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In Every Crisis an Opportunity? European Union Integration in Defence and the War on Ukraine
Russia’s war on Ukraine has upended the European security order. Ukraine has requested EU membership, unprecedented sanctions have been imposed on Russia, European countries have shipped weapons and munitions to Ukraine and NATO has shored up its military presence. Despite such action, is it possible to speak of a transformative moment or ‘Zeitenwende’ for EU security and defence? This article analyses the state of EU integration in defence since the war on Ukraine. Drawing on hypotheses developed under ‘new intergovernmentalism’, this article analyses how EU Member State preferences in defence and intergovernmental-supranational dynamics are being shaped by the war. In particular, the article probes how supranational and intergovernmental institutions have reacted to the war and how domestic preferences have fed into recent EU defence efforts. In doing so, the article provides a preliminary assessment of the state of EU integration in defence since Russia’s invasion of Ukraine.
Journal of European Integration, Vol. 45, No. 3
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Counter-order: Chinese Power, the West and Geo-economics
Abstract
The United States (US)-led world order that has prevailed for the past few decades is being contested by rival powers such as China. A crucial aspect of great power competition is economic statecraft and China is skilfully fusing various aspects of its economic diplomacy and financial strength to undermine the US and its allies. China’s rise occurs in a specific context: the looming challenge of a more decentralised global economy marked by non-state actors and alternative currencies. Maintaining the US’ dollar dominance has emerged as a key plank of Washington’s overall grand strategy toward China, but the West still needs to collectively develop a coherent strategy for economic statecraft. This Policy Brief outlines and analyses the prevailing global economic context, the counter-order being developed by China and the growing importance of geo-economics for Western countries.
CSDS Policy Brief, 2023, Vol. 12 (written with J. Alexander Thew, Frank Finelli and Mickey P. Strasser)
Introduction
Global order over the past three decades has been governed by the rules and institutions set by the United States (US) and West. Globalisation has led to increased trade and this has contributed to a reduction of poverty and higher standards of living across the globe. China has been one of the main beneficiaries of this trend. Yet, rising incomes and integrated markets have become somewhat of a double-edged sword because the wider distribution of resources means any war will result in high economic costs. The idea that globalisation, interdependence and trade will bring world peace has been challenged. If anything, wider access to wealth, industry and capital has led to the military modernisation of states that want to subvert the very order that led to their development. This Policy Brief looks at how rival powers such as China are using economic statecraft to enhance their relative power and subvert the Western order that has prevailed since at least 1944.
Our arguments in this Policy Brief are based on observations made at an international security seminar held at the US Military Academy, West Point, on 9-10 February 2023. During this seminar, the authors were part of panel discussions as moderators, speakers, discussants and rapporteurs and they exchanged views on the evolution of geo-economics and global strategic competition. In this regard, this second piece in a series of three Policy Briefs from the international seminar provides a window into the growing importance of economic forms of power and the weaponisation of economic interdependencies. Needless to say, we write here in our personal capacities and none of the content herein can be attributed to our respective employers.
Creating the counter-order
China is a major economic power but it is ruled by a single, authoritarian, political entity called the Chinese Communist Party (CCP). In this sense, the Chinese “state-capitalist” economic model is different to those found in the US and Europe. The CCP is in a position to align its economic and geopolitical strategy. For example, China has offered negative real interest rates to subsidise loans to State-Owned Enterprises (SOEs), which has fuelled Chinese firms’ global expansion, drowned out fair competition and supercharged the China’s industrial development. With Russia’s sizeable resources and its closeness to the Chinese economy, the world is steadily bifurcating between the American and Chinese economic models.
However, the US and China are still engaged in an economic relationship of convenience. The West’s wealthy consumer base supports China by importing its goods. Only relatively recently have we seen measures to “reshore” or “near-shore” manufacturing capacity back to the West and to protect key industries (e.g. semiconductors). Given the economic interdependencies between the West and China, and in the context of growing strategic rivalry, a greater focus on economic security is to be expected. However, this focus cannot be confined to lowering trade dependencies. To be sure, ensuring that Chinese technologies cannot be used for the purposes of espionage, surveillance and/or sabotage (e.g. 5G) remains an important priority.
The US dominated global financial system is being questioned by China. Should the Chinese yuan effectively challenge the dollar in parts of the global financial system, then capital flows could shift more easily in China’s favour. China and its like-minded partners have a vested interest in weakening the dollar, even if they do not want the responsibility and cost of becoming the world’s reserve currency. What is more, China has a stake in not weakening state power in global currency markets more generally. Indeed, in 2021 Beijing outlawed crypto trading and mining. Such steps were taken as the rise of bitcoin led to capital outflows from China and a depreciation of the renminbi.
The US dollar will likely maintain its dominance for the foreseeable future, but China is able to erode Western economic power in other ways – not least by deploying infrastructure and aid programmes. China’s “Belt and Road Initiative” (BRI) is both infrastructure and aid development because it seeks to increase interdependencies between Beijing and developing countries. China seeks to use the BRI to globally promote its SOEs and norms, and ensure that the developing world sides with Beijing. To this end, China coats its interactions with normative pleas to historical anti-colonial movements, all while pursuing its own national interests.
Although there have been reports about the supposed demise of the BRI, the Chinese state holds to the idea of investing US$1 trillion until 2027 in infrastructure projects such as roads, railways and ports in over 70 countries. The challenge facing China is how to effectively leverage these BRI infrastructure projects when recipient states do not share China’s normative view of the world or interests in international fora such as the United Nations. In such cases, China needs more than economic inducements and so it may choose instead to use its diplomatic and military power to coerce BRI partners. China is already opening military bases in Africa.
