A Step-By-Step Strategy for a European Defence Industry

Alberto Bueno

7 mins - 22 de Marzo de 2024, 07:00

The European Union continues its unique political-institutional metamorphosis to foster a European policy and industry. The publication of the new European Defence Industrial Strategy (EDIS) adds an important milestone to the progress of the last decade, an accelerated need, to strengthen the European Defence Technological and Industrial Base (EDTIB) – then, revamp it, to support national defence industries – in the wake of Russia’s invasion of Ukraine. EDIS comes at a time of great uncertainty in the war, where doubts about allied commitment to Kyiv are due, among other reasons, to serious shortcomings in the European military industrial complex. However, despite the direct impact on the EU’s institutional architecture of the EDIS approach, this top-level policy document is marked by a cautious, incremental ambition.
The EDIS fits within the paradigm shift that the EU is trying to articulate with respect to (common) defence policy: a genuine contribution to these public policies that constitutes more than the mere aggregate of national wills. A shift that seeks to position the EU as a global actor by equipping itself with mechanisms that allow it to respond to structural deficits, such as supply chain security or the heterogeneity of programmes and actions, something that is identified both by the expert community and by the strategy itself. Thus, the concept of readiness emerges as key in the EDIS.

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The strategy’s overall aim is to strengthen European industry(ies) –  the brackets are ours – in three objectives for the 2030 horizon: (i) the value of intra-EU defence trade should represent at least 35% of the value of the EU defence market; (ii) at least 50% of Member States’ defence procurement budget should come from EDTIB (60% in 2035) – for example, currently around 80% of defence procurement comes from outside the EU; and (iii) Member States must jointly procure at least 40% of defence equipment – “buy in Europe” and “made in Europe”, but something more: it also wants to homogenise procedures, harmonise lines of action and eliminate duplication. It certainly takes up von der Leyen’s idea of “spending more, better, and European”.

Analysts such as Christian Villanueva have criticised the quantitative nature of these targets, which avoid fixing the adequacy of platforms, systems or weapons; that is, the EDIS does not raise any questions about the quality of these as long as they are produced in Europe. Sharing the relevance and wisdom of the observation, it should be stressed that quantitative goals are easier to sell, both internally – the governments themselves – and externally – societies – because they are tangible and measurable – and in this sense, the trite 2% of GDP in defence spending is worthwhile... by its virtue it carries the penitence.

But I would highlight another aspect of these objectives: they perfectly reflect the spirit of the EDIS, as a gradual path, with mechanisms already explored – and which are offering satisfactory results, at least in terms of institutional unblocking – and a reasonable timeframe in the medium term. Moreover, not entering into the assessment of the timeliness of the systems, platforms or weapons makes it easier for each country to abide by the obligatory margin of sovereign decision. This gradualism makes it possible to tempt the will of European states. 

The incremental path can also be seen in these mechanisms: financial instruments to promote collective operations, such as the European Defence Industry Reinforcement through Common Procurement (EDIRPA) or the Ammunition Production Support Act (ASAP), and industrial cooperation frameworks, such as the Coordinated Annual Defence Review (CARD), and Permanent Structured Cooperation (PESCO), are continuing. In this logic, EDIS accompanies the new European Defence Industry Programme (EDIP), through which the Commission commits up to an additional €1.5 billion. Sincerely a modest figure and certainly a staggered increase, which would leave the EU’s share of all defence spending in its territory at between one and two per cent, but which again marks out where the ultimate responsibility lies: with the European partners.

Indeed, this is an essential consideration: defence is an intergovernmental policy area. The main thrust of EDIS will necessarily come from the member states, which will decide on the degree to which targets are met. From there, the questions already present about industrial preferences, key sectors for the EU, companies in niche sectors or so-called ‘national champions’ remain; not surprisingly, the EDIS expressly points to SMEs and companies in disruptive technology sectors as one of the main recipients of this effort. 

Furthermore, the aim is to induce cooperation through these collective acquisitions, although this does not prevent each state from retaining control of the capabilities. A key element in its progress will therefore be Franco-German collaboration, which is not at its best – if it ever was – or contributions from Italy or Spain. But also, the strength of Poland and other Eastern European countries, which are very aware of what markets such as the United States and South Korea have to offer. At the same time, states such as Estonia, Poland, and France are calling for more commitment and new formulas, such as the issuance of “Eurobonds” for defence. Another suggested avenue is that the European Investment Bank should also grant loans for the military industry and not only for dual-use goods, as has been the case to date.

Again, these discussions obey a gradualist reading, which aims to change the EU’s inertia slowly while maintaining the balances between 27 wills. What we are seeing is the pure politicisation of a policy area that seemed totally removed from it. That is the Copernican twist in the matter. 

A final element of EDIS analysis has to do with foreign relations, and specifically with the US and Ukraine. On the former, there are only a few indirect comments via transatlantic relations; it seems sensible, given that this is a European strategy exploring its own path. However, it should not be forgotten that NATO, in which the US is a nuclear player, is central to the defence planning of European states. The US also launched its own defence industrial strategy last January, focusing on four areas: (I) supply chains; (II) manpower; (III) procurement policy; and (IV) the US economy. Although the first of these areas is not raised, it is primarily the first of these that teaches spaces for collaboration.

As for Ukraine, an economy of and at war with a strong military industry, EDIS offers concrete projects, such as an EU-Ukraine defence industry forum by 2024, an innovation office in Kyiv and Ukraine’s participation in EU defence industry programmes. Surely these partnerships will be the way to ‘integrate’ the country into the club without, in fact, doing so. 

Finally, there is no mention of strategic autonomy in EDIS. This is another wise move. There is nothing better than moving away from grandiloquent political and strategic concepts that are ambiguous, to say the least, in order to implement the strategy. In short, the EDIS is a milestone in itself, even if its articulation is gradual, long-term and does not seek to break with established institutional balances and dynamics: because the sense of urgency of its implementation will be determined by the will and interests of the 27 and their respective national markets.

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