Europe Daily Bulletin No. 13262

3 October 2023
Contents Publication in full By article 33 / 33
Kiosk / Kiosk
No. 091

The Impact of the War in Ukraine on the European Defence

In his study on “The Impact of the War in Ukraine on the European Defence”, the deputy director of IRIS, Jean-Pierre Maulny, highlights the increase in acquisitions of military equipment from outside Europe, mostly off the shelf.

Since Ukraine was invaded by Russian troops, defence budgets have risen, particularly in Austria, the Baltic countries, Finland, the Netherlands, Slovakia, Slovenia, Sweden and, in spectacular fashion, Poland, where the increase in real terms was +46% between 2022 and 2023. In total, acquisitions of military equipment by European countries between 2022 and the first half of 2023 were in the neighbourhood of 100 billion euros, according to the author. However, these purchases have mainly been made outside the EU. Across 2022-2023, this corresponds to as much as 78% of the EU countries’ engagements, with the United States as principal beneficiary, mopping up 80% of acquisitions made outside Europe.

Within the EU, i.e. for the remaining 22%, Germany takes the lion’s share, with 50% of intra-EU spending worth a total of 11.5 billion euros. Sweden takes second place with 4.7 billion euros, a long way ahead of France, with just 12% of acquisitions for a total of 2.5 billion euros.

South Korea, which has the advantage of the capacity to offset European and American shortfalls in terms of short- and medium-term deliveries, has seen its share of the European market grow exponentially. It now corresponds to 13% of total acquisitions outside the EU. This growth is expected to coincide in the future with intra-EU production, with K2 tanks to be built in Poland by 2026. Lagging a long way behind are the United Kingdom and Israel (3% each).

Maulny’s analysis note confirms the fact that the revival in the defence spending of European countries is reflected in acquisitions made as a matter of urgency, albeit taking care to ensure interoperability with the principal ally within NATO. The inability of the European industry to fill orders in any less than 2 to 3 years, or even longer in some cases, automatically disqualifies it. Its historical refusal to invest in increasing production capacities, lamented in diplomatic terms by Commissioner Thierry Breton and the chairman of the military committee of NATO, the Dutch Admiral Rob Bauer, goes some way to explaining the evaporation, in 18 months, of nearly 78 billion euros of European taxpayers’ money which, instead of supporting the development of the European industrial and technological defence base, has gone to enrich that of the United States and other countries.

It is true that although budgets and acquisitions have risen significantly, it remains to be seen in the long term for how long these defence efforts will continue. It will depend on many factors, the researcher correctly explains, referring amongst other things to the evolution of war in Ukraine and the resulting sense of urgency, as well as the financial capacity of the states and the budgetary trade-offs that will become necessary in the future. But by hiding behind all this uncertainty, the European industry will lose the opportunity to get itself in a position to respond to demand, current and future, European and international. Meanwhile, the sector, which has become far too fragmented, is in dire need of consolidation.

Maulny argues that most of the European instruments, starting with the European Defence Fund, are inadequate to respond to the situation caused by the war in Ukraine, as they are designed principally to develop cooperation, research and development. It is true that they were not designed to facilitate acquisitions, like EDIRPA (common procurement), or to modernise production capacities, in the case of the ASAP regulation, which the author seems to have completely forgotten about. These new instruments, temporary in nature, are additions to what is still a very sparse toolkit.

The European Defence Investment Programme (EDIP), expected before the end of the year, and the industrial defence strategy, which the Commission is expected to adopt on 8 November of this year, may be very useful additions to the range. However, this would require all actors in the sector in the member states – armament directives, the industry, the military sector – to go down the road of consolidating supply and demand. (Olivier Jehin)

Jean-Pierre Maulny. The Impact of the War in Ukraine on the European Defense. Institut des relations internationales et stratégiques (IRIS). Policy paper, September 2023. 22 pages. This analysis note may be downloaded free of charge from the website of the Institute: https://aeur.eu/f/8to

In Oekraine

The VRT journalist Rudi Vranckx serves up a history of the Russia-Ukraine conflict, well documented but lacking in originality, despite witness statements collected from March 2022 onwards in Kharkiv, Mariupol, Bakhmut, Bucha, etc. This author, however, has the added benefit of asking a number of important questions that only history will be able to answer in the coming years.

Vranckx devotes a lengthy chapter to the nuclear rhetoric of Vladimir Putin, the risks of escalation or a nuclear accident following a deliberate or accidental bombardment of the Zaporijia power station. Quoting the former American senator Sam Nunn, who made it his mission to campaign for the reduction of the nuclear risk, particularly after the Cuban missile crisis, he points out that there are three fundamental conditions to avoid disaster: “rational leaders, precise intelligence and the absence of serious military blunders” (our translation throughout). “Today, 60 years later, these are precisely the questions on which there are serious doubts”, he writes.

Is there any room for a diplomatic resolution? Not in the immediate future, the author considers, having stressed the number of casualties on both sides and the fact that it is impossible for Putin to give up territorial gains and for Zelenskyy to concede any land to Russia. Furthermore, even if Russia succeeded in defeating the Ukrainian army, the spirit of resistance that has developed among the population would make occupation extremely difficult, in the view of the author, to the point of being impossible to maintain in the medium or longer term.

