Commission chief: EU’s defence strategy ‘incomplete’ without Ukraine

The EU should take Ukraine’s military needs into account as it designs Europe’s future defence industry strategy, European Commission President Ursula von der Leyen said on Thursday (30 November).

“Our strategy can only be complete if it also takes into account Ukraine’s needs and Ukraine’s industrial capacity,” von der Leyen said in her speech at the European Defence Agency’s (EDA) annual forum in Brussels.

Von der Leyen said Ukraine should be integrated into EU defence programmes to help cater to its needs in its war against the Russian invasion.

“The first step to achieve this is to involve Ukraine in the consultation process of the Industrial Strategy,” von der Leyen said.

“This should lead to integrating Ukraine in some of our defence programmes, with the agreement of the European Parliament and Council, where necessary.”

Her comments come as the European Commission looks to propose its European Defence Industry Programme early next year, which would also look at ways to fund the industry.

They also come as the EU’s executive is consulting the defence industry and member states to shape its European defence industry strategy (EDIS) to make production capacity more flexible and resilient via cooperation to produce urgently needed capacities, as Euractiv reported.

That said, cooperation remains the exception, rather than the rule. Brussels has been scrambling to get European defence companies to ramp up their production to cope with the new demands sparked by the war.

Von der Leyen said that to her “the most urgent would be to look into new possibilities for our defence cooperation under the current Treaties,” which prohibit the EU budget from purchasing arms she added.

Record spending

The push for more consolidation of the bloc’s industry strategy comes as EU defence spending reached a record €240 billion last year in the face of Russia’s war on Ukraine, according to least EDA numbers from Thursday (30 November).

The figure represented an overall increase of 6% from 2021 as the EU’s 27 member states ratcheted up their purchases of new hardware.

Six countries had increased their spending by over 10%, with NATO applicant Sweden splashing over 30% more.

“Our armed forces must be ready for a much more demanding era,” EU’s chief diplomat Josep Borrell, who heads the EDA, said. “Adjusting to these new realities first and foremost means investing more in defence,” he added.

But Borrell warned that despite the increases the bloc still faced “key capability gaps” and continues to “lag behind other global players”.

Planning, shopping and owning together

The first priority is “strategic planning function” von der Leyen said, calling for “more joint programming”, that “ties together” national and EU-level planning to give “predictability to the industry and reduce fragmentation on the demand and supply sides”.

Long-term, that could help in developing flagship capabilities and projects of common interest that are “European by nature” in cyber, strategic transportation, air defence, and satellites for instance, “on which we must focus our efforts and resources”.

To secure aggregation of demand, the EU must look into “how the United States create stable demand for industry, lower costs and facilitate export transactions through the Foreign Military Sales programme,” she said, referring to an idea mentioned in the consultation.

In his speech at the forum, European Council President Charles Michel also made a point to call on member states to better cooperate in securing the value chain.

“Only coordinated European action will ensure that we have access to critical raw materials to increase domestic military production,” he said, emphasising the need to secure much-needed graphite, which China produces.

€600 billion

Giving access to public and private financing opportunities is part of the President’s ideas. 

“We must explore all possible ways to reward, incentivise, and compensate costs of cooperation and industrial competitiveness,” in the strategy “by suggesting new funding possibilities”, von der Leyen said in reference to access to public and private financing opportunities.

EU funds, so the idea goes, could incentivise from research to joint ownership.

It could also involve a VAT exemption not only for joint procurement but also for “joint ownership” of defence capabilities, new rules for the European Investment Bank (EIB), and giving defence special attention in the EU’s debt rules.

For that, the EU executive will propose a European Defence Industry Programme (EDIP) “early next year” based on the Act in Support of Ammunition Production (ASAP), and the Joint Procurement Act (EDIRPA) as a flagship measure in the next EU budget (2028-2035), that “must be adequately funded”.

Michel said that Europeans “should also consider the idea of European defence bonds … to strengthen our technological and industrial base. These EU bonds could emerge as a new asset class, including for retail investors.”

He also said that EU countries “can invest at least €600 billion in the next 10 years”, calling on them to not reduce budgets.

According to him, if in the next 10 years, member states would keep investing as much as they did in 2023, they would then already spend €600 billion on defence.

“With €600 billion, we can do great things; this could be a watershed moment,” he added. 

Simpler rules

Another goal is “simpler and more efficient rules”, von der Leyen said.

“We need an updated regulatory framework, to give the industry and member states predictability and coherence on a continental scale,” she said – but did not give additional details.

To “better integrate civilian technologies in our defence industrial base” will be essential too, von der Leyen said, adding the Commission will prepare a white paper on dual use.

She used military mobility as an example. Under this scheme, the EU is helping member states to reinforce civilian transportation lanes to make them work for military use, as well as red tape.

She also mentioned the next secured connectivity providing European satellite constellation IRIS2 and a European cyber shield.

[Edited by Nathalie Weatherald]

Read more with Euractiv

Russia accuses Bulgaria of malice and stupidity over diplomatic overflight ban

Russia accused Bulgaria of malice and stupidity on Thursday (30 November) for refusing to allow Foreign Minister Sergei Lavrov's plane to fly through its airspace to attend a meeting in Skopje, North Macedonia.