ÐÓ°ÉÔ­´´

A series of battles is expected this year over the European Commission’s
programme for scientific research. The outcome may have a far-reaching effect
on the future of public and private support for research and development
in Europe.

The Commission’s budget for research amounts to only 5 per cent of total
R&D spending in countries within the European Community. But in recent
years the goal of the programme has been to revive and promote Europe’s
high-tech industries. Now that goal is being questioned. The doubts include
whether it is proper for public spending to pay for research in the private
sector, and whether industry needs this type of support at all.

The member states of the Community have always answered these questions
according to their own priorities. But the 12 are becoming a single market
and a single regulatory unit for the products of science-based industry.
Technology companies are becoming European multinationals rather than national
champions. ÐÓ°ÉÔ­´´s are finding that they can move anywhere in Europe.
So research priorities agreed in Brussels both influence and react to those
set by companies and countries.

The Commission plans to spend 5.7 billion Ecus ( £4 billion) on
science in the five years from 1990 to 1994, under the Framework programme.
But this is not a programme carefully built to reflect consensus on the
purpose of European research. It is more a collection of projects left over
from past, isolated research initiatives.

The mood now is to rationalise Framework. Hence the fight brewing in
the Community over the goals of research. The question now is how much member
states are willing to change the programme, and in what direction.

The Community started in 1957 as the European Coal and Steel Community,
the European Economic Community, and Euratom. The first two funded some
research. But it was Euratom that embodied the 1950s ideal of better living
through science.

The goal of Euratom was European political union through the control
of technology. Its founders assumed that nuclear power would be the basis
of industrial strength. So the European Commission would control all fissile
material, its laboratories would design and patent reactors, and its member
states, dependent on the Community for energy, would find political disunity
impossible.

The dream never materialised. But Euratom bequeathed to the Community
four laboratories, now collectively called the Joint Research Centre, which
have attracted criticism over their slow progress towards finding new roles
outside the nuclear arena. Euratom also initiated nuclear research programmes
that led to the Joint European Torus at Culham near Oxford – the world’s
most successful fusion project. In all, fission and fusion still account
for almost 12 per cent of Framework’s budget.

During the 1970s, priorities in Brussels switched. After the first big
UN environment conference in Stockholm in 1972, the Commission started a
programme of environmental research. It also set up a unit to predict trends
in science and technology to guide Community policy. Envisaged as a fully
fledged European institution, the unit instead became a small project in
the Commission’s new research directorate. As a result, there is no official,
independent body evaluating Community research priorities.

In 1984, the industry commissioner, Etienne Davignon, pulled together
all of these initiatives, along with scientific cooperation with the Third
World and medical research projects, and called it the first Framework programme.
Davignon also set another objective – to rescue Europe’s technology-based
industries, especially the telecommunications and information technology
sectors. His method was to set up a programme of pre-competitive industrial
research which would rely on international collaboration.

Davignon’s strategy stemmed from the near panic that gripped Europe
at the start of the 1980s, as Japan emerged as world leader in many advanced
technologies and European companies seemed doomed to third place behind
the US and Japan.

The accepted reason for Europe’s failings was its division into national
markets. Every country had its own champions in different industrial sectors
selling to domestic markets. Tariff barriers protected these companies from
competition with firms in other countries so there was little incentive
to innovate or market aggressively. The problem was diagnosed as ‘Eurosclerosis’.

The cure was to turn protected national companies into aggressive multinationals
which could compete internationally from a pan-European base. This was when
the Common Market, previously a dead letter in the constitution of the European
Economic Community, started to attract increasing interest, and the plan
was hatched to construct a single European market by 1993.

Research was again drafted in to serve these political ends. It was
seen as the means to industrial recovery and the single market. That meant
that Community research funds would have to be targeted first to encourage
companies to operate on a European scale, and secondly to boost the R&D
base that was seen to have be lacking after years of protectionism.

There were, and still are, problems with this approach. To qualify for
funds projects have to involve researchers from more than one Community
country. Industrial laboratories thus have to collaborate with competitors
– a notion that is anathema to most companies because they lose exclusive
rights to the resulting products. Believers in the free market also dislike
such collusion. It smacks of unfair state aid to the private sector.

Davignon’s answer, which still governs the Framework programme, was
to concentrate funding on ‘pre-competitive’ research, on fundamental subjects
so remote from marketable products that competing companies could profit
by pooling expertise without giving away trade secrets. One example, which
few people criticise, is collaboration to set common standards in, for example,
communications equipment.

Margaret Sharp, of the Science Policy Research Unit at the University
of Sussex, says the approach worked, because the cosseted national champions
of the 1970s did indeed merge and ally, and learnt to compete in a world
market during the 1980s.

