Rapporteur:

Maurizio MENSI

Co-rapporteur:

Jan PIE

Advisor	Alberto DAL FERRO (advisor to the rapporteur, Group III) Vassilis THEODOSOPOULOS (advisor to the co-rapporteur, Group I)
Referral	European Commission, 27.3.2024
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Consultative Commission on Industrial Change (CCMI)
Adopted in section	15.5.2024
Adopted at plenary session	30.5.2024
Plenary session No	588
Outcome of vote (for/against/abstentions)	208/2/10

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) welcomes the European Defence Industrial Strategy as an important step towards strengthening Europe’s defence readiness and thus its capacity to protect its citizens, its territory, and its core values and way of life.

1.2.

The EESC believes that ensuring the readiness and responsiveness of the EDTIB is a crucial pillar of Europe’s defence readiness, since the EDTIB is the indigenous trusted supplier of the state-of-the-art hardware, software and services that our armed forces need to fulfil their mission.

1.3.

The EESC welcomes the shift in approach from emergency measures to a longer-term, structural response, which is essential for supporting the adaptation of the EDTIB to the new security environment. In particular, it welcomes the focus on the need to increase European sourcing for European needs. In this respect, increasing, consolidating and channelling European demand towards the EDTIB is as essential as enhancing the EDTIB’s capacity to meet such demand.

1.4.

The EESC welcomes the focus on security of supply, which is fundamental to European defence readiness, currently undermined by over-dependence on non-European suppliers and the absence of a European-level governance mechanism for times of crisis. It also notes that the proposed security of supply regime includes several interesting elements, but its application may be problematic due to the complexity of supply chains and the potential sensitivity and classification of information needed for mapping and monitoring.

1.5.

Moreover, the EESC highlights the importance of leveraging partnerships with friendly countries with common values to meet the strategy’s objectives. Ukrainian participation in EU defence industrial programmes, as well as fostering closer links between the EDTIB and the Ukrainian DTIB, will create important strategic benefits for both. Enhanced coordination with NATO on topics of mutual interest would also be advantageous, provided that the security interests of all EU Member States are fully respected.

1.6.

At the same time, the EESC regrets that the strategy does not address public perception. This is an important shortcoming, since public perception is a key factor in democratic societies and free markets like ours, and thus an important driver of the EDTIB’s challenges relating to sustainability, influencing both political and market decisions. This challenge must be urgently addressed, including through a coordinated, EU-wide public communications campaign to counter long-standing misconceptions and to raise awareness and support among the European public regarding the need to safeguard Europe’s peace, security, prosperity and values, and the EDTIB’s essential contribution thereto.

1.7.

Against this background, the EESC believes that the strategy suffers from certain shortcomings, as underlined below. With respect to its objectives, the key instrument for its implementation (EDIP) is unlikely to be operational before late 2025. Therefore, the strategy must be complemented by other, short-term measures aimed at addressing immediate needs.

1.8.

The EESC therefore calls on Member States to accept the Commission’s invitation to look for in the short-term options for boosting, through available instruments, large-scale joint defence procurements, the large-scale ramp-up of the EDTIB, and the launch of defence flagship projects.

1.9.

The EESC is also of the view that ensuring the defence industry’s access to skills, technology and research, is crucial from both an industrial and a strategic perspective. To this end, investment in training, research and strategy development are key. Moreover, he aforementioned campaign to raise the European public’s awareness of the EDTIB’s contribution to Europe’s security, prosperity and values should include a component dedicated to fostering the diversity and the attractiveness of the EDTIB among future and young professionals, as well as encouraging the lifting of obstacles such as civil clauses in university regulations. Initiatives promoting workforce mobility for defence, possibly drawing inspiration from the ‘Military Erasmus’ programme, could also be explored.

1.10.

The EESC underscores that the success of the strategy will depend primarily on Member States’ full engagement and recognition of the added value of a European approach. It therefore calls on Member States to ensure that its implementation is undertaken without undue delay and is supported by adequate financial resources. In this respect the EESC also fully supports the Commission’s call to the European Investment Bank to modify its lending policies and fully support the defence industry, and welcomes the clarifications regarding the non-inclusion of defence activities in the EU environmental taxonomy. It is essential to establish a closer connection and cooperation between industry, military, science and research.

2.   Background to the opinion, including the legislative proposal concerned

2.1.

On 5 March 2024, the European Commission and the High Representative presented the first-ever European Defence Industrial Strategy, together with the European Defence Industry Programme (EDIP).

