ED Position Paper: EWG 18 - 30 Strengthen European defence – some perspectives

 EWG 18 - 30

Strengthen European defence – some perspectives 

30 March 2023

On 18 May 2022, the European Commission published a Communication analysing, at the request of the Council, deficits in defence investment and possible remedies to overcome them. This document clearly highlights the need for Europeans to better work together, especially at a time when military expenditures will increase sharply in response to the war in Ukraine and draws some perspectives.

The European Commission stresses the risk that, similarly to periods of financial scarcity paradoxically, this abundance of resources leads to investment choices contradictory to the strengthening of the industrial and technological defence base at the European scale. Due to a feeling of urgency, States may indeed be tempted to buy off the shelf in the United States. Due to a national reflex, they can also seek to develop solutions on their domestic territory while being already available in another European country. In both cases, the additional budget could therefore lead to a weakening of the European defence industry, whereas it constitutes a central element for strengthening European strategic autonomy.

There are numerous examples of technological and industrial European successes, but with failures in the procurement where American weapons were finally preferred to the European ones. As an example, regarding MLRS/HIMARS, “strangely for a continent that did come together to develop and manufacture the Meteor BVRAAM, the political will to make the same type of decision over a system such as an MLRS is sadly lacking today”.

This is in line with the fact that European States must rely on the United States for their security. As stated by the Swedish Defence Minister, priority should be given to the security provided by NATO with the nuclear and conventional defence:

The Russian aggression against Ukraine has incited NATO allies to reinforce their military capabilities towards the deployment of a pool of 300 000 European high readiness troops. “Such a European pillar within NATO would greatly benefit from an effective EU contribution, notably through its European Defence Fund” In this respect, “the question could eventually be asked whether it still makes sense that SACEUR always is an American officer”.. This fundamental question underlines in fact that firstly, this proposal concerns only the conventional component of NATO and, secondly, Europeans must have the military capability to plan, command and operate by themselves in case of absence of Americans, in the spirit of the Saint Malo declaration.

In this context, the European Commission wishes to position itself as the coordinator and catalyst in the implementation of the effort to recapitalise armed forces within the European Union. Without such coordination, "short-term acquisitions will have a longer-term impact leading to weakened market strength and missed opportunities for decades to come." It therefore proposed a set of new instruments:

  • A Defence Joint Procurement Task Force for short-term purchases

  • The creation of European Defence Capability Consortia for the joint purchase of solutions developed in cooperation

  • A project for a joint European defence programming and procurement function

  • All accompanied by financial incentives for investment and innovation (including VAT exemption)

The European Commission is thus seeking to go beyond the proven limits of intergovernmental coordination of capability efforts. While budget cuts following the financial crisis of 2007-2009 have strongly affected military investment, States preferred focusing on national rather than common effort. Thus, the share of cooperative purchases has fallen from 20% in 2004 to just 11% today. Action by the European Commission is welcomed in order to overcome centrifugal tendencies and ensure the proper use of public funds while strengthening European defence.

However, does this imperative justify the proliferation of new tools in order to meet this challenge? There could be a strong temptation to develop a community approach to defence investment. Admittedly, the Communication of 18 May 2022 does not go that far. However, it bears the seeds of the European Commission's desire to take matters into its own hands – and perhaps to replace States. On closer inspection, the Commission's approach gathers all the dimensions of a defence industrial policy: group purchases in the short term but also in the longer term, aid for innovation, the mapping of industrial base to manage its resources and skills... All of this is very similar to the missions of a defence acquisition agency.

A stronger and more effective European defence depends above all on making good use of existing tools. In fact, there are very good ones that are far from being exploited to their full potential. Rather than seeking to create new instruments, it is important to take full advantage of existing ones. The European Commission is already doing this partly in its Communication by highlighting the role that the European Defence Agency (EDA) must play, but the mobilisation should go further.

Faced with the urgency and in order to limit centrifugal tendencies, it is relevant to use the toolbox rather than to seek and build new Community instruments, which would require time to acquire the appropriate maturity and could, moreover, come into conflict with the competences of States in the field of defence. Three approaches are relevant.

Firstly, the “toolbox” available goes beyond the scope of the European Commission. The latter has played a significant role since 2016 in favour of the competitiveness of the defence industrial and technological base through the European Defence Fund and dual-use policies implemented by DG DEFIS. However, this dimension covers only part of the required skills.

In order to support innovation, the EDA has a major role and undeniable skills built up since 2003. It also has the advantage of combining its own resources and hosting seconded national experts, because it remains an intergovernmental agency while being integrated into the Common Security and Defence Policy (CSDP). As a result, it is naturally the place for consolidating national and collective approaches at European level to prepare future capabilities. Strengthening the EDA is a logical and effective choice to synchronise on the innovation pillar.

