European Scrutiny Committee
Oral evidence: PESCO and UK-EU Defence Co-operation, HC 1347
Wednesday 28 June 2023
Ordered by the House of Commons to be published on 28 June 2023.
Watch the meeting
Members present: Sir William Cash (Chair); Richard Drax; Mr David Jones; Craig Mackinlay; Gavin Robinson; Greg Smith.
Questions 38-59
Witnesses
I: Mr Tom Holter, Director, Royal Norwegian Ministry of Defence.
Witness: Mr Tom Holter.
Q38 Chair: Good afternoon, Mr Holter. Thank you for joining us today. It is a pleasure to have here a representative from one of our closest European allies, Norway. If I may just say so, I was born on 10 May 1940, which was the day after the Norway debate. Recently, I followed a film—I do not know whether anyone would like to know this, but I will say it to you—about how our relationship with your King was one of the great jewels in our crown in terms of saving the royal family of Norway. I would just like to put that on the record.
Today, Mr. Holter, we will be looking at the participation of third countries—non-EU member states, in the bloc’s lingo—in PESCO projects. We are hoping that you can provide us with Norway’s perspective on PESCO, as a European third-country participant in a number of projects. However, before we get started, and for those watching at home, would you briefly introduce yourself?
Mr Holter: By all means, and thank you for those kind words. My name is Tom Holter. I am a director in the security policy division in the Norwegian MOD. Actually, I am a fairly old hand in the MOD. Obviously, like most people here, I have worked with NATO, and also the UK.
Chair: Could you speak directly into the microphone, because we are missing some of this?
Mr Holter: Yes. As I said, my name is Tom Holter. I am a director in the Norwegian MOD. I have worked there for many years now, and I have also worked with the UK. It so happens that I was stationed in our embassy in London from 2012 till 2016, I believe it was. I had the pleasure of working with the MOD, the FCO and the Cabinet Office. I actually upset quite a few parliamentarians, so that was a very fun period of my life.
Thank you for inviting me to the inquiry. We joined the PESCO project on military mobility in late 2021, so we have some experience—not very long—of participating as a third state. I should perhaps say up front that we have gained some experience of participation, but also of what we get back. I think it is, overall, a positive balance sheet—I think that is fair to say. There are nuances, obviously, but that is the overall impression.
I understand that the format will be question-based; I will be happy to try to answer your questions.
Q39 Chair: Thank you very much. I will ask the first question: how important was it that the EU allowed third countries—non-EU states—to participate in PESCO projects, and what value do third countries add to PESCO projects and, more generally, to the western defence alliance?
Mr Holter: Thank you for that question. The fact that the EU opened up participation in the PESCO project to non-EU members—it was a Council decision in November 2020, if I am not mistaken—was most important and, as we see it, a strong recognition that third states are important for European security. I think that became clear immediately after 2014, and it is certainly reflected in the revised EU strategic compass from last year.
I think there are strong reasons, both political and military, for involving third states. The obvious one is that there are key allies outside the EU, including the US, the UK and Canada. We would like to think that Norway also figures among those, but clearly from the political side, in this day and age of geopolitics, it is simply vital to show western unity—even more so, obviously, in a post-Ukraine world. Even if the EU has moved forward on the military side, its overall role, particularly in hard security, is still very limited, so it depends in a critical way on the military resources of non-EU allies, including strategic enablers. That is obviously where the US and the UK come in very firmly.
Perhaps on a third note, the inclusion of non-EU allies is also very important in the light of EU-NATO co-operation. Military mobility is a flagship of EU-NATO co-operation. There have been near-ministerial decisions from the EU and NATO, I think from 2018, on increased, ambitious targets for military mobility, including the harmonisation of cross-border movements in Europe. Norway also participates under the aegis of the European Defence Agency. That is the short answer to your question.
Q40 Chair: One last question from me: do you have any reflections on the situation regarding Russia in the context of the interaction between PESCO and NATO, and is it a matter of concern for you? You are following this very carefully, Finland and Sweden having recently joined up. What is your sense of the direction as we speak?