2.2.

The aim of the strategy is to strengthen more broadly the readiness and competitiveness of the European Defence Technological and Industrial Base (EDTIB), as an essential prerequisite of European defence readiness.

2.3.

Defence readiness has become crucial in the new security environment, which is marked by a steep increase in regional and global security threats, and particularly the return of high-intensity conventional warfare in Europe, following Russia’s illegal, brutal, full-scale invasion of Ukraine in February 2022.

2.4.

Against this background, the EU and its Member States face two main challenges. In the very short-term, they must be able to help Ukraine resist the Russian aggression. Beyond that, the EU must urgently get prepared for the eventuality of a large-scale conflict. This is crucial, as European military experts have repeatedly warned that Russia, which is increasingly channelling its resources towards its military apparatus, could launch a large-scale hybrid or military attack against an EU member within a few years, with a European leader recently warning explicitly that Europe has entered a ‘pre-war era’.

2.5.

To achieve these objectives, the EDTIB must be always ready and able to deliver the full spectrum of qualitatively superior capabilities required by European armed forces.

2.6.

This, however, is not the case today. Following three decades of under-investment in armaments and defence-relevant training and skills across Europe, the EDTIB’s capacity to produce has been significantly weakened. EU Member States have predominantly used their limited defence acquisition budgets to procure non-European products and in an uncoordinated manner.

2.7.

Since February 2022, defence investment spending across the EU has risen sharply, but the trend of buying alone from abroad has been exacerbated. According to a recent study, 78 % of the defence acquisitions by EU Member States between the start of Russia’s war of aggression and June 2023 were made from non-EU suppliers and according to the latest EDA figures, in 2022, only 18 % of total equipment spending in the EU was procured collaboratively. This trend has extremely deleterious effects on the EDTIB, as it leads to lost revenues, investment capacity, economies of scale, know-how and production capacity.

2.8.

To address this challenge, the European Defence Industrial Strategy outlines several actions structured across four pillars, namely (1) facilitating and incentivising Member States to jointly plan, invest in and procure from the EDTIB (1); (2) supporting the production and innovation capacity of the EDTIB and setting up an EU security of supply framework; (3) mainstreaming defence industrial considerations across all EU policies; and (4) leveraging partnerships with Ukraine, NATO and other partners to support these objectives.

2.9.

The strategy recognises that the resources available for EDIP (EUR 1,5 billion) under the current EU Multiannual Financial Framework (MFF) are sufficient only for a small-scale effort and that they should be complemented by other important means and sources of funding in the short-term. Beyond 2027, an ambitious financial envelope under the next EU Multiannual Financial Framework (MFF) is considered essential.

2.10.

The strategy puts forward non-binding medium-term goals concerning the share of intra-EU defence trade in the overall EU defence market.

3.   General comments

3.1.

The EESC welcomes the European Defence Industrial Strategy as an important step towards strengthening Europe’s defence readiness and thus its capacity to protect its citizens, its territory, and its core values and way of life. This is a paramount interest of all EU Member States.

3.2.

The EESC also believes that ensuring the readiness and responsiveness of the EDTIB is a crucial pillar of Europe’s defence readiness.

3.3.

The EESC welcomes the shift in approach from emergency measures to a longer-term, structural response, which is essential for supporting the adaptation of the EDTIB to the new security environment.

3.4.

The EESC is of the opinion that, given EU competences in defence, the strategy covers the main dimensions of the issue at hand – including consolidation of demand, support to industry including for R&D and innovation, security of supply, mainstreaming of defence readiness in EU policies, and partnerships – and provides a solid framework and instruments to further incentivise European cooperation.

3.5.

The EESC particularly welcomes the focus on the need to improve European sourcing for European needs. In this respect, increasing, consolidating and channelling European demand towards the EDTIB is as essential as is enhancing the EDTIB’s capacity to meet such demand.

3.6.

The medium-term targets put forward by the strategy are an important indicator of progress, which are necessary for evaluating and potentially calibrating efforts going forward. However, the EESC regrets that the targets are non-binding and believes that they have been set too low and too slow given the security risks at stake. Industry has estimated that building an EDTIB fit for the new security environment requires 80 % of European defence acquisition budgets to be invested in Europe. EESC believes that this should therefore be the target and that the EU should aim to reach it urgently and no later than 2040.

3.7.

The EESC calls on Member States as well as on the European Commission and the European Parliament to do their utmost, to ensure that these targets do not remain mere aspirations but are fully realised. This will also help avoid wasteful fragmentation and duplication and ensure more efficient allocation of scarce resources.