China’s efforts have given rise to US and European Union (EU) alternatives called the Build Back Better World (B3W) and Global Gateway initiatives, respectively. These initiatives offer developing countries an alternative because the sustainability of the BRI could be called into question in the future. Any major economic shock in China or change in the CCP’s economic strategy could choke inward investment flows to developing nations, which would be destabilising.
Alternatively, the growing dependency of developing countries on China could benefit the CCP for more than just economic reasons. For example, if these countries default on debt payments, they could become even more dependent on China because these financial agreements are often collateralised with rights to critical infrastructure. This, in turn, could lead developing countries to “hand over” strategic infrastructure assets (e.g. ports and electricity grids) to China in the form of direct ownership or favourable concessions. High profile cases in Ecuador and Sri Lanka already point to some of the fears associated with the BRI.
Furthermore, there is also evidence to suggest that China will weaponise its vast wealth in critical raw materials. China’s relations with countries in Asia, Africa and Latin America are partly predicated on the strategy of securing further global supplies of raw materials. Both the US and the EU are taking steps to ensure access to supplies of materials, but the challenge facing Western countries is that resource needs will only increase with the technological demands of the digital economy. We already see how governments in the West are becoming more aware of the importance of critical minerals: in 2018, the US listed 35 minerals that were deemed critical for the economy and national security, but this list was increased to 50 in 2022
The currency of power
In addition to China’s strategy, there is a need to think about the overall health of the global financial system. For example, cryptocurrencies seek to circumvent state authority by verifying transactions and maintaining records with a cryptographically based and decentralised system. Although China and other countries have sought to ban or strictly control cryptocurrencies, there are still high adoption rates in emerging markets and bitcoin even bounced back within months of China’s ban. While cryptocurrencies and blockchain technology still fail to substitute traditional government-backed currencies, and are as yet to be tested as a viable alternative on a global scale, they are an issue of growing concern to governments.
In fact, the regulation of cryptocurrencies might be one of the few areas where China and the US currently agree, though China appears to be on a much more aggressive path for implementing a central bank digital currency, which could be quite disruptive. State-backed currencies have allowed governments to both regulate the global economy and exercise state power (e.g. central banks manage prices and inflation). For this very reason, advocates of cryptocurrencies tend to be ideologically opposed to the role of the state in the global financial system, and cryptocurrencies are seen as a way of decentralising financial transactions.
Questioning the role of governments clearly threatens to up-end traditional forms of global financial governance. Here, crypto entrepreneurs seek – but have so far failed – to supplant the state’s traditional role of ensuring trust between sellers and buyers. Indeed, the increasing uptake of cryptocurrencies threatens to make it harder for the West to impose sanctions on hostile individuals, firms or states. For example, cryptocurrencies have the potential to skirt the SWIFT banking system entirely – this system handles more than 44 million financial messages per day.
Cryptocurrencies raise serious public policy concerns. For example, there is no agreed international tax system for goods and services traded with cryptocurrencies. Tax avoidance and evasion through cryptocurrencies can undermine state tax-takes and dent public budgets for critical spending areas such as defence. In this respect, cryptocurrencies could overlap with the creation of new tax havens and expanded illicit activity, which could be instrumentalised by state rivals and/or criminal organisations.
Relying on cryptocurrencies implies a greater need to enhance cybersecurity protocols and the protection of the electronic information network. It is questionable whether a decentralised currency has the resources or political authority to provide such security and assurances. The US and its partners have a vested interest in not seeing cryptocurrencies finance illicit economic activities. With this decentralised currency system in place, it would be certainly harder to trace and punish illegal activities – some research already claims that 23% of all cryptocurrency transactions are associated with criminal activities.
The challenge facing the West and China in the coming years is how to benefit from digitalised banking, while still being able to control the negative effects of this evolution in financial markets including greater control of these currencies by private actors. Both the US and EU are exploring the benefits and possibilities of introducing a “digital dollar” or “digital euro”, but both have taken a rather cautious approach to the issue. China, for its part, has been more adventurous in the pursuit of a “digital yuan” and the government sees it as a way to boost domestic equality and economic growth. Thus, while China, the US and Europe all want to maintain political control over innovative currencies, the full geo-economic implications of the introduction of digital currencies are unknown but some features are becoming clearer. This includes how China could utilise a “digital yuan” to facilitate cross-border payments to reduce the impact of U.S. sanctions.
The demands of dominance
In this second Policy Brief in a three-part series, we have discussed some of the geo-economic undercurrents at play in the rivalry between the US and China. Clearly, strategic rivals like China have a vested interest in challenging – while not fully replacing – the dominance of the US dollar, but we have also touched upon the interplay between finances and infrastructure, aid and currencies. The logic that has guided us in this Policy Brief is a belief that state planners in Western countries are still behind the curve in developing strategies of economic statecraft. While it is true that the US, the EU, Australia, Japan and others are rapidly developing their economic security strategies, we have tried to show how capital flows, debt and economic dependencies form an intricate web of vulnerabilities for Western countries. It is unclear how digital currencies will develop in the future, but we see significant risks in this unconventional currency, which could give rise to decentralised financial flows and more organised crime.
The maintenance of the US dollar as the world’s reserve currency has been a fundamental element of US power and the foundation for the growth of democracies around the world, but the risks associated with the rise of rival currencies such as the renminbi are clear. Today, the US dollar is faced with growing competition in currency markets. China is seeking to use the renminbi to lure states around the world into its own economic orbit. The major challenge for the Western world today is how China can combine its currency ambitions with other tools of economic statecraft including infrastructure projects through the BRI, the instrumentalisation of debt in developing countries and using its relative wealth in critical raw materials to control global supply chains.
