Support the competitiveness and innovation capacity of the Defence Industry in Europe

The European Defence Fund proposed by the Commission on the 7 June 2017 contains two parts covering the entire cycle of defence industrial development.

The first part is intended to fund collaborative research in innovative defence technologies. The second part is for the cooperative acquisition of defence capabilities.

It includes the European Defence Industrial Development Programme, which seeks to meet the challenges facing the European defence industry.

A window of opportunity for Europe

The moment is historic for European defence. Difficulties at international and European level, and the fight against terrorism, have forced the European Union to move forward on defence issues.

Member States have thus realized the value of investing more and acting in a more coordinated way to respond to these challenges. The risk of Europe slowly losing ground is high if nothing happens.

A real interinstitutional political will in the Council, the Commission and the Parliament has helped to meet tight deadlines and maintain the level of ambition for this European Defence Fund.

The need for a strong budget

Each Member State has to be aware of the urgent necessity to take part to budgetary efforts made at European level. The actual repartition of efforts between Member States concerning defence is not sustainable on a long-term perspective.

We therefore need an ambition worthy of the capabilities that we wish to develop.

The cofinancing system proposed by the regulation on the