EU countries vow to plug defence industry deficits

BRUSSELS, May 14 (Reuters) European Union countries pledged today to cooperate more closely on military procurement and research in an explicit admission that the bloc must address national fragmentation of its defence industry.

''We can no longer decide on the equipment we need on a purely national basis,'' EU foreign policy chief Javier Solana said in a statement after EU defence ministers signed a document committing them to greater cooperation.

''This approach is no longer economically sustainable and, in a world of multinational operations, it is operationally unacceptable too,'' he added of the EU's ambition to become a global security player.

Defence chiefs approved a six-page document committing governments to more joint procurement, tackling national state aid and other obstacles to fair market access, reducing red tape for cross-border transfers of defence equipment, and promoting small and medium-sized defence suppliers.

''We do not envision this ... as a 'fortress Europe','' the strategy paper noted.

''But we recognise that the problem of accessing the U.S.

defence market, and of establishing balanced technology exchange across the Atlantic, make it natural and necessary for Europeans to cooperate more closely,'' it added.

The step is the latest in a series of gradual moves by the bloc to free up its jealously guarded national defence markets and squeeze more value out of military budgets that in most EU countries are stagnating or shrinking.

Nick Witney, chief executive of the European Defence Agency set up to promote more EU defence cooperation, said governments would be held to the document's pledges.

''It depends on the follow-through but this is a potentially landmark document,'' Witney told a news conference.

Brussels has in recent years sought to prise up the EU's closely guarded 30 billion euro 40 billion dollars national military markets to more cross-border competition.

Twenty-three of the EU's 27 states have agreed to advertise some of their defence contracts on an electronic bulletin board to encourage cross-border bids, of which the first -- for a modest 2.7 million euros -- was awarded last month.

The European Commission, the bloc's executive body, has also started a battle to rein in abuse of EU military procurement rules by setting guidelines to limit when governments can invoke national security to shield contracts from open tender.

That effort is due to culminate in draft legislation in the second half of this year, although the Commission expects tough resistance from some national governments.

REUTERS AB RK1635