European Centre for Counterterrorism and Intelligence Studies, Germany & Netherlands – ECCI
As Europe rearms, capitals and industry struggle to coordinate
euractiv ـ Defence companies are asking the capitals to provide long-term investment so they can plan for the future
During a week of defence-related conferences in Brussels, which Euractiv covered on the ground, ongoing tensions between EU governments and the continent’s defence industry were on full display.
Russia’s war in Ukraine is soon entering its fifth year, but despite arguing that European defence is urgent, European capitals, EU institutions and European arms makers are still struggling to hear one another out as they attempt to rearm the continent.
Industry insiders say they often hit a brick wall, with discussions marred with mixed messages, while plans are frequently bogged down by national interests.
The EU has put billions on the table for Europe’s security, including €1.5 billion for the European Defence Investment Programme (EDIP) and €150 billion for the Security Action for Europe (SAFE) defence loans instrument. Both aim to help governments buy more European weapons and help the industry ramp up production.
Nevertheless, implementation is lagging.
Last year, EU countries laid out plans detailing how they intend to spend the newly available money on joint procurement. The SAFE loan’s terms call on capitals to provide a description of the defence products they intend to purchase. But sources familiar with the file said the plans were not very detailed.
A non-binding methodology from the Commission offered guidance on how countries could clarify how each defence purchase meets the loan’s eligibility criteria. It noted that companies were responsible for calculating the European and non-European components of each product sold, the backbone of the rules to access the €150 billion SAFE facility.
But Euractiv learned that manufacturers are still waiting for defence ministries to spell out exactly what they want in terms of products. This is yet another illustration of the disconnect between capitals and Europe’s arms makers.
European defence contractors, EU institutions, and national capitals are all calling for a complete overhaul of Europe’s defence sector to increase stockpiles following Russia’s invasion of Ukraine. Some household names like Rheinmetall, Nexter, Thales, PGZ or Dassault have made headlines for setting up new factories on the continent. At first glance, it appears that everyone is speaking with one voice.
But companies are also asking governments to provide long-term investment so they can plan for the future. Many companies ramped up production without knowing what orders would come through to justify the investment. This has created uncertainty across the sector.
Earlier this month, French President Emmanuel Macron berated his country’s defence industry for not producing fast enough. Yet he added French arms makers were locked in a fierce race with competitors. “No one is waiting for us,” he warned some of the country’s biggest manufacturers.
Lost in translation
Mixed messaging from across the pond is adding further confusion. Americans have asked Europeans to handle their own security, a task that requires improving Europe’s production capacity and producing more equipment domestically. But the US has worked at cross-purposes with its demands by reminding the bloc to keep buying American, effectively depriving European manufacturers of orders and revenue.
Since August, NATO allies have purchased billions-worth of US weapons for Ukraine through the NATO-coordinated PURL initiative.
European Centre for Counterterrorism and Intelligence Studies, Germany & Netherlands – ECCI