Mr Holter: That is also a very good question, because I followed the PESCO project on military mobility prior to the Russian invasion. This project in particular has gained increased momentum after the invasion. The EU has something called the EU action plan on military mobility. I think the first was back in 2018-19; there is now a revised version. I have not read the details, but I know that one key element of the revised edition is to delete Belarus from the overall planning and to include those parts of south-eastern Europe that could be particularly vulnerable.
There is also, as you indicated, a renewed and strong emphasis on the Nordic dimension to military mobility. Clearly, when both Finland and Sweden become full members, there will be increased potential and expectation for increased defence co-operation in the Nordic framework, but I would underline that that is under a clear NATO, and to some extent EU, heading. That also includes military mobility across the whole Nordic region. It also means that Norway will, in a sense, get a new strategic position. Historically, in the NATO framework, our primary role has been one of receiving reinforcements, and taking care of surveillance, etc., in the north. When Sweden and Finland become full members, I think our role will probably change to being more of a staging area for reinforcements into the entire Nordic region. That is really the guiding principle for defence planning for Norway and the other Nordic countries. We have something called NORDEFCO: the framework for Nordic defence co-operation. It is subordinated to NATO, but military mobility will now be taken forward in NORDEFCO.
Q41 Greg Smith: Good afternoon, Mr Holter. Could you take us through the general conditions that a third country must meet in order to join a PESCO project? What do you have to sign up to and say that you will absolutely do to meet the conditions of joining?
Mr Holter: Thank you for that question. We certainly have had rather close contact with those elements. I believe there was a Council decision back in November 2020 that spelled out some of the key principles and conditions for third countries joining. When we sent our request to join, we really tried to observe those principles and conditions. I think it is fair to say that some of them are rather political in nature—for example, they are about sharing the values of the Union, supporting CSDP and the new level of ambition, and underpinning the European defence industrial base. There is language to that effect in the Council decision.
There are some more concrete conditions: a third state must not create dependencies with regard to arms procurement, research and capability development, and also not limit the use of any capabilities that are developed under PESCO. I believe there is a requirement for third states to have a security agreement for the exchange of classified information with the EU, which we have, and also an administrative arrangement with the European Defence Agency, which we also have.
Looking at how this has worked for Norway—this is also reflected in the language—there is a requirement for third states to give substantial added value to the EU project. From a political perspective, that is perhaps the most important thing of all. We reflected on what that would be for Norway, because obviously we hoped to benefit from this, but it became increasingly clear that they also expected Norway to really add value. We tried to highlight our strategic position in northern Europe, but also our personnel, competence and funding. It is nevertheless clear that a third state, at the end of the day, determines for themselves the nature of their contribution, and that has also been rather important for us.
I should perhaps mention, because we tried to do some research on it, that there is an annexe to the Council decision—something called the PESCO binding commitments. That is a whole series of military and financial requirements that participating states are expected to observe and ideally fulfil. Some of them are a bit like NATO; they are about increasing defence expenditure, and defence research as a part of the defence budgets. There is also the expectation that nations will contribute to fulfilling priorities in the EU on the defence planning process, including CARD—the annual review that they have. Our experience so far is that we have not really been pressured or scrutinised on any of these in any detail. Norway is not part of CARD at all. We are obviously part of the NATO defence planning process, but we have no resources to involve ourselves in a parallel process, at least not today.
From a more specific Norwegian point of view, and relating to our own administrative arrangement, there are some concrete principles or requirements. One fairly important element, which was not introduced by Norway, relates to the categories of participants and the type of language they use. You might think that there are member states and then there are third states, but our administrative arrangement introduces a third category called project participants. It includes all EU member states that participate in the project, but also third states with an administrative arrangement relating to the project.
Chair: Thank you very much. We have a list of questions and I want to be sure that we keep to time because somebody else is coming later.
Q42 Gavin Robinson: Good afternoon, Sir. What say do third countries have in how PESCO develops or a project is run?
Mr Holter: In the administrative arrangement?
