Commission unveils significant actions to contribute to European Defence, boost innovation and address strategic dependencies

This article is brought to you in association with the European Commission.

Today, the Commission puts forward a number of Commission-led initiatives in areas critical for defence and security within the European Union. These comprise a Contribution to European defence, covering the full range of challenges, from the conventional defence industry and equipment on land, sea and air, to cyber, hybrid and space threats, military mobility and the relevance of climate change; and a roadmap on critical technologies for security and defence. These new initiatives are concrete steps towards a more integrated and competitive European defence market, particularly by enhancing cooperation within the EU, thereby building scale, mastering costs and enhancing operational effectiveness. With its announcement today, the Commission provides input in the run-up to the EU Strategic Compass on Security and Defence.

By using all available means inan ever-evolving geopolitical and technological context, the Commission aims at strengthening the Union’s ability to counter fast-changing multi-layered threats.

The Commission has, in particular, identified the following main new areas to further strengthen the competitiveness of the European defence market:

• explore how to further stimulate Member States investments in key strategic capabilities and critical enablers that are developed and/or procured in European Union cooperative frameworks;
• further incentivise the joint procurement of defence capabilities developed in a collaborative way within the EU;
• call upon Member States to continue moving towards streamlined and more convergent arms exports control practices, in particular for defence capabilities developed in an EU cooperative framework.

Investments in defence research and capabilities and joint procurement

By the end of 2022, the European Defence Fund (EDF) will have invested €1.9 billion in defence research and capability development projects. This will kick-start key large-scale collaborative capability development projects while stimulating defence innovation. The Commission will also develop further incentives to stimulate Member States’ investments in defence strategic capabilities, notably where they are developed and/or procured within EU cooperative frameworks. In particular, the Commission will explore a number of instruments to incentivise the joint procurement of defence capabilities developed in a collaborative way within the EU, including by proposing a Value Added Tax (VAT) waiver, setting up new financing solutions, and reviewing the EDF bonus mechanisms to favour commitments to joint procurement of equipment, maintenance and operations in addition to joint development of the relevant defence technologies. The Commission will include a chapter with observations on developments, barriers and opportunities relative to multinational defence capabilities projects in the Annual Single Market Report, usually published in conjunction with the European Semester Autumn Package.

More generally, the Commission will ensure that other horizontal policies, such as initiatives on sustainable finance, remain consistent with the EU’s efforts to facilitate the European defence industry’s sufficient access to finance and investment.

Streamlined and more convergent export control practices

While Member States are in charge of issuing export licences for military equipment, the Commission invites them to bring forward ongoing work to streamline and gradually converge further their arms export control practices, especially for those defence capabilities that are jointly developed, in particular in an EU framework. The Commission invites Member States to seek an approach according to which, in principle, they would respectively not restrain each other from exporting to a third country any military equipment and technology developed in cooperation. This work should ensure that EDF-funded products will profit from adequate and competitive access to international markets without prejudice to Member States’ sovereign decisions.

Synergies between civilian and defence research and innovation and reducing strategic dependencies

The Roadmap on critical technologies for security and defence outlines a path to enhance the competitiveness and resilience of the EU security and defence sectors by:

• inviting Member States to contribute actively to the Observatory of critical technologies currently being established;
• encouraging dual-use research and innovation at EU level;
• inviting Member States to develop an EU-wide coordinated approach to critical technologies in the context of the Strategic Compass;
• supporting security and defence innovation and entrepreneurship through a number of new tools (e.g. incubator, investment blending facility, etc.);
• creating, together with the European Defence Agency, an EU Defence Innovation Scheme to bring their respective efforts under one umbrella;
• assessing security and defence considerations more systematically, as appropriate, when implementing and reviewing existing or designing new EU industrial and trade instruments, in order to reduce strategic dependencies.

Reducing the identified dependencies in critical technologies and value chains is another important aspect of the Roadmap. In this perspective, the Commission proposes to embed defence considerations in major EU industrial and technology initiatives (e.g. Alliances, standards), protect EU security and defence interests when procuring critical infrastructure (in particular in the digital domain) and reinforce the Foreign Direct investment screening by encouraging all remaining Member States to set up a national screening mechanism.

