The European Commission and the High Representative presented the first-ever European Defence Industrial Strategy at EU level and proposed an ambitious set of new actions to support the competitiveness and readiness of its defence industry.
Two years ago, Russia’s unjustified, on-going war of aggression against Ukraine marked the return of high-intensity conflict on our continent. The European Defence Industrial Strategy (EDIS) sets a clear, long-term vision to achieve defence industrial readiness in the European Union. As a first immediate and central means to deliver the Strategy, the European Commission tabled a legislative proposal for a European Defence Industry Programme (EDIP) and a framework of measures to ensure the timely availability and supply of defence products.
The Strategy outlines the challenges currently faced by the European Defence Technological and Industrial Base (EDTIB) but also the opportunity to tap its full potential and sets out a direction for the next decade. To increase European defence industrial readiness, Member States need to invest more, better, together, and European. To support Member States in achieving these goals, the European Defence Industrial Strategy presents a set of actions aiming at:
- Supporting a more efficient expression of the Member States’ collective defence demand. This will be based on existing instruments and initiatives, such as the Capability Development Plan (CDP), the Coordinated Annual Review on Defence (CARD) and the Permanent Structured Cooperation (PESCO). It will be supported by incentivising Member States’ cooperation in the procurement phase of defence capabilities;
- Securing the availability of all defence products through a more responsive EDTIB, under any circumstances and time horizon. Investments by Member States and the European defence industry in developing and bringing to market tomorrow’s state of the art defence technologies and capabilities will be supported. Measures are also proposed to ensure that the EDTIB has at its disposal what it needs even in crisis periods, thereby increasing the EU’s Security of Supply;
- Ensuring that national and EU budgets support with the necessary means the adaptation of the European defence industry to the new security context;
- Mainstreaming a defence readiness culture across policies, notably by calling for a review of the European Investment Bank’s lending policy this year;
- Developing closer ties with Ukraine through its participation in Union initiatives in support of defence industry and stimulating cooperation between the EU and Ukrainian defence industries;
- Teaming up with NATO and our strategic, like-minded and international partners, and cooperating more closely with Ukraine.
The Strategy sets indicators, aimed at measuring Member States’ progress towards industrial readiness. Member States are invited to:
- Procure at least 40% of defence equipment in a collaborative manner by 2030;
- Ensure that, by 2030, the value of intra-EU defence trade represents at least 35% of the value of the EU defence market;
- Make steady progress towards procuring at least 50% of their defence procurement budget within the EU by 2030 and 60% by 2035.
The European Defence Industry Programme (EDIP) is the new legislative initiative that will bridge from short-term emergency measures, adopted in 2023 and ending in 2025, to a more structural and longer-term approach to achieve defence industrial readiness. This will ensure continuity in the support to the European defence technological and industrial base, to accompany its swift adaptation to the new reality.
EDIP includes both financial and regulatory aspects. EDIP will mobilise €1.5 billion of the EU budget over the period 2025-2027, to continue enhancing the competitiveness of the EDTIB. EDIP financial support will notably extend the intervention logic of EDIRPA (financial support from EU budget to offset the complexity of cooperation between Member States in the procurement phase) and ASAP (financial support to defence industries increasing their production capacity), to further encourage investments by the EDTIB. EDIP will also support the industrialisation of products stemming from cooperative R&D actions supported by the European Defence Fund. The EDIP budget may also be used to set up a Fund to Accelerate defence Supply chains Transformation (FAST). That new fund will aim at facilitating access to debt and/or equity financing for SMEs and small midcaps industrialising defence technologies and/or manufacturing defence products. EDIP budget will also enhance the EU’s defence industrial cooperation with Ukraine and support the development of its defence industrial and technological base. To do so, EDIP could possibly draw additional funding from the windfall profits derived from immobilised Russian sovereign assets (subject to Council decision on a proposal by the High Representative).
On the regulatory aspects, EDIP comes with novel solutions. It will make available a new legal framework, the Structure for European Armament Programme (SEAP), to facilitate and scale up Member States’ cooperation on defence equipment, in full complementarity with the PESCO framework. It also entails an EU-wide regime for security of supply of defence equipment, which will ensure constant access to all necessary defence products in Europe and provide a framework to efficiently react to possible future supply crises of defence products. In addition, EDIP will allow the launch of European Defence Projects of Common Interest, with potential EU financial support. Finally, EDIP proposes to set up a governance structure, where Member States are fully involved, to ensure overall consistency of EU action in the field of defence industry (the Defence Industrial Readiness Board).
Source: European Commission | Press Corner (https://shorturl.at/LNWY5)