Defence`s Feeds

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Act fast. Face up to war in Ukraine. Prepare for 2040. Those were the messages from industry panelists and experts gathered on Thursday to discuss strategic autonomy and defence industrial gaps at the European Defence Agency (EDA) annual conference.

As years of underspending take their toll on Europe’s defence capacities, Member States face the challenge not only of building back their armed forces but ensuring a certain level of strategic autonomy - relying less on the United States. That burden also falls on the European defence industry that has long been geared to peacetime production, the panel heard.

“The war in Ukraine has highlighted our capability shortfalls,” said Jean-Pierre Maulny, Deputy Director, French Institute for International and Strategic Affairs (IRIS). “The United States has larger stocks of anti-tank missiles and air defence systems. Sometimes we in Europe don’t do more because we cannot do more,” he told the panel.

In the search for more self-reliance, Tuija Karanko, Secretary General, Association of Finnish Defence and Aerospace Industries, reminded the 300 participants in Brussels and the 1,000 registered online viewers that: “all the military people in this room have known about their gaps for many years … We need more of that transparency.”

For industry, strategic autonomy needs to exist at different levels, but that is difficult because the EU cannot control everything at every level. “We are not fully autonomous because we have key companies depending on third parties,” said Pablo Gonzalez, Director NATO and EU Defence & Space, Indra. There is a need for younger, skilled engineers, the panel heard.

So what to do? More European collaboration will lower costs, as well as joint research and joint development. Joint procurement for strategic assets made in Europe could help. But having a “Buy European” law, as in the United States, brings risks of isolation for the European continent, Karanko said.

For Laurynas Šatas, Chief Executive at Aktyvus Photonics, Europe has the potential to improve, but there is a need for more emphasis on the defence sector. As a Lithuanian laser company, Aktyvus Photonics is an example of a small- and medium-sized company that would benefit from a better environment with less European bureaucracy to bridge ambition and reality as it seeks to pass innovation up to bigger companies. “We have the intellectual capacity. Tomorrow is in our hands,” he said.

European armed forces are not fully prepared for a large-scale conflict with Russia, Major General Karel Řehka, Chief of Defence, Czech Republic, told the European Defence Agency (EDA) annual conference on Thursday. “We must primarily prepare for the most difficult and most dangerous scenario: that is the large-scale war against an advanced adversary,” General Řehka told the conference. Despite EU support to Ukraine, the Union must also do more for Kyiv, he said. “If Ukraine does not succeed, our security will be at risk for decades.”

Joint procurement to replenish weapons' stocks is central to that. “The area of joint procurement has already proved its added-value. And EDA has expertise for this,” he said.

"When it comes to military capabilities I need the following: I need timely delivery of military equipment, I need interoperability of systems on the battlefield. And I also need the possibility of gradual upgrades throughout the whole lifecycle, especially with the speed of changing technologies," General Řehka said. 

In his keynote speech to 300 participants at EDA’s annual gathering in Brussels, as well as some 1,000 registered online, General Řehka also urged the European defence community to consider the future. EU Member States must focus on advanced weapons’ systems for a horizon of three decades' time. “We have faced strategic shocks every 10 to 15 years. So it would be very naïve to think that would not happen again,” General Řehka warned.

 

HYBRID THREATS

Shining a spotlight on transatlantic ties, EDA's Chief Executive Jiří Šedivý discussed security and defence cooperation with Ambassador Julianne Smith, the United States' Permanent Representative to NATO, who stressed the need for resilience and adaptation to hybrid threats, particularly from Russia and China. "I think the priority for us is really looking at ways in which we can come together to address some of these hybrid tactics that nations around the world are increasingly relying on," Ambassador Smith said. 

In a later panel debate moderated by EDA’s Deputy Chief Executive Olli Ruutu, senior officials also discussed how to develop, procure and operate together. Stacy A Cummings, General Manager at NATO’s Support and Procurement Agency (NSPA), cautioned that, despite the war in Ukraine, governments were still not coming together as one to coordinate and agree a single contract for the defence industry.

