NGRNOn 5 March 2024, the European Commission and the EU’s 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.
The European Defence Industrial Strategy (EDIS) sets a 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 is presenting 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, the Commission states that 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;
- Securing the availability of all defence products through a more responsive EDTIB, under any circumstances and time horizon;
- 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 Europe’s 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. The EC invites Member States 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.
With regard to research, the EC Communication on the European Defence Industrial Strategy states, amongst others, that “collaborative research, development (R&D) and procurement of defence equipment should progressively become the norm in the EU”. The Communication envisages the “development of a Strategic Drone Technology Roadmap to identify priority areas to boost research and innovation, reduce existing strategic dependencies and avoid the emergence of new ones, or the set-up of an EU network on civil-defence drone testing centres to facilitate exchanges between civilian and defence sector”. The EC also calls for offering innovative undertakings, especially start-ups, SMEs, small Mid Caps and RTOs, “more flexible, faster, and leaner funding cycles” and for facilitating “better connections with military end-users and investors”.
The European Defence Industry Programme (EDIP) is presented by the EC as 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. The EC regards this as a means to ensure continuity in the support to the European defence technological and industrial base, “to accompany its swift adaptation to the new reality”. EDIP will mobilise €1.5 billion of the EU budget over the period 2025-2027.
The first-ever European Defense and Industrial Strategy was prompted by Russia’s armed aggression against Ukraine.
“Faced with the return of a high-intensity war in Europe after Russia’s unprovoked full-scale invasion of Ukraine in 2022, the EU must quickly strengthen its defense preparedness. The rules-based global order is being severely tested, and countries in the EU’s neighborhood, as well as beyond, are increasingly affected by tensions, instability, hybrid threats and armed conflicts. These developments challenge our security, prosperity and democratic values,” the Strategy says.
It should be noted that during the development of the document, consultations were held with the relevant Ukrainian agencies regarding our experience in defense and protection against Russia’s armed aggression, as well as our vision of the development of the European and Ukrainian defense industry. The Ministry of Strategic Industries submitted its proposals, which were partially taken into account by the European Commission.
Cooperation between the defense industries of Ukraine and Europe is envisaged, which will strengthen both sides and enable both to gain mutual benefits.
- It is proposed that the Ukrainian industry could participate in the Union’s defense support program. Ukraine will be able to participate in joint procurement, and Ukrainian defense companies will be supported in building capacity and cooperation with the European industry.
- It will also stimulate cooperation between Ukrainian and European industries and exchange of information on standards and experience.
- To strengthen cooperation, the EU will host the EU-Ukraine Defense Industry Forum in 2024.
- To ensure interaction between EU startups and innovators and Ukrainian industry and armed forces, the EU will open an Innovation Office in Kyiv.
The European Defense Industrial Strategy is accompanied by the European Defense Industry Program (EDIP). This is a document that prescribes the mechanism for implementing the Strategy and is a legislative initiative in the future. In the future, it must be approved by the European Parliament and the Council of Europe.
“Due to Ukraine’s upcoming accession to the EU, the program is obliged to strengthen cooperation with Ukraine at the industrial level. As part of the EU’s future commitment to Ukraine’s security, the EU should promote greater cooperation with Ukrainian PSD to enhance its ability to meet urgent needs, and work towards harmonizing standards and improving interoperability,” the document says.
EDIP provides for:
- Open membership in European defense support programs for Ukraine.
- A separate budget line to support Ukraine’s defense industry and defense companies.
- To finance this budget item, a share of the proceeds from frozen Russian sovereign assets may be used, among other things. This requires a decision of the EU Council on the proposal of the High Representative.
This step will support the capacities of the Ukrainian defense industry, integrate it into the EU’s defense industrial base, and bring the country closer to EU membership.