EU defense policy has underperformed since its official conception in the late 1990s. The EU’s military intervention capacity is negligible and the EU as a defense actor is largely irrelevant to most conflicts in Europe’s neighborhood. Observers have explained the union’s marginal role in European security by pointing to the absence of a common European threat perception, a lack of financial resources, a shortage of creative policy proposals, successive U.S. governments poised to blockade the EU’s ambitions, and member states unwilling to delegate power over defense to the supranational level. Instead, NATO, with its intergovernmental decision-structures, U.S. security guarantees, and 360-degree approach to defense, has been the primary organizational backbone for European defense.
It is not surprising, then, that in 2014, when Russia first invaded Ukraine and illegally annexed Crimea, European governments rallied around the alliance and the EU’s then fledgling defense ambitions faded into the background. In 2022, NATO is again the central framework for Europe’s military response to Russia’s war. But at the EU level, things have changed since 2014. In the years that followed, the disruptions of Donald Trump’s presidency and the UK’s Brexit vote reignited EU defense efforts. EU capitals and Brussels committed to proving the union’s continuing relevance, including on defense matters. They began building a bureaucratic defense infrastructure that harnesses the EU’s regulatory and budgetary powers for defense industrial policy.
In 2022, since the early days of the war, this new bureaucracy has been producing policy proposals on how to utilize the EU’s defense industrial tools in the context of war. Most promising are those that focus on organizing Europe’s rearmament efforts and forging a stronger European defense industrial base. They can usefully complement NATO’s defense and deterrence efforts. Now, they need money and political buy-in to have an effect. Without it, even the most propitious initiatives will stay stuck beneath their potential.
Big Steps for the EU, Small Steps for European Defense
Take the European Commission’s new joint procurement initiative. The rationale is simple: European governments have announced significant defense budget increases in 2022. They are still playing catch-up: projections show that it will take until 2023 at least to finally recover from the underspend of the financial crisis. But for the first time in decades, European defense is no longer limited to trying to achieve more with less. Now that Europeans are suddenly spending more money on defense to urgently fill capability gaps in their military arsenals—some long-standing, some caused by arms exports to Ukraine—it makes sense to coordinate their weapons purchases.
This is an opportunity to modernize European militaries, ensure the interoperability of their equipment, and forge a stronger European defense industrial base. But joint defense procurement is often difficult and slow. European governments tend instead to channel their budgets to domestic defense firms or buy off-the-shelf from third-country suppliers. European wartime defense procurement so far is not happening in a coordinated fashion: only 18 percent of all defense investment by member states is conducted in cooperation with other EU countries.
The commission wants to use financial incentives to encourage cooperation and good practices that will minimize delays and extra costs. For this purpose, it has proposed a short-term fund (the European Defence Industry Reinforcement Through Common Procurement Act, or EDIRPA). However, EDIRPA only has access to a total budget of €500 million from the end of this year until 2024 to incentivize actions that address urgent and critical defense product needs(and that are carried out by a consortium of at least three EU member states). That is not enough money to have much of an impact. There are more examples: a commission-led defense innovation scheme, announced in May, has been allocated a €2 billion package over five years, but it is drawing most of its funds from the budget already allocated to the European Defence Fund. The fund, a €7.9 billion program to support EU defense R&D over the next seven years, itself suffered in the last round of EU budget negotiations: the commission initially proposed to spend €15 billion over seven years, but member states cut the fund’s budget almost in half.
With these initiatives, the EU, conceived initially as a peace project, and technically forbidden to directly procure or deliver defense equipment, is breaking internal taboos and pursuing a new, creative approach to defense policy. The focus on using financial incentives to motivate member-state behavior represents a policy shift. In the early years of its involvement in defense policy, the EU focused on using regulatory instruments to prevent defense market fragmentation. For instance, a 2009 European Commission directive on defense procurement allowed it to launch infringement proceedings against countries that unduly prioritize their national defense firms. But the regulatory “sticks” approach was never very successful in changing the behavior of governments clinging to their sovereign decisionmaking over defense matters. In recent years, the commission has abandoned it in favor of financial “carrots.” Without the necessary resources and political attention, what feel like giant steps forward inside the union look small in the context of war in Europe.
