Cash-strapped Europe pools defence, saves little so far
* Europeans pool aircraft, equipment in quest for savings
* Efficiency drive unlikely to halt squeeze on defence spending
* Sovereignty, national security concerns hold back integration
ZARAGOZA, Spain, June 17 (Reuters) - At military exercises in northern Spain, French and Spanish fighters fly alongside Swedish and Czech transport aircraft while a multinational team of mechanics changes the engine on a Belgian plane.
On display is "pooling and sharing" - the idea that cash-strapped European allies can retain their military muscle and keep their budgets in check by cooperating on how they buy and operate costly yet critical defence equipment.
Launched in 2010 in response to the global financial crisis, it not only aims to eradicate purchases of duplicate or overlapping materiel, but also to foster integration and make the continent more powerful than the sum of its parts.
More defence cooperation is seen as a necessity in Europe, in many cases trumping concerns about national security or lost influence and fostering dreams of a common army seven decades after World War Two. But practical, organisational and financial considerations are giving some officials pause for thought.
Defence experts both in Europe and its ally the United States fear it may become an excuse for further defence spending cuts, in a continent that, since the demise of the Soviet Union, no longer sees itself as facing an imminent military threat.
There are questions over how much money it saves, and the biggest Western military powers - the United States, Britain and France - balk at picking up the bill for the biggest, most expensive items while providing a security shield for smaller nations.
"What pooling and sharing should not be is a way for member states to say 'Oh, now we can do with less defence budget'," said Rini Goos, deputy chief executive of the European Defence Agency, the EU's defence arm, which advocates the policy.
"We have to stop the rot in that sense," he told Reuters.
ALL EUROPEAN TOGETHER
In the clear skies above Zaragoza, where the 14-day military exercise continues this week, everything was designed to portray a picture of seamless pan-European cooperation.
Aircraft from Belgium, the Czech Republic, France, Germany, Italy, the Netherlands, Spain and Sweden took part, with a team of mechanics from all the countries working on one another's planes, all conversing in English.
French Lieutenant-Colonel Magalie Allard, the maintenance commander at the exercise, said the countries were even pooling spare parts and their tools.
In many respects, that sort of cooperation is nothing new. France and Belgium already have joint pilot training, the Belgian and Dutch navies have all but merged and the two countries are looking to establish a joint helicopter command.
France and Britain have agreed to set up a joint military force, share equipment and nuclear missile research centres.
But in a sign of the problems that can befall even the best attempts at cooperation, a plane carrying military chiefs from Brussels to the event was delayed for four hours by an air traffic controllers' strike in France, and a paratrooper drop was cancelled due to an engine problem with a Belgian C-130.
Still, defence chiefs, especially those from smaller nations, see great scope in "pooling and sharing", or what NATO, with its own desire for greater multinational cooperation within the alliance, refers to as "smart defence".
"I am not sure we will get to this European army one day because some big nations have their own agendas, but for smaller nations, definitely," said Colonel Frederik Vansina, chief of staff of Belgium's air force. "I see a Benelux army maybe in a few decades ahead. Why not?"
The idea of a European army, first bandied around in the 1950s, remains a distant dream, but there is an ever-increasing level of cooperation among EU nations, as witnessed in Libya and alongside U.S. forces in Afghanistan and Iraq.
"Pooling and sharing" has no overarching end goal, consisting rather of initiatives and projects identified by EU members, such as boosting the air-to-air refuelling capacity found wanting during the 2011 Libya campaign.
Three big European aerospace companies called on Europe on Sunday to launch its own independent military drone programme, a sector dominated by U.S. and Israeli companies.
The concern for allies such as the United States, which believes European defence cuts have already gone too far, is that cooperation becomes a sticking plaster for European military weakness that means European states avoid reversing defence spending cuts once their economies recover.
Countries that like the idea of sharing more resources are also concerned about what would happen if there were a national emergency - would they have access to the pooled equipment?
And what happens to the vast number of jobs in the military and defence industry as the level of cooperation increases? Cuts to the Spanish and Greek militaries risk swelling their already vast ranks of youth unemployed.
"Countries remain scared to pool capabilities because they don't want to lose control and they don't like the idea of having to sacrifice jobs," said Clara Marina O'Donnell, senior research fellow at the Centre for European Reform, a think-tank.
And even when the logic of eight or 10 European countries - some with shared borders and histories - coming together seems incontrovertible, there is evidence that the financial gain, one of the main arguments in favour, is not always there.
The European Defence Agency (EDA) said it had no estimate of savings from pooling and sharing so far.
EDA Chief Executive Claude-France Arnould said in November EU members could save up to two billion euros over 15 years if they boost cooperation on military satellite communications and up to a further 500 million euros a year by standardising certification of military aircraft and other equipment.
NATO has no estimate of savings to date, but expects "significant savings" in years to come from reducing duplication in managing new equipment programmes, a NATO official said.
O'Donnell cites EU officials as saying that combined EU defence spending has fallen from around 200 billion euros in 2008 to 170 billion euros last year, a vast decline.
But savings from cooperative defence projects over the same period were only 200 or 300 million euros, she said, due to high initial costs.
"So we are looking at an order of magnitude that is 100 times smaller," she said, underlining that while the goal may be sound, the benefits of the policy may be far less than hoped, especially when it comes to the money saved in the short term.
(Editing by Philippa Fletcher)