Brussels: Europe and the Arabs
EU Foreign and Security Policy Coordinator Josep Borrell stressed that to strengthen European defense in a tense geopolitical context, we urgently need to overcome the fragmentation of our defense industry through more joint procurement and more joint projects. According to what was stated in a post on the website Russia's aggression against Ukraine, but it is now common sense. It is a prerequisite if we want to be able to strengthen our defense capacity in a tense geopolitical context.
That is why the European Council has commissioned me, as High Representative for Foreign and Security Policy, to define a new European defense industrial strategy in cooperation with the Commission and the European Defense Agency. Last Tuesday I presented the outcome of our work with my colleagues, Executive Vice President Vestager and Commissioner Breton.
A greater sense of urgency
Indeed, the war against Ukraine has brought a greater sense of urgency to the issue of enhancing the productive capabilities of the European defense industry. To respond to Russian aggression, we have done what would have been unthinkable a few years ago – providing weapons, primarily from our existing stockpiles, to a country at war using the European Peace Facility. But after two years of very intense war, the existing stocks were exhausted and the conflict developed from a war of stocks to a war of production.
After two years of very intense war, the existing stocks were exhausted and the conflict developed from a war of stocks to a war of production.
We must move from emergency mode to a long-term vision so that we can replenish our inventory and develop the defense capabilities that we will need in the future in a more contentious geopolitical environment, while at the same time continuing to provide adequate military support to Ukraine. .
The first necessity concerns the production of ammunition. The industry responded to this emergency by increasing its production capacity by 50% since the beginning of the war. Which is very cool. Today, in this area, the constraint is not the lack of production capacity, but the lack of orders and financing. Industry leaders tell us clearly: place orders and we will produce more.
Ammunition is only part of the problem
However, the ability to produce ammunition is only part of the problem. We need to make more efforts to develop this industrial sector. The European defense industry includes a large and diverse group of players, from large multinational companies to small and medium-sized enterprises. It is highly concentrated geographically: a few member states account for 90% of the total European defense industry. This industry has annual sales of €70 billion and employs 500,000 people.
They provide about 40% of European defense needs, which means that our militaries import the majority of the weapons and equipment they use. Over the past two years, this percentage has been much higher due to the need to increase our capabilities very quickly: between the beginning of Russia's war of aggression and June 2023, 78% of EU member states' defense procurements were made outside the EU. . At the same time, the European defense industry also exports between 40 and 50% of its production to countries outside the EU. The products we import and export are completely different in nature.
Governments are the only buyers
What makes this sector unique among all industries is that governments are the only buyers. In 2022, defense investment by EU member states reached €58 billion, almost four times less than in the United States. Defense policy remains the exclusive prerogative of EU member states, which are the masters of their militaries. If we want to strengthen the European defense industry, working with Member States is crucial.
We need to invest more and better together and in Europe. We've said it many times before, but this time, we have to do it. In fact, EU member states are still unable to adequately coordinate and consolidate their defense plans and procurement. In 2021, the proportion of European cooperative procurement reached only 18%, despite the 35% benchmark set by the same Member States in 2007.
The fragmentation of the European defense industry is linked to the political fragmentation of the continent. In Europe, we do not have a Pentagon that focuses demand and drives industry. We must overcome this fragmentation through greater cooperation, stimulating more joint procurement of defense capabilities and projects of common European interest....