June 2017 will be remembered as a milestone in the evolution of European defence. The Reflection Paper on Defence showcases three possible scenarios for the evolution of EU cooperation in defence. At the same time, the European Defence Fund was revealed, marking the first steps towards better defence spending for the EU at 27.
Background
Since the publication of the EU Global Strategy in April 2016, many things have changed in security and defence for the EU. From increased uncertainty regarding the possibility of relying on the US, to the internal earthquake of Brexit, these decisions are going to have clear repercussions on how Europe perceives its defence capabilities, and how key actors will engage in the process.
When announcing the European Defence Action Plan in September, Jean-Claude Juncker stated: “if Europe does not take care of its own security, nobody else will do it for us”. In November, the Action Plan was unveiled, outlining how a European Defence Fund can support Member States’ spending in joint defence capabilities.
Defence was a key topic for continued development, appearing as the main elements as part of a complementary reflection paper to the White Paper on the Future of Europe, outlining the main issues that the EU at 27 Member States (MS) has to face.
Reflection Paper on the Future of European Defence
This Reflection Paper is a conscious attempt to better define the risks and opportunities that the EU at 27 sees itself facing for the next 10 years and the necessary steps it must take to manage the uncertainty that threats and events may bring.
The paper defines clearly EU’s drivers: strategically, the main issues are the concern over the Eastern and Southern neighbourhood, the situation in sub-Saharan Africa, refugees, the increasingly escalating regional rivalries and power vacuums, and the evolving nature of transatlantic relations with the US regarding climate change and resource scarcity, which have been pushed even further to the forefront with President Trump’s decision to pull out of the Paris Agreement.
Politically, the main driving force is citizens’ perception of security, as terror attacks are hitting often and hard. Economically, budget expenditures in defence need to be increased to match the necessities to protect the nations and the EU from new technological threats.
Expenditure and weapon system gaps comparison: EU-US. Source: EU
Understanding these policy drivers, the EU draws from three scenarios depending on the level of commitment that Member States are willing to show in different issues. Cooperation in defence matters, as does working towards a more coherent and shared strategic culture that will allow Europe to take more responsibility for its own defence. Economic cooperation is also needed for more efficient defence spending and the evolution towards a single market.
1) Security and Defence Cooperation: MS would cooperate on security and defence more frequently, mainly on a voluntary basis, depending on ad-hoc decisions when need arises, relying on initial economies of scale.
2) Shared Security and Defence: MS would show greater financial and operational solidarity, enhancing their ability to project military power, fully engaging in external crisis management and building partners’ security and defence capacities. Considerable economies of scale in the defence market at European scale would be in place.
3) Common Defence and Security: Mutual assistance and solidarity would become the norm between MS, overcoming self-help conditions, underpinned by a certain level of integration of their defence forces. Member States would have more efficient defence spending through more economies of scale, specialisation, sharing of expensive assets and technological innovation aimed at reducing defence costs, and would be better equipped to face international competition.
Scenarios’ implications on Defence issues. Source: EU
The European Defence Fund and the future of the European defence industry
Already announced in the European Defence Action Plan, the unveiling of the European Defence Fund appears as an interesting answer to support any of the three planned scenarios.
The Common Security and Defence Policy (CSDP) is included in the intergovernmental side of the Lisbon treaty, so the advancement of pooling resources is more constrained than if dealt with on a supranational basis. The Fund includes two “windows”; one for Research and another for Capability Development, expecting an investment of around EUR 5.5 billion per year by 2020.
Expected financing goals. Source: EU
The Fund is planned to act as a tool for coordination, supplementation and amplification of MS investments in defence, also fostering innovation and economies of scale.
Resource pooling is presented as an effective way for MS to achieve a greater value for money and develop more efficiently than if alone. Cooperation is expected to ensure the competitiveness of the EU defence industry and to introduce standardization through market competition, reducing duplication costs of the material purchased by MS.
The Fund will prove to be a challenging opportunity for the European defence industry, as a slightly different market will open, with more money to be spent, but will also drive the market towards specialization and the shaping of standards to the those of the more demanded goods. It is expected that SME’s will participate more actively, especially in terms of R&D and technological advancements.
The defence industry should start looking ahead, understanding how standardization may take place, and the possible new regulations that may emerge from the resource pooling and the intergovernmental agreements that may come after the Prague summit.
Defence and Security Conference in Prague and the work ahead
On 9 of June, Prague hosted a Defence and Security Conference that joined together representatives of the 27 MS, EU and NATO officials, calling for greater cooperation among European States for a better defence of the region.
Discussions were mainly held to understand the perspectives of the EU in defence and the state of the capacities in Europe. The main load of the work ahead will be to operationalize the new elements to be introduced and to understand which scenario will unfold.
For the time being, without the UK pulling towards NATO and out of the decisions on the orientation of the Defence policy of the EU, it seems that the second scenario of Shared Security and Defence will unfold after some time of increased cooperating under the first. More solidarity and better spending thanks to the new fund and the possible participation of other financing institutions, solidarity will appear. With solidarity and increased ability to project military power, a strategic culture among MS is more likely to emerge. It is a process that needs to be understood with the limitations of the actual regulatory framework, which does not prevent new options from emerging.
For the EU, as stated by Juncker, “The protection of Europe can no longer be outsourced.” This will be a moment to reflect on the risks and challenges of these first steps, which will have important repercussions both for the population’s perception of security and how business will be conducted under new economic and financial possibilities.
