2024-03-07 22:25:20
The European Commission wants to strengthen the production of weapons and ammunition in European arms companies. This follows from the new European strategy for the defense industry. The strategy responds to Russian aggression and Ukrainian pleas for supplies of weapons and other military materials.
Last year, the Commission promised Ukraine, for example, the delivery of a million pieces of ammunition. But the plan sucks. Ukrainian President Volodymyr Zelenskyi mentioned this in his speech on the two-year anniversary of the Russian invasion, when he revealed that Ukraine had received only 30 percent of the promised ammunition. The head of EU diplomacy, Josep Borrell, later added that by the end of March, the EU should deliver about 52 percent of what it promised.
Photo: EU
The aforementioned supplies of ammunition and weapons were mostly taken care of by European initiatives such as the program for joint procurement of military equipment (EDIRPA) or the extra-budgetary fund called the European Peace Instrument, which reimburses member countries for military equipment sent to Ukraine.
The mentioned programs represented a quick response to the urgent needs associated with the war in Ukraine. But for the security of Europe, it is crucial to reorient from short-term reactions to long-term prospects. And that’s exactly what the new strategy focuses on.
“The readiness of the defense industry requires more public and private investment across the entire spectrum of needs. As well as a greater ability of the defense industry to respond to the needs of member states, both in time and scope,” official sources from the European Commission state about the strategy.
The first comprehensive strategic document
The final form of the strategy, which the commissioners approved on Tuesday, mentions, for example, support for the collective procurement of defense systems, an emphasis on European technologies, support for individual national budgets during the transition to new weapons systems, or the development of closer ties with Ukraine and NATO. The volume of defense trade within the EU and the involvement of European companies in public contracts should be increased.
Czech expert Zuzana Krulichová, a researcher specializing in European defense policy from the Faculty of Social Sciences of Charles University and the Europeum Institute for European Policy, acknowledges the effort to come up with a long-term strategy.
“At the same time, a new European defense investment program (EDIP) is being proposed, which follows on from the previous EDIRPA program, which is only short-term in nature and its funding will end in 2025. EDIP therefore represents a longer-term instrument with a larger budget,” adds Krulichová.
According to the proposal of the European Commission, the EDIP program should have a budget of 1.5 billion euros and should operate between 2025 and 2027.
The senior director of the industrial cooperation section of the Ministry of Defense of the Czech Republic, Radka Konderlová, also views the new strategy positively. “I welcome the comprehensive strategy for the area of support for the European defense industry. It is the first EU strategic document in this area, which was created in the framework of broad consultation not only with member states, but also with industry and financial institutions, including commercial banks,” he says.
It should have been a long time ago, says the MEP
MEP Tomáš Zdechovský (KDU-ČSL), who has been working on defense issues for a long time, told the editors that the central strategy to strengthen the European defense industry should have come a long time ago.
“It came late, it should have come a few months after the start of the war already in 2022, when we did not know how long the Russian invasion would last, but the Commission should have developed scenarios for all possible situations. One of them should have been to strengthen the defense capabilities of the EU and coordinate member states states on the issue of arms industries, so that it makes more sense,” Zdechovský claims.
According to him, it is important for the defense industry in individual states to unite at the same level. However, he is “slightly” skeptical about the strategy itself, because it took the European Commission a long time to “get the hang of it” and prepare the strategy. “The process takes some time and the results will not be available until several months or years later. Only time will tell if it will work,” adds the MEP.
At the same time, however, he points out that the strategy should not change much. “To significantly change the strategy would also mean the loss of hundreds of hours of negotiations and agreements on the next course of action. It is important to speed up the entire process and remove bureaucratic obstacles,” he describes.
A new financing option for the defense industry
Among other things, bureaucratic obstacles limit the financing of armaments through loans from private banks, which, according to Zdechovský, causes long-term underfinancing of the European defense industry. “Last June, I therefore submitted a question to the European Commission regarding taxonomy, sustainable activities and its impact on the defense industry. I asked, among other things, whether the European Commission considers the production of weapons to be socially sustainable,” explains Zdechovský.
Banks have to report their financial activities and it is desirable that they invest as much as possible in sustainable activities.
The European Commissioner for Financial Stability Mairead McGuinness answered him that the sustainability rules do not limit the financing of any sector. “The commissioner told me that the defense industry is a key contributor to the resilience and security of the EU and thus to peace and social sustainability,” adds the MEP.
Banks don’t want to finance a lot of armaments
However, some banks still do not want to finance armories. However, a new strategy could change that. The Commission called on the European Investment Bank to review its existing rules for granting loans and to open up to investments in the defense industry.
If the European Investment Bank takes such a step, it could motivate private banks across Europe to take the same action.
The senior director of the Ministry of Defense, Radka Konderlová, also considers the new financing options for the defense industry to be the most important initiative of the Commission. “I very positively evaluate the inclusion of the financial sector and the access of the defense industry to financial instruments. This is proving to be critical for the ability to build the production capacity of the defense industry,” she specified.
The researcher Krulichová also mentions bureaucracy as a reason for the great delay in the development of European industry. “At the moment, the European defense industry is highly fragmented, burdened by bureaucracy and has been overlooked for a long time. Two years since the outbreak of the war in Ukraine and in the current situation of uncertainty regarding the US presidential election, it is therefore essential that the EU focuses on removing these structural problems, ” describing.
According to Krulichová, the final influence on the successful implementation of the strategy and its further direction will mainly be the member states, because security policy is primarily within their competence.