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Ursula von der Leyen unveils plans for defence industrial strategy

Source: European Defence Agency (EDA)

The European Union should strive towards a fully-fledged ‘European Defence Union’, the President of the European Commission Ursula von der Leyen told the European Defence Agency’s annual conference.

 

Warning Member States against buying too many assets and too much equipment without coordination, and from abroad, President von der Leyen said the Commission is preparing a new ‘European Defence Industrial Strategy’ for early in 2024.

 

 

“We have made tangible progress towards a European Defence Union, but the strategic challenges we face have grown even faster,” von der Leyen told the 300 delegates gathered in Brussels, who included Ministers of Defence, EU lawmakers, members of Europe’s armed forces, defence industry representatives and experts. “The next chapter is a fully-fledged European Defence Union.”

 

 

Forged out of the ashes of the Second World War, the EU has always seen itself as a peace project. Von der Leyen urged Europeans to now think of the EU as a security project. “Peace needs security,” she said.

Josep Borrell, EDA’s Head of Agency and EU High Representative, welcomed a €70 billion increase in defence spending, following what he called a “silent process of disarmament” in Europe in previous decades.

Borrell reiterated his view that the EU continues to lack critical capabilities. Presenting EDA’s 2022 defence data, Borrell said that, at a record €240 billion, 2022 European defence spending again increased by 6% on the previous year, marking the eighth year of consecutive growth.

“We have to increase the level of our ambition,” Borrell said of European cooperative military projects. “This is an opportunity to think bigger.” He also called for more joint spending in research and technology (R&T), after a 6% fall in 2022. “This, we cannot afford.”

 

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European Defence Industry Programme

Building on EDA’s work in military collaboration, von der Leyen said the Commission’s strategy would seek to deepen further defence cooperation in the EU. “We need a strategic planning function that ties together national and EU-level planning. This will give predictability and reduce fragmentation,” she said. “We need simpler and more efficient rules … We can use our regulatory framework.”

In her policy speech, von der Leyen told the EDA annual conference that the Commission will first consult with industry. In addition to a White Paper on dual use research, the EU executive will “explore all possible ways to reward, incentivise and compensate the costs of cooperation and industrial competitiveness,” von der Leyen said.

She said the Commission will propose a European Defence Industry Programme early next year. This will integrate the experience of recent EU legislation, ASAP and EDIRPA.

 

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ASAP stands for Act in Support of Ammunition Production.  It aims to facilitate the ramp-up of ammunition production capacity in the European defence industry. ASAP has a budget of €500 million over 2023-2025. EDIRPA stands for European defence industry reinforcement through common procurement act.  EDIRPA has a budget of €300 million.

Von der Leyen also said the Commission was working closely with EDA on VAT exemption to support joint procurement, as well as joint ownership of defence capabilities. The Commission will also look at how a government’s defence investments might be taken into account under EU fiscal governance rules.

Von der Leyen said it could be a “relevant factor when we assess if Member States have an excessive deficit.”

 

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