She said that in the area of ammunition, countries are “coming to us individually to give a demand signal for a specific type of ammunition. The nations are coming one at a time. What we need is a convening mechanism.” Cummings said she hoped to see that change in the next five years across the defence spectrum as processes and policy adapt from peacetime to the more demanding security environment. “We can’t afford to invest in individual solutions.”

Kim Jorgensen, Director-General and Permanent Representative to the EU at the European Investment Bank, made a pledge for an end to duplication.  But he said that there were constraints on where the bank can invest when it comes to defence. “In the area of military mobility, we can see a big role for us,” he said, referring to EDA-led work on standardising cross-border military transport procedures.

Vice Admiral Arie Jan de Waard, National Armaments Director and Director of the Defence Materiel Organisation, the Netherlands, was also clear at the conference on the need for collaboration, saying: “Don’t duplicate. Do it (develop weapons) with EDA, do it with NSPA. Strive for interoperability. Use the same systems.”

Timo Pesonen, Director General, DG DEFIS, European Commission, said he welcomed the political guidance at the highest political level on defence. He urged for the EU to press forward on innovation, highlighting EDA’s innovation hub. “We need to have a common programme with Member States and EDA to attract young engineers and change the image of the defence industry.”

 

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Swedish Minister of Defence Pål Jonson laid out on Thursday Sweden’s aims for its Presidency of the Council of the European Union from January, focusing on the EU's Strategic Compass, support for Ukraine and partnerships with non-EU countries.  “Europe needs to be a stronger security actor,” Minister Jonson said. “To my mind, there is no zero-sum game for a stronger NATO and a stronger EU,” he asserted.

Speaking at EDA’s annual conference “Investing in European Defence”, Minister Jonson also said his country continued to push for full NATO membership to help protect Europe from Russian revanchism. He also warned not to repeat the mistakes of the past in collaboration, saying there were lessons to be learned from the “graveyard of failures” in international defence cooperation.

“This is one of the most critical situations for European security since the end of the Second World War,” Minister Jonson told the conference, which brought together some 1,300 participants in Brussels and online.  “This raises a lot of new questions for us, both in regard to our capabilities and our defence industrial base,” he said.

In a ministerial panel chaired by EDA Chief Executive Jiří Šedivý, Jan Jireš, Deputy Minister for Defence Policy and Strategy, Czech Republic, detailed the progress during the Czech EU presidency on joint procurement. "Joint procurement can take many forms. Look at what we are doing with Slovakia, together buying from Sweden. This is not, strictly speaking, joint procurement. But we are cooperating, trying to coordinate. And there are many benefits," Deputy Minister Jireš said.

STANDARDISATION, JOINT PROCUREMENT ARE CRUCIAL

Greece’s Minister of Defence Nikolaos Panaiotopoulos also expressed his support for more European cooperation, echoing a growing sentiment by saying “if not now, then when?” “For many Member States, we will terminate the use of obsolete Russian and Soviet weapons listed in all our systems. Now is the opportunity for newly-produced capabilities in the EU,” Minister Panaiotopoulos said, highlighting the revival of shipbuilding in Greece. "I think the world is in flux. I think we are facing a not-so-subtle attack on the notion of our Western societies. We need to take that into consideration now and act with one sense of urgency," he said.

For Sweden, maintaining the EU’s support for Ukraine remains a priority, Minister Jonson said, emphasizing the need to use existing EU initiatives. He also spoke of developing standardisation of arms and ammunition, harmonising of requirements and joint procurement as the EU seeks to provide Kyiv with the capabilities it needs to fight Russia’s war in Ukraine.

“We always say that we are a big, small country. But we try to lead by example, we launched our support package for the Ukraine just two weeks ago,” Minister Jonson said. “It is crucial that Ukraine regains its territorial sovereignty,” he said.

Minister Jonson said the Swedish EU presidency would focus on taking forward the Strategic Compass, particularly in cyber and space. Working close with the United States, Canada and Britain, as non-EU countries, will be a critical part of the Swedish EU presidency, he said.

