Brussels will boost the arms industry with group purchases, compatible arsenals and emergency warehouses | International

The European Union is moving forward to protect and arm itself. This will be done by increasing joint weapons procurement programs from European companies, filling the arsenals of Member States with weapons compatible with those of the rest of the partners and establishing strategic warehouses of basic components – financed by European funds – which will serve as an emergency supply base in the event of a crisis. The EU’s new European Defense Strategy aims to strengthen a common purchasing center, allowing partners to increase orders through this channel and ensuring that up to half of defense purchases (in market value) are carried out with European companies by 2035. according to the draft strategy 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 that develop arms and munitions, according to the plan being finalized by the European Commission. The strategy also includes the gradual integration of the Ukrainian defense industry into European emergency programs and plans that will allow the EU executive to demand that the industry prioritize the production of certain products in the event of urgent need for supplies.

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

With the large-scale invasion launched by Vladimir Putin, the Twenty-Seven took steps: they sent weapons to Kiev and loaded them into a European fund, they launched a mission to train Ukrainian troops and sent increasingly powerful weapons. Today, as French President Emmanuel Macron called for no option to be ruled out – even sending troops to Ukraine, a possibility to which allies as powerful as the United States and Germany have closed the door – many people question the real capacity of the EU. and its industry to guarantee supplies in the event of a threat. Brussels is seeking to strengthen this industry.

“An escalation at regional and global level cannot be ruled out,” says the draft strategy, which includes regulations and an investment plan and which is expected to be presented next week and also speaks of hybrid threats, with cyberattacks, sabotage and hacking of essential infrastructure and assets. “Geopolitical developments underline the pressing need for Europe to assume greater responsibility for its own security and to prepare to effectively deal with all the threats it faces,” the text continues. . And achieving defense readiness requires massive investment in defense capabilities.

Little budgetary margin

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The strategy includes ambitious measures, but for the moment the financing plan has little room in a context of tight budgets and the end of the legislature. Brussels is still looking for where to find funds. Currently, it can hold around 1.5 billion recycled from another item, according to community sources.

In 2022, defense spending of the Twenty-Seven increased for the eighth consecutive year, to 240 billion euros, according to the strategy. But 78% of defense purchases from the start of the war until June 2023 have been made from companies outside the EU. Furthermore, although it was agreed years ago that Member States should devote 35% of the equipment budget to joint purchases, only 18% has been achieved.

Brussels now wants to reverse this trend and use the same system it used to acquire Covid-19 vaccines: larger contracts guarantee a better price, but also help the industry plan contracts. “Periods of high intensity and attrition warfare require the ability to mass produce, more quickly and together as Europeans, a wide range of defense equipment, such as munitions, drones and surveillance systems. portable air defense,” says the strategy, which speaks of moving from “emergency response to preparedness.” In addition, investing together “will offset the financial costs”, says the strategy, currently being finalized by the High Representative for Foreign Policy and Security, Josep Borrell, and the Internal Market Commissioner, Thierry Breton, in charge of defense industry. .

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

The plan will also promote that the defense equipment available to Member States can be “interoperable” and “interchangeable” between them and with “strategic partners”, who are governed by the same standards (which would assimilate European arsenals and weapons) and which have common or at least recognized certifications in the EU. Until now, there are multiple weapon models, ammunition ranges and similar technologies in different Member States that make this assimilation difficult.

In addition, the Commission will create an instrument – ​​the so-called European Armaments Program – which will allow member states to have more funding for joint purchases and standardization and can be exempt from VAT. They can also issue bonds to guarantee the long-term financing plan for arms programs.

The community executive will create a catalog of defense equipment of products manufactured in the EU for joint purchases but also for bilateral purchases and is even open to financing “additional quantities” of equipment to create a “strategic reserve” which will be available quickly.

Measures to mobilize civil industry

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

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

The plan also aims to break another big taboo: that which prevents the EIB, known as the climate bank, from financing companies that develop deadly weapons and munitions. “The current credit policy of the EIB Group represents a major obstacle to the deployment of support instruments for the sector,” the strategy states. “It must be modified,” continues the text, which maintains that this modification “will have cascading positive effects” because it will give a positive signal to the market. The measurement will not be easy. Several member states, including Germany, are refusing to change the EIB’s rules to open this door, which is also not appreciated by some people within the community institutions, including the EIB, who fear financing defense equipment that ends up outside the EU and involved. in other conflicts.

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