The EU increasingly fears that the war will not stop at the border with Ukraine and intends to prepare its states for any contingency. The high representative for Foreign and Security Policy of the EU, Josep Borrell, launched a resounding message this Tuesday in the presentation of the European strategy to strengthen the defense industry once morest the Russian threat: “When we present the strategic compass of The EU [unas semanas después de la invasión rusa], I said that Europe was in danger, now it is even more so.” Being ready implies more ammunition and more weapons and, consequently, more capacity to manufacture them, more research and more investment in the defense industry, viewed with suspicion until recently.
The political leaders of the Commission who presented the Brussels plans this Tuesday have tried to convey that sense of urgency. “We have to take charge of our security,” explained the vice president of the Union Executive, Margrethe Vestager. This is a clear reference to the fact that European countries must stop trusting that the United States is the umbrella that will protect them from an aggressor power like Russia and become independent from “the electoral dynamics” on the other side of the Atlantic, especially now that the Republican Donald Trump threatens to return to the White House. “The period of the peace dividend has passed,” stressed the head of the Internal Market, Thierry Breton, in turn citing an expression from the late eighties – at the end of the Cold War – which advocated a reduction of defense spending.
The objective pursued by Brussels is to “invest more and better.” The first part of this slogan is very clear from the moment that the 23 EU countries (including Sweden, which will formally join in a few days) that are also members of NATO have committed to increasing their annual budget. defense up to an amount equivalent to 2% of GDP. According to the numbers provided by the Commission, in 2023 the Member States spent 58 billion euros on military equipment and if the Alliance’s objective was reached, the figure of 143 billion would be reached. The second part of the commitment adopted by Brussels translates into better coordinating spending through joint purchases, inspired by vaccines during the pandemic, to generate synergies and resemble a block instead of having 27 spending items, one for country. The potential of these numbers is best seen if they are contrasted with the 84 billion annually that Russia spends on weapons or the 250 billion that the United States spends.
Joint purchasing is one of the tools that the Commission has put on the table. It’s not the first time he’s done it. The EU long ago set the goal of collective procurement reaching 35% of defense spending. For now, that goal is very far away, 18%.
Seeing this, the objective of states purchasing 50% of war material from European industry by 2030 and 60% five years later seems very ambitious. Although at the same time, this seems like the best way to boost production in this sector. A senior executive of one of the largest European arms and ammunition companies pointed out a month ago, in a meeting with journalists, that companies, in order to invest in increasing their manufacturing capacities, need to sign purchase and sale contracts with governments that guarantee them the cost effectiveness. The same manager was also very skeptical regarding the European Commission being in charge of the purchases, pointing out that this is a crucial issue of the “sovereignty of the countries.”
Encourage production capacity
Breton and Borrell have warned the same thing when asked regarding the budgetary shortage of the strategy presented (1.5 billion). “This is not in any way regarding assuming the prerogatives of the States or changing the treaties,” the Frenchman justified. “Let’s not confuse things,” Borrell asked, “the buyer will continue to be the State. What we are trying to do is encourage production capacity. “The vocation is to take care of the defense industry, which is something critical.” The statements of both represent, at the same time, an implicit rejection of the proposal of their boss, the president of the Commission, Ursula von der Leyen, who a few weeks ago, at the Munich Security Conference, proposed that in the next legislature there is a Defense Commissioner. What they come to defend is that there be someone responsible for policy for the defense industry, a role that Breton is playing in this legislature.
The lack of money is something that has been discussed in the days prior to the presentation of the strategy. For example, France, Poland and Estonia sent a letter to the European Commission this Monday demanding “adequate financing” for the sector. “The most important part of the strategy will be its implementation plan, which should be drawn up without delay. It must be backed by adequate financing, and to this end we ask the Commission to present concrete financing options, especially for the period leading up to the next European budget,” the text states.
To somewhat alleviate this lack of money, the strategy also proposes exceptions to VAT, the launch of projects of common interest for defense or the adaptation of the credit policy of the European Investment Bank (EIB) to “the political priorities of the EU.” ”. The possibility of using Russian assets frozen in the Union, some 270 billion, to supply war material to Ukraine is even on the table. “Until now there was talk of using this money for the reconstruction of Ukraine; Maybe it’s time to think regarding using it to avoid its destruction,” said the high representative, very aware of the resistance he will encounter among several Member States and the legal difficulties of the proposal.
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