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Following the 2016 referendum on Brexit, EU countries have tried to revive (again) the common European defence policy. They therefore worked for implementing existing but unused tools, and outlined a blueprint for the launch of joint programmes. Despite these efforts, planned programmes have not been launched yet, putting the quest for further cooperation at risk.

In the last years, EU members have agreed to press defence cooperation ahead by effectively implementing the tools already included in EU treaties on the one hand, and by establishing defence-tailored funds on the other. The instruments relevant European stakeholders are developing include the revised Capability Development Plan (CDP), the Coordinated Annual Review for Defence (CARD) and the Permanent Structured Cooperation (PESCO). To incentivise member states in pursuing EU joint programmes rather than national or multinational ones, the European Commission approved the allocation of defence-tailored funds for 2019 and 2020, namely the European Defence Industrial Development Programme (EDIDP) and the Preparatory Action on Defence Research (PADR). They will probably be replaced by a more comprehensive European Defence Fund (EDF) in the 202www027 timeframe.

In a debate with MEPs, Ursula von der Leyen outlined her vision as Commission President, 16 July 2019. Some observers hope that she exerts a positive impact on future joint efforts. (Photo: EU / European Parliament)

The EU Council decision of 14 May 2019, which assessed the progress achieved in the first year following the launch of PESCO, notes that the different EU-led initiatives have already increased the aggregated defence budget by 3.3% in 2018 and by 4.6% in 2019.

Brussels considers that defence-tailored EU funds could incentivise member states to use pooling and sharing as an instrument to reaffirm their military role. Indeed, years of underfunding have left EU states unprepared to tackle today’s global threats alone. EU defence funding could push member states to reduce duplication, overcapacity and barriers to defence procurement, which cause a €26.4Bn per year waste according to EU reports.

PESCO and the EDF are considered crucial tools for putting EU defence into practice, as they could incentivise member states to kick-off joint R&D programmes, usually poorly funded at the national level. EU members had finally been able to launch these initiatives after two decades of impasse, mainly due to British reticence on strengthening intra-EU defence ties. The political commitment that EU states were showing appeared so strong that US stakeholders have repeatedly recalled the basic rules of the EU-NATO relationship – no decoupling, no duplication, no discrimination.

However, as always happened so far on European defence, progress is deceiving compared to announcements, especially in terms of impact. As will be further explained, the Juncker Commission has tried to rapidly push EU defence forward by approving unprecedented measures. However, the fact that cooperation advance slowly (for instance for what concerns the so-called EUROMALE programme) and the nature of the projects under development demonstrates that EU tools are probably been misused because not driven by the good considerations.

PESCO and the EDF

Approved in 2017, PESCO is intended to help the 25 participants (all EU member states excluding Malta and the UK – Denmark has an opt-out clause on defence) to increase their defence budgets, harmonise and optimise their military capabilities, ameliorate the efficiency and effectiveness of their armed forces and to reinforce the EU defence industrial base and strategic autonomy. The fact that participants bind themselves to develop the programmes chosen among the 34 available is an innovation for European defence, so far implemented on a voluntary basis only. Nevertheless, as already discussed in ESD 02/2018, the military impact of PESCO will likely be limited. This form of cooperation is not the first step towards the creation of a common European army – as stated by High Representative/Vice-President Mogherini. Nor is there any ambition to create rapid intervention forces that can replace/integrate EU Battlegroups – which have never been redeployed for combat missions so far. Furthermore, PESCO projects with the largest number of participants are not necessarily those with the greatest military interest/impact, rather being the most politically shared or the easiest to be completed. The Military Mobility project and ESSOR are two emblematic examples. The Military Mobility project intends to ameliorate mobility across Europe by better adapting existing infrastructures and by harmonising relevant regulations and provisions. It has 24 participants, but it will have a very limited impact on European defence per se. Worse still, the programme favours the redeployment of US troops in Europe. The ESSOR (European Secure Software defined Radio, ESSOR) project, which could increase European strategic independence in the field of secure military communications, has only 9 participants. The most ambitious projects added with the second batch (approved in November 2018) essentially follow the same scheme.

In order to step-up European defence cooperation, the European Commission proposed to include a defence-tailored fund, the European Defence Fund (EDF), in the 2021-2027 Multi-annual Financial Framework (MFF). The Council and the Parliament reached a political agreement on the fund in February 2019, but the final amount, as well as the participation of third countries, will be further discussed during the negotiations on the MFF. Should the current proposal be confirmed, €13Bn (about €2Bn more than previously expected) will be allocated for defence programmes over a seven years-long period. They should be ideally shared between research (€4.1Bn to finance competitive and collaborative projects, mainly through grants), and capability (€8.9Bn to be mainly dedicated to prototypes and certifications). In order to be funded, projects must respond to member states’ priorities agreed to at the EU level and be carried out by at least 3 participants from 3 states. The cross-border participation of SMEs and mid-caps will be particularly welcome. The research and design phase can be funded up to 100%, testing, qualification and certification actions up to 80% and prototype development up to 20%. PESCO projects, which development is considered as a priority due to their EU nature, could receive an additional 10% funding (from 20% to 30%). Between 4 and 8% of the total EDF budget will fund disruptive, high-risk innovation that will boost Europe’s long-term technological leadership and defence autonomy.

