European sovereignty: how does defence and industrial policy enhance strategic autonomy?

European sovereignty: how does defence and industrial policy enhance strategic autonomy?

September marks the start of the new work year around the Schuman roundabout, the heart of the European institutions. Far from being just a time to take stock, the autumn is also a time for providing impetus for the final stretch of the year.

European industrial policy is no exception, particularly when it comes to supporting the European defence industry, which has recently become a major focus. This was the line taken by the 27 Heads of State and Government at the Versailles Summit in March 2022: “Strengthening our defence capabilities” is essential to reinforce European sovereignty and reduce dependence, they declared on that occasion.

In 2022, the outbreak of war in Ukraine prompted EU Member States to send defence and military equipment to Kyiv to defend itself against the Russian attack.

As a result, stocks are gradually being depleted across Europe, creating dependencies and vulnerabilities for the security of Member States. In response, the European executive has proposed a number of initiatives and funds to speed up industrial production, particularly of ammunition, and encourage Member States to work together.

Strategic autonomy put to the test of urgency

In recent months, the Europeans focused on the urgent need to support Ukraine and replenish stocks, all the while investing in the EU’s industrial defence base.

The European defence industry reinforcement through common procurement act (EDIRPA) was conceived in this mindset. The 300 million euro fund to encourage states to buy equipment together to replenish their stocks. The unprecedented proposal to use European funds for defence procurement in the summer of 2022 has taken its time to make its way through the corridors of Europe and the European Parliament will vote on the future of EDIRPA in the week of 11 September.

Its little brother, the 500 million ASAP (Act in support for ammunition production) fund to help companies boost their production of ammunition for Kyiv, has been on the rails since July.

For these two initiatives, a central element of the debates has been whether to give priority to equipment of European origin – a demand pushed in particular by France, supported by Greece and Cyprus – or to favour imports from third countries, even if this means using European funds.

In supporting the second approach, the eastern EU countries point to the availability of American, Israeli and South Korean stocks, which would enable them to respond more quickly to the needs of the Ukrainians.

This year, the 27 gradually demonstrated their willingness to favour European purchasing and manufacturing. Still, the situation’s urgency gave a large room to companies outside Europe capable of producing and delivering more quickly.

Defence is not the only sector affected by this reflection on the autonomy of European manufacturing. The Europeans have been trying for several years to strengthen their ability to develop new technologies and semiconductors (the Chips Act), secure the value of critical materials (the Critical Materials Act), diversify their energy mix, etc.

A long-term vision without a budget

The concept of strategic autonomy, championed by French President Emmanuel Macron, has gained momentum against a backdrop of renewed international tensions with major authoritarian countries such as Russia and China. The COVID-19 pandemic demonstrated the need to be able to produce medical equipment in Europe, while the war in Ukraine highlighted the need for energy resilience and access to markets for critical materials, cutting-edge technologies and weapons.

His proposal for a fund, originally planned for the summer and accompanied by an authorisation for VAT exemption, has been postponed several times. The main reason is the lack of budget in the European Multiannual Financial Framework (MFF).

“We want to put forward financial measures because we believe that the two [a fund and regulatory provisions, editor’s note] work together to really structure the defence industry,” Anne Fort, head of the defence industry and market policy unit at the European Commission’s Directorate-General for Defence (DEFIS), said last June.

The lack of budgetary resources is currently one of the challenges facing the European executive in its proposals to relaunch the industry, at a time when countries such as the United States and China are investing massively in sectors that they consider essential to establishing their sovereignty on the world stage.

From the EU side, the European Commission plans to present EDIP, the European defence industry programme, in the coming months. The aim of this programme is to provide long-term support for European industry.

The debate to define the contours of Europe’s strategic autonomy in the defence field is set to intensify over the coming months, with the European elections in June 2024 in sight.

Sources : Conseil européen, Conseil de l’UE (EDIRPA, ASAP), B2Pro, Politico, Euractiv