European Commission unveils a 1.5 billion euro strategy to strengthen its defense industry.

According to the press release dated March 5, 2024, the European Commission has made a decisive turn in strengthening the Union's defense industry with the unveiling of its new defense industrial strategy. Orchestrated by Commissioner Thierry Breton, this initiative aims to fill the Union's gaps in defense capabilities, an urgency highlighted by the current difficulties in providing adequate military support to Ukraine.
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SCAF Next-Generation Weapon System (NGWS) Featuring Eurofighter and Unmanned Aerial Platforms (Picture source: Airbus)

First announced by Ursula von der Leyen during her State of the Union address in September 2023, and reiterated at the Munich conference, the strategy calls for increased investment, improved coordination, and the consolidation of Europe's defense. The European Defence Investment Programme (EDIP) will be at the heart of the European Defence Industry Strategy (EDIS), succeeding existing programs such as ASAP and EDIRPA, which are endowed with 470 million and 300 million euros, respectively. The European Defence Industry Programme (EDIP) is the legislative initiative that will bridge the gap between short-term emergency measures adopted in 2023 and a more structural, long-term approach. With a budget of 1.5 billion euros planned for the period 2025 to 2027, and Commissioner Breton advocating for a colossal 100 billion euro fund, the Union commits to vigorously supporting its defense industry.

This strategy aims to reduce European dependence on imports while facilitating joint and coordinated purchases, which could be exempt from VAT. In this regard, Ukraine could be associated with the procurement program, while measures are contemplated to encourage arms exports to third countries, thus offering new markets to European industries. On the regulatory front, for example, EDIP introduces new solutions, including a new legal framework, the Structure for European Armament Programme (SEAP), to facilitate and intensify Member States' cooperation on defense equipment.

However, facing a defense industry that struggles to produce in sufficient quantity and speed to meet urgent needs, particularly in Ukraine, a consensus emerges on the need to authorize the purchase of non-European ammunition. This approach marks a departure from the previous "buy European" doctrine, notably defended by France, despite the risk of not meeting the goal of delivering 1 million shells by March 2024.

To overcome budgetary constraints limiting this strategic ambition, voices are raised in favor of joint European debt. Among them, Estonian Prime Minister Kaja Kallas and the French President have proposed an amount of 100 billion euros. Although this position does not have unanimous support, Poland, Estonia, and France position themselves as leaders of nations supporting significant expenditures, as evidenced by a recently published joint note.

Defense News March 2024