The solution to these growing challenges is far from simple. As Western countries continue to use sanctions, tariffs and technology controls to challenge rivals, states caught in the cross-hairs of such measures may be tempted to align with China in acts of self-preservation. This observation is not a call to lower the sanctions imposed on Russia, but it is an invitation for the West to think about all its other diplomatic relationships around the world in places such as Latin America, Africa and Asia. China today finds it far too easy to pull out the “colonialism” card against the West, but the world should be reminded that China is in many respects engaged in a form of “neo-colonialism” in many parts of the world. So far, Western countries have not come up with a compelling narrative and strategy that can rival China.
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Order: the Financing of Alliances and Western Power
Abstract
Russia’s war on Ukraine and the rise of China are raising serious questions about order in international politics. If the West is to have a fighting chance at maintaining its military supremacy and upholding global order, it needs to answer some fundamental questions about the United States (US)-led alliance system and what is expected of allies. This Policy Brief looks at burden-sharing in the North Atlantic Treaty Organisation (NATO). As the US seeks to focus its attention on China and the Indo-Pacific, greater responsibility for the security of Europe seems likely to fall on European shoulders. In a context where the US has underwritten European security for close to 80 years, and where American lives and money have been put on the line, it is long overdue that Europe do more for its own defence.
CSDS Policy Brief, 2023, No. 11 (written with J. Alexander Thew, Frank Finelli and Mickey P. Strasser)
Introduction
Russia’s war on Ukraine and the rise of China are raising questions about international order: the collapse of arms control treaties, the weaponisation of raw materials and technologies and the use of unconventional tactics to subvert international law and prey on vulnerable countries are the hallmarks of the emerging order. For most of the West, there is a need to re-learn the fundamentals of power. The risks posed by nuclear-armed adversaries and their greater reliance on war and aggression means that there can be no substitute for sustained investments in Western militaries: defence and deterrence are again the order of the day. However, if the West is to have a chance at maintaining its military supremacy and upholding global order, it needs to answer some fundamental questions about its alliance system and what is expected of allies.
This Policy Brief focuses on burden-sharing in the North Atlantic Treaty Organisation (NATO). At a time when the United States (US) is focusing its attention on China and the Indo-Pacific, greater responsibility for the security of Europe should fall on European shoulders. In a context where the US has underwritten European security for close to 80 years, and where American lives and money have been put on the line, it is overdue that Europe do more for its own defence. While any systemic decoupling of the transatlantic alliance should be avoided, Europeans cannot continue to free-ride on American power indefinitely.
Our arguments in this Policy Brief are based on observations made at an international security seminar held at the US Military Academy, West Point, on 9-10 February 2023. During this seminar, the authors were part of panel discussions as moderators, speakers, discussants and rapporteurs and they exchanged views on the evolution of geo-economics and global strategic competition. In this regard, this first piece in a series of three Policy Briefs from the international seminar provides a window into the growing importance of burden-sharing and the economic fundamentals of defence. Needless to say, we write here in our personal capacities and none of the content herein can be attributed to our respective employers.
The first line of defence
The first line of defence of the West is NATO, which is underwritten by American power. The alliance is a public good that is beneficial for all members and ensures that all allies feel secure. However, we also know that the military and financial contribution to collective defence in the alliance is disjointed – the US makes an outsized contribution to collective defence. As we saw with the previous US administration, the question of burden-sharing is a deeply political issue that underlies the healthy management of NATO. Europe, being a wealthy continent, has consistently under-performed in relation to defence spending. Europeans have historically failed to meet the “2% of GDP” pledge at the heart of NATO’s defence investment plans, and many still do despite Russia’s 2022 invasion of Ukraine – only 7 allies met the target in 2022. However, with the US increasingly focusing on the Indo-Pacific, calls for Europe to do more for its own defence will only become louder – regardless of who sits in the White House.
We have already seen how questions of burden-sharing in NATO are intensely political, and NATO as an organisation has had to adapt to pressure from Washington in this regard. To this end, in 2017 NATO Secretary General Jens Stoltenberg underlined the importance of “cash, capabilities and contributions” as a way of capturing what individual NATO allies bring to the alliance. At a time when former President Trump was calling for more investment in defence, NATO headquarters was at pains to show that commitment to the alliance could be measured in more than just defence spending. The reality, however, is that arguments for greater spending rang more loudly than any appreciation for commitments to military operations or what capabilities NATO allies were purchasing – even when acquired from the US.
There are, of course, numerous academic studies that have probed the realities of burden-sharing in NATO. Some scholarshave argued that free-riding in NATO is an overblown argument, not least because there are questions about the causal link between increased defence spending and influence in Washington – top European defence spenders do not necessarily enjoy a closer relationship to the US. This same school argues that burden-sharing and free-riding should be understood in a geographical and temporal context – free-riding may fluctuate over time and depend on geopolitical circumstances. Another school of thought argues that many European NATO allies are not really driven by geopolitical or strategic considerations when planning their defence expenditure. Instead, so the analysis and data show, burden-sharing choices are driven by regional political economies.
“Spending more, spending better”
The idea that NATO countries have to ‘spend more and spend better’ is not new, but so often the specific dynamics of spending better are overlooked. Whenever political leaders speak about the need to increase defence budgets, analystsimmediately think of a country’s overall defence expenditure, expressed in real terms or as a percentage of GDP. It is such a metric that forms the basis for NATO’s “2% of GDP” target. Of course, many analysts have already questioned the value of such meta-metrics, not least because in some cases they may actually be artificially reached by allies due to inflation or budget cuts – it historically takes defence longer to feel budgetary cuts, and this raises defence spending artificially against other areas of government spending. For example, during the Covid-19 crisis there was a risk – that did not eventually materialise – that as the GDP rates of European countries decreased, the share of defence spending as a percentage of overall GDP would artificially increase, all while not doing anything to raise real rates of defence spending.