Strengthening the defence dimension of space at EU level

The Commission will also explore how to further enhance the protection of EU space assets, notably through additional Space Surveillance and Tracking (SST) services and by making full use of the potential of the EU industry. It will promote a ‘dual-use by design’ approach for EU space infrastructures, with a view to offering new resilient services that address governmental needs, including in the area of defence.

The Commission and the High Representative will also explore the possibility of activation of solidarity, mutual assistance and crisis response mechanisms in case of attacks originating from space or threats to space-based assets.

Enhancing European resilience

Finally, the Commission will also fully implement key enabling initiatives for European resilience. In particular, to counter hybrid threats, the Commission, in cooperation with the High Representative and the Member States, will assess sectoral resilience baselines to identify gaps and needs as well as steps to address them. Following the adoption of the Strategic Compass, the Commission will contribute to the future EU hybrid toolbox and will consider identifying experts in relevant policy areas.

In addition, to strengthen cybersecurity and cyber-defence, the Commission will propose the Cyber Resilience Act and request the European Standardisation Organisations to develop harmonised standards regarding cybersecurity and privacy; and together with the Member States, it will step up preparedness for large scale cyber-incidents. By the end of this year the Commission, together with the High Representative, will propose an update of the joint Action Plan to enhance military mobility within and beyond Europe.  Finally, also this year the Commission will take various actions to address climate change challenges related to defence.

Next steps

Through these defence initiatives, the Commission announces actions to be launched and implemented in the upcoming years. The Commission remains ready to consider additional steps forward in the light of progress made and the evolution of the threats and challenges the Union faces in the future.

The dedicated defence session during the informal Summit in France on 10 and 11 March 2022 offers an opportunity to discuss these initiatives on defence.

Members of College said:

Ursula von der Leyen, President of the Commission said: “Against the backdrop of deepening geopolitical rivalries, the European Union must maintain its technological edge. It can do so by addressing the wide range of threats, from conventional to hybrid, cyber and space, and can build the necessary scale through joint development, joint procurement and a convergent approach to exports. In addition to ensuring the security of EU citizens, the European defence sector can contribute to the economic recovery through positive innovation spill-overs for civilian uses.”

Executive Vice-President for a Europe Fit for the Digital Age, Margrethe Vestager, said: “As more civilian technologies make their way to military application, and with the cooperation tools now in place, the EU has what it takes to lead if we act together. We need to bring together our SMEs and innovation potential from across the Union. The new wave of security and defence technologies should be developed under an EU cooperative framework from the outset.”

Thierry Breton, Commissioner for the Internal Market, said: “In the face of the new geopolitics, we need a stronger Europe in defence. Threats to the EU’s security are no longer only of military nature, but are increasingly becoming hybrid, shifting towards cyber-attacks and disinformation campaigns endangering the heart of our democracies. We need to focus on reducing strategic dependencies, supporting innovation of the defence ecosystem, encouraging joint procurement of defence capabilities. We must protect the new contested areas, such as space. And for this, we rely on the industrial defence and aerospace sectors, a high-tech ecosystem that is an essential driver for Europe’s strategic autonomy and technological sovereignty.” 

Background

The EU Strategic Compass for Security and Defence is a Council document, steered by the High Representative Josep Borrell, that aims at providing Member States’ common ambition to answer to the threats and challenges the EU is facing through concrete objectives and deliverables for the next 5-10 years. The Council should adopt it in March 2022.

The roadmap on critical technologies for security and defence corresponds to a request from the European Council of 25-26 February 2021 to outline a path to boosting research, technology development and innovation and reducing the EU’s strategic dependencies in critical technologies and value chains for security and defence.

The update of the 2020 New Industrial Strategy: Building a stronger Single Market for Europe’s recovery in May 2021 confirmed that technological leadership remains an essential driver of the EU’s competitiveness and innovation, in particular for critical technologies. The Commission action plan on synergies between civil, defence and space industries of February 2021 recognised the growing importance of disruptive and enabling technologies originating in the civil domain for Europe’s future security and defence and the need to promote cross-fertilisation and synergies between civilian and defence technologies.

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