “leadership” in vetoing the treaty is understood even within his own party as resulting from weakness rather than strength.  His government didn’t win; the coalition is straining at the seams.  The pro-European Liberal Democrat narrative – that by being in government with the Conservative Party they are providing much needed moderation from the inside – has been shot to bits.  The 1.3 million people employed in the financial services industry in Britain, in whose name Cameron deployed his veto, didn’t win either; the City of London now waits with bated breath to learn how it will be affected by decisions made by a group in which it no longer has representation.  Nor did the many more million people beyond the City’s square-mile win; Cameron used his veto and got nothing for it.  Now either the eurozone survives within a new-look Europe over which Britain’s influence is limited, or it falls apart, with disastrous consequences all round.

But it is also far from clear that the “new Europe” has won.  Up to 26 member states now face a turgid time with their own populaces, parliaments, and lawyers as they try to fashion this new accord.  There will probably be casualties along the way, with Ireland a prime contender courtesy of its referendum requirement. Meanwhile, Europe still faces the same crisis of sovereign debt that it did before the Council met this past weekend.  The new fiscal compact, once it is agreed, might well help eurozone countries avoid similar crises in the future, but the crisis of the moment will still need resolving.  Finally, Europe will be weaker if it has on its periphery rather than in its midst one of the world’s major financial centers and most capable military powers.

It did not need to be like this.  German Chancellor Angela Merkel later commented that she didn’t think Cameron was ever really “at the table.”  He was, but he was misreading the game.  Were France and Germany meant to haggle more to keep the U.K. on board?  And if they refused to fold, as Cameron had feared they might, could the U.K. lead the other non-eurozone member states in heading up a smaller, but still influential, outer core that would keep Europe focused on the broader, rather than the deeper, picture?

Cameron’s strategy was a reasonable one, at least at the outset.  The problem was that his strategy never evolved.  Had Cameron’s team spent as much time listening to the reaction their demands for concessions were eliciting as they did making these demands in the first place, they might have understood earlier which way the cards were falling and adapted accordingly.  For example, Polish Foreign Minister Radek Sikorski had warned Cameron publicly in Berlin only weeks beforehand not to count on Poland, another non-eurozone member, as an ideological ally.  In laying out his vision for deeper integration, he addressed the U.K. directly: “We would prefer you to join in, but if you cannot, please allow us to forge ahead.”  Meanwhile Britain’s lists of demands continued to be submitted on more private channels but were met with total silence.  Should these have been clues that the formula of 17 and 10 might not hold?  Had this been understood, cards could have been played differently.  Why not, for example, seize on the Commission’s suggestion to introduce the new fiscal rules through Protocol 12 – an annex of the treaties – thereby avoiding the need for ratification by national parliaments or referenda, and use this as a basis to secure some less-ambitious concessions?

One weekend of miscalculations later, the end sum is a Europe today that consists of 26 member states aiming to pool sovereignty further while one onlooker looks to retrench.  For some time now, the eurozone crisis has looked set to bring about the dividing of Europe into a core and a periphery.  The UK’s efforts have consequently been directed toward ensuring that, in this eventuality, the periphery would still have real influence with the core.  Now, unexpectedly alone in a periphery of one, this task has suddenly become a whole lot harder.

Sarah Raine is a non-resident fellow based in Berlin with the German Marshall Fund of the United States.

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