Therefore, when any discussion of top-line defence spending figures occurs we should immediately focus on the quality of the spend overall. In other words, there is a need to focus on exactly what alliance defence spending is geared toward. Fortunately, scholars have already attempted to disaggregate military expenditure in NATO and this has led to at least four main baskets of spending: 1) equipment costs (e.g. weapons systems); 2) personnel costs (e.g. payroll and social costs for civilian and military employees); 3) operations and management costs (e.g. spare parts, supplies and utilities); and 4) infrastructure costs (e.g. fixed military installations). Overall, the data shows us that only approximately 15% has been invested in equipment even though NATO and the EU have both established a “20% target” for equipment and research and development (R&D) as part of their overall investment in defence. Instead, the data shows that over 56% was spent on personnel, 24% on operations and maintenance and just under 3% on infrastructure.
Disaggregating defence spending in this way is important, especially in an alliance setting, so that we can enhance transparency and get a better handle on the state of burden-sharing. In this sense, if collective defence is to have any real meaning then allies have a vested interest in knowing where each dollar or euro is being spent. The lack of transparency certainly does not help overcome feelings of suspicion and accusations of free-riding among allies – mutual trust is at the heart of any alliance, yet without transparency on spending and commitments trust can be eroded. The reality today is that the data and accounting methods of defence spending in NATO are not conducive to producing a realistic and clear-eyed picture of allied commitments, and this lack of accuracy may even damage NATO’s ability to identify vulnerabilities or gaps in its defence innovation and capability suite.
Europe’s burden?
Ever since Russia’s invasion of Ukraine in early 2022, Europeans have been called upon to support Kyiv with financial assistance, military advisory capacities and military equipment. As part of this effort, vulnerabilities in Europe’s defence manufacturing capacities have been exposed with challenges associated with production times and scale for basic supplies such as ammunition. Still, even though the EU has developed new ways of delivering and reimbursing the military equipment being sent to Ukraine, Europe still falls short of American levels of military support. For example, whereas the US is estimated to have delivered €44.3 billion in military equipment to Ukraine since January 2022, the EU27 have delivered approximately €10.7 billion over the same period. In this respect, the EU has delivered the bulk of non-military financial assistance to Ukraine since January 2022 rather than military equipment – by January 2023, the EU Institutions had provided €30.3 billion to Ukraine compared to €25.1 billion by the US.
Despite Europe’s support for Ukraine, however, the continent’s commitment to defence cannot simply be measured in terms of the legacy equipment and ammunition it hands to the Ukrainian armed forces. Indeed, European investments in defence are required to ensure collective defence and deterrence – not simply to deter current and future Russian aggression, but also to be able to help manage future military friction with rising powers such as China. In this respect, several European countries have invested in a relatively rapid fashion in new equipment. Countries such as Croatia, Estonia, Latvia and Lithuania have moved quickly to buy air defence systems; others such as Finland, Germany, Norway and the Netherlands have procured next-generation fighter aircraft such as the F35; Poland has procured battle tanks and howitzers and the Netherlands have agreed to acquire howitzers too; and others, like France, have prioritised seabed warfare and nuclear modernisation. This is a very material contribution to NATO and EU defence.
Looking to the future, however, Europe has to contend with the issue of sustained investment in defence. The level of ambition shown so far is quite underwhelming: only €8 billion over 7 years under the European Defence Fund, €5 billion over 7 years for military assistance and a proposed €500 million for a short-term, two-year, financial vehicle to support the production of ammunition. While all of these figures represent a real break-through in the way the EU approaches defence spending – for years the question of using EU funds for defence was taboo –, these amounts are too timid for the strategic reality facing Europe today. This is why some have called for a massive and sustained increase in defence investment. Looking at EU action in the Covid-19 recovery period, the European Commission initially borrowed up to €100 billion for economic support. Why not something similar for defence?
Such a financial level of ambition would be more than welcome for Europe’s contribution to transatlantic burden-sharing, but the EU is still hamstrung by a number of structural factors that impede bolder action on defence. For one thing, Europe does not represent an integrated banking and financial system and it certainly cannot be likened to the US federal system. Borrowing for EU strategic projects cannot yet rely on mutualised debt and European states still protect and promote national banking champions for their own benefit rather than EU-level or NATO efforts. The truth is that, despite the crisis management steps taken in the wake of the 2008 financial crisis, the European banking system is still too fragmented and governments are not prepared to leverage existing financial sources found under the European Investment Bank. One wonders if European nations can seriously leverage the finances for collective defence without a proper banking union that integrates capital markets and allows for more fluid cross-border transactions.
Toward and beyond Vilnius
In this first Policy Brief of a three-part series, we have addressed the issue of transatlantic burden-sharing and we underlined how important it is for Europe to be far more ambitious on defence spending. In the two Policy Briefs that follow, we argue that international politics is undergoing profound change marked by counter-order and disorder. In this piece, we have focused on “order” – or rather the steps the West needs to take to maintain the order it has enjoyed for several decades. Russia’s war on Ukraine clearly undermines international order and the principle of territorial sovereignty. Europe has stepped-up its game and realised that the geographical proximity of the war means it needs to invest in military equipment and overcome political taboos in defence. Yet, without US support Europe’s effort would have been largely futile and clearly America continues to undergird the NATO alliance in critical ways.
