European Commission President Ursula von der Leyen has sharply criticized the uncoordinated procurement of defense equipment in the European Union. Less than 20 percent of investments are made jointly. This means that we are still very far from the EU target of spending 35 percent of expenditure together.
Moreover, according to Von der Leyen, according to the latest figures, a large part of the extra funds ends up at defense companies outside the EU. In their view, this is at the expense of the EU’s competitiveness, its domestic economy, its military and security.
“If member states buy in an uncoordinated manner, this could drive up prices,” she said at the European Defense Agency’s annual conference in Brussels on Thursday. Nor should it be assumed that one can always rely on the international market when purchasing defense equipment.
Incentives for joint projects
To make changing course easier, the former German Defense Minister proposed providing additional incentives for joint projects. Accordingly, it would be possible to agree that expenditure on such projects would be temporarily treated separately when checking compliance with EU debt rules.
Von der Leyen mentioned reducing bureaucracy and jointly identifying ‘flagship capabilities’ as further possible options. For the latter, there could be EU-coordinated planning.
Uniformity is also important for Ukraine
According to Von der Leyen, the current purchasing policy, for example, ensures that the troops in a German-Dutch formation use the same type of howitzer, but cannot use each other’s ammunition. “It can’t go on like this,” she said.
Von der Leyen also cited Ukraine’s need for support as a reason for quick action. “The war in Ukraine is materially more intensive than any other war in recent history,” she said. Russia has fired ten million shells in a year and Ukraine uses 10,000 drones every month.
Weapons from bond financing?
EU Council President Charles Michel proposed at the conference to issue bonds to finance European defense. These could emerge as a new asset class, including for retail investors.
Listen to Michel’s speech:
At the same time, Michel pointed out that a lot of money is already available today. This year, defense spending by EU member states totaled around 270 billion euros, he said. Of this, almost 60 billion euros would be spent on investments.
Source: Krone
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