The European Defence Fund: Political Impact and Challenges
The European Defence Fund
The European Defence Fund (EDF) is an initiative launched by the European Commission in 2017 under the Multiannual Financial Framework (MFF). For the 2021-2027 MFF, the main objective is to promote defence cooperation between EU Member States through the coordination, complementarity and amplification of national defence investments, to encourage an innovative and competitive defence industry, to enhance cooperation between companies and stakeholder states, and to support research and development in defence technology. The EDF is divided into two windows. One part of the fund is allocated to collaborative defence research projects. The other part is to provide capability levels and incentives for companies and EU Member States to cooperate on joint defence projects. This fund enables multi-level cooperation in the security and defence sector and increases competitiveness with other military powers in a global dynamic where all nations are seeking to remilitarise their territory and strengthen their defence industry. As a matter of fact, since the end of the Cold War, global military spending has risen considerably due to the volatility of the international scene. According to the Stockholm International Peace Research Institute, global military expenditures for 2018 reached $1,82 billion or 2,6% more in real terms compared to the $1,73 billion spent in 2017. In the context of this fast-changing development, the European Union attempts to assert itself through the European Defence Fund and the biggest military spenders, namely the United States (US), China, and Russia.
A changing security landscape
In response to the international arms race, the EDF was initially allocated a budget of €13 billion for the period 2021-2027. In the meantime, European priorities and challenges have shifted towards public health, research, and on the fight against climate change. The budget allocated to the EDF was subsequently revised downwards. The EDF budget was fixed at €8 billion, including €2,7 billion for collaborative defence research and €5,3 billion to fund capability development projects.
However, since its adoption, threats have evolved, as have the challenges to European security. The use of conventional and unconventional means to jeopardise security stability has increased on the international scene, as have the actors who use them. In addition to existing threats in its neighbourhood, such as armed conflict sor civil wars, Europe faces a wide range of hybrid threats, including terrorist threats, the proliferation of weapons of mass destruction, cyber-attacks, propaganda, chemical, biological, radiological, nuclear (CBRN) attacks, and disinformation. Given the volatility of the international scene and the danger facing European territory, the mid-term review of the MFF on 20 June 2023 was an opportunity for the European Commission to propose a revision of the MFF. The strengthening of EU defence research and development through an increase in the budget was accepted following the review. An additional €1.5 billion will be allocated to the EDF, bringing the total to €9.5 billion. In a long-term financial plan, the review is an opportunity to reassess European needs regarding new and current security and defence issues and provide common responses to them. With the Russian invasion of Ukraine having an immediate impact on European countries' decisions on military spending, the European Union should allocate more defence funds to Member State industries to enable the pooling and harmonisation of the European defence industry, particularly in the field of research and technological innovation. This will enable Europe's small military powers to overcome their gap with the major military powers and give the strongest defence industries the means to go further in innovation and capability design. This would simultaneously strengthen Europe's strategic autonomy.
Reinforcing the status of the European Union on the international stage
The implementation of the EDF is closely linked to the strengthening of Europe's strategic autonomy, and consequently to the consolidation of the EU's position on the international stage. Adopted in June 2016, the EU’s Global Strategy introduces the concept of an EU autonomy strategy. It is rooted in the idea of making the EU capable of conducting operations and crisis management missions within the EU, in its neighbourhood and in other regions of the world, of being well equipped militarily and of operating independently of the US and the North Atlantic Treaty Organisation (NATO). The fund, combined with the strategy, would enable the EU to assert itself politically on the international stage, where the preservation of stability and security is increasingly under threat. As the EU's High Representative for Foreign Affairs and Security Policy, Josep Borrell, has said, strategic autonomy is also a “process of political survival” for the EU. This process could have consequences at three levels.
It would allow the EU to protect itself from its volatile neighbourhood environment. Indeed, all the crises happening in the southern and eastern neighbourhoods of Europe are having a strong impact on the EU’s internal security due to ripple effects. This is the case of the security situation in Sahel, which has led the EU to notice terrorist threats growing on its territory and to set up training missions -such as EUCAP Sahel Niger or EUCAP Sahel Mali- to prevent the spread of terrorist groups within and outside the region.
