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Business News/ News / EU’s New Defense Plan Aims to Boost European Military Purchases
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EU’s New Defense Plan Aims to Boost European Military Purchases

The European Union will aim to make as much as half of its defense system purchases within the bloc by 2035, reversing a trend of buying a majority of its military equipment from third countries.

EU’s New Defense Plan Aims to Boost European Military PurchasesPremium
EU’s New Defense Plan Aims to Boost European Military Purchases

(Bloomberg) -- The European Union will aim to make as much as half of its defense system purchases within the bloc by 2035, reversing a trend of buying a majority of its military equipment from third countries.

The goal is part of the EU executive arm’s European Defense Industrial Strategy, which also outlines collaborative investments, measures to secure critical supplies and changes to the European Investment Bank’s lending policies, according to a draft document seen by Bloomberg.

The European Commission is expected to present the strategy, which is still subject to change, within the coming weeks. 

Russia’s invasion of Ukraine has exposed the limitations of the EU’s industry and its reliance on others for key supplies and defense capabilities, leaving the bloc struggling to ramp up production capacity and spending after decades of underinvestment.

“The geopolitical developments point to a compelling need for Europe to take increased responsibility for its own security and to get ready to effectively address the full spectrum of the threats it faces," according to the draft. “The EU is and must continue to become a stronger actor in security and defense, thus a more capable security provider not only for its own citizens but also to the benefit of international peace and security." 

Proposals in the defense strategy include: 

In addition to the war in neighboring Ukraine, the EU and its member states are faced with widespread hybrid threats, including cyber attacks, sabotage and hacking of critical infrastructure, according to the draft.

The EU will need to command the ability to mass produce defense equipment such as ammunition and drones, according to the strategy. Europe must also protect its access to the maritime, air, cyber and space domain.

These efforts will require collaborative investments and joint procurement rather than acquiring off-the-shelf equipment from third countries if the EU is to shift from an emergency response to a state of readiness.

The commission will propose the creation of a new body to coordinate investments called the Defense Industrial Readiness Board to improve cooperation between member states and the commission. The board would also monitor critical products and supply chains.

The EU also proposes identifying flagship projects such as a cyber shield, an integrated European air and missile defense system, the development of sensors that allow the bloc to detect, analyze and respond to threats in space, and the protection critical infrastructure.

To strengthen cooperation, the bloc’s executive arm proposes a new legal instrument called the European Armament Program to standardize and simplify procurement procedures and funding opportunities, including tax breaks and the possibility for member states to use EU grants as collateral to issue bonds.

Partnerships are central to the proposed strategy, especially through enhanced cooperation with the North Atlantic Treaty Organization and by developing closer ties with Ukraine in the defense industrial sector, including by exploring the option of allowing Kyiv to participate in joint procurement activities as if it were a member state.

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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Published: 27 Feb 2024, 05:21 AM IST
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