A Leaderless Effort
The problem is not a lack of opportunity or a lack of ideas. It is a lack of leadership. No one “owns” EU defense policy today. Agreement between France and the UK has historically been necessary to make progress on defense in Europe. With the UK out of the EU, many look to France and Germany instead. But Paris and Berlin disagree on how to shape Europe’s rearmament. France accuses Germany of having no ambition to forge an EU defense industrial base; Paris disapproves of Berlin’s decision to spend the extra defense money it has pledged under the banner of its “Zeitenwende” on buying U.S.-made equipment.
Berlin, meanwhile, suspects that France is pushing a “buy European” policy because it wants its own defense firms to benefit from the new financial resources. Germans emphasize the fact that arsenals need to be filled quickly, and that European capability projects cannot deliver as quickly as U.S. suppliers. When Berlin recently launched its European Sky Shield initiative, which aims for Europeans to jointly acquire air and missile defense systems, France complained that it was not consulted and objected to Berlin’s plan to build the shield with German, Israeli, and U.S. systems, rather than going with a European option.
Crucially, even if Paris and Berlin agreed on a path ahead for EU defense, the rest of Europe might not be inclined to follow. Over the course of the war in Ukraine, both have lost credibility in Europe. German Chancellor Olaf Scholz’s initial reluctance to abandon the Nord Stream 2 gas pipeline has provoked resentment, and French President Emmanuel Macron’s attempts to position himself as a mediator with Russian President Vladimir Putin have gained him a reputation of being dovish on Russia. Both Paris and Berlin have been criticized for not sending enough arms to Ukraine.
Instead of the Franco-German duo, frontline countries in Europe’s north and east have often been at the forefront of the European response to the war. But they are unlikely to take up the EU defense mantle. With a focus on NATO’s territorial defense and deterrence efforts, they have traditionally been skeptical of an EU defense role. They suspect that the EU’s initiatives will benefit only large defense firms located in France, Germany, or Italy and not their own small and medium enterprises. And they worry about alienating the United States—President Joe Biden’s administration is welcoming toward EU defense efforts only as long as they are “complementary to and interoperable with NATO,” and most U.S. officials are openly skeptical of what they perceive as European defense protectionism.
Leadership is not coming from Brussels, either. Commission President Ursula von der Leyen has taken a crucial role in shaping the EU’s response to the war in terms of sanctions and energy policy measures. But she has shown no real interest in defense policy. Whereas her predecessor Jean-Claude Juncker made strengthening the EU’s role in Europe’s defense a priority for his administration, and broke new ground with initiatives to fund defense R&D and improve military mobility in Europe, her September 2022 State of the Union speech, a wartime address in many ways, did not include a single reference to EU defense cooperation.
Less Long-Term Vision, More Short-Term Money
Looking ahead, it is easy to imagine the EU’s defense initiatives losing what little momentum they still have. Already, the announced national defense budget increases are starting to look less impressive—between inflation and long procurement times, Germany’s newly launched “special fund” for the Bundeswehr is losing its luster and the UK has delayed planned budget increases. The European energy crisis is likely to take up most of the political and financial capital over the winter months. The funds required for eventual Ukraine reconstruction efforts will make it harder to prioritize defense spending, especially in the context of an economic recession. What is more, as the war progresses, European unity is dissolving. Southern European countries do not perceive Russia as a threat to their national security to the same extent as do eastern Europeans. Russia’s poor conventional military performance is read by some in western Europe as a sign to relax. Meanwhile, the results of the recent midterm elections allayed European fears that the United States would interrupt military contributions to Ukraine—at least in the short term.
