This year could prove to be pivotal for the future of European defence. The countries fighting the Taliban in Afghanistan will find out whether their new counter-insurgency strategy works on the ground. NATO and the European Union will know whether the conflict on Cyprus will be resolved or frozen, which is important because membership of the two alliances, NATO and the EU, has significant overlap and Cyprus is the single-biggest impediment to closer co-operation between the two.

The US and the UK will undertake strategic defence reviews to define the main threats facing them and how to respond. NATO, following the return of France to its military structures, will likewise get a new strategic concept that is supposed to infuse it with renewed relevance. And the EU will learn whether the new foreign policy and security institutions and mechanisms that it has fashioned for itself under the Lisbon treaty make action more coherent and efficient.

Problems revealed by war on Taliban

Since the end of the Cold War two decades ago, various strategic defence reviews undertaken by individual allies have held out the promise of “radical change”. But the impact of such ambitions has often been negligible, not just in the member states but at the supranational level, too. The EU's battlegroups, for which planning began in 2004, were supposed to make the EU faster and more flexible in reacting to crises. To this day, not a single battlegroup has ever been deployed.

What is different this time around, however, can be summarised in two words: Afghanistan and budgets. Afghanistan has driven home the point that neither NATO nor the EU nor their member states have the means to fight the kind of war that the Taliban are waging. They will have to adapt if they are going to win.

Closer co-operation required

Soaring budget deficits have ramped up the pressure to increase the efficiency of defence spending. The combined defence budgets of the EU's 27 member states currently amount to around half of the sum the US spends on its military. But because European spending is fragmented and each country essentially maintains a full-service army, a far smaller share than in the US flows into investment, including research and development – €42 billion in Europe and €166bn in the US, according to 2008 figures from the European Defence Agency (EDA). By contrast, the EDA's 26 member states (all the EU members except Denmark) spent more in absolute terms on personnel than the US, €106bn compared with €93bn. This suggests bloated armed forces that are equipped by an armaments industry that is not as competitive as it could be.

Such figures reinforce the logic behind the EDA, whose projects aim to promote co-operation on research and development and, in the long run, to create an internal defence market. But the EDA and project-based co-operation more generally are still hampered by the engrained habit that the EU's 27 member states conduct their own threats assessments and strategic planning. The 2003 European Security Strategy, updated in December 2008, is far too general to serve as a strategic guide. But such an overarching guide is sorely needed because EU member states set their defence priorities in strikingly different areas with very little thought given to complementarities and economies of scale. Some member states focus on territorial defence against an imaginary enemy; others are shifting their resources to new kinds of warfare, such as cyber-attacks; yet others see the main task of their armed forces as peacekeeping or state-building, and so put more emphasis on deployability and on ‘softer' skills and capabilities.

The development of the European Security and Defence Policy (ESDP) over the past decade has been driven in large part by the member states. But in the absence of a proper assessment of the member states' defence capabilities and how they might complement each other, the ESDP will continue to be hampered by ad-hoc solutions and national policies that are far less efficient than they ought to be. Afghanistan is just the kind of crisis that makes the costs of this approach visible.