Similarly, acquiring skills required to implement programmes is a long and complicated process regarding complex systems such as weapons. The European Commission experienced this in a related field, space, two decades ago. Faced with the difficulty of mastering adequate skills, it finally agreed to rely on the European Space Agency (ESA). Similarly, it is important for the European Commission to mobilise OCCAr (Organization for Joint Armament Cooperation) to run programmes. Admittedly, OCCAr is an intergovernmental agency, which is not inside the Community perimeter and which only brings together a small number of European countries. However, ESA’s intergovernmental character has not prevented it from effectively supporting European space policy.

OCCAr, with its innovative principles, is an excellent place for the management of cooperation programmes, as the French Court of Auditors has stated. The current programmes managed by OCCAr represent about 100 billion euros. The acquisition of equipment developed within the OCCAr should be encouraged in the participating states, whether they are full members or associates through a particular programme.

Secondly, it is not always necessary to use supranational instruments to conduct capability investments. The European Commission must also consider delegating the management of projects to one or more countries once convergence between States has taken place. It is not necessary to build new organisations when the countries can agree to manage among themselves, without a dedicated acquisition agency, the purchase and supply of equipment.

The European Commission must therefore consider the possibility of delegating the project management of projects it supports to a national acquisition agency. For instance, France provided assistance to Belgium within the framework of CaMo (Capacité Motorisée) programme when the latter accepted the Scorpion offer to be equipped with armoured vehicles. The DGA acted as the acquisition agency on behalf of Belgian armed forces. Also several other member States are sharing resources in a similar manner. For the short term this solution therefore appears more relevant, through a user club, than the creation of an additional institutional layer, being either intergovernmental or community.

It is also possible to go through this ad hoc cooperation not only for purchases but also for the management of programmes or in-service support. Meteor missile programme validates this approach for the development of a new capability. Six European countries trusted one of them, in this case the United Kingdom, to take over the management of this programme without creating an ad hoc agency. The success of this programme shows that such an approach is feasible and effective if it meets the expectations of States. It should therefore not be overlooked as a possible approach.

Thirdly, before launching programs, it is important to ensure a real convergence of operational needs between armies. There is no point in activating, new or existing, instruments without consultation between the end-users who are armed forces. It is important to overcome past shortcomings that can lead to a lack of correlation between operational and industrial logics.

In line with the Strategic Compass proposals, it is important that capability efforts fully meet the operational needs of armed forces. Consultation with the European Union Military Staff is a key element for the success of the military ramp-up in Europe.

In our view, the three proposed approaches constitute the foundations for a successful implementation of the European Commission's initiative. It is important to capitalise on existing instruments to act quickly and effectively while benefiting from the impulses managed by the Commission itself.

In the longer term, we can foresee a gradual evolution towards joint procurement for the benefit of the whole EU. Such a development, compatible with the financing of defence equipment from national budgets, raises the question of the juste retour. The principle of juste retour, which introduces obligations for compensation, industrial participation and other instruments designed to support national interests, remains a requirement of the national parliaments that vote on defence budgets. Further evolution of this requirement is necessary to ensure our forces get the best capabilities, in time, for the best price and with reasonable benefits for the economy of our Member States. Our working group intends to develop one or more practical proposals for this purpose.

The principles of OCCAr, by providing for the globalisation of the juste retour among the participating states (and not programme by programme), tend to mitigate its constraining effects, while maintaining the interest for European cooperation; Going one step further away from the juste retour would remain difficult under current conditions and could probably only be envisaged in the context of a federal approach to an EU defence budget voted by the European Parliament. The proposal of Chancellor Scholz to develop the OCCAr on the one hand, and to hold a regular Council of Defence Ministers on the other, deserves attention. Such a Council of Ministers, which in a first step can be done within the framework of the existing Treaties, would be responsible for EU defence issues and in particular for the preparation and implementation of such a budget.

This would lead to common procurement of defence equipment owned by EU, as specified in the provisions of Article 42.1 of the TEU: “[The Common Security and Defence Policy] shall provide the Union with an operational capacity drawing on civilian and military assets”. These common defence assets – procured, managed and maintained within an appropriate European body – would remain under the control of Member States according to the provisions of the European Treaties defining the CSDP. In our view this article should be invoked when equipment can be obtained more effectively in this way or when it leads to better forces. As practical example we suggest to use this article to equip the future European Rapid Deployment Capability (RDC). When several nations contribute their equipment to the RDC, this will lead to a complicated logistic structure and use of non-interoperable systems. 

OCCAr, for the sake of efficiency, non-duplication of structures and simply for the sake of urgency, could be a natural instrument for joint procurement, financed by the Member States, or common procurement, financed by the EU.

These two developments seem to us consistent with the proposal of the Commission of a regulation of the European Parliament and of the Council on establishing the European defence industry Reinforcement through common Procurement Act.

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