Gavin Robinson: Yes. Do third countries have a say or do they follow what is already agreed?
Mr Holter: I would say that third countries have a relatively good say in this. As I said, there is a specific category called project participant, which also encompasses all third states with an administrative arrangement. That has led us to believe that it goes beyond being a third state. Obviously, PESCO is embedded in the Lisbon treaty, but third states may take part in decision-making processes for implementation of the individual project. At the operational level—in day-to-day work—we have a strong feeling of inclusion. We sit at the table, with the right to speak and propose. I think that that is practised liberally, for example, in the exchange of unclassified information and invitations to meetings. It works very well. However, as PESCO is embedded in the Lisbon treaty, Norway has no say in the overall governance structures or decisions at that level. That obviously includes the admission of new participants. However, at the end of the day—you will find this in the language of the Council decision—there is an expectation of active participation by third states. It is fair to say that we feel that we are assessed on the amount of our contribution and the merits of the arguments, not the fact that we are a third state.
Q43 Mr Jones: As you know, the United Kingdom is currently discussing with the European Union Britain’s membership of the military mobility element of PESCO. How many separate administrative arrangements has Norway entered into with the European Union in terms of PESCO?
Mr Holter: The PESCO project on military mobility is to date the only PESCO project that we participate in.
Q44 Mr Jones: So you are at a similar stage to the United Kingdom. When that was being discussed, to what extent did your Parliament have a dialogue with your Government? Was there parliamentary scrutiny of the terms of the administrative arrangement?
Mr Holter: No, not really, according to my recollection. Our admission into the project was made at Government level, but obviously, according to our constitutional system, Parliament has to be at least informed and ideally consulted on important security matters. This has been mentioned in formal documents—for example, the annual budget proposition. and orientations by the Ministry of Foreign Affairs and the Ministry of Defence, which are regulated—to embed it in the cross-party environment in our Parliament.
Q45 Mr Jones: I visited Norway with another parliamentary Committee last autumn to discuss the scrutiny of treaties by Norway, and the process that you just outlined was explained to us. There is a continuing dialogue between parliamentarians and Ministers, but it appears from what you have just told us that the level of parliamentary scrutiny for an administrative arrangement such as this is rather less than for a treaty.
Mr Holter: Yes, indeed. As you alluded to, this is not a treaty in the true sense of the word; it is at a somewhat lower level. It is more of a technical arrangement, I think.
Q46 Mr Jones: Would parliamentarians be able to have sight of the wording of the administrative arrangement that was being discussed between Norway and the EU?
Mr Holter: The finalised document? Absolutely. It is not a classified document, in that sense, as far as I know. I do not think that is a problem.
Q47 Craig Mackinlay: Why do third, non-EU countries decide to take part in these PESCO projects, rather like Norway? What was the overriding desire to get involved with military mobility, for instance? Is this something that NATO was not doing well or had not really put on its radar? What was its attractiveness to countries?
Mr Holter: Thank you for that question, which is also a good one. We asked ourselves that question: why the EU inter-military mobility? First, as you probably know, military mobility has been hailed as the flagship of EU-NATO co-operation. I think there was a recognition both in NATO and in the EU that this was an area where co-operation was not just desirable but necessary. Our philosophical approach to that was that obviously NATO will be the key framework for the evaluation of defence in the future—there is absolutely no doubt about that—with co-operation with key allies like the US and the UK.
Obviously, NATO will also be responsible for collective defence—that is, moving heavy equipment across Europe. The EU has a role in preparing the ground for those movements. The EU has a number of key instruments, including the harmonisation of cross-border movements, diplo clearance and customs. Also, I think it is fair to say that it has the prime ownership of transport corridors, and a rather big programme for the funding of dual-use infrastructure. Norway is unfortunately not part of that funding mechanism, but Sweden and Finland are, and we expect them to use that extensively in the Nordic defence co-operation.
In a sense, they complement each other. To be successful, military mobility has to involve both organisations. At least up until now, much of the focus has been on cross-border movements. Regulatory works have in a sense been the low-hanging fruit, which has added value without, so far, enormous economic costs.