However, Europeans need to read the runes. The major issue today in international politics is China. The US has underlined its resolve to respond to this rise and its destabilising effects, and it has focused in on the Indo-Pacific theatre. Europe may not see China through a military lens, but the coming era of great power competition is a major test. The NATO alliance and the EU both need to come to terms with the challenge posed by China. While there is growing attention to securing supply chains and re-shoring or near-shoring manufacturing capacity, there can be no substitute for military power. When leaders sit down at Vilnius in the summer of 2023, they need a new vision for collective defence not only pegged to top-line defence spending: we need to see a real commitment to the quality of this spend through equipment acquisition and modernisation and defence innovation, in addition to personnel.
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Strategic Competition: Toward a Genuine Step-change for Europe’s Defense Industry?
Since 2016 the European Union has embarked on a step-change in the way it financially supports and incentivizes defense-industrial cooperation. The year 2022 will go down as another important moment in this process with the EU announcing a series of measures, such as joint defense procurement and joint planning and programming. Russia’s war on Ukraine has only underlined the importance of such steps, but it has also exposed the vulnerabilities of the European Defense Technological and Industrial Base. This article provides an account of the development of EU defense-industrial policy since Russia’s war on Ukraine and it critically engages with some of the challenges that have emerged for Europe’s defense industry, EU Institutions and EU Member States. In so doing, the article asks whether the war on Ukraine will lead to a genuine step-change in EU defense-industrial cooperation.
The Economics of Peace and Security, 2017, Vol. 18, No. 1
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Navigating the Euro-Atlantic Defence Innovation Landscape
This report set out to analyse emerging transatlantic defence innovation systems and the extent to which EU and NATO efforts in the domain overlap, are in conflict or have potential synergies. The overarching finding is that EU and NATO systems are separate but heavily interdependent. They are separate in terms of membership, governance structures, legal regimes and the way financial resources can benefit innovation in non-member markets. However, they are interdependent in the sense that they cover similar fields, their memberships are similar, investments – both financial and human – in one setting will affect the resources available in the other and the end-product can benefit the security of both.
NATO established its Defence Innovation Accelerator for the North Atlantic (DIANA) in 2022 as an initiative to accelerate and promote transatlantic cooperation on the development of critical technologies and to harness civilian innovation to solve critical defence- and security-related issues. It has also established the NATO Innovation Fund (NIF) as the world’s first multi-sovereign venture capital fund to invest in start-ups and to provide funds to develop emerging dual-use technologies. Questions remain regarding engagement from member states, in particular the US with its highly guarded defence innovation system, and how innovation within NATO will be affected by the lack of a common regulatory regime on new technologies.
The EU established a defence innovation hub (HEDI) at its European Defence Agency in 2022, streamlining existing innovation work and adding new tasks. It seeks to attract non-traditional defence actors using challenges and prizes. In parallel, the European Commission has established a defence innovation scheme (EUDIS) using test hubs, hackathons, matchmaking and a defence equity facility to find synergies between civilian and military research, and support innovative companies entering the defence market. To what extent the funding will be sufficient and there is political will to support these measures, and how common procurement and export control regimes might impact defence innovation remain unclear.
The synergies, overlaps and gaps are many. On a positive note, the two organizations increasingly view defence innovation and emerging and disruptive technologies (EDTs) in a similar fashion. One area of potential competition is the security and ownership of intellectual property rights (IPRs), where protection of IPRs differs in an EU and a NATO context. Another area of friction could be funding, where the extent to which either organization could benefit from financial resources that stem from the other’s innovation system is unclear. In addition, both the EU and NATO are public bodies that are destined to want to justify public investments in defence. This is likely to lead to a potentially worrying situation in which an extremely low risk approach is adopted, where organizations only fund those defence innovation projects that they deem to have a high chance of success.
Member states that want to maximize the benefits of either system should consider the areas of activity set out below.
Work to integrate the two innovation systems by:
- Increasing staff-level coordination between NATO’s DIANA and the EU’s HEDI and EUDIS.
- Establishing more common ground on the policy and regulatory issues surroundingcritical technologies using existing avenues such as the EU-US TTC.
- Working jointly with the EU and the US on securing access to the raw materials requiredfor many emerging technologies, such as rare earth minerals.Nurture national ecosystems by:
- Speeding up the domestic innovation cycle and establishing novel procurement procedures that are more accommodating to smaller companies entering the defence market.
- Establishing avenues that can bridge cultural and knowledge barriers between public agencies, military forces, traditional defence industry prime contractors and smaller companies and start-ups in the field of EDTs.
- Ensuring that national export control regimes do not undermine national interests in international defence innovation.Manage the politics of innovation in the EU and NATO by:
- Conducting a thorough assessment and prioritization of the sort of innovation a member state hopes to achieve or requires, the value that can be added to each or any available innovation system, and which organizations and modes of working are best suited to the national innovation system and its industrial set-up.
- Leveraging bilateral and mini-lateral cooperation to maximize the benefits of cooperation in a multilateral setting.Secure outreach and engagement by:
- Actively informing the target audiences for EU and NATO measures about initiatives that might not be on their radar.
- Investing in secondments to accrue and bring back knowledge to national systems.
- Engaging with the armed forces as end-users when strategies for international defenceinnovation cooperation are written and actions are implemented.
