BRUSSELS — The European Union is no longer just a peace project.
On Tuesday, the European Commission will present a European Defence Industrial Strategy alongside a subsidy cash pot of at least €1.5 billion called the European Defence Investment Programme.
If member countries agree, it will mark the end of the post-Cold War peace dividend that saw military spending shrivel.
“[The strategy] is not an answer to the war in Ukraine, but rather a broader response to a strategic paradigm shift. It’s a recognition that [defense] is a subject that’s not going to go away for a while,” said Camille Grand, a former NATO assistant secretary-general and now a distinguished policy fellow at the European Council on Foreign Relations.
The aim is to get the EU — the world’s second-largest economy — to finally begin punching its weight when it comes to defense.
That’s an idea that has swirled around the EU since its creation as the European Coal and Steel Community in 1951.
The plan for a European defense union was born in the mind of one of Europe’s founding fathers, France’s Jean Monnet, and was ironically killed when French lawmakers refused to ratify the treaty in 1954. Now another Frenchman, European Commissioner for Internal Market Thierry Breton, will take the lead in presenting the EU executive’s defense plans.
Instead of forming a multinational fighting force — something that was considered in the early years of the Cold War — this time it’s all about building up the bloc’s military-industrial complex as well as decreasing Europe’s reliance on American weapons — an especially acute fear as Donald Trump rises in the polls ahead of this year’s U.S. election.
The European Commission strategy breaks a taboo: While Brussels had previously agreed to use the EU budget to fund ammunition production and incentivize joint procurement on an emergency basis, the Commission now wants to enshrine the principle in the long term.
Nonetheless, this week’s defense plan does not contradict the EU’s initial aim to prevent war on Europe’s soil, according to Riho Terras, a member of the Parliament’s European People’s Party and former commander of the Estonian military.
“Europe has to be prepared for war, and since it’s an economic union, we should concentrate on the defense industry,” he said.
Eyes on capitals
Breton is expected to steer clear of politically-charged pitches such as building a European army, and focus instead on where Brussels actually has a competence: The single market.
However, some of the proposals are far-reaching. They include copying the U.S. Foreign Military Sales system to help EU countries build up weapons stocks and make it easier to sell weapons, as well as the power to redirect civilian industry to defense in case of an emergency — plus financial incentives for more joint weapons procurement.
Cash should go only to European companies, according to the Commission’s thinking. Ukraine will be treated as a quasi-member country and will be allowed to participate in joint weapons purchases.
The EU’s executive branch insists it is not overstepping. Defense “must remain a national responsibility,” Breton told French media Monday. “It’s not about changing the treaties, it’s about working better together within the framework of the treaties.”
As it’s a regulation, the investment program will need sign-off from both capitals and the European Parliament.
The Commission expects pushback from governments. “We’re going to have a lot of explaining to do, I’m not going to hide it, and some things may not end up exactly where we wanted,” a Commission official told reporters last week.
“Member states won’t accept that their competences will be taken away,” a senior EU diplomat told POLITICO. “When it comes to a coordinating role of the Commission on military sales or industry consortiums, I am not sure about the value added.”
However, external events — such as Trump’s reelection or a U.S. withdrawal from NATO — could push capitals to make the jump toward more European integration in defense, according to Antonio Missiroli, a former NATO assistant secretary-general for emerging security challenges.
“The European Union tends to react to shocks,” he said, mentioning the war in Ukraine. “Paradoxically, if more shocks materialize in this respect, there will probably be more readiness to go down new paths in order to support the defense industrial base in Europe.”
Cash is key
The success of the defense strategy will also ultimately depend on how much cash it gets.
“Money matters, it’s not anecdotal,” said ECFR’s Grand. “It’s not just about organizing the market, we’re in a field where if you put money on the table, it makes a difference … or not.”
While the European Defence Industrial Programme is expected to be worth at least €1.5 billion, much more will be needed if Brussels is serious about building up a competitive industrial complex. Ultimately, Europe needs €100 billion, according to Breton.
One idea raised by French President Emmanuel Macron, Estonian Prime Minister Kaja Kallas and Belgium Prime Minister Alexander De Croo is to copy what happened during the pandemic and issue joint debt.
“The funding of wars is almost always done with deficits and there’s a very good reason to do that, because it’s simply inefficient to increase taxes for temporary spending — which we always hope war will be,” said Guntram Wolff, a senior fellow at the Bruegel think tank.
But diplomats said that eurobonds are still a no-go for frugal nations such as Germany, the Netherlands or Nordic countries.
A debt-financed €100 billion cash pot as floated by Breton is “not in the cards,” according to the senior EU diplomat, who added: “I also don’t see much room for additional money from the EU budget.”
But that could change in the event of a big external crisis.
Other ideas include groups of countries teaming up to jointly issue defense bonds; changing the rules for the European Investment Bank to allow it to invest in defense; and tweaking the EU’s taxonomy for sustainable activities to explicitly include military projects.
Laura Kayali reported from Paris, Jacopo Barigazzi reported from Brussels.