The High Representative of the Union for Foreign Affairs and Security Policy, Josep Borrell, told a small group of journalists, including EUROPE, on Friday 24 March that the European Commission should present “in April”, a proposal to increase the capabilities of the European defence industry.
This proposal is part of the three-part proposal to supply 1 million rounds of ammunition to Ukraine within 12 months and to strengthen the European defence industry, as agreed by the EU Council on 20 March (see EUROPE 13145/1).
The day before, the President of the European Commission, Ursula von der Leyen, had explained that in order to reach this million, it would be necessary for “to massively increase ammunition production capacity in Europe”. She had therefore announced, without giving a date, that the European Commission would present a proposal for a legal instrument that would allow for an increase in the industrial production of ammunition, which “includes, for example, support from the EU budget”.
“It’s about building, expanding and repurposing manufacturing facilities and strengthening the entire ammunition supply chain to be fast”, explained the President of the Commission.
The High Representative noted that the European budget could not be spent on buying arms, but could be spent on increasing the capabilities of a sector, which in this case was to be the defence industry. “How? I don’t know”, he admitted. “We can imagine boosting capacities by subsidising, by incentivising, but not by buying production”, he explained.
Mr Borrell explained that this proposal would be “completely different” from the European Defence Industry Reinforcement through common Procurement Act (EDIRPA).
According to the High Representative, if there is the demand, it will grow the European defence industry. Member States agreed to allocate €1 billion from the ‘European Peace Facility’ (EPF) to reimburse those who would buy European ammunition to send to Ukraine, with contracts to be concluded before 30 September 2023. Mr Borrell recalled that with the reimbursement rate standing at 50–60%, this should already ensure the equivalent of about €2 billion of orders for the European and Norwegian industries.
Similarly, 1 billion of the EPF will be used to reimburse ammunition from European stocks. “My feeling is armies can have enough stocks to exhaust the 1 billion funding if they really want to destock, especially from munition coming from the Soviet Union era”, Borrell said.
In his opinion, “looking at a guesstimate”, Member States have more stock than they say. “If they want, they can give ammunition”, he explained. He added: “My message is that you don’t need it next week or next month. You are not going to fight”. The High Representative said that de-stocking was linked to the development of defence industry capabilities, saying that Member States would donate more ammunition if they knew that there was a “real prospect of replenishing” stocks.
Producing together
At their summit on Thursday 23 March, the heads of state and government emphasised the need to strengthen European industrial capacities, welcoming the European Council’s agreement on the three-part proposal.
In parallel to the joint purchase of munitions, “European defence industries will benefit from increased support from the European Union to strengthen their production capacities, secure supply chains and promote access to investment”, explained French President Emmanuel Macron, adding that it was necessary to “ give ourselves the means to build a war economy at a European level”.
For Belgian Prime Minister Alexander de Croo, buying together is “a first step”. “The second must be to produce together (...) The strategic objective is to create a European defence industry that must help us to be more independent and more autonomous”, he explained.
“We have to move to things being concrete, we still have a lot of work to do to make the European defence industry stronger”, said Sanna Marin of Finland, adding that it was important that Europe was also ready to strengthen its industry to continue to help Ukraine. “It is possible that the war will be prolonged. We need to have the capacity to produce all this material in the future”, she explained.
For Luxembourg’s Xavier Bettel, it is necessary that “countries (are) able to know that they belong to this common project, it is something that could be a solution, rather than production happening in each Member State”. He recommended that in the end it should not be “just French and German production”, but European production, saying that he was neutral because there was no Luxembourg defence industry. (Original version in French by Camille-Cerise Gessant with the editorial staff)