Politea, 2023 (written with Björn Fägersten and Charlotte Kleberg)
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Secuelas y réplicas: Europa tras la guerra
Desde que hace ahora un año Vladimir Putin ordenara invadir su país vecino, la guerra en Ucrania se ha convertido en la cuestión central del panorama estratégico europeo y en uno de los eventos que más ha convulsionado el orden -o el desorden- internacionaldesde el fin de la Guerra Fría. Se trata de un acontecimiento de una entidad disruptiva solo comparable a otros dos grandes traumas globales de los últimos 30 años, los atentados de 2001 y la pandemia de 2020, con la diferencia de que ha llegado sin apenas margen temporal que permita haber digerido las repercusiones de todo tipo causadas por el coronavirus. Ahora, además, hay un rasgo distintivo que hace el ataque ruso más grave que los dos sucesos anteriores: su origen. A diferencia de los estragos causados por un murciélago en Wuhan, aquí estamos hablando de una decisión política deliberada. Y, a diferencia del 11 de septiembre, el responsable no consiste en un grupo clandestino que opera en los márgenes del sistema, sino que se trata, nada menos, de uno de los cinco componentes de la élite permanente que en teoría garantizan la paz internacional desde el Consejo de Seguridad de Naciones Unidas. La trascendencia del desafío es pues enorme y va bastante más allá del sufrimiento humano sobre el terreno, por elevado que éste sea, pues el éxito de la potencia agresora supondría recuperar la vieja idea de que la guerra, sin fundamento alguno de derecho internacional y con desprecio a la soberanía de los demás Estados, puede volver a ser una forma de conseguir ganancias políticas.
En ese sentido, la invasión de Ucrania es un trauma contemporáneo que, paradójicamente, resulta muy poco moderno. El terrorismo yihadista y el COVID-19 sí son fenómenos propios de la globalización; de un mundo donde los enemigos han dejado de ser convencionales, incluso conocidos, y donde las desgracias vienen sobre todo caracterizadas por el efecto multiplicador que se deriva la hiperconexión actual en todos los órdenes: millones de personas que viajan y propagan infecciones o comparten experiencias de vuelos sometidos a férreo control, ideas radicales que se imitan, noticias que se expanden en tiempo real y productos fabricados al otro lado del mundo cuyo alcance no está garantizado. Rusia, sin embargo, se está comportando desde febrero pasado como un viejo imperio decimonónico con sentimiento de misión histórica que pretende restaurar la gloria nacional y ampliar sus fronteras a través de la conquista militar del territorio contiguo.
Real Instituto Elcano, 2023 (contribution to edited volume by José Juan Ruiz and Ignacio Molina)
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Annus Horribilis: Russia’s War, Ukraine’s Struggle, Europe’s Future
Abstract
One year on from Russia’s invasion of Ukraine, Europe continues to support Kyiv with military equipment and financial and political support. The bravery of Ukrainians is unparalleled, but, to truly support Ukraine, Europe needs to answer serious questions about its defence. Potential future turbulence in the transatlantic relationship means that European states have only a slender window of opportunity to put the EU and NATO on an ambitious footing. Europe needs to urgently address its intelligence capacities, military capabilities and defence industry. Yet, no ambitious European agenda can emerge while European governments continue to disagree on the major political questions that have arisen since the war. How to deal with Russia after the war and what more Europeans can do to ensure their own defence are just some of the questions that will require answers, sooner rather than later.
CSDS Policy Brief, 2023, No. 6
Introduction
War weariness: the luxury of those not fighting. After one year of war, we continue to see the Ukrainian armed forces and people resist the Russian aggressor. Ukrainians have repelled Russian forces from the heart of the country and now fight the Kremlin largely in the East of the country. No one can doubt the steadfastness of Ukraine, but Kyiv’s partners and friends – who have decided against direct military intervention in the war – are being largely judged in steel and gold or how far and fast they are able to arm and re-supply the Ukrainian armed forces. Even though Europe has welcomed millions of Ukrainian refugees, imposed extensive sanctions on Russia and opened the EU accession process with Ukraine, the core objective is to ensure Ukraine’s victory.
Inevitably, war raises difficult questions: how far can America and Europe continue to support Ukraine’s war effort? Is the defeat of Russia a realistic prospect and what does “defeat” mean in reality? On what footing should Europe’s relations with Russia be placed after the war? Even after a year of war, there are still no easy answers to such questions. Today, Europe has largely severed economic and energy ties with Russia, but Putin still looms over European security, not least because of the ideology and goals that drive him and his nuclear arsenal.
With potentially dramatic political shifts on the horizon in America, Europe has greater pressure on its shoulders toassist Ukraine and to keep Russia at bay. True, European governments have reinforced NATO’s military presence in central and eastern Europe. They have also understood that the German-led logic of binding Russia in peace through economic interdependence has failed. Through the European Union (EU), they have even broken an important taboo: namely, that the Union – once shy about funding arms – can finance the provision of weapons to partners most in need.
After a year of war, is it still too early to draw lessons from Russia’s war on Ukraine? This is often asked. Yet, the war has already revealed both the shortcomings and boldness of Europe. This Policy Brief analyses Europe’s response by looking at its intelligence on Russia’s invasion, supply of military equipment to Ukraine, Military Mobility initiative, treaty-based security guarantees, EU-NATO relations and the transatlantic relationship.
Artificial intelligence?
One of the immediate issues to have emerged out of the war on Ukraine relates to the state of Europe’s intelligence services. Although a handful of European states had the precise military intelligence necessary to predict Russia’s invasion, the truth is that key states such as France and Germany did not follow through on the information they had at hand. Even with Russia’s illegal seizure of Crimea in 2014, and the amassing of Putin’s troops on Ukraine’s borders in advance of the 24 February 2022 invasion, many European governments still did not believe that Russia would attack Ukraine again. In contrast, the United States (US) engaged in a very public exposure of Russia’s plans to invade. A day before the large-scale invasion, the US reported that some 160,000 to 190,000 Russian troops were sitting as close as 5 kilometres to Ukraine’s border. The fact that some European intelligence services downplayed these steps by the Kremlin would be laughable if the situation were not so tragic.
