Nordic Armaments Co-operation Savings Potential

Open access

Abstract

The purpose of this paper is to estimate the potential cost savings of Nordic defence co-operation, which is frequently given as one of the arguments in its favour by politicians. Theoretical grounds for savings in co-operation such as economies of scale are reviewed in both the business and defence contexts. Then the potential cost savings in the future acquisition plans are studied through comparing countries’ plans and in maintenance through assessing the commonality of current military equipment. Comparison of public defence purchasing plans reveals that the opportunities for procurement co-operation are limited as Nordic countries are planning to acquire mainly different equipment. Due to differences in current military equipment, the savings opportunities in maintenance are likewise limited other than in the land vehicles’ sector. As currently practiced, Nordic defence co-operation seems not to offer any savings potential that could make a difference at the overall military budget level. The independent assessment of this article is based on publicly available data, which limits both the scope and details of the results.

Arena, M.V., Blickstein, I., Younossi, O. and Grammich C. (2006). Why Has the Cost of Navy Ships Risen?: A Macroscopic Examination of the Trends in US Naval Ship Costs Over the Past Several Decades. Vol. 484. RAND Corporation, Santa Monica, CA.

Bertlman T. and Anclair, Å. (2013). International Defence Cooperation Efficiency, Solidarity, Sovereignty: Report from the Inquiry on Sweden’s International Defence Co-operation, Fö 2013:B; Swedish ministry of Defence 2013, p. 32. Retrieved from http://www.government.se/reports/2014/10/international-defence-cooperation---efficiency-solidarity-sovereignty

Bromley, M. and Wezeman, S. (2013). Current trends in the international arms trade and implications for Sweden, SIPRI. Retrieved 27.5.2015 from http://www.sipri.org/research/armaments/transfers/publications/other_publ/other%20publications/Current%20trends%20in%20the%20international%20arms%20trade%20and%20implications%20for%20Sweden.pdf p. 29

Bruun-Hanssen, H. (2015). Forsvarssjefens tale i OMS 12.januar 2015. Retrieved 22.5.2015 from https://forsvaret.no/aktuelt_/ForsvaretDocuments/Forsvarssjefens%20%C3%A5rstale%202015.pdf

Capron, L, (1999). The long-term performance of horizontal acquisitions, Strategic Management Journal, Vol. 20, No. 11, pp 987-1018.

Danish Defence Forces. (2012). Nordic defence ministers' meeting in Skagen 5-6 Nov. Retrieved ed 27.5.2015 from http://www.fmn.dk/eng/news/Pages/NordicdefenceministersmeetinginSkagen.aspx

EDA (2011). EDA’s Pooling & Sharing. Fact Sheet, European Defence Agency. Retrieved 3.4. 2015 from www.eda.europa.eu

EDA European Defence Agency. (2015). European Defence Data 2013. Retrieved 20.5.2015 from http://eda.europa.eu/docs/default-source/eda-publications/eda-defence-data-2013_web, ISBN: 978-92-95075-27-6

European Commission (2015). Defence Procurement. Retrieved 9.9.2015 from http://ec.europa.eu/growth/single-market/public-procurement/rules-implementation/defence/index_en.htm

The Finnish Defence Forces (2015). Main Tasks. Retrieved 13.9.2015 from http://www.puolustusvoimat.fi/

Finnish Ministry of Defence FMoD (2015). Puolustushallinnon materiaalipolitiikka (Materiel Policy of Ministry of Defence). Retrieved 27.5.2015 from http://www.defmin.fi/files/1831/materiaalipolitiikka.pdf

Forsvaret. (2014). Forsvarets årsrapport (Norwegian defence force annual report). Retrieved 20.5.2015 from https://forsvaret.no/aarsrapport

Forsvaret. (2015a). Forsvarets oppgaver. Retrieved 11.5.2015 from https://forsvaret.no/oppgaver

Forsvaret. (2015b). Overall Mission of the Danish Armed Forces. Retrieved 11.5.2015 from http://www2.forsvaret.dk/eng/About/mission/Pages/Mission.aspx

Forsvarsdepartementet (2014). Framtidige anskaffelser til Forsvaret (FAF) 2014-2022 (Future acquisitions for Defence Forces). Retrieved from https://forsvaret.no/ForsvaretDocuments/faf-norsk_2014-2022_utgitt-mars-2014.pdf

Försvarsmakten (2013). Materielförsörjning - Försvarsmaktens planerade materielförsörjning 2014 - 2021 (Defence forces acquisition plan). Retrieved 22.5.2015 from http://www.forsvarsmakten.se/siteassets/4-om-myndigheten/vart-arbetssatt/materielforsorjning/mp13_materielforsorjning_2014-2021.pdf

Försvarsmakten (2014). Försvarsmaktens Årsredovisning 2013 (Swedish defence force annual report), FMV - FSV - Grafisk produktion, Stockholm, Sweden.

Försvarsmakten. (2015). About the Swedish Armed Forces. Retrieved 11.5.2015 from http://www.forsvarsmakten.se/en/

German and Swedish Ministries of Defence (2010). Intensifying Military Cooperation in Europe - “Ghent Initiative”. Berlin and Stockholm, German and Swedish MoD. Retrieved 27.5.2015 from http://www.europarl.europa.eu/meetdocs/2009_2014/documents/sede/dv/sede260511deseinitiative_/sede260511deseinitiative_en.pdf

Giegerich, B., and Nicoll, A. (2012). The struggle for value in European defence. Survival, Vol. 54 No.1, 53-82.

Gray, B. (2009). Review of Acquisition for the Secretary of State for Defence: An Independent Report. Ministry of Defence. P. 296.