It is also still possible, however, to imagine an alternative scenario. France and Germany could break out of their current rut and overcome their defense industrial jealousies. Flagship European capability projects like the Future Combat Air System fighter jet and the Main Ground Combat System, which have for years been beset by delays and disagreements over industrial leadership, work-sharing, and technology, have recently announced some modest progress. Paris and Berlin could rebuild their credibility in Europe by showing that they are serious about continuous military assistance to Ukraine, and by volunteering to lead on any future reconstruction efforts. Domestic defense industrial interests dictate that U.S. policy continues to prioritize arms sales to Europe. But while it is improbable that the United States will voluntarily forego the profits U.S.-based industries are making from arms sales to Europe, Washington could nonetheless emphatically support moves toward greater investments in EU-backed capability development, for instance by encouraging coordination between EU-NATO defense planning processes.
EU defense does not need another “vision.” Those have often proved alienating and divisive. Juncker’s push for an “EU army” and Macron’s “strategic autonomy” both led to lengthy abstract and ideological debates that in the end did more harm than good. Instead, member states must allocate the EU the resources that will enable it to prove its value.
Important decisions are coming up. The commission wants to follow up its short-term EDIRPA initiative with a longer-term European Defence Investment Program (EDIP), with more money to support joint procurement (including through a value-added tax waiver). EDIP will be negotiated in 2023 to launch in 2024. The risk is that again these initiatives will not be given enough funds to be effective.
The European Commission and the European Parliament both want an “ambitious review” of the EU’s seven-year (2021–2027) budget in 2023. But any increases are far from guaranteed. In 2019, fiscal hawks in Berlin and other frugal member states agreed to joint borrowing in the context of the pandemic. But they are reluctant to embrace a similar logic in response to today’s crises. Aside from the political difficulties associated with increasing or even reallocating budget resources, it would take member states fighting for the EU’s defense initiatives to make a difference. In the last budget negotiations, no government took ownership of the EU defense dossier; funds that the EU had initially allocated to defense were cut significantly.
Member state attention and input is needed not just on budgetary questions, but also when it comes to shaping the EU’s defense initiatives. For instance, the commission would prefer to incentivize only the procurement of majority EU-made capabilities, but not all governments agree with this position. EDIRPA, initially conceived by the commission as a procurement initiative with a “buy European” rationale, was amended by member states to be more open to third-country suppliers because European industry could not keep up with the current demand. In response, EU governments are turning to the United States—which itself faces supply issues—and increasingly also other suppliers like South Korea, to quickly fill their arsenals.
There is also the challenge of balancing the acute need to strengthen European conventional capabilities with the long-term need to invest in R&D and innovation. Introducing stricter democratic oversight tools for the EU’s defense initiatives could help increase their legitimacy and longevity. And to get member states to prioritize European considerations and a more integrated defense market over domestic industry interests, it might be time to bring back regulatory sticks like the EU’s defense directives, deployed in addition to financial carrots.
Of course, the union’s defense industrial initiatives are only one piece in the puzzle of Europe’s emerging defense and security architecture. NATO’s defense and deterrence efforts remain essential. But the EU itself must eventually look beyond defense industrial policy and toward shaping its role as a security provider in Europe’s neighborhoods to the south and east. Amid a war in Ukraine, Washington now has once more committed itself to the acute threat that Russia poses, and the alliance has found renewed purpose. But a healthy NATO does not automatically obviate the potential utility of the EU as a defense actor. The United States is still looking to eventually reallocate resources away from Europe.
In the context of the ongoing war in Ukraine, however, the EU’s value proposition on defense is that it can use its budgetary and regulatory tools to help forge a European defense industrial base that can produce much-needed capabilities to modernize European arsenals, alleviate the dependency on third-country suppliers and security guarantors, and expand Europe’s capacity to stabilize its own neighborhood.
The EU is proud of its ability to grow through crises—Europhiles will often argue that the financial crisis, the migration crisis, and the coronavirus pandemic all led to changes in the union’s institutional structures, legal frameworks, budgets, and political procedures that allowed it to move forward. This is a controversial proposition, however. In reality, progress is often muddled.
EU defense for decades has been frozen in a state of perpetually unfulfilled potential and a search for its role in European security. Major war returning to the continent should provide clarity, accelerate bureaucratic processes, and sustainably increase funds for the EU’s most promising defense initiatives. But there are no guarantees. So far, national instincts prevail, and political attention is elsewhere. If nothing changes, the EU’s new defense bureaucracy’s proposals remain just that.
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