The future of defence industrial policy in debate

The EU might spend money on defence for the first time ever. MEPs are discussing proposals to support EU countries developing and acquiring military equipment together.

€ 500 million funding

MEPs are considering a proposal to establish a European Defence Industrial Development Programme (EDIDP), under which €500 million would be allocated from the EU budget for 2019-2020 to co-finance the joint development of new defence technologies and support joint equipment purchases. This amount is later expected to be increased to €1 billion a year. A part of the budget will be reserved to encourage cross-border participation of SMEs.

The European Commission has asked the co-legislators to give the proposal a priority treatment with a view of reaching the agreement in early 2018, so that first projects could be financed in 2019.

Doing more with less

The main idea is “doing more with less”. Indeed, the analysis is clear: 26,4 billion of euros are wasted every year due to duplication, overcapacity and barriers to defence procurement. In comparison with the USA, the EU spend 1,3% of GDP for its investment in defence, and the USA, 4% of GDP.

Thus, according to the EU, € 600 million could be saved by EU countries by sharing infantry vehicles, and € 500 million could be saved by having the same ammunitions certification system.

European Defence Industrial Development Programme

Last week, the Industry Committee held a public hearing on the future of defence industrial policy. The hearing focused on the current Commission proposal on the European Defence Industrial Development Programme. This is one of the building blocks of the European Defence Fund and should be the forerunner to programmes in the next MFF (Multiannual Financial Framework) to support defence industrial development and defence research.

The French Rapporteur who is in charge of steering the proposals through Parliament Françoise Grossetête, said “we have to better cooperate on innovative projects and better protect our know-how and technology”. She suggests to support the proposal, with the aim of obtaining military technology that costs less, is more reliable, and reduces dependency on third countries. She advocates a minimum of 10% of the support to go to SMEs, and proposes to modify a number of allocation criteria.

Saving European defence

The following debate pitted MEPs from different parties against aerospace representatives and EU member states, revealing fissures over the EU’s historical move towards deeper defence integration.

If both the European Parliament and national capitals approve the post-2020 investment programme, the EU will become the fourth largest investor in Europe in defence industry research after the UK, France and Germany.

Some MEPs argue that this European fund could be seen as “subsidy” for large defence players, claiming that the real problem is that « member states don’t spend enough on their armed forces”.

According to Ben Hayes from think tank Transnational Institute, money for EU security projects in the past has been badly invested. Jakub Landovský, Deputy Defence Minister of the Czech Republic and Head of the Defence Policy and Strategy Division, agreed with this point, adding that the EU need to spend money more efficiently, and to promote SMEs inclusion with incentive in terms of bonuses.

Finally, Jan Pie, Secretary General of the AeroSpace and Defence Industries Association of Europe, thinks the EDIDP is essential: if approved, it will put the EU at the top of defence R&D spending and could really push cooperation between Member States. But two conditions are particularly necessary : “the funding should focus on capabilities that will make a technological and operational difference, and should stay in the EU”.

Photo credit : European Parliament, EPP Group

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