The President of the European Council, António Costa, said on Monday 3 February in Brussels, at the end of the informal ‘retreat’ of European leaders devoted to the EU’s defence, that we needed to do “more, faster, better, stronger” and that it needed to be done “together”.
“We now really need to step up a gear and speed things up, because Russia and Putin are not just threatening Ukraine, but all of us, and we need to be able to defend ourselves”, stressed Danish Prime Minister Mette Frederiksen.
According to Mr Costa, the leaders agreed to focus on the main capability shortfalls, identified by the Member States “in full coherence with NATO”, and on areas where the EU can have real added value. These include air and missile defence, missiles and munitions, military mobility and strategic enablers.
“Strengthening the European defence industry has to be at the centre of this effort. We must produce more of the capabilities we need, and do it faster.”, added the President of the European Council.
The President of the European Commission, Ursula von der Leyen, called for greater defence coordination, “for instance, from joint public procurement, ensuring interoperability, which brings down costs and gives us scaling opportunities and advantages”. She also highlighted the need to simplify public procurement legislation and encourage innovation.
Mobilising additional resources
To develop Europe’s defence capabilities and industry, European leaders have stressed the need to spend more.
“For many, many years, we have under-invested in defence. Thus there’s a great urgency to increase the defence spending with a big magnitude”, admitted Mrs von der Leyen, herself a former German Defence Minister. The White Paper on defence, which the European Commission and the High Representative of the Union are due to present on 19 March, will deal in part with funding.
“2% [of GDP] is no longer enough, and it has to be done in a socially balanced way. (...) This is, of course, a national objective, but it is also a collective responsibility”, explained Mrs Frederiksen.
But for Bulgarian Prime Minister Rossen Jeliazkov, before increasing the targets, the commitments already made must be respected. “Until a significant number of countries reach 2%, it is still too early to talk about an increase”, he said.
Seven EU Member States of NATO do not reach the threshold of 2% of GDP, which represents an investment deficit of €60 billion per year.
While the Greek Prime Minister, Kyriákos Mitsotakis, called for “greater flexibility in the fiscal rules” of the EU “in order to encourage countries that devote more than 2% of their GDP to defence spending not to be penalised by existing legislation on spending ceilings”, Mrs von der Leyen explained that the Commission would see how best to use the rules of the Stability and Growth Pact.
“For extraordinary periods, it is possible to have additional measures. I think we live in this context. We are going to look at how to introduce as much flexibility as possible for defence investment and spending, to give Member States more room”, she promised.
In addition to public investment, the EU27 have highlighted the possibility of using - or developing - other instruments to finance defence.
Many executives also highlighted the possibility of financing by the European Investment Bank (see EUROPE 13570/1). Last Friday, 19 Member States asked the EIB to play a greater role.
“We need more public funding and more private funding by changing the way the EIB is financed, by moving away from taxonomy and favouring European purchasing”, said French President Emmanuel Macron. “The EIB is prepared to examine this issue. It needs more flagship projects on its table. And, of course, it needs private funding. It must enter into dialogue with the private banking sector to modernise its lending practices”, added Mrs von der Leyen.
Other instruments are being considered at EU level, pending the next multiannual framework, scheduled for 2028. According to the Lithuanian President, Gitanas Nausėda, in the past it has been possible to find innovative solutions to finance public spending to tackle the Covid-19 pandemic. “The SURE Fund, NextGenerationEU and the RRF were also in response to the crisis. We therefore need decision-making mechanisms of this kind today”, he added.
The Greek Prime Minister also proposed the creation of a €100 billion fund, modelled on the RRF, which could finance joint European actions such as a European missile defence shield, a project he is promoting with Poland. “In addition to the need for greater flexibility at national level, it is also absolutely necessary to establish a common European fund for defence projects, which are essentially European priorities”, he argued.
While the Greek leader did not specify how this fund would be financed, the German Chancellor, Olaf Scholz, was cautious about the possibility of launching a joint loan. “There is a widespread view that there must be more flexibility to finance the massive increase in our defence investments, for example by borrowing”, he explained, while pointing out that “the European Union does not have the prospect of contracting common debts”.
Similarly, while some Member States are talking about redirecting European funds, particularly from European cohesion policy, the Bulgarian Prime Minister is opposed to this course of action. “Particularly in the context of enlargement to the Western Balkans, the cohesion instrument should not be used, but should remain earmarked for cohesion policies”, he warned.
Strengthening transatlantic relations
The European leaders also stressed the importance of closer cooperation with NATO, as well as with the United States and the United Kingdom. NATO Secretary General Mark Rutte and British Prime Minister Keir Starmer attended working sessions at the ‘retreat’.
“It is good that we can complement NATO, not superimpose ourselves on it, because NATO already has (defence) plans in place”, explained Latvian Prime Minister Evika Silina. “Cooperation with the United States is essential. That said, the EU must strengthen its position within NATO”, added the new Belgian Prime Minister, Bart De Wever.
As for the Lithuanian President, he said he “cannot imagine how we could build a deterrent, how we could deter Russian aggression, including in Europe, without our close ally and partner in NATO, the United States”. (Original version in French by Camille-Cerise Gessant with Mathieu Bion and Pauline Denys)