Collectively, Europe is a very large military spender. But it is far from being a large military power. This is because of inefficiencies in spending and the untapped potential of working together on planning and procurement. (Graphics: EU)

The MALE RPAS

The development of the MALE RPAS, the Medium Altitude, Long Endurance Remotely Piloted Aircraft System also known as EUROMALE or EURODRONE, could have represented a first remarkable example of European cooperative programme. However, its future is now questioned as it is an ambitious programme that could finally fail.

OCCAR formally launched an invitation for tender for the development of a European-produced MALE RPAS in October 2018, following the successful completion of the two years-long, €65M worth definition phase launched by Italy, Germany, France and Spain in 2016. Airbus Defence & Space GmbH was identified as prime contractor, while Airbus Defence & Space S.A.U., Dassault Aviation and Leonardo were selected as major sub-contractors. System integrators Elettronica, Hensoldt, Indra and Thales formalised an offer for a coherent ISTAR functional chain for the programme some months later. According to the original schedule, the signature of the contract is expected in the fourth quarter of 2019, to be shortly followed by the launch of the development, production, and initial in-service support. This might allow a prototype flight in early 2023, and to deliver the final system in 2025.

In order to further advance cooperation, the European Council included the programme among PESCO ones at the end of 2018. The Czech Republic has finally decided to join the development team through Aero Vodochody, while Belgium entered the programme with the role of observer. Moreover, the MALE RPAS will be among the first recipients of the European Defence Industrial Development Programme, thanks to the allocation of €100M.
The operational requirements participants agreed on stemmed from the lessons learned using US- and Israel-produced systems and the willingness to fill the existing capability gap in this segment to increase strategic independence. Per these considerations, they agreed on the need of a highly capable asset able to provide 24/7, day and night Intelligence, Surveillance, Target Acquisition and Reconnaissance (ISTAR) in wide areas and in-theatre activities. Other requirements included all weather capabilities, efficient maintenance, interoperability with existing and future defence systems, and resilience against cyberattacks. Modularity, long range of action, wide area coverage and the ability to operate short transit flights and manoeuvre at high airspeed have been identified as additional features. According to the full-sized mock-up unveiled at the ILA Berlin Air Show 2018, and also exhibited at the 2019 Paris Air Show, the MALE RPAS will be larger than General Atomics’ MQ-9 REAPER. It will feature a twin-pusher propulsion and a single electro-optical/infrared (EO/IR) sensor.

Considering these features, however, the European-made MALE could represent a new missed occasion for pooling and sharing and for filling a significant capability gap among European armed forces. The offer that the selected companies presented to OCCAR in May 2019 has not convinced member states, especially France. The use of a twin-pusher propulsion rather than a single one (according to German desiderata) has an important impact on costs, which doubled from €1Bn to €2Bn for the next study phase. Even if Germany, whose contribution to the project accounts for 31%, would decide to fully fund motorisation (an unconfirmed option), the choice of the propulsion will have a negative impact on the MALE RPAS’ estimated weight – about 11 tonnes compared to the REAPER’s 4.5 tonnes. Worse still, the weight will negatively affect operating costs, and the system’s competitiveness, thus dramatically reducing export possibilities – yet crucial for the success of the programme. All this considered, the countries involved will try to renegotiate the contract with companies to find a better balance between performances and costs. However, this process could originate a new delay in the initial schedule, as 2020 was initially identified as the year for the delivery.

Map of the members of the Permanent Structured Cooperation (PESCO); dark blue: PESCO member, light blue: other EU member

Moreover, the programme could finally be the victim of political considerations. In the last months, the Italian government declared that it could finally resume the purchase of 20 Piaggio P.2HH UAVs, initially blocked due to budget constraints, to save the company from bankruptcy. Indeed, such a move could put the Italian participation in MALE RPAS at risk, as the country cannot afford to participate in several big programmes at the same time with its current level of defence expenditures. Similarly, Spanish participation could be finally questioned, as the country has purchased two MQ-9 REAPER last April and is also evaluating the possibility to procure US-produced fighters.

The Lack of an “EU Defence Mindset”

Recent efforts to establish a real EU defence have been warmly welcomed by stakeholders and experts – at least at the beginning. Indeed, the degree of cooperation that member states have been able to reach in only a couple of years is remarkable compared to previous attempts. Most interestingly, the efforts begun in the aftermath of the Brexit referendum seemed driven by the quest of a coherent strategy and synergy among stakeholders. Before 2016, EU member states focused on the most politically shared actions rather than advancing according to a specific strategy aimed at achieving given objectives and priorities. The legal and political measures taken in the past finally suffered from the lack of enduring political willingness and of a coherent strategy. The fact that the bottom-up approach has been preferred to the top-down one created further fragmentation over time, and downsized the real impact of joint defence policies and programmes.
In the pathway that followed, the Commission has taken the lead of joint efforts involving states (via the Council), EU people representatives (via the EU Parliament), EDA and EU defence industries.