For Europeans, the period before the war therefore revealed a mind-boggling inability to act on intelligence. Why was that? One answer could be that some European states believed that intelligence was being skewed to advance a more hawkish stance towards Russia. Accordingly, there was the distinct impression that states close to Russia were being ignored despite their repeated warnings about the threat posed by the Kremlin. Another answer, by extension, was the lack of faith in American intelligence: those that saw US intelligence being manipulated in advance of the Iraq War bought into the idea that American intelligence can never really be trusted. This was obviously wrong. Alternatively, some European governments simply did not want to entertain the idea of a Russian invasion because they knew it would obliterate years of accommodating foreign policy towards the Kremlin. Hence, some European leaders were still expending energy on diplomatic talks with Putin even while he mobilised for war.
These intelligence shortcomings beg the question: what future case of military aggression will European states try to downplay before they are forced to act? True, with hindsight everything becomes easier and clearer. It is far too easy today to say that, had intelligence been acted on earlier, Europe could have sent arms to Ukraine, fired up its defence factories, turned more states against Russia’s actions and weened itself off of Russian energy sooner. In this sense, hindsight sets an unrealistic benchmark. Nevertheless, given the lessons learned from Russia’s invasion Europe has now no excuse to know what it must do in future wars. Russia’s invasion was a rude awaking for European intelligence, but it should also help write the “playbook” for European responses to future wars.
Venus armed?
Despite the serious Europe failures to act on intelligence, one of the surprise developments was the EU’s move towards financing weapons, ammunition and supplies for Ukraine’s war effort. The unattractive and typically bureaucratic sounding European Peace Facility (EPF) has been one of the EU’s major contributions to Ukraine’s war effort. In 2022, the Facility was supposed to have a financial ceiling of €540 million but, such was the demand to help finance arms for Ukraine, it was increased to €2 billion for 2023. A powerful symbol of the EU’s solidarity with Ukraine, we should recognise that the EPF was never truly established to help Ukraine fight back Russia. While most EU states believed the Facility would largely apply to Africa, this meant that EU planners were ill-prepared to reimburse the type of military equipment inventories used in conventional wars. Consider that the Union first started to ship helmets and medical equipment to Ukraine, but after one year of fighting Europeans are transferring air defence systems, armoured vehicles, aircraft and even tanks.
The war should certainly put into perspective the remaining regulatory and legal hurdles that have so far hampered progress on Military Mobility. Although transport infrastructure will take some time to build or adjust, there can be no doubt today that Europe needs sound military transport infrastructure to deter Russia from further aggression. Yet, more is needed. Europe should transform Military Mobility. Thus far, the focus has been on better helping to rotate forces in and out of NATO eastern flank countries. However, as NATO appears to be moving towards a more permanent force posture in central and eastern Europe, the EU and NATO will need to start thinking about the protection of military bases and civilian populations, which will entail large-scale investments in missile and air defence systems. The German-led “European Sky Shield Initiative” hints at this, but a more lasting solution beyond the 16 European states currently signed up is needed.
Furthermore, the war on Ukraine has raised important questions about security guarantees in Europe. Today, states in both the EU and NATO benefit from treaty-based security guarantees. Article 5 of the Washington Treaty and Article 42.7 of the Treaty on the EU (TEU) set out the basic logic that an armed attack on one state is an attack on all. The war on Ukraine has shown that any NATO-EU state would want both organisations to help in its hour of need. Yet, the EU is woefully unprepared to act on the basis of its own Mutual Assistance Clause (the more palatable name for Article 42.7 TEU). Finland’s and Sweden’s impending NATO accession may imply even less attention to the Mutual Assistance Clause, yet some may have noticed that Ukraine has been offered EU membership. Ukraine, as a future EU member, will not allow any wayward drift on Article 42.7. Surely, the EU will have to find ways to bolster the Mutual Assistance Clause, and to better connect it with NATO’s Article 5, before Ukraine becomes an EU Member State?
In war, prepare for…?
The war on Ukraine has offered European states and institutions the opportunity to prove their ability to act autonomously. They are providing military, financial and political support to Kyiv. Europeans are now running to keep up with defence production, and there are whispers in the air that Europe needs to be put on a “war economy” footing. Other events, such as Washington’s Inflation Reduction Act, have spurred on European decision-makers to find ways of supporting Europe’s industry. In the midst of war, the EU has sought to launch major strategic projects such as IRIS2 to bolster space communication assets. European states have launched major defence programmes such as next-generation fighter aircraft too. Furthermore, European defence budgets are slowly creeping up and allies may agree in Vilnius this summer to set “2% of GDP” as a baseline rather than a ceiling of defence spending.
In other respects, however, cooperation has only gone so far. The EU and NATO are still unable to jointly articulate a “master plan” for European security because respective member states do not genuinely want one. Thus, EU-NATO relations are restricted to joint declarations, common actions or staff-to-staff meetings. These are largely bureaucratic actions. Yet meaningful cooperation is possible, even if it can be frustrating. Think of Military Mobility. Ideally, any credible Europeanisation of NATO would see bold plans for EU-NATO cooperation on air and missile defence, critical infrastructure protection, cyber defence and space. These are by no means easy areas to get right in an EU-NATO context, but the war on Ukraine has only raised the bar higher for European security and ideas of this magnitude.
