Commission unveils the White Paper for European Defence and the ReArm Europe Plan/Readiness 2030

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

Today, the Commission and the High Representative have presented a White Paper for European Defence – Readiness 2030.The Commission has also presented, as part of the ReArm Europe Plan/Readiness 2030, an ambitious defence package providing financial levers to EU Member States to drive an investment surge in defence capabilities.

While the ReArm Europe Plan/Readiness 2030 strengthens pan-European defence capabilities with new financial means, the White Paper frames a new approach to defence and identifies investment needs.

Commission President Ursula von der Leyen said: “The era of the peace dividend is long gone. The security architecture that we relied on can no longer be taken for granted. Europe is ready to step up. We must invest in defence, strengthen our capabilities, and take a proactive approach to security. We are taking decisive action, presenting a roadmap for ‘Readiness 2030’, with increased defence spending, important investments in European defence industrial capabilities. We must buy more European. Because that means strengthening the European defence technological and industrial base. That means stimulating innovation. And that means creating an EU-wide market for defence equipment.”

These measures aim to respond to the short-term urgency of supporting Ukraine, but also to address the pressing long-term need to boost Europe’s security and defence.

White Paper for European Defence – Readiness 2030

As announced by President von der Leyen in the political guidelines, the last several years have exposed the chronic under investment and a lack of efficient spending in Europe’s military capabilities. To frame the new approach and to identify Europe’s investment needs, the Commission and the High Representative have presented a White Paper for European Defence – Readiness 2030.

The White Paper presents solutions to close critical capability gaps and build a strong defence industrial base. It proposes ways for Member States to massively invest in defence, procure defence systems and build up the readiness of the European defence industry over the long run. This is essential for Europe’s security.  Europe must invest in the security and defence of the continent, while continuing to support Ukraine to defend itself from Russia’s aggression. To effectively address these challenges, the White Paper outlines a number of key lines of action:

• Closing capability gaps, with a focus on critical capabilities identified by Member States.
• Supporting the European defence industry through aggregated demand and increased collaborative procurement.
• Supporting Ukraine through increased military assistance and deeper integration of the European and Ukrainian defence industries.
• Deepening the EU-wide defence market including through simplifying regulations.
• Accelerating the transformation of defence through disruptive innovations such as AI and quantum technology.
• Enhancing European readiness for worst-case scenarios, by improving military mobility, stockpiling and strengthening external borders, notably the land border with Russia and Belarus.
• Strengthening partnership with like-minded countries around the world.

ReArm Europe Plan/Readiness 2030

As announced by President von der Leyen, the ReArm Europe Plan/Readiness 2030 enables spending of over €800 billion, structured around the following pillars:

1. Unleash the use of public funding in defence at national level

The Commission has invited Member States to activate the national escape clause of the Stability and Growth Pact, which will provide them additional budgetary space to increase their defence spending, within the EU fiscal rules.

To safeguard fiscal sustainability, the deviation will be limited to:

• Increase in defence expenditure only, taking as a starting point the statistical category ‘defence’ in the classification of the functions of government (COFOGs); 

• Up to a maximum of 1.5% of GDP for each year of activation of the national escape clause;
• For a period of four years. 

2.  A new dedicated instrument for Security Action for Europe – SAFE:

In light of the current exceptional circumstances, the Commission will raise up to €150 billion on the capital markets, drawing on its well-established unified funding approach to help EU Member States rapidly and substantially increase investments in Europe’s defence capabilities. These funds will be disbursed to interested Member States upon demand, on the basis of national plans.

The disbursements will take the form of competitively priced and attractively structured long-maturity loans, to be repaid by the beneficiary Member States. The loans will be backed by the EU budget’s headroom. SAFE will allow Member States to immediately and massively scale up their defence investments through common procurement from the European defence industry, focusing on priority capabilities. This will contribute to ensuring interoperability, predictability, and reducing costs for a strong European defence industrial base. Ukraine and EFTA/EEA countries will be able to join common procurements, and it will be possible for buy from their industries.

SAFE will also allow acceding countries, candidate countries, potential candidates and countries having signed a Security and Defence Partnerships with the EU to join common procurements and contribute to aggregated demand. They can also negotiate specific, mutually beneficial agreements on the participation of their respective industries  in such procurements.

3. Leveraging on the EIB Group and Mobilising private capital by Accelerating the Savings and Investments Union

The ReArm Europe Plan/Readiness 2030 also relies on the European Investment Bank Group to widen the scope of its lending to defence and security projects, while safeguarding its financing capacity. On top of unlocking substantial funding, this will send a positive signal to the markets.

Lastly, public investment alone will not be sufficient to fill the defence industry’s investment needs, from start-ups to large established companies. For this, the Savings and Investments Union Strategy, adopted by the Commission today, will make it easier to mobilise private savings into more efficient capital markets and channel investments into critical sectors of the economy, such as defence, for those who wish to invest in them.

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