EU to support common defense market, boost joint spending | News | DW | 30.11.2016
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EU to support common defense market, boost joint spending

The European Commission has put forward proposals to strengthen a single market for defense research and procurement. Inefficiencies in the market result in 25-100 billion euros in waste a year.

The European Union unveiled plans on Wednesday to boost joint defense spending and research in an effort to create a more efficient and innovative defense sector as the continent seeks to respond to a host of security challenges.                                      

"If Europe does not take care of its own security, nobody else will do it for us," European Commission President Jean-Claude Juncker , who has called for a European Army, said in a statement. "A strong, competitive and innovative defense industrial base is what will give us strategic autonomy."

The EU executive's proposal calls for the creation of a European Defense Fund to support joint research in defense technologies and common development of military assets and technologies across the 28 member states. 

Research and capability

A so-called "research window" would support collaborative research with the support of 25 million euros ($26 million) next year and a budget allocation that could reach 90 million euros by 2020. After 2020, the Commission plans to develop a defense research program funded with an estimated 500 million euros per year.

A second "capability window" would enable member states to jointly invest and purchase military assets like drones and helicopters in order to drive down costs per unit. Currently, members tend to place smaller procurement orders individually, often missing out on bulk savings. This part of the defense fund could be supported with about 5 billion euros per year. The 5 billions euros would not be new EU spending,  but rather funds committed by member states which want to collectively purchase defense assets.

"We are not here to propose to member states to use more money for defense," Jyrki Katainen, commission vice president for jobs, growth and competitiveness, told reporters in Brussels. "What we are proposing is to use existing resources in a better way in order to get better security."

Another arm of the proposal envisions the Commission supporting the European Investment Bank to improve funding access to businesses along the defense industry supply chain.

Single defense market

The proposals are part of an effort to break down barriers in the defense market to foster economies of scale and greater collaboration within Europe, creating a sort of "single market for defense."

The Commission said it would "strengthen the conditions for an open and competitive defense market in Europe to help companies operate across borders and help Member States get best value for money in their defense procurement."

EU foreign policy chief Federica Mogherini emphasized what was being proposed would increase NATO's capabilities and did not amount to a European Army.  "We are not talking about a European headquarters here ... about a European army," Mogherini told reporters. "It is about streamlining what we have to make EU defense work better," she said.

EU member states will now evaluate the proposal ahead of a December summit of European leaders.

Europe faces an increasing complex international security landscape - from an aggressive Russia and migration flows to threats from terrorism and instability on its periphery. The United Kingdom's vote to leave to EU and US President-elect Donald Trump's campaign statements that Washington may not come to NATO members' aid if they don't meet NATO's 2-percent defense spending target have cast questions over Europe's ability to defend itself.

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Efficiency improvements

EU member states spend about 200 billion euros on defense per year, largely made up by Britain (48 billion euros), France (39 billion euros) and Germany (35 billion euros). That makes the bloc collectively the world's second biggest defense spender after the United States, which spends over twice as much. Now, with Britain likely to seek a way out of the EU, total defense spending for the bloc would drop by nearly a quarter.

Over the last decade Europe's defense spending in real terms has dropped 12 percent. The Commission's proposal seeks in part to make up for this net real loss in defense spending through single market efficiency improvements.

"Europe suffers from inefficiency in spending due to duplications, a lack of interoperability, technological gaps and insufficient economies of scale for industry and production," the Commission said. It added that 80 percent of defense procurement is done nationally, resulting in expensive duplication of military industrial production.

By the EU's estimates, this failure to cooperate in the defense sector costs between 25 and 100 billion euros per year.

The Commission also noted that defense sector cooperation will have a positive impact on the economy and boost job creation.

Britain's BAE Systems and the Europe-wide Airbus Group dominate the EU defense industry, but there are also some 1,350 small and medium-sized companies in the sector. The defense sector directly or indirectly employs 1.4 million people.

cw/msh (AFP, dpa)


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