Europe needs to take more responsibility for its own security, and look not just to the war in Ukraine but face up to future threats, Head of the European Defence Agency (EDA), High Representative Josep Borrell said on Thursday. Speaking at EDA’s annual conference in Brussels, Borrell called on Member States to cooperate more to equip Member States with the defence capacities the European Union needs.

At the forum, “Investing in European Defence”, Head of Agency Borrell said the EU was also at a turning point in defence spending, after the EU’s Member States surpassed the €200 billion-level in 2021 for the first time. Borrell presented EDA defence data for 2021.

“After the Cold War, we shrunk our forces to small-size armies without coordination … We lack critical defence capabilities,” Borrell said. “We have to compensate years of underspending”, he told the conference.

“Total defence expenditure that Member States have announced will grow by another €70 billion in the next three years,” Borrell said. “But people don’t fight with banknotes. There’s a lot of work to be done. This is going to be a challenge to spend this money in a coordinated manner. If our national decisions are only focusing on present needs … it will be again a fragmented European capability landscape.”

Speaking to the EU defence community, with some 300 participants at the Brussels venue and many more following online, Borrell said we need to find the right balance between responding to present needs and preparing for future threats.

Borrell outlined the positive trends but underscored the risks. “We are facing real threats, close by and likely to get worse,” Borrell said.

EDA READY TO SUPPORT PROCUREMENT

Defence investments in the EU reached a record level of €52 billion in 2021, making up almost a quarter of total defence spending. For the third year in a row, EU Member States collectively met and went beyond the 20% agreed benchmark. Nineteen Member States reached the benchmark, the highest number since EDA started collecting data, and five more than in 2020.

But even if collaborative defence equipment procurement rose to 18% of total spending on equipment from 11% in 2020, “we are still far below the 35% agreed benchmark,” Borrell said.

Borrell told the conference that EDA stands ready to support the actual procurement, or even act as contracting agent, if Member States so wish. The Agency has the legal basis and experience to do so

The EU needs to address short term needs by investing and procuring jointly. “Put simply: buying more together,” Borrell said.

EDA Chief Executive Jiří Šedivý also told the conference that Europe must ramp up its capacity to act militarily – because EU citizens want it. “Our citizens want and expect us to act. A recent flash Eurobarometer survey that three quarters of Europeans say that ‘we need grater military cooperation within the EU.’

Brussels, 8 December 2022. The European Defence Agency (EDA) has today published its annual Defence Data report for 2020-2021, detailing defence spending by the 26 EDA Member States. In 2021, total European defence spending stood at a new high of €214 billion, marking a further 6% increase on 2020 and the seventh year of consecutive growth. EDA’s report finds that Member States are investing more than ever on the procurement of defence equipment and research and development with a 16% rise compared to 2020, totalling a record €52 billion.

RECORD EUROPEAN DEFENCE EXPENDITURE & INVESTMENT

At €214 billion, total defence expenditure corresponds to 1.5% of the 26 EDA Member States’ gross domestic product (GDP), the same as recorded in 2020. The 6% rise in spending compared to 2020, marks the strongest yearly growth rate since the rebound started in 2015 following the financial crisis. Compared to the historic low reached in 2014, defence expenditure has increased by almost €52 billion, or 32% in real terms.

EDA’s Defence Data report finds that the sustained increase in overall spending is also reflected in national numbers. In 2021, of the 18 Member States who increased spending, six raised it by 10% or more. The highest increases amounted to more than €4 billion by Italy in absolute terms and a 42%, 33% and 27%, increase in relative terms by Finland, Greece and Slovenia respectively. However, eight Member States reduced spending, with the largest national cut standing at 15% in relative terms.

EDA’s Defence Data report concludes that defence expenditure has globally resisted the economic impact caused by the COVID-19 pandemic. Member States’ announcements following Russia’s war of aggression against Ukraine signals that the increases in expenditure are likely to continue in the years ahead.

HR/VP and Head of the European Defence Agency Josep Borrell said: “European defence cooperation has come a long way. However, too little is spent in cooperation. As Member States increase their defence expenditure in defence, cooperation must now become the norm. We have built the cooperation frameworks to make this happen. Spending alone is not enough, we need to do it better, and that means doing it together. This is the only way to effectively equip European armed forces for the challenges ahead.”