Q48 Craig Mackinlay: To be clear, on military mobility, which seems to be the one that everybody is working towards more than any of the others—there is quite a list of PESCO projects—because of the EU angle in terms of customs and perhaps train networks across Europe, trunk highways and that type of thing, it is more important for the EU to be considering these things because it can open the door, rather than a NATO ambition that it could not fulfil on its own. Would that be a fair analysis of the mobility scheme?
Mr Holter: Yes, I think so. NATO also has its own infrastructure programme and infrastructure budget. But to my knowledge, that is more limited to key fixed strategic points—harbours and so on—and does not involve, for example, roads, bridges, railroad tracks and so on. NATO has a different approach to these things.
Q49 Craig Mackinlay: There are a number of PESCO projects. I do not know the list of ones that Norway is involved with, but two seem to be relevant to Norway; you can tell me whether you are involved in them. I think critical seabed infrastructure protection would be interesting to Norway, given the gas pipeline network. I will also mention—not for any reason other than the fact that it has the word “Arctic” in its name—the arctic command and control effector and sensor system. I do not know entirely what that entails, but I can guess. What other PESCO projects is Norway getting involved in?
Mr Holter: I think it is fair to say we are still in a relatively early phase in our experience with PESCO. Obviously, we have screened the list; it is now a very long list. I think it is fair to say also that progress is somewhat varied. I think the EU does its own review, every now and then, of which projects deserve to be taken forward.
We made a limited list—I think it was almost three years ago—of the projects that could be interesting for Norway. PESCO mobility was obviously at the top. There are a few other projects. There is a German/French-led one—something called the network of logistic hubs. We are not part of that yet. We have had some initial consultations with the co-ordinating nations; we like to see this in the Nordic context now. We may—I underline “may”—decide to join that. There are also a few projects more on the capability side. But I would hesitate to indicate exactly what further projects Norway will participate in. We are simply not there yet.
On the two you mentioned, I do not think they are on my list—at least not yet.
Q50 Chair: Can you outline the general credit and debit sides of being part of a PESCO military project? What are the credits and debits—the pros and cons—and what has the military mobility project achieved so far?
Mr Holter: I guess the short answer, in terms of the pros and cons, is that military mobility is a rather complex area. The PESCO project, by its very nature, is led by member states—obviously, there is Council oversight and review, but fundamentally it is a forum between capitals for strategic co-ordination and the setting of priorities. The PESCO project does not necessarily go into every detail, but that overall co-ordination is, I think, very, very important. It is complex: it involves civil-military co-operation; it involves nearly 30 states. That is our starting point.
I will also emphasise the role of the co-ordination nation—the Netherlands. They do a very solid job in terms of both co-ordination and setting the agenda. There is also a secretariat, drawn from, I think, both the foreign service and the EU military staff. We do not have much contact with them, but I think they are important.
As I said, the EU has some key instruments that are important for all the key elements of military mobility. At least three elements have to be in place for this to succeed: the harmonisation of the cross-border arrangements across Europe; customs; and then, obviously, the more fiscal part—the infrastructure. I think in the PESCO project, even if they do not do all the work themselves, they have an overall view on this, which I think is important.
We do not see many cons, but I will pick out a few elements from our experience. As I said, I think there is room for improvement in terms of the exchange of classified information. For example, it would have been useful for us to have the EU’s military requirements for military mobility. We do not have access to that; there is a long, bureaucratic process to get that. There is also room for improvement in terms of exercises with a military mobility focus, including in an EU-NATO framework.
On the question of harmonising customs, we have talked about the EDA group, which is trying to harmonise the EU form 302, which is the NATO and EU formula. For some mysterious reasons, it is very hard to get the complete formula. I would not necessarily say that it is very labour intensive, but the personnel dimension is not to be underestimated, at least if you want to do it properly.
