The European Commission and the High Representative today issued the Joint Communication on the Defence Investment Gaps Analysis proposing further measures to strengthen the European defence industrial and technological base.
This delivers on the request of EU Heads of State or Government who, at the Versailles Summit on 11 March, invited the Commission, in coordination with the European Defence Agency to: “put forward an analysis of the defence investment gaps by mid-May and propose any further initiative necessary to strengthen the European defence industrial and technological base.”
Overcoming expenditure and capability gaps
Member States recently announced increases in their defence budgets close to €200 billion in coming years, after substantial cuts and severe underinvestment over the last two decades. The Communication calls on the EU member States to avoid uncoordinated spending which results in further fragmentation on the demand and supply side.
The Commission and EDA assessed the capability gap based on the new security situation. Following this analysis, it is suggested to focus on three issues as urgent short-term priorities: replenishing stockpiles, replacing Soviet-era legacy systems, and reinforcing air and missile defence systems.
The Communication also indicates several capability developments needed in the air, maritime, ground, space and cyber defence domains.
In the immediate term, The Commission and the High Representative/Head of the Agency, will establish a Defence Joint Procurement Task Force.It will work with Member States to coordinate an EU response to very short term urgent needs, notably the refilling of stocks.
Ashort-term EU instrument will be proposed by the Commission to incentivise Members States willing to jointly procure to fill the most urgent and critical gaps. The Commission is proposing 500 million over two years (2022-24) to support such joint procurement.
By the third quarter 2022, the Commission will put forward a Regulation establishing a European Defence Investment Programme (EDIP) setting conditions for Member states to jointly procure while benefitting from VAT exemption and potential EU financial support.
In the longer term, the Communication envisages a joint EU defence programming and procurement function building on existing structures and processes and in coherence with NATO planning process.
Overcoming defence industry manufacturing capacities gaps
In order to support EU defence industries in their ramp up of manufacturing capabilities, the Communication presents several measures.
In cooperation with the EDA, an in-depth mapping of EU current and necessary industrial manufacturing capabilities will be carried out by the Commission.
A Critical Raw Materials initiative by the Commission will serve to facilitate access to critical raw materials also for defence industry.
The Communication also calls upon EIB to assess if it should enhance its support to the European defence industry and joint procurement beyond its ongoing support to dual use including by adapting, if necessary, its lending policy.
European Defence Fund
As regards R&D relevant for defence, the Commission will consider strengthening the budget of the EDF in the mid-term review of the MFF and take additional steps when implementing the European Defence Fund to attract new entrants. This is part of the EU Defence Innovation Scheme where the Commission will cooperate with EDA.
At the next European Council, the Commission will recommend the EU Heads of State or Government to endorse this analysis.
- 18 Maj 2022