Opinion What Europe must do for its defence: Address Structural Constraints”

The post-Cold War Europe saw a severe neglect of sizeable investments in building key military capabilities and developing necessary technological and industrial bases. Europe’s lack of defence capability was exposed when it could deliver only half of the promised one million 150mm artillery ammunition rounds to Ukraine. The fundamental reasons for this delay were issues like insufficient factory capacity, shortage of raw materials and inadequate financial resources. This incapacity looks appealing given the fact that the lack of adequate artillery ammunition is now considered one of the reasons behind the fall of Ukraine’s Avdiivka.

As the war in Ukraine continues and Russia grows stronger on the battlefield as well as at the negotiating table, Europe’s security and defence largely remain weak. Diplomacy and economy can only complement brute force, not replace it. However, the foreign policy of Trump 2.0 has pushed Europe on the path of re-arming itself, with the EU poised to play a decisive role in this re-armament.

But the EU is not designed to take up leadership roles in the defence domain as the EU treaties leave no scope for a “common defence” in the absence of a unanimous decision by the European Council. Given the divided political landscape owing to the rise of far-right and Eurosceptic political parties and leaders, a “common defence” seems a distant reality. This brings the focus on developing the capabilities of the individual member states. That is a different story in itself.

To begin with, Europe remains a fragmented landscape when it comes to weapons procurements. Different countries have different defence establishments, different priorities and different favoured companies which often leads to overlap, duplication and supply-chain bottlenecks. Although the European Defence Agency did set a joint procurement benchmark of 35 per cent, the real procurement was only 18 per cent in 2022. It is because of this highly fragmented defence market and lack of cooperation that the EU is losing, according to estimates by the European Commission in 2022, between 25 to 100 billion euros every year.

To understand the level of fragmentation, some data will help. While the United States operates just one type of main battle tank, three types of armoured infantry vehicles, two types of 152/155 mm howitzers, and seven types of tactical combat aircraft, Europe, by contrast, fields twenty-three, twenty-eight and twenty different models of these respective weapon systems.

Thus, Europe is in urgent need of addressing the fragmentation problem. Defining universal standards and specifications in the European defence market may greatly help it reduce costs and make sure that the arms, ammunition and weapon systems are interchangeable across national borders. Besides, joint-procurements, mergers and acquisitions of defence-related small and medium-sized enterprises (SMEs), approximately 2,500 in number, may address issues concerning supply chain bottlenecks, lack of cross-border collaboration and industrial fragmentation.

The elephant in the room, however, is the question of how to finance this rearmament. It is here that the role of the ReArm Europe or the Readiness 2023 Plan, comes into play. It aims to comprehensively restructure the state of European defence through five main pillars: A 150-billion-euro Security Action for Europe (SAFE) fund to help member states prioritise air defence; missile and drone capabilities; removal of fiscal restraints on borrowings; incentives for investments, for example, through restructuring of the Cohesion Fund; expanding the role of the European Investment Fund; and mobilising the European private capital.

Although the programmes claim to raise a massive 800 billion euros for strengthening Europe’s military capabilities, a significant chunk of this fund — 650 billion euros — have to be generated by the member states themselves. But can Europe, particularly the big players like France, Germany and Britain afford to divert a significant chunk of their public finance to defence and security, especially when their domestic political and economic landscape does not allow them to do so?

One possible solution would be the establishment of an intergovernmental Rearmament Bank as proposed by British General Nicholas Carter and journalist Ed Lucas and modelled after the European Bank for Reconstruction and Development. If established, the bank is expected to generate 100 billion euros which can be used for financing the immediate armament needs of the member states as well as boosting the long-term manufacturing capacity of the defence companies.

As Europe embarks on its re-armament journey it must address these critical challenges to invest in its own capabilities, reduce its dependence on the US and emerge as an autonomous player in the field of production of combat capabilities like the fighter jets, stealth bombers, hypersonic weapons, space-based capabilities, heavy transport aircrafts as well as electronic warfare capabilities. Imperative to this is the urgent need of the member states to at least spend 3 per cent of GDP on defence while making the long-agreed 2 per cent threshold a baseline.

The writer researches European Security and Defence at the Indian Council of World Affairs, Sapru House, New Delhi. The views expressed are his own and do not necessarily reflect those of ICWA