REBOUND IN COLLABORATIVE EUROPEAN DEFENCE SPENDING 

The significant increase in defence spending has also translated into an appreciable rise in collaborative European spending, but still well below agreed collective benchmarks. In 2021, Member States allocated a record €7.9 billion to European collaborative defence equipment procurement projects, almost double the €4.1 billion recorded in 2020.

Spending on European collaborative defence equipment procurement in 2021 accounted for 18% of total defence equipment procurement, an increase on the 11% in 2020. A contributing factor is also the higher number of Member States who provided data in 2021 compared to 2020. The 35% European collaborative defence equipment procurement benchmark, which is also a commitment under the Permanent Structured Cooperation (PESCO), remains out of reach and will require almost doubling current investment in this area to reach the benchmark, which translates to €15.1 billion.

EUROPEAN DEFENCE SPENDING - 2021 KEY FINDINGS

EDA’s report, based on data voluntarily provided by 26 Ministries of Defence, also finds that total defence expenditure represented 2.9% of total government expenditure. Additional findings include:

• Of the €52 billion spent on defence investments, 82% or €43 billion were used for equipment procurement and 18% or €9 billion for research and development. This is a similar percentage split as recorded over the past three years.
• Defence research and technology spending is uneven across Member States, with 13 increasing, 12 decreasing, and one unchanged. Standing at 3.7% of total expenditure on R&T, Germany has the highest allocation of the 26 Member States in this area.

INCREASED INVESTMENT IN DEFENCE RESEARCH & TECHNOLOGY BUT COOPERATION LAGS

In 2021, defence Research and Technology (R&T) spending amounted to €3.6 billion, marking a massive 41% increase compared to 2020 and a new EDA recorded high. Compared to the historic low in spending reached in 2016, expenditure for defence R&T almost tripled. In 2021, over €1 billion extra was allocated, putting the 2% agreed benchmark within reach, but falling short at 1.7%. However, the trend is driven by Germany and France, which are responsible for more than 80% of the total defence R&T expenditure. As in 2020, they remain the only two Member States to reach the 2% benchmark.

In 2021, Member States spent €248 million on defence R&T projects in cooperation with other EU states, marking the first significant growth in this area since several years, totalling almost 70% compared to 2020. Nevertheless, expenditure lags compared to the high of €477 million recorded in 2008. Today, just 7% of total defence R&T expenditure is spent in cooperation, the second lowest recorded by EDA, and far from the 20% collective benchmark.

BACKGROUND

EDA collects defence data on an annual basis, and has done so since 2006, in line with the Agency’s Ministerial Steering Board Decision of November 2005. The Ministries of Defence of the Agency’s 26 Member States provide the data. EDA acts as the custodian of the data and publishes the aggregated figures in its booklets.

All data is collated (“total incorporates 26 EDA Member States”), and it has been rounded. Defence expenditure figures are provided in constant 2021 prices, to take inflation into account and allow for a comparison across years.

Notes for editors

1. EDA Defence Data Report 2020-2021
2. EDA Defence Data webpage
3. The European Defence Agency (EDA), the hub for European defence cooperation:
   1. Created in 2004 to support and facilitate defence cooperation in Europe, EDA has become the place where countries willing to develop their defence capabilities collaboratively can do so.
   2. EDA’s expertise and activities cover the whole spectrum of cooperation: from harmonising requirements to delivering operational capabilities; from research & technology (R&T) and innovation to developing technology demonstrators; from training and exercises to support to CSDP operations.
   3. EDA also closely engages with the European defence industry to enhance Europe’s defence technological and industrial base and help make the industry stronger and more competitive.
   4. The Agency’s role and impact have constantly grown, especially with the implementation of the EU’s Global Strategy (2016) which also led Member States to reinforce the Agency’s mission in 2017.
4. Follow #EUdefence on social media (Twitter, LinkedIn, Instagram, YouTube) for more and visit our website www.eda.europa.eu.

 

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