Hagelin, B. (2006). ‘Hardware Politics, “Hard Politics” or “Where, Politics?”: Nordic Defence Equipment Co-operation in the EU Context’, in The Nordic Countries and the European Security and Defence Policy, edited by Alyson J. K. Bailes, Gunilla Herolf and Bengt Sundelius, Oxford: Oxford University Press, pp. 167-184.

Hartley, K. (1983). NATO Arms Co-operation. Georg Allen & Unwin, London.

Hartley. K. (2008). Collaboration and European Defence Industrial Policy, Defence and Peace Economics, Vol. 19(4), pp. 303-315.

Heuninckx, B. (2008). A primer to collaborative defence procurement in Europe: Troubles, achievements and prospects, Public Procurement Law Review, Vol. 17 No. 3, pp. 123-145.

IHS Jane’s Defence Weekly (2015). Denmark selects Piranha V, halts artillery buy. Retrieved 22.5.2015 from http://www.janes.com/article/51105/denmark-selects-piranha-v-halts-artillery-buy

Jones, G., Ryan, E. and Ritschel, J. (2014). Investigation into the Ratio of Operating and Support Costs to Life-Cycle Costs for DoD Weapon Systems, Defense ARJ, Vol. 21 No. 1: pp. 442-464.

Järvenpää, P. (2014). Nordic defense cooperation: NORDEFCO and beyond, in: Northern Security and Global Politics, Routledge, Oxon eds. Dahl, A-S. and Järvenpää, P., pp.137-154.

Kvalvik S. R. and Berg-Knutsen E. (2009). Cost-efficient operation of defence - theoretical foundations (Kostnadseffektiv drift av Forsvaret - Teoretisk fundament), Forsvarests forskninsistitut report 00305, ISBN 978-82-464-1544-4.

Lehtonen, J-M. and Anteroinen, J. (2013). Cooperation in public purchasing - an armaments case, The 20th EurOMA conference, 7-12 June, Dublin, Ireland. Retrieved from http://www.euroma2013.org/

Lindberg (2015). Puolustusvoimien komentaja Lindbergin puhe 4.2.2015 (A speech by Defence Forces Commander Lindhberg). Retrieved 20.5.2015 from Keskisuomalainen http://www.ksml.fi/uutiset/keski-suomi/puolustusvoimien-komentaja-lindbergin-puhe/1980890

The Military Balance (2014). Chapter Four: Europe, The Military Balance, 114:1, 59-160, DOI: 10.1080/04597222.2014.871877

NATO (2012). Smart Defence? Retrieved 3.1.2013 from http://www.nato.int/cps/en/natohq/topics_84268.htm

NORDEFCO (2013). The NORDEFCO MCC Action Plan 2014-17. Retrieved 29.5.2015 from http://www.nordefco.org/files/131111%20AP14_17_FINAL.pdf

NORDEFCO (2015a). The Basics about NORDEFCO. Retrieved 29.5.2015 from www.nordefco.org

NORDEFCO (2015b). NORDEFCO Annual Report 2014. Retrieved 12.9.2015 from http://www.nordefco.org/Files/NORDEFCO_arsrapport_2014.pdf

Porter, M. E. (1979). How competitive forces shape strategy. Harvard Business Review, March-April, p. 137-145.

Pugh, P. (2102). Source Book of Defence Equipment Costs. Ed. David G. Pugh.

Saxi, H. L. (2011). Nordic Defence Cooperation After the Cold War, Oslo: Norwegian Defence University College (FHS), Norwegian Institute For Defence Studies (IFS). Retrieved 27.5.2015 from http://hdl.handle.net/11250/99336

SIPRI (2015). MILEX Database. Retrieved 11.5.2015 from http://www.sipri.org/research/armaments/milex/milex_database

Staples, M. (2013). The Future of European Defence: Tackling the Productivity Challenge, McKinsey & Company. Retrieved 3.9.2013 from http://www.cfr.org/europe/mckinsey-future-european-defence-tackling-productivity-challenge/p31216

Stevenson, W. (2011). Operations Management. McGraw-Hill/Irwin, 11th International Edition, New York, p. 908.

Swedish Ministry of Defence (2015). Final reports on deepened defence cooperation between Finland and Sweden and International Defence Cooperation Efficiency, Solidarity, Sovereignty. Retrieved 4.6.2015 from http://www.regeringen.se/globalassets/regeringen/dokument/forsvarsdepartementet/final-reports-on-deepened-defence-co-operation-between-finland-och-sweden.pdf

Søreide, I. E. (2014). Speech at Nordic Defence Industry Seminar, Sundvolden, 20.05.2014. Retrieved 29.4.2015 from https://www.regjeringen.no/nb/aktuelt/Speech-at-Nordic-Defence-Industry-Seminar-Sundvolden-May-20th-2014-/id760341/

United Nations Office for Disarmament Affairs UNODA (2015b). Transparency in Armaments - UN Standardized Instrument for Reporting Military Expenditures: Guidelines, Department for Disarmament Affairs United Nations, New York. Retrieved 20.5.2015 from http://www.un.org/disarmament/convarms/Milex/Docs/Forms/Guidelines/MILEX%20publication%20final%20E.pdf

UNODA (2015a). United Nations Report on Military Expenditures. Retrieved 20.5.2015 from http://www.un-arm.org/Milex/Home.aspx

Valášek, T. (2011). Surviving Austerity: The case for a new approach to EU military collaboration. Centre for European Reform. 42 pages. Retrieved 15.5.2015 from http://www.cer.org.uk/sites/default/files/publications/attachments/pdf/2011/rp_981-141.pdf

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 88 88 13
PDF Downloads 22 22 3