1709071252 Brussels will strengthen the defense industry through joint purchases compatible

Brussels will strengthen the defense industry through joint purchases, compatible arsenals and emergency storage facilities | International

Brussels will strengthen the defense industry through joint purchases compatible

The European Union is moving forward to shield and arm itself. This is done by expanding joint arms purchase programs between European companies, replenishing Member States' arsenals with weapons compatible with those of other partners, and setting up strategic warehouses for basic components – financed with European funds. which is intended to serve as an urgent supply base in the event of a crisis. The EU's new European defense strategy aims to strengthen a common shopping center so that partners can increase their orders through this channel and up to half of defense purchases (in market value) should go to European companies by 2035, the draft strategy says , to which EL PAÍS had access.

Brussels will also ask member states and the European Investment Bank (EIB) to change their rules to allow financing for companies developing weapons and ammunition, according to the plan currently being finalized by the European Commission. The strategy also includes the gradual integration of the Ukrainian defense industry into European programs and contingency plans, which will allow the local government to require the industry to prioritize the production of certain products when there is an urgent need for supplies.

Russia's war against Ukraine was a wake-up call for the EU, awakening a continent in crisis, with open warfare and a defense industry that had been neglected for years. The partners had outsourced security to the NATO umbrella – 22 of the 27 member states are allies of the military organization – and thus to the United States, with limited investment and many purchases outside the community club.

With the large-scale invasion launched by Vladimir Putin, they went through 27 stages: they sent weapons to Kiev and loaded them into a European fund, they launched a training mission for Ukrainian troops and sent increasingly powerful weapons. Now, as French President Emmanuel Macron asked not to rule out any option – even sending troops to Ukraine, a possibility to which such powerful allies as the United States and Germany have closed the door – many are looking at the actual capacity of the task EU and its industry to ensure supplies in the event of a threat. Brussels wants to strengthen this industry.

“An escalation at regional and global levels cannot be ruled out,” says the draft strategy, which includes a regulation and an investment plan and is expected to be presented next week and which also mentions hybrid threats, sabotage and piracy of infrastructure and essential Financial assets. “Geopolitical developments point to the urgent need for Europe to take greater responsibility for its own security and prepare to effectively deal with the full spectrum of threats it faces,” he continues. And achieving defense readiness requires massive investment in defense capabilities.

Low budget scope

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The strategy envisages ambitious measures, but given tight budgets and the end of the legislative period, the financing plan currently has little scope. Brussels is still looking for sources of funding. According to the municipality, about 1,500 million of them can currently be recycled into another item.

In 2022, the twenty-seven's defense spending increased for the eighth consecutive year to 240,000 million euros, the strategy says. But 78% of arms purchases from the start of the war to June 2023 were made to companies outside the EU. Furthermore, although it was agreed years ago that Member States should spend 35% of the equipment budget on joint purchases, so far only 18% has been achieved.

Brussels now wants to reverse this and use the same system as when procuring vaccines against Covid-19: larger contracts guarantee a better price, but also help the industry to plan the contracts. “High-intensity/attrition times of war require the ability of Europeans to mass-produce a large amount of defense equipment such as ammunition, drones and man-portable air defense systems more quickly and collectively. “Useful,” says the strategy, which talks about moving from “emergency response to preparedness.” Joint investing will also “offset the financial costs,” says the strategy, which is currently being finalized by High Representative for Foreign Affairs and Security Policy Josep Borrell and Internal Market Commissioner Thierry Breton. .

Brussels will create a new body, the Defense Industrial Readiness Board, and use EU funding programs to support “relevant flagship projects,” industrial sectors that need strengthening, defense capabilities that need to be industrialized and critical bottlenecks that hamper security of supply.

The plan will also ensure that the defense equipment held by member states can be “interoperable” and “interchangeable” between them and with “strategic partners” and subject to the same standards (which would assimilate European arsenals). and weapons) and which have common certifications or are at least recognized in the EU. To date, there are numerous models of similar weapons, ammunition ranges and technologies in the various Member States, which make this adaptation difficult.

In addition, the Commission will create an instrument – the so-called European Armaments Program – that will allow member states more funds for joint purchases and standardization and may be exempt from VAT. They can also issue bonds to ensure the long-term financing plan for weapons programs.

The municipal administration will create a catalog of defense material for EU-made products for joint purchases but also for bilateral purchases and is even ready to finance “additional quantities” of material to create a “strategic reserve” quickly available.

Measures to mobilize civil industry

In this armored and reinforced Europe, Brussels wants to raise awareness of the external threat and the importance of strengthening the military sector of an EU born as a peace project. Therefore, the community club will explore measures to quickly mobilize civil industry production lines for defense production purposes and ensure skilled manpower in all possible scenarios.

The new strategy also aims to facilitate access to financing. The defense industry faces serious barriers to entry, particularly the private sector, due to perceived risks and the idea – which the Commission bans – that it does not fit into sustainable finance. Brussels will build a network of investors willing to participate in the defense sector and support investments, the document seen by this newspaper said.

The plan also aims to break another major taboo: the one that prevents the EIB, known as the climate bank, from financing companies that develop deadly weapons and ammunition. “The current lending policy of the EIB Group represents a major obstacle to the use of support instruments for the sector,” the strategy says. “It is necessary to change it,” the text continues, claiming that this change “will have a positive impact” because it will give a positive signal to the market. The measure will not be easy. Several Member States, including Germany, refuse to change the EIB rules to open this door, which also does not please some people in the Community institutions, including the EIB, who are afraid of financing defense material that ends up outside the EU . and involved in other conflicts.

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