Yet Europe’s security challenges do not end at the continent’s borders. Too often, security in the South and East of Europe have been seen as a trade-off. Today, there certainly appears to be little to no appetite in Europe for out of area military operations. Experiences in Afghanistan and the Sahel have taken the wind out of open-ended stability missions. However, saying that crisis management is passé is not the same as saying that Europe should not respond to war and conflict beyond its shores. If Europe is still not fully prepared to defend the homeland alone, however, then it has little hope of securing its interests globally. The war on Ukraine has already taken on global proportions, and this invites Europe to ask whether it should be a regional or global power. The Indo-Pacific is home to core European interests, but it is also the location of a massive arms build-up and the erosion of trust. What happens if Taiwan asks the EU to deliver arms through the EPF in case China invades? If you believe that this question is overly dramatic, then nothing has been learned since 24 February 2022.
Operation Unified Europe?
One of the constant refrains heard since the outbreak of war has been how unified NATO and the EU have been. Thus far, there has certainly been a remarkable unity of purpose. The people of Ukraine deserve nothing less. Both the EU and NATO have been able, so far, to generally paper over the cracks of structural grievances. Hungary has threatened to veto numerous EU initiatives on Ukraine. Turkey has threatened to scupper Sweden’s accession to NATO, as well as upping its bellicose rhetoric towards Greece and Cyprus. Larger states have sought to “lead” Europe in its response to the war, but only to the annoyance of the rest. Should Europe wait for America’s permission to arm Ukraine with heavy weapons or not? Should Europe heed Putin’s nuclear threats or not? Should Europe push Ukraine to accept negotiations with Russia or not? Should Europe tone down its sanctions on Russia or not? The dividing lines are everywhere.
Fortunately, the leaders of the EU and NATO as organisations and the US have done a rather good job of keeping a lid on these divisions. Some may well ask how the response to Ukraine would have unfolded with Donald Trump in office, but the Biden administration has played its hand relatively well in terms of delivering aid to Ukraine and shepherding allies. Yet, in other respects, the war has glaringly exposed Europe’s continued dependence on the US. Think of how Washington provided political cover for Germany over the Leopard tank debacle. The US is making it abundantly clear that the bulk of its attention should be placed on China. Yet, perhaps the US government is not being loud enough on this point.
The longer the war on Ukraine lasts, the more it becomes entangled with US priorities in the Indo-Pacific. If the US wants to both maintain European security and check China’s rise, one plausible short-term approach is to ensure a swift defeat of Russia in Ukraine. Yet a “two front” approach creates its own difficulties. The US has historically proven that it can fight wars in two geographical areas simultaneously, especially if allies are involved and defence spending remains high. The question is whether Washington has the resources and will to do so again. A real danger for Europeans is that America talks itself into a “China only” strategy at a time when Europe is unprepared to take more of its defence into its own hands.
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Agenda Exterior: escenarios para una guerra
Lo único que sabemos con certeza es que la guerra terminará algún día. Hasta que llegue ese día, el pueblo ucraniano seguirá luchando por su patria con el apoyo de la UE, la OTAN y sus socios.
Uno de los principales aspectos psicológicos de la guerra ha sido sacudir a los europeos de su letargo relativamente pacífico: las guerras de agresión por el territorio vuelven a ser una realidad. En consecuencia, los gobiernos europeos han vuelto a hablar de “economías de guerra”. Se han dado cuenta de que producir, mantener y suministrar material militar es un asunto serio: encargar carros de combate no es como encargar y montar una mesa nueva en Ikea. Así que, como no podemos saber cómo acabará la guerra, y no tenemos garantías de que Rusia no aproveche cualquier estancamiento o derrota para reagruparse y volver a invadir, la industria de defensa europea pasará a ser fundamental en los planes para mejorar la defensa y la disuasión europeas.
Sin embargo, la legítima entrada de armas en Ucrania se produce en un momento en que los regímenes de control de armamento y no proliferación están hechos trizas. La guerra de agresión de Rusia ha puesto de manifiesto la brutal realidad de que la soberanía no puede protegerse con cartas y tratados: lo que realmente cuenta son las armas. Esta constatación no puede sino hacer del mundo un lugar más oscuro y premonitorio. Europa debe desprenderse de las proverbiales telarañas estratégicas acumuladas durante las últimas décadas para pensar con más claridad y actuar con más decisión en pro de su defensa.
Politics Exterior, 2023
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A Stellar Moment? Spain, Strategy and European Space
This analysis looks at the shifting nature of space, security and defence in the EU. It provides an account of the growing geopolitical contest in space and stresses the vital importance of space for Europe’s strategic autonomy. What is more, the analysis looks at Spain’s approach to space, security and defence and it outlines how it is supporting the EU’s space efforts. Looking to the future and the first-ever EU Strategy for Space, Security and Defence, this paper probes some of the challenges and opportunities facing Spain –and the EU– as a space actor.
Real Elcano Analysis, 2023, No. 9
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Yearbook of European Security 2022
Abstract
The 2022 Yearbook of European Security provides an overview of events in 2021 that were significant for European security. The book charts major developments in the EU’s external action and security and defence policy. Divided into region and issue-specific sections, this Yearbook contains entries on the EU’s multilateral efforts and work in security and defence, as well as specific geographical sections on North Africa and the Middle East, Sub-Saharan Africa, Asia, Europe and the Americas. The section on security and defence provides comprehensive information about EU defence tools such as the Permanent Structured Cooperation (PESCO) initiative, and an overview of security issues such as space, cybersecurity, terrorism, border management, hybrid threats and more.
To enrich the reading experience, the document contains references to key EU texts, various EUISS analytical publications, an index and informative infographics.
EUISS Book, 2021 (written with Linnéa Cullman)
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Daniel Fiott 