Strategic autonomy in European defence is key to credibility

By Elżbieta Bieńkowska, European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs

Elżbieta Bieńkowska

European citizens want a Europe that protects. Europe must therefore progressively ensure its own security. Defence will be a cornerstone of the Future of Europe we want to collectively build. No Member State is strong enough to meet on its own the evolving threats and challenges we are currently facing. More Europe in defence is not an option, it is a necessity. But if Europe is to have any credibility as a security provider it needs to achieve strategic autonomy in critical defence technologies and capabilities. This requires a modern, competitive and innovative European defence industry.

With the European Defence Fund launched on 7 June as the industrial pillar of the Defence Package, this is precisely what we are aiming to achieve. The Commission is, for the first time, ready to use all its tools, including the EU budget, to support and promote stronger defence cooperation.

Concretely, we are moving forward on two strands:

• First, on defence research, we have launched the publication of the first calls for the Preparatory Action for Defence Research with the objective of selecting the first projects by the end of the year. The Preparatory Action (with an expected budget of €90 million over three years), will pave the way towards a dedicated EU defence research programme post- 2020 with a budget of €500 million per year.
• Second, on capability, we have proposed a Regulation to establish a European Industrial Development Programme, whose aim is to co-finance, with EU budget, the development stage of collaborative defence projects. The Programme is proposed to have an ambitious budget of €500 million up to 2020 and €1 billion per year after 2020.

Calls for projects would correspond to capability priorities defined by Member States and the selection of projects would be done in close cooperation with Member States, who will be in the driving seat at all stages of the implementation of the Programme.

The conditions to obtain co-financing from the EU budget are that there must be at least 3 companies from 2 different Member States, that co-financing from the Member States is ensured, and finally, that Member States commit to jointly procuring the capability once it is developed. EU support can cover up to 100% for actions in the development phase, such as studies and testing, and up to 20% of prototyping costs (or 30% for projects undertaken as part of a potential Permanent Structured Cooperation). The development phase is where the risks are the most concentrated, so this is where the EU action is most needed to unlock cooperation.

It is crucial that this Programme can benefit a large number of Member States, and not only the large defence industry primes. This will require that the defence supply chains open up to more crossborder cooperation. The programme will therefore incentivise Member States and industrial cooperation in a geographically balanced way as it foresees that a credible part of the budget will benefit actions enabling the cross-border participation of SMEs.

The Defence Fund is an unprecedented and ambitious proposal from the Commission. It could prove to be the key to incentivising greater and sustained European defence cooperation and strengthening Europe’s strategic autonomy as a consequence. The Fund is also about increasing efficiency in the overall defence spending and avoiding unnecessary duplications.

It is now for the Member States and the European Parliament to discuss these proposals, and hopefully agree on them as a matter of urgency. There is no time to lose. If we are to finance the first capability development projects in 2019, we need to be ready by early 2018. In parallel, Member States, together with industry, need to identify cooperative projects that could benefit from the Fund and be submitted to the Commission for co-financing.

With the European Defence Fund, we are at a turning point of the European Defence Cooperation. We should not miss the political window of opportunity to build a credible Defence Union.