Daniel Fiott

In advance of the 2024 EU Defence Industrial Strategy, and before I write a more focused and substantial piece of analysis, I wanted to lay out some key themes and issues that will confront the drafters of the new Strategy. 

First, let me say that the Strategy itself should be placed in its proper political context. It is, of course, questionable whether such a strategy should be released just before the EU heads towards parliamentary elections and a new Commission. The downsides of releasing the Strategy in advance of this transition is that it could get lost in the fog that will surround the new Commission: a fog of new initiatives and, perhaps, a different political direction. The upsides are clear too, though. For example, we simply do not know who will end up in charge of DG DEFIS in the new Commission – the DG could be subsumed into another broader security and defence DG that puts into the shadows the industrial dimension or a less ambitious Commissioner could take the portfolio, leading to inertia. A Strategy agreed now in a sense could “bind the hands” of the forthcoming Commission by outlining a coherent level of ambition. Let us be clear, defence is so intrinsic to EU integration now that the Union cannot afford to be lax in the defence-industrial dimension. In any case, a majority of Member States want a clearer direction for EU defence-industrial policy, and so does industry too. 

Second, any EU Defence Industrial Strategy will require reflection on the purpose of the text. Yes, it will probably be released at around the two year anniversary of the Versailles Summit and publication of the Strategic Compass. This is a symbolic objective to keep up political messaging on EU defence industrial policy. It is also a way for the Commission to assert its continued and undisputed relevance in the field of defence, especially as the Strategic Compass – as a process of deliverables – suffers from a degree of fatigue. Beyond the fineries of symbolic politics, however, any serious Strategy will have to grapple with some basic but difficult questions: what is the European Defence Technological and Industrial Base (EDTIB)? What should the EDTIB become and how? In 5-10 years, how should we shape the EDTIB? What role will regulation, financial incentives and major strategic defence products play in this process? How can Europe successfully marry demand and supply in the coming years? What can we produce in the EU today and what else should we be able to develop in the future? What skills, investments, regulations and manufacturing capacities will be required to meet these goals? 

Third, in answering these questions any EU Defence Industrial Strategy should move beyond the existing content of the Strategic Compass (see the “Invest” chapter). Even though the EU Defence Industrial Strategy will likely echo the Compass’ language on capabilities, the Strategy must set out a coherent set of objectives. At its most basic level, the EU Defence Industrial Strategy will likely recap and regroup the major initiatives outlined by the Commission over the past few years, including:

• European Defence Fund (EDF) – to continue the early successes of the Fund over the coming years and to work for a financial increase of the fund during the mid-term review of the Multi-annual Financial Framework. This may also be an opportunity to call for more direction on the types of defence capabilities the EU finances, which could also influence wider debates about EU capability prioritisation under Permanent Structured Cooperation, the Coordinated Annual Review on Defence and the Capability Development Plan.
• European Defence Investment Programme (EDIP) – to use both the Act in Support of Ammunition Production (ASAP) and European Defence Industry Reinforcement through Common Procurement Act (EDIRPA) as preparatory initiatives to pave the way for joint defence procurement. Here, the Commission will likely plea for a substantial amount of investment for joint defence projects. The Member States, who are also negotiating the future financial size of the European Peace Facility, will be key to the success of the EDIP.
• Technologies – the EU Defence Industrial Strategy will also likely devote attention to the Commission’s work on dual-use technologies, the Observatory on Critical Technologies and the linkages between existing EU investments in civil, space and defence sectors. Here, the Commission may be tempted to flesh out some of the industrial implications of the recent EU Space Strategy for Security and Defence.
• Investments – here, the Commission will likely recall its commitment to supporting SMEs and the need to unlock investment for these firms. This could be an opportunity to outline the political steps needed to unlock capital from the European Investment Bank and venture capital funds. This may lead to a clarification of the Commission’s vision regarding defence and sustainability, which has caused some concern and questions in the past. Furthermore, the Commission will have to stress the continued importance of defence investment, but it will also need to make a case for more collaborative investments on the part of EU Member States.
• Regulation – the Commission is likely to stress the importance of the defence sector as part of the Single Market. It may again underline the importance of the two directives on transfers and defence procurement, but a less celebratory tone will likely be taken. Instead, both of these legislative tools will be highlighted as accompanying tools to broader Commission initiatives on joint defence procurement and security of supply.
• Skills – a major industrial objective in the current period is the need for skilled labour. Many current and future defence programmes will require the right people and management processes, yet it is still a challenge to recruit individuals with the right skill sets. This is, of course, ultimately a question about the direction and priorities of the education sector in Europe, but any ambitious EDTIB will require a human capital base.
• Greening – as part of the discussion on sustainability and defence, the Commission is likely to devote some of the EU Defence Industrial Strategy to “green defence” capabilities and initiatives. This may be a hard element to sell in the Strategy, as the war in Ukraine has placed the focused on short-term (and fossil fuel powered) weapons systems. In this regard, any language on “green defence” is likely to be bound up in the language on innovation and future technologies. 

These are just some of the issues the EU Defence Industrial Strategy is likely to tackle. I will update the list as I get closer to publishing the final version of this reflection. Whether the content of the EU Defence Industrial Strategy will be the quantum leap the EDTIB needs remains to be seen. One document alone will not do the job. Instead, Europe needs ambitious investments for joint defence programmes. Let’s see if the horses (Member States) can be drawn to the water. 

Finally, we have to understand that any EU Defence Industrial Strategy will be a Commission document. Of course, the European Council could use their Spring 2024 meeting to endorse the Strategy. Yet, more than an endorsement is needed. If the Strategy is to be brought forward into the next Commission the European Council should set down a political programme with objectives for the next Commission to pursue. Here, we should recall that the European Council’s own political agenda will end in 2024 and there will be a need for a new five-year agenda. In this new agenda, the European Council has a golden opportunity to set the direction for the European defence industry. 

Such a strategic message needs to establish the defence industry as an integral part of defence and society as a whole. Since 2016, the EU has taken huge steps forward in the defence-industrial domain and the public has been exposed to the importance of defence manufacturing due to the Ukraine war. Yet, the images of ammunition tells only a partial story of Europe’s defence industry. It is a high-tech industry that is the basis for Europe’s security and economic agility. Years of neglect has dented one of Europe’s industrial jewels. The European Council should use the forthcoming EU Defence Industrial Strategy as a chance to demonstrate to the public, ministries and investors that the EDTIB is the foundation for any credible defence. 

More on this topic soon…