3.8.

Mainstreaming defence industrial considerations across EU policies is a key enabler to this end. The Commission’s clear message as regards the essential contribution of the EDTIB to resilience, security and the need to reflect this contribution in industry’s access to finance, is particularly relevant. The EESC also fully supports the Commission’s call to the European Investment Bank to modify its lending policies and fully support the defence industry, and welcomes the clarifications regarding the non-inclusion of defence activities in the EU environmental taxonomy.

3.9.

The EESC also welcomes the strategy’s attention to security of supply, critical raw material, chip, competences, which is crucial for defence readiness. In Europe, security of supply is currently undermined by overreliance on non-European suppliers and the absence of an EU-level governance mechanism for times of crisis. The proposed security of supply regime includes several interesting elements, such as the distinction between different types of crisis and graduated measures, as well as possible support for strategic stockpiling of basic components. Other provisions, such as opening up existing framework contracts during crises, could also substantially enhance security of supply. At the same time, the implementation of such a regime may be challenging. The complexity of defence supply chains would make comprehensive mapping and monitoring resource-demanding and challenging, especially for elements lying outside the Union. The potential sensitivity and classification of the required information can be another difficulty. Using primarily publicly available information and voluntary information requests may mitigate this difficulty, but could also limit information accuracy, validity, relevance and completeness.

3.10.

Moreover, the EESC highlights the importance of leveraging partnerships with friendly countries with common values to meet the strategy’s objectives. Ukrainian participation in EU defence industrial programmes, as well as fostering closer links between the EDTIB and the Ukrainian DTIB, will create important strategic benefits for both, including during and after the war and with a view to Ukraine’s eventual accession to the Union. Enhanced coordination with NATO on topics of mutual interest would also be advantageous, provided that the security interests of all EU Member States are fully respected.

3.11.

At the same time, the EESC regrets that the strategy does not address specifically public perception. This is an important shortcoming, since public perception is a key factor in democratic societies and free markets like ours, and thus an important driver of the EDTIB’s challenges relating to sustainability, influencing both political and market decisions. In particular, a significant number of Europeans still view the defence industry as ‘unsustainable’ and a drain on social spending and therefore as undeserving of support, overlooking both the vital contribution of defence to the public good of security and the mutually advantageous cross-fertilisation between civil and defence technologies and innovation. These misperceptions can be exacerbated by foreign information manipulation and interference in our societies and political processes, as part of hybrid campaigns by malicious actors, particularly Russia. This negative image of the defence industry creates serious challenges for the EDTIB regarding access not only to finance, but also to insurance, energy, facilities and skills. This challenge must be urgently addressed, including through a coordinated, EU-wide public communications campaign to counter long-standing misconceptions and to raise awareness and support among the European public regarding the need to safeguard Europe’s peace, security, prosperity and values, and the EDTIB’s essential contribution thereto. It is the duty of political leaders to remind citizens in our free and democratic societies that peace and freedom are not for free and have to be defended. At the same time, the EU Hybrid Toolbox envisaged in the Strategic Compass should be deployed also with a view to protecting the EDTIB from hybrid threats.

3.12.

Overall, the EESC applauds the strategy for recognising the exceptional challenge that the Russian aggression poses for Europe. At the same time, Europe also faces other important risks, such as ongoing and potential future conflicts in Europe’s neighbourhood and beyond as well as the potential disengagement of its key ally. The strategy arrives at a time when these challenges have become acute and the long-discussed need for Europe to assume greater responsibility for its own security has become urgent. The true benchmark of the strategy will therefore be whether it is up to these challenges.

3.13.

Against this background, the EESC believes that the strategy suffers from certain shortcomings, which are highlighted below. With respect to its objectives, the key instrument for its implementation (EDIP) is unlikely to be operational before late 2025. This timeframe cannot address Ukraine’s pressing needs and Member States’ short-term capability shortfalls, which demand urgent action. Therefore, the strategy must be complemented by other, short-term measures aimed at meeting immediate needs.

3.14.

The EESC also underscores that, while the Commission and the High Representative announce through the strategy a paradigm shift in the EU’s approach to the defence industry, the strategy itself will not deliver the war-ready defence industrial base that Europe needs. In fact, Member States have the resources and decision-making authority necessary to reverse defence procurement trends, cooperate on capability programmes, and firmly establish a view of defence as a guarantee for security. The Commission may call on Member States to act in these directions and provide incentives to do so, but the incentives available today are limited and, in the case of funding, ultimately also dependent on Member States’ willingness.