In practice, however, the single European market itself has brought
its own problems. Some firms find it difficult to work with a European rival
that shares the same customers. So, the German computer firm Siemens-Nixdorf
increasingly pools research effort with IBM of the US, rather than, say,
the French computer firm Bull. Recently, Bull has also set up an alliance
with IBM. In theory, such intercontinental ventures allow partners to sell
new products in discrete geographical markets. Framework officials would
prefer to fund collaboration between Bull and Siemens, but they have recently
reluctantly allowed European subsidiaries of foreign companies, including
IBM, into some programmes.

Critics of Framework, such as Glyn Ford, a British MEP and influential
member of the European Parliament’s research committee, say pre-competitive
is a euphemism for non-competitive. Ford says Framework’s showcase projects,
such as the European research programme in information technology (ESPRIT),
consists of projects the companies would not bother doing if the Commission
were not paying half the cost. He argues that competition should be left
to take its course and that Commission funding for industrial R&D should
be limited to basic research, chiefly to promote contacts between companies.

Some in industry agree with Ford. Klaus Knapp of Siemens says that European
firms would welcome help, not with research, but in bridging the gap from
research to market. Knapp says that if the Commission wants to boost Europe’s
computer industry, it should concentrate on ventures which companies are
reluctant to pursue. Take, for example, a silicon foundry to make chips.
In purely economic terms European companies do not need one because they
can go abroad for chips, says Knapp. And the financial risks weigh against
commercial development of a foundry. But since the Community wants companies
to get their chips in Europe, it should shoulder the risk.

Other industrialists believe overreliance on basic research is an obstacle.
Akio Morita, chairman of the Japanese giant Sony, said recently that too
much emphasis on basic research can keep a company from being competitive.
In the same week, Eric Spitz of the French computer firm Thomson said ‘you
don’t need too much R&D to make good industry’ (This Week, 15 February).

On the other hand, Carlo de Benedetti, head of the Italian computer
firm Olivetti, says pan-European research programmes and incentives for
alliances among European companies should still be the basis of Community
policy. Geoffrey Allen, former research director of the British chemical
firm Unlever, says Brussels should spend more on ‘networks’, to promote
links between academia and industry, and within industry, to improve the
flow of information about developments and new products.

A recent paper from the staff of the research commissioner, Filippo
Pandolfi, agrees with Knapp that research is not holding Europe back. It
cites numerous statistics to show that compared to the US, Europe is not
lacking in R&D or innovation. ‘The problem is rather a weak capacity
to integrate R&D and innovation in a coherent strategy to direct and
profit’ from research.

It is not R&D that directs industrial strategy, says Pandolfi, but
the reverse. This would imply that industries should set research strategies,
not Commission bureaucrats who largely decide which industrial research
Brussels will fund. Pandolfi wants more of such ‘bottom-up’ direction from
industry in the next Framework.

Pandolfi’s paper comes down strongly in favour of ‘targeted projects’
directed at helping specific industries get products off the drawing board.
But it also concludes that the Community should keep investing in its existing
research programme. The implicit admission seems to be that you cannot help
European companies compete just by funding pre-competitive R&D, but
that existing programmes would be hard to turn off.

To an extent, the inertia in the Framework programme is understandable.
We might not start a nuclear fusion programme if we were starting from scratch.
But how do you curtail existing research into areas such as fusion, which
has political backing and has already cost 4.5 billion Ecus?

If the Commission wants to keep what it has and to invest in targeted
projects, it will need a big budget increase. Enter Jacques Delors, the
president of the Commission. In his proposals for the next five years of
Commission spending, Delors called for the research budget to increase from
its current 4 per cent to 6 per cent of an increased total budget (This
Week, 22 February).

Like Pandolfi, Delors wants a lot of that increase to go into targeted
projects to increase innovation in specific sectors, such as the textiles,
car, and computer industries. Britain’s Prime Minister, John Major, opposes
both the increase and the ‘sectoral’ approach. France backs Delors. Battle
will be joined when the British take over the chair of the Council of Ministers
later this year.

The opposition of member states is only one part of the feud, however.
They will be joined by the European Parliament, which after the amendments
to the Community treaty adopted at the Maastricht summit last December,
will have power to veto decisions over Framework. Also as a result of Maastricht,
the treaty’s previous injunction to do research ‘to strengthen the scientific
and technological basis of European industry’ is now followed by the phrase
‘while promoting all the research activities deemed necessary by virtue’
of the rest of the treaty. This, says Ford, includes health and environmental
research, and work on the social dimension of new technology.

Ford and other MEPs want a new emphasis for Framework. Ford wants more
research into clean transport, novel energy supplies, and the implications
of ‘socially sensitive products’ of biotechnology. The Parliament is likely
to continue to demand a significant shift in priorities when it considers
the next round of Framework proposals this year. It also wants control of
the research evaluation unit now in the Commission, to decide when to turn
unproductive programmes off. The Parliament has a record of opposition to
nuclear fusion.

The lines are drawn. The battles later this year could resolve the question
of how public authorities in Europe will fund industrial research in future,
or whether they will even continue to try.