Henry Kissinger once said that “since Peter the Great, Russia has been expanding at the rate of one Belgium per year”, Vranckx quotes, adding that Putin has kept up this tradition: “with the semi-annexation of the provinces of Abkhazia and South Ossetia in Georgia in 2008, Russia obtained half a Belgium. The conquest of the Crimea in 2014: almost one Belgium. The new territories annexed in Ukraine: three times the size of Belgium (…). With southern Ukraine (taking Odessa and joining it up with Transnistria: Ed), Putin would have preferred to add a fifth Belgium, but this objective became difficult (to achieve) after the fall of Kherson”.

Do we need to be worried about a third world war? Although there is no third world war to speak of, in view of the location of the conflict on Ukrainian territory, the war being waged in Ukraine by Russia is already largely globalised. With around 50 countries actively supporting Ukraine, including on a military level, with aid now standing at 100 billion dollars. And in the opposite corner, Russia is receiving military aid from North Korea and Iran, whilst retaining political and economic support from the other BRICS countries. Although we will have to wait and see how the conflict develops before concluding whether the invasion of Ukraine in 2022 constituted the start of the third world war, we can still “hope that ultimately, reason and humanity will prevail”. The author concludes by quoting the warning issued by Albert Einstein in 1948: “I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones”. (OJ)

Rudi Vranckx.  In Oekraine – Dreigt de derde wereldoorlog? (Available in Dutch only).  Horizon. Overamstel uitgevers bv. SBN: 978-9-4926-2628-8. 287 pages. €22,99

What can be Expected after the Elections in Cyprus, Greece and Turkey

The Centre of European and International Studies of the University of Nicosia devotes the latest edition of its information letter to potential developments in the eastern Mediterranean, following the elections to be held in Cyprus, Turkey and Greece.

In the view of former European civil servant Kyriakos Revelas, whose work is based, amongst other things, on the bilateral meeting of the Greek and Turkish leaders on the sidelines of the Vilnius summit and the resumption of the meetings of the high-level cooperation council, there is now a window of opportunity to scale down the degree of conflict in the Greek-Turkish relationship, before seeking a resolution of bilateral disputes, or collectively developing greater stability.

With the involvement in other countries, the region can become an important energy hub and energy market to both effectively cover local needs and contribute to energy security in the EU (…). Other obvious areas of cooperation include reducing sea pollution, preserve biodiversity and the mitigation of climate change which is affecting the Mediterranean and the riparian countries more severely than other parts of the planet”, Kyriakos argues, going on to add that “joint leadership of these efforts by Turkey, Greece and Cyprus, as well as Egypt and Israel, would signal to the peoples of the region that a new era has dawned and encourage other (sub-) regions to also launch cooperation schemes”.

The EU should actively encourage such efforts which would not only contribute to enhanced energy security but indeed to stability and sustainable development in an unstable and conflict-prone neighbourhood”, the author writes, adding that “faced with the relative retreat of the US from the region and increased interest by other international actors, notably Russia and China, the EU should endeavour to turn the destructive conflict at its borders into a constructive relationship by infusing trust among the conflict parties”.

The roadmap agreed between the two Foreign Ministers in Ankara on 5 September provides exchanges at three levels: the political dialogue, implementation of confidence building measures and discussions on a positive agenda of cooperation in various fields. Turkey feels excluded from the Eastern Mediterranean Gas Forum (EMGF) whereas its members consider the Turkish participation is not possible as long as the country does not abide by international law. The ideal would be for Turkey to become party of the UN Convention on the Law of the Sea (UNCLOS); as a minimum, the de facto implementation of its provisions should be agreed (the US seem to follow that pattern) (…). Under these conditions, the EMGF should enlarge to include Turkey and possibly other countries. Furthermore, the scope of EMGF may widen to renewable forms of energy; or a similar mechanism may be set up for wind energy or for anti-pollution activities; these steps can be part of an evolving regional architecture of cooperative security”. (OJ)

Andreas Theophanous (edited by). What can be Expected after the Elections in Cyprus, Greece and Turkey. University of Nicosia. In Depth. Volume 20, issue 3, September 2023. ISSN: 2421-8111. 37 pages. The information letter of the Cyprus Centre for European and International Affairs may be downloaded free of charge from the website: https://aeur.eu/f/8tn

Le financement des PME

The quarterly review of the association Europe Finances Régulations devotes its latest edition to the financing of SMEs, with a series of articles describing how changes in monetary policy and crises affect small and medium-sized enterprises and their access to funding. According to Henri Fraisse and Jean-Stéphane Mésonnier, non-conventional operations, such as long-term refinancing operations (VLTRO, TLTRO), have broadly been sufficient effectively to support the financing of SMEs, “at least the ones with the highest ratings”. Other articles deal with the conditions for access to bank lending, equity finance and the provision of guarantees and public financing. (OJ)

Sylvain de Forges (edited by). Le financement des PME : actualité et perspectives (available in French only). Revue d’économie financière. No. 150, 2nd quarter 2023. ISBN: 978-2-3764-7084-7. 336 pages. €35,00


Russian invasion of Ukraine