Boosting EU defence: overcoming German fiscal caution is the key

17 January 2024, 13:16

As the second anniversary of Russia’s full-scale invasion of Ukraine approaches, on February 24, European Commissioner Thierry Breton, who oversees the defence industry, is set to unveil an ambitious new program named Edip, boasting a substantial budget of 1,5 billion euros. This initiative aims to establish a dedicated fund for the rearmament of the European Union and to provide essential assistance to Ukraine. While the proposal is undeniably timely and pertinent, it has stirred some discontent among certain member countries within the European Union.

Thierry Breton’s proposal did not sit well with a group of so-called “frugal” countries led by Germany, which are unwilling to increase state expenditures and consolidate funding, which will inevitably demand larger contributions from their side. On the other hand, Poland’s new Minister of Foreign Affairs, Radosław Sikorski, publicly expressed his support.

As stated by the European Commissioner during a press conference in Paris on January 15, Europeans must “significantly increase their capabilities in arms production after having disinvested too much”.

In his opinion, this is necessary not only to assist Ukraine but also to ensure the protection of the EU’s maritime borders, airspace, and digital space in a world where conflicts regularly arise. “If four states come together for joint procurement, the European Union will finance them at a rate of 10-15%,” he clarified.

If the new program is approved, Thierry Breton hopes that the money will go towards providing financial support to European defence companies for substantial investments “without waiting for orders from governments, as this is happening now”. He also mentioned the launch of the military communication satellite Iris2, for which 6 billion euros have already been allocated, and the “cyber dome” designed to protect the digital space. Separately, the commissioner touched upon the idea of manufacturing European aircraft carriers that several states would operate. As of today, this concept is being considered only hypothetically.

Thierry Breton attempted to persuade the most hesitant European parliamentarians by sharing the conversation he had with Donald Trump in Davos in 2020, in the presence of Ursula von der Leyen, as reported by the French magazine La Croix. He repeated the words of the U.S. president, who supposedly warned: “You must understand: if Europe is attacked, we will not come back to help you, and NATO is dead because we are going to leave it”. Confirming the accuracy of this conversation, Thierry Breton added on January 15: “I am simply stating facts. Since Trump’s re-election is possible, we must pay attention to what he said. And it’s important to note that such rhetoric is not unique to Republicans. Even Barack Obama had previously urged Europeans to increase their defence efforts”.

European Union countries currently allocate only 1,5% of their gross domestic product to defence which is below the NATO agreed target of 2% for all member countries. If all member states were to reach this level, it would result in an additional 75 billion euros per year. This amount is not far from the 100 billion euros that Thierry Breton is hoping for.

How does Thierry Breton’s defence project relate to providing military aid to Ukraine? “In 2023, the European Commission already committed to providing direct support to defence enterprises to supply weapons for Ukraine,” clarifies La Croix. “It has created a program called Asap (Aid to Support Ammunition Production) to increase ammunition production. These efforts would enable the EU to produce one million rounds annually by the spring of the following year”.

Thierry Breton believes that achieving this target is entirely possible. By the end of 2024, European factories should be capable of producing between 1,3 to 1,4 million ammunition on European soil and, by 2025, increase their production volumes.

“To give Ukraine the opportunity to win the war and also to have a strong position in negotiations with Russia, the European Union must have a defence industrial base that is at least equal to Russia’s,” explained the European Commissioner at a press conference.

However, investments made so far are slowly transforming into actual deliveries of ammunition for Kyiv. Since the beginning of the war, the EU has already increased its ammunition production capacity by 30%, according to data provided by the European Commission. At the same time, European companies supply 40% of their production to third countries outside Ukraine, in accordance with contracts. “Legally, we are not obliged to prioritise the sale of our ammunition to Ukraine,” Brussels justifies.

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