3.15.

The EESC stresses that, for decades, there has been a huge gap between rhetoric and actions from Member States on a wide range of defence related issues, ranging from harmonisation of military requirements and cooperative projects to the enduring Member States-controlled exclusion of defence in the investment policies of many national pension funds, to cite just a few examples. Importantly, defence has often been seen in Member States as a secondary issue and not as a vital priority. Moreover defence budgets, especially their investment elements, have often been used as a budget regulator in times of financial constraint.

3.16.

The EESC also agrees with the Commission’s assessment that the means so far available for the implementation of the strategy are inadequate. EDIP’s proposed EUR 1,5 billion budget represents too small a fraction of European needs and defence spending to have a structural effect on the market, while the potential utilisation of the windfall profits of frozen Russian assets to fund EDIP remains far from certain.

3.17.

The EESC therefore calls on Member States to accept the Commission’s invitation to explore in the short-term options for boosting, through available instruments, large-scale joint defence procurements, the large-scale ramp-up of the EDTIB, and the launch of defence flagship projects. The envisaged consideration of defence investment as a relevant factor under the revised Stability and Growth Pact could be particularly relevant for funding such projects.

3.18.

The EESC echoes the Commission’s assessment that fulfilling the strategy’s objectives will necessitate a truly ambitious financial envelope under the next MFF. Supporting the adaptation of the EDTIB to the new era of strategic competition could require an EU budget line for defence on the order of EUR 100 billion for the 2028-2035 period. This financial envelope would be needed to adequately fund R&D projects, under a reinforced EDF, as well as to incentivise and support Member States’ joint procurement and sustainment of capabilities, particularly critical enablers, and to support industry in increasing its readiness, production capacity and supply chain resilience, under a fully-fledged successor to EDIP.

3.19.

The EESC is also of the view that ensuring the defence industry’s access to skills is crucial from both an industrial and a strategic perspective. To this end, the aforementioned campaign to raise the European public’s awareness of and support for the EDTIB’s contribution to Europe’s security, prosperity and values should include a component dedicated to fostering the diversity and the attractiveness of the EDTIB among future and young professionals, as well as encouraging the lifting of obstacles such as civil clauses in university regulations. Initiatives promoting workforce mobility for defence, possibly drawing inspiration from the ‘Military Erasmus’ programme, could also be explored.

3.20.

In conclusion, the EESC believes that the European Defence Industrial Strategy represents an important recognition of the challenges facing Europe and the urgent need for a comprehensive effort to strengthen the EDTIB’s readiness and competitiveness. At the same time, the measures proposed for achieving this objective expose the limits of the EU’s competences and resources in defence.

3.21.

As such, the EESC underscores that the success of the strategy will depend primarily on Member States’ full engagement and recognition of the added value of a European approach.

3.22.

The EESC believes moreover that only Heads of State and Government can take the lead and deliver the concrete buy-in from Member States that is urgently needed to make a substantial upgrade on European defence (industrial) readiness.

3.23.

Hence, the EESC calls for a parallel effort at the level of the European Council that goes beyond the European Defence Industrial Strategy and ensures that European defence and the EDTIB have the full support needed from Member States and European Parliament to enhance European technological sovereignty and strategic autonomy in today’s critical security environment.

3.24.

The EESC also stresses that the European defence industry is one of the key industries underpinning the future of European strategic autonomy, not only due to the critical importance of defence itself, but also because companies active in defence are also key players in Europe’s strategically important space sector and develop trusted, high-end cybersercurity solutions for protecting Europe’s critical digital infrastructures.

3.25.

Finally, mindful of the increasingly dangerous geopolitical environment and of the grave consequences for our common European security that could result from an uncoordinated and ineffective implementation of the strategy and other relevant measures, the EESC calls on Member States to explore all possibilities for making fuller use of existing Treaty provisions that foresee the progressive framing of a common defence policy that might lead to a common defence.

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(1)  See Regulation (EU) 2023/2418 of the European Parliament and of the Council of 18 October 2023 on establishing an instrument for the reinforcement of the European defence industry through common procurement (EDIRPA) (OJ L, 2023/2418, 26.10.2023, ELI: http://data.europa.eu/eli/reg/2023/2418/oj) and the Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council on establishing the European defence industry Reinforcement through common Procurement Act (COM(2022) 349 final) (OJ C 486, 21.12.2022, p. 168).