On what it has achieved so far, again our overall impression is positive. Much has been done, but clearly it is still work in progress. The overall intention is to have a fully-fledged system for moving large-scale operations across Europe—a system for military mobility—in place by the middle or the second half of the decade. This is also a very dynamic process, and it has to be adapted to an evolving security situation, including in relation to Ukraine.
I think that, at the strategic level, it is really about contributing to burden sharing in NATO where NATO and the EU come together on this topic. It includes the US and the UK, and I understand—I hope I am not revealing anything—that Denmark is on the way in. It will then include nearly all NATO and EU countries, except Malta and—I am not sure—perhaps Austria, and perhaps also the UK. Those are the most important things.
More specifically, there is a requirement for third states, or any participating state, to produce something called a national plan on military mobility. We had nearly a year to produce such a plan, and actually it was delivered to the Netherlands just a couple of months ago. That is very useful in focusing our minds and setting our priorities. As a result of the PESCO project, we are in the process of establishing a northern network of national points of contact for military mobility, which will handle all the data.
Q51 Chair: I think, Mr Holter, that some people may be wondering what the words “military mobility” actually mean. It is a rather motherhood and apple pie project, isn’t it? It is very nice to be able to work with other people—they are called alliances—but military mobility is not a totally clear concept. Does it mean that you actually pitch in with people, rather like article 5 of the NATO treaty? Or is it just something that is thought to be a good idea because it keeps everybody in touch with one another?
Mr Holter: That is a good question. We also had to take some time to get a clear understanding of what we are dealing with. Based on the work that is going on in NATO and the EU, there are at least three components that are very important. One is the harmonisation of cross-border arrangements. My understanding is that if you want to take a tank or a military truck from Portugal to the Baltic states today, it can take not days but weeks because there are different rules and regulations for the transportation of military equipment across Europe, so cross-border military harmonisation is very important.
Actually, the European Defence Agency has taken a key role in that area. Norway is part of that—we have been part of that for a couple of years—and we have now in place two sort of technical arrangements for the land and air domains, which are about to be implemented across all the EU countries and Norway. The US and Canada are still not part of that.
Q52 Chair: Another question occurs to me in this context: does “military” include air force?
Mr Holter: Yes, indeed—it includes all domains.
Q53 Chair: Are you satisfied that it is an integrated system when it is made to work? Or do you think that perhaps it needs a bit more clarification?
Mr Holter: It goes without saying that the natures of the three domains are very different, but I think the same sort of rules apply generally, so cross-border harmonisation is one and, as I said, customs is another—the harmonisation of those arrangements. It should be added there that Norway will be participating in this work, but we are not part of the EU customs union. For example, if we are to adopt an EU formula for this, it has to be similar to NATO, and we are not yet there.
As I said, the third important component is obviously the physical infrastructure—simply to have the kind of roads, bridges, railroad tracks and so on that can carry heavy equipment and that are as harmonised as possible. For example, if you go to Finland, the width of their tracks is the old Soviet one.
Chair: As we are getting a bit short on time, I will ask Greg Smith to ask the next question and to perhaps ask about procurement at the same time.
Q54 Greg Smith: Sure. Can you take us through some of the limitations that third countries face as part of any particular PESCO project—what decision-making powers you have and what say you have on the overall direction of the project? Can you include with that, as the Chair just indicated, the challenges around procurement for that project, not least in respect of where you find yourself at odds with any restrictions relating to the single market?
Mr Holter: So far, as I said, we participate only in the PESCO project on military mobility. That, at least up until now, has not really had any sort of procurement dimension, but if it should have, Norway is obviously part of the internal market through the EEA agreement. That means we are also sort of bound by—there is something called the defence directive in the EU, which sets certain requirements for a particular procurement over a certain financial limit and so on. It has to be, obviously, open to international tender and so on, with, however, the possibility for waivers. I do not deal with that on a daily basis, but I understand that the threshold for nations to use that sort of escape clause is relatively low, so I guess there is some frustration with the defence directive. Nevertheless, we are also committed to that.
