European Defence Fund could be breaching European treaties, legal opinion says

German Bundeswehr Land Operation Exercise takes place in Munster [EPA-EFE/DAVID HECKER]

The European Defence Fund (EDF) moved closer to becoming reality this week in Strasbourg when MEPs gave it the green light. However, some uncertainties persist as a legal expert opinion obtained by EURACTIV suggests that establishing the fund could be violating EU law.

EU lawmakers backed the EDF proposal by 337 votes to 178 against, and 109 abstentions.

The fund was first proposed by the European Commission in November 2016, in an effort to move towards an integrated European security and defence policy. In June, the Commission presented a draft regulation for its establishment, which specified that the EDF is meant to fund research and development projects and support the European defence industry.

Once approved by the Council, according to the plans, the EDF would soon get a funding of €13 billion in the EU’s next long-term budget (MFF). That budget is divided into €4.1 billion for collaborative defence research and €8.9 billion to co-finance collaborative development projects which complement member states’ investment by co-financing the costs for prototype development and the ensuing certification and testing requirements.

This could also include the development of new weapon systems, including the Euro drone, a next-generation fighter jet or a German-French main battle tank. Earlier in November, EU member states had broadly agreed to the project “in its general direction.”

“It is imperative that we improve European defence cooperation to avoid duplication of projects, ensure our strategic autonomy and develop strong industrial flagship programmes. Now it is up to the Council to assume its responsibilities in order to preserve a real community approach during negotiations”, Françoise Grossetête, a spokeswoman for the centre-right EPP group, in European Parliament.

In the run-up to the vote in the plenary, however, the Left party in the Parliament commissioned a legal opinion to assess whether the EDF is compatible with European Union law.

According to Andreas Fischer-Lescano of the University of Bremen, who drafted the legal study, the Lisbon Treaty explicitly prohibits the financing of military or defence projects from the European Union’s common budget.

“This assessment applies irrespective of whether the predominant aim of the EDF is the promotion of defence capabilities or the strategic defence autonomy of the EU – as suggested by the EDF Regulation’s Explanatory Memorandum – or whether one assumes the aim stated in the Regulation of an integrated support of the industry and of RTD measures in the defence sector, or whether a combination of three predominant aims (fostering defence, industry and RTD) is used as a basis,” Lescano reasoned in the legal opinion. His reasoning has also been confirmed by two EU law experts contacted by EURACTIV.

According to the Treaty on European Union (TEU), the EU budget cannot support military operations or the production of military capabilities. For this reason, the appropriate legal basis of the EDF is Article 173 and Article 182 of the Treaty on the Functioning of the European Union (TFEU). Research and development activities in the field of defence can be supported by community money.

“The report clearly shows what we have been denouncing for a long time,” said Left MEP Sabine Lösing before the vote. “Article 41 of the EU Treaty prohibits the financing of defence and military, and thus armaments programmes.”

Commission plays down concerns

Asked by EURACTIV to comment on the legal opinion, EU officials dismissed its concerns.

“The European Defence Fund will provide the financial means and incentives and will strongly encourage the participation of small and medium-sized enterprises in collaborative projects and foster breakthrough innovation solutions,” a Commission spokesperson said.

An EU official close to the file told EURACTIV that “the objective of the EDF is not to support military operations or the production of capabilities. The objective is to support cooperative research and development conducted by the defence industry.”

“The EDF explicitly specifies that it can only cover actions up to the certification of defence products and technologies. As a consequence, the production of defence products will not be funded by EDF. This is the responsibility of the industry and member states,” he continued.

According to the Commission, this would involve investment in state-of-the-art and inter-operable equipment and technology in areas such as meta-materials, encrypted software, drone technology or satellite communication.

“All projects under the Fund must comply with international law and be implemented in accordance with ethical standards,” the Commission spokesperson added.

He stated that legal analysis conducted by the European Parliament, Council and the Commission had all given the fund a clean bill of health.

The fund, together with the EU’s Permanent Structured Cooperation (PESCO) agreement, comes at a time when the EU is aiming to step up its ‘strategic autonomy’ from the US – and could be a first step towards the establishment of a European defence union.

Brussels wants to stop squandering billions of euros through splintered defence policies, rationalise a fragmented approach to buying and developing military equipment and reduce Europe’s heavy reliance on Washington.

“None of our initiatives, including the EDF, change the procurement rules in defence in Europe,” Jorge Domecq, chief executive of the European Defence Agency, told a defence industry summit in Brussels in early December. “We hear a lot about this from our American allies, for example, but it is fake news.”

Daniel Fiott, an analyst at EU Institute for Security Studies (EUISS), said there was a growing realisation that ” if the Europeans don’t have their own capability programs in the next five or 10 years, if they don’t support their own SMEs and innovators, then in five to 10 years time there will be nothing called the European defence industry”.

“That is really important now, because there’s a realisation in many capitals, and especially in institutions, that in the future, the EU might be entangled in other interests – whether that will be US, Russian, Chinese, or elsewhere – which you may not want to be part of,” Fiott said.

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