EU pushes for stronger defence and joint weapons purchases

The European Commission has unveiled its first-ever defence strategy and investment programme — in a bid to reduce its dependence on the US and in response to the ongoing war in Ukraine.

EU commissioner for the internal market Thierry Breton said during a press conference on Tuesday (5 March) that increasing Europe’s defence industrial base is “an existential importance” — a sentiment echoed by others in recent days.

“Two years ago … I said Europe is in danger. I’m sorry, I was right. Europe was in danger. And it’s still more in danger,” EU foreign affairs chief Josep Borrell said. “Peace is not more a given.”

Following Russia’s full invasion of Ukraine in February 2022 and amid concerns about the potential return of Donald Trump to the White House, Europe’s defence capabilities have gained more attention and are now expected to feature prominently in electoral campaigns.

“We need to get that transatlantic balance right irrespective of electoral dynamics in the US. We must take more responsibility for our own security,” EU commission vice president Margrethe Vestager said.

The much-awaited European Defence Industrial Strategy (EDIS) aims to boost Europe’s defence capabilities by enhancing cohesion among member states, closely coordinating with Ukraine and Nato.

While defence remains predominately a competence of EU member states, the EU strategy has focused its leverage on the internal market.

Covid-style ‘joint procurement’

Copying the Covid-19 vaccine strategy, the new proposal aims to increase military equipment stocks through joint programming and procurement. For that, the strategy sets a goal to collectively procure a minimum of 40-percent of military equipment by 2030.

“We need a more coherent off-take market for our industry through more EU and Nato joint procurement that allows our industry to maintain the manufacturing capacity needed for our safety and security,” said centre-right German MEP Christian Ehler.

The fragmented nature of the market, with defence capabilities concentrated in a few member states, creates mistrust and prevents fair competition between industry players, Vestager said, pointing to redundancies, disorganisation and inefficient value for taxpayers’ money.

Between February 2022 and June 2023, member states spent about €100bn on defence purchases. But nearly 80 percent of that money was spent outside the European Union, mainly purchasing military equipment from the US.

“This is no longer sustainable, if it ever was,” Vestager said.

The commission has proposed that at least 50 percent of their defence procurement will have to be done within the EU by 2030 — and 60 percent by 2035.

But importing military equipment from other countries is still necessary because the demands have increased since the war in Ukraine, Borrell said, noting that about 40 percent of domestic defence production is exported outside the EU.

“It is no longer a matter of looking at the stocks, but [being] able to [have] a continuous flow of production,” he also said.

Russian assets and €1.5bn in EU funds

After decades of low investment, lack of financing has been identified as one of the main challenges for the industry in recent years.

The new strategy is calling for a review of the lending policy of the European Investment Bank (EIB) whose current rules do not allow financing weapons, ammunition and military infrastructure.

It also wants to promote the defence industry across the financial sector and mobilise €1.5bn of the EU budget over the period 2025-2027.

This comes after Breton proposed to allocate €100bn in new joint debt for financing defence investments — an idea opposed by so-called ‘frugal countries’, such as the Netherlands.

With this €1.5bn programme, the commission aims to support countries in the procurement phase, help companies increase their production capacity, and keep enhancing Ukraine’s defence capacities. Plus, having dedicated funding for SMEs manufacturing defence technologies.

“We have decided to kick up a gear,” said Breton.”This isn’t rocket science… but we have seen that this sort of policy can work.”

In addition, the commission has suggested using the windfall profits of frozen Russian assets to jointly purchase military equipment for Ukraine — a proposal first pitched by EU commission president Ursula von der Leyen last week.

“If we agree that these assets could be used in order to support Ukraine’s reconstructions, they could also be used to avoid Ukraine’s destruction by increasing their defence capability,” Borrell said.

This new proposal, which would require unanimous agreement, is expected to see possible discord among EU member states.

Germany, for example, is likely to oppose this initiative, Judy Dempsey, a researcher from the think tank Carnegie Europe, told EUobserver last week.

The proposal will now be discussed among EU countries, which will need to give the green light to the regulation together with the European Parliament.

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