However, this embryonic form of strategic thinking, which could have finally been a game changer for EU defence cooperation, is already demonstrating its weaknesses. In particular, the pathway identified by the Commission to enhance EU defence and ease cooperation at the EU-level will likely have opposed effects than those intended.
In particular:

  • Being R&D-oriented, EU funding could finally be diverted by companies for other uses – and the Commission will be unable to mitigate the phenomenon.
  • Ongoing EU initiatives, thought to enhance strategic independence from the US are somehow benefiting Washington in political and industrial terms.

Funding R&D Could Endanger EU Defence

The first phases of a defence programme have become the most expensive ones in the last decades, while life-cycle costs have been shrinking. Per this consideration, the Commission believes that helping member states to fund military R&D could convince them to choose cooperation for modernising their armed forces despite budget constraints.
To further reinforce the impact of EU funds on the build-up of a common EU defence, the Commission added some specific prerequisites to become EDF’s recipients. First, member states must engage themselves to buy the products developed from EU-funded R&D projects and/or prototypes. Second, the uniqueness of the product is a necessary condition to receive EU funds in an attempt to reduce the number of variants developed – the Italian and French FREMMs are one of the most notable examples.

However, these conditions could finally be incoherent with what the Commission wants to achieve, as companies and states might grab funds and later overcome EU-imposed conditions. As defence companies often struggle to obtain funding needed for R&D, usually asking states to provide them with economic support, member states will likely push national businesses to apply for EU funds. They might then commit themselves to fund the process required of the development and to procure the final product. Once the funds will be obtained, states might finally refuse to fund the remaining phases, reduce or cancel orders, and all other modifications often occurring to military procurement programmes in recent years.

Member states and national companies might thus obtain funds to finance R&D in common technologies they are interested in. Once the know-how obtained, the original programme might be sacked (as has occurred to several multilateral programme, began in pool and ended up with nation-tailored products). Such a scenario would end in the waste of EU funds, as they would neither allow to push forward new joint programmes, nor to advance EU defence cooperation.

Worse still, as defence mainly remains a national prerogative, the Commission would not be able to prevent such a phenomenon, nor to condemn states or companies in case of misuse.

The A400M is an example of successful cooperation on defence projects. (Photo: ESuT)

Even in case of successful funding, the EDF mechanism will not solve some peculiar problems of common defence programmes, namely the duplication of production lines. Member states will likely use the “made in EU” nature of the programme as a justification to pursue their employment policies. Consequently, they will likely ask to duplicate production lines (like occurred to the Eurofighter programme), asking one for each concerned country (or equivalent compensation), thus negatively affecting efficiency and costs. This would result in common programmes, but unsustainable formulas.

The Negative Impact of Timing

The fact that funds belonging to the EDF will be allocated between 2021 and 2027 might not help member states in the modernisation of their defence equipment. The most relevant defence programmes for the next decades have been already launched in Europe, either as national programmes or in multilateral frameworks. This is the case, for instance, of the next generation fighter and of the future main battle tanks.

Worse still, the fact that the EDF will be confirmed with the approval of the next MFF is somehow beefing up US sales in Europe. Uncertainty and distrust in EU-developed programmes, usually delivered with significant delays and more expensive than off-the-shelf solutions (e.g. A400M), have finally convinced several member states to fill their capability gaps by buying US-produced systems, with at least two important consequences. First, further reducing the need to develop new European technologies. Second, such an approach undermines the efforts to use EU defence cooperation as a tool to regain strategic independence from the US, as it is feeding up the industrial and political ties between Washington and European states – reinforcing the US narrative on European defence.

Possible Solutions

The fact that the Commission used economy-led considerations to assess which phase of military products’ development it wanted to fund shows that, as usually happens in Europe, the defence industry has been considered as any other industrial sector. Despite quite common, this assumption is wrong, as the defence industry has its own, tricky functioning, influenced by the high strategic importance it has for each country. To maximise the impact of EU defence funds, the Commission could have relied more on independent military experts – rather than on member states designed ones, whose proposals would be influenced by the states they are serving! Creating a Director General (DG) for Defence, an option which is on the table, would have better supported decision-making on the EDF. The efficiency of funds could have been maximised by focusing on different phases of the production cycle. For instance, funding the acquisition process of jointly developed programmes might have allowed for more control over the respect of preconditions before granting funds. Such a method, a sort of reward for states that accepted to invest to enhance cooperation, could have finally convinced members of the convenience of pooling and sharing. Moreover, granting EU funds for acquisition could have solved the problem of third parties’ participation in joint programmes, which remains a disputed issue today. As for European countries, the EU would have funded acquisition for third countries depending on the degree of economic and industrial participation in the development phase. A technique that would have somehow mirrored the one used by the US, which gives credit to countries willing to buy American-produced armaments but unable to pay for them.
The fact that the next European Commission (to take office in November) will be led by former German defence minister Ursula von der Leyen might finally bring a more comprehensive knowledge of defence, with a potential positive impact on future joint efforts.

For the time being, the development of real European defence programmes still seems far from being achievable despite the efforts made in the last years.

Giulia Tilenni is an analyst in international affairs based in Paris, France.