In terms of general limitations, as I alluded to in a previous answer, there is obviously a limitation in the sense that PESCO is embedded in the Lisbon treaty. So it goes without saying that when the EU makes strategic decisions on the governance structures and the admission of new participants, Norway is not around that table.
Beyond that, I would say that there is a strong feeling of inclusion in the day-to-day work. The dissemination of unclassified information and of invitations to meetings works very well. There is a feeling of inclusion both at the professional and personal level. I think it has worked very well. We have a seat at the table, and the right to speak and propose. It is up to us to make our own views felt and to participate actively.
If you read the wording of the administrative arrangement and the Council decision, there is an expectation when third states participate that they will participate actively and bring added value.
Q55 Mr Jones: Mr Holter, in our earlier exchange, you mentioned that the Norway-EU administrative arrangement was not a classified document and was available. Would you be able to write to the Committee and tell us where a copy of that agreement could be downloaded? That would be very helpful.
Mr Holter: I will certainly check that.
Q56 Mr Jones: My final question is on the European Defence Fund. Norway is part of the fund through EEA membership and has the same rights as EU member states. What are the pros and cons to the EU of limiting participation in the EDF to member states or EEA members? Do you think that the EU should consider amending the EDF regulation to allow third countries to participate?
Mr Holter: Thank you for that question; it is obviously a very pertinent one. First, with the EDF, I think we are now into the second implementation in Norway. The EDF has proven to be not just a positive but an important experience for our defence industry, as well as financially.
We established earlier a kind of mini-organisation, which involved the MOD, the defence research establishment, and, obviously, part of the defence industry. We have a “Team Norway” to handle that. I think 40% of Norwegian defence exports go to Europe, and the Norwegian defence industry is heavily involved in Europe. We worked quite a bit on it, and I was involved in getting the connection, in terms of participation; it has proven very important.
We are part of the programme committee, and we feel that we have a say there. As you alluded to, I think part of the key to our success has been the EEA agreement, so that we participate on par with member states.
Q57 Mr Jones: Forgive me for interrupting, but what would you say are the benefits and disbenefits to the EU, rather than to Norway?
Mr Holter: I would like to think that that Norway can add value to the EDF. Also, as I said, the Norwegian defence industry is really heavily integrated in the European defence industry—although, obviously, the US and UK are most important to us. We have three or four major defence companies in Norway. In many projects, they form part of larger European consortia. My impression is that they really add value.
Having said all that, we also stress that the EDF must be open and offer the possibility of full participation by all non-EU allies. We see the transatlantic defence market as one market. It also has a strong NATO-EU dimension, particularly in terms of capability development. They must complement each other and not compete or duplicate each other’s work. It is important for the EU to show openness and for non-EU allies to participate.
Q58 Chair: May I ask you a final question, Mr Holter? From the beginning of the aggression by President Putin against Ukraine, I was very concerned by the fact that Germany originally offered only helmets. That was not quite what one would hope for. What is your view, in the context of what is happening in Ukraine, of the need for countries such as Norway to pitch in in a way that demonstrates a bit more than just a token effort? Of course, Germany has tried to catch up since then.
Mr Holter: That is obviously a key question. I will not comment on what other allies have contributed—
Chair: You are being very tactful.
Mr Holter: What I can say is that, from day one, or at least from day two or three of the Russian invasion, Norway has been very active in giving military and civilian aid to Ukraine. On the military side, I do not know off the top of my head all that we are contributing.
Q59 Chair: I will conclude on this point. Would it not also be true to say that, when it came to the crunch in the second world war, the valiant Norwegian people really showed their mettle and were very helpful to us? That is something we shall never forget, just as I dare say you will not forget that we helped to save your royal family.
Mr Holter: Absolutely. The connection between the UK and Norway is rock solid and goes back to world war two, and even before that. It will be rock solid into the future. I hope that it is not to the detriment of anyone else, but it is fair to say that the UK remains Norway’s closest ally in Europe.
Chair: Thank you very much. It is very kind of you to come to see us today on a Zoom call. We are most grateful for your comments.
Mr Holter: The feeling is mutual. It was a pleasure.