The article focuses on the fundamental restructuring of the Western Eu
ropean arms industry in the light of two sets of theories, neofunction
alism and intergovernmental institutionalism. The structure of the arm
s industry in Western Europe is changing rapidly as previously distinc
t national industries are merging and developing multiple patterns of
cooperation. At the same time the costs of development and production
of new weapons systems have skyrocketed, while defence budgets have de
creased. This process forces European states to cooperate in developme
nt and procurement of new defence equipment. The article discusses the
se trends and the struggle between the EC Commission and the member st
ates about political control of the arms industry. It concludes that,
for several reasons, in the foreseeable future the member states will
probably prefer to keep control of the arms industry in a loose, and s
trictly intergovernmental, organization. Thus the planned common marke
t for defence equipment and the EC internal market will continue to be
separated, and the influence of the Commission will be minimalized.