It would enhance EU action for international crisis management, and give a new dynamic to the Schuman Declaration which stated that “world peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it.” The economic interdependence that used to be enough to guarantee peace is no longer sufficient. To avoid conflict, the EU must have the means to ensure its own protection, defend its territory, and deter the enemy from destabilising international security by adjusting its strategies.
Progressively, the European Union could become more competitive with powers such as the US, China, and Russia, which are constantly increasing their defence investment in terms of research, innovation and technology. Indeed, the US ranks first in the world in terms of military spending. Its defence expenditures reached $877 billion in 2022. This was an increase of 0,7% in real terms on the 2021 budget of $801 billion. As the world's second largest military spender, China has been increasing its defence budget for 28 consecutive years, allocating $292 billion in 2022 to its military budget. This is 4,2% more than in 2021, with an estimated budget of $279,74 billion. Russia is the world's third largest military power, with a budget of $86,4 billion in 2022. It is 9,2% more than the 2021 budget (estimated at $78,45 billion).
The increasing complexity of the world, the changing nature of internal and external threats, the emergence of transnationalism in international relations and growing interconnectivity have altered the international balance of power and had an impact on international stability. This adaptation has had an impact on the EU's internal policy. These impacts have challenged the unity of European Member States before bringing them together.
What the EDF has triggered in the EU
A two-speed Europe
The cut in the EDF budget by the European Commission has relegated the reinforcement of European security and defence capabilities to a secondary position, due to the remote idea of war reappearing on the European continent and the need to consolidate the different defence and security policy perspectives of the Member States of the European Union. This has also led to a diversification of opinion on the desire to strengthen European defence and security capacities independent of NATO and the US, and in the political project of developing a strategic autonomy for the European Union. This was demonstrated through the negotiation of the MFF during the Finnish presidency of the Council of the European Union in 2019 and the French presidency in 2021. Finland proposed to cut the EDF budget in half for 2021-2027 and allocate it an amount of €6 million. On the contrary, France proposed a budget of €924 million. As a result, the notion of a two-speed Europe in terms of security objectives and means was reinforced. On one hand, some Member States were reluctant to have a stronger military role for the EU in order to avoid the duplication of NATO’s role. They were confident about NATO and the US ensuring security over their countries. This was the case of the Baltic States constantly warning that they were under threat from Russia due to the sharing of borders and the Russian military district in the enclave of Kaliningrad. On the other hand, some EU governments, mainly the major military powers such as France or Germany, were pressing for increased national spending to guarantee Europe’s security and defence. There was a clear divergence of vision between European countries with fewer security and defence capabilities, relying on others to protect them, and those capable of securing their own territory and defending themselves.
The EU Battle Groups have demonstrated this lack of common vision within the EU. Created in 2007, the EU Battle Groups consist of troops made available by European Member States and deployable within 10 days. These groups are not controlled by a centralised authority and generate unequal expenditure between countries with the means to deploy equipped troops. The gap between military strategies and threats assessment have discouraged European countries from getting involved in deploying the Battle Groups. As a result, they have never been used but are still active with the aim of overcoming obstacles and being deployed. However, due to the increase in common threats, national foreign, security and defence policy strategies, which previously differed, are tending to coincide between European Member States and within the institutions of the European Union.
Improved interoperability
Two instruments have been created to reduce the aforementioned divergences and extend the scope of European foreign security and defence actions. In 2017, the Permanent Structured Cooperation (PESCO) was launched, allowing EU Member States to integrate their defence capabilities on a voluntary basis, and with legally binding commitment. While this means can accentuate the division between Member States, it can also enable integration and cooperation, and serves to demonstrate the benefits and effectiveness of European defence capabilities. PESCO is a crucial mechanism for achieving strategic autonomy through closer cooperation between EU Member States and political preparedness. To complement this momentum, the European Peace Facility (EPF) was launched in 2021. This new financing instrument has a budget of €5 billion for the periods 2021-2027. The EPF guarantees the supply of military equipment and humanitarian aid, increases EU military mobility, and supports increased defence spending by EU countries. In this way, the European Union gives its Member States the financial resources they need to strengthen security and defence cooperation and increase the EU's influence on the international stage. In the context of recent security events and the reassessment of threats facing the EU, a consensus has emerged on cooperation and coordination of actions. The European Defence Fund, the Permanent Structured Cooperation, and the European Peace Facility are part of a package of defence measures offering Member States complementarity in maintaining security.
A “de facto solidarity” - Robert Schuman
From Robert Schuman to Ursula Von der Leyen, the European project has always been synonymous with solidarity, cooperation and interoperability. Initially to consolidate peace, today to manage crises and maintain European and international stability, the European project is adjusted and consolidated through European unity. The new and multiple security challenges are too great for individual Member States to tackle alone. Over time, European Member States have increased their national security capabilities and strengthened their cooperation and coordination. The Baltic States' willingness to devote 3% of their GDP to defence spending and the EU's provision of arms and assistance to Ukraine through the European Peace Facility are just two examples. This demonstrates the willingness of EU Member States to work together to maintain safety and security. The EDF, initially relegated to the background due to the multiple crises the EU has gone through, is regaining its importance. The initial project of a united Europe is present. The project of an interoperable Europe is progressing. The implementation of the EDF has consolidated the idea of the European concept described by Robert Schuman: “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity.”
Four challenges facing the EDF
These concrete achievements linked to the EDF have raised a number of challenges that the European institutions and the EU Member States must address. Four of them, among many others, are highlighted here:
The first concern relates to the traceability of weapons manufactured as part of a common defence industry and their delivery in support of partners affected by conflict. In order to develop the European defence industry and prevent such a situation from recurring, a European body should develop a system of checks and balances, as well as a means of tracing weapons so that they can be easily found and tracked.
The second concern is the development of new technologies and critical weapons. Given that the fund will be allocated to defence industry stakeholders on a project basis, the innovation of new technological weapons should be monitored. The European Commission, the European Parliament, and the Council of the EU have agreed in an inter-institutional agreement not to fund Lethal Autonomous Weapons Systems (LAWS) to ensure that new technologies remain human-centred. This is why the European Commission must set up a control authority capable of supervising the projects it funds through a system of monitoring, control, and audit. This will also enable the money invested to be tracked and will emphasise transparency between the European institutions, private players and European citizens.
The aforementioned challenge is closely linked to the direct arms financing in EU legislation. As the Lisbon Treaty forbids “expenditure arising from operations having military or defence implications”, the EU provides money to Member States through public funds such as the EDF, the Cohesion Fund or the Recovery Fund to finance their military and defence industries. By authorising the use of these funds for defence spending, the EU is indirectly helping to finance weapons and bring them into line with Community law. This subtlety caused concern among EU diplomats, who stated that “the treaty explicitly excludes funding for weaponry” and wondered whether this strategy would work. Thierry Breton, European Commissioner for Internal Market, insisted on the “drastically, dramatically changed” European security context to justify using EU money to finance arms directly or indirectly. As the Cohesion Fund and the Recovery Fund were set up to help EU countries recover from the avian flu pandemic, the European Union should clarify the use of these funds and consider a strict plan on how they can be spent.
Finally, the mid-term review of the EDF could potentially lead to a significant reduction in other areas of the EU's public fund, but this has yet to be confirmed as decisions on the increase in the fund have not yet been made public. Europe is facing an economic and environmental crisis and is trying to recover from the COVID-19 pandemic. If Russia's aggression against Ukraine has convinced European public opinion to strengthen the practical and financial means of European defence and security, the EU must be able to justify the origin of the funds injected and the priority given to this area over others. There is common agreement on the war on European citizens, but the fears and interests of different nationalities are not the same.
Conclusion
As the international security landscape continues to evolve and transform, governments must adapt to meet new threats and ensure their defence. Within the European Union, the creation of the European Defence Fund has helped to address these crucial new security issues. This has had an impact on the European Union by highlighting its potential. Weaknesses that suggested the EU would not work have now become a strength, bringing together ideas and actions to address the common interests of European security. Although these objectives have exacerbated the divergent visions of EU Member States, the threats at Europe's borders and the instability of the international scene have made it essential to find a consensus. Today, there is a political will, which exceeds the financial capacities of the Member States, to move forward and cooperate to maintain security and assert Europe's place in the international system. European institutions, the private sector and public opinion in Europe are currently facing a number of challenges. They concern priorities, vision and action in the field of security and defence. However, these challenges do not seem impossible to meet, since they are based on a common objective: to have a European Union that is secure and capable of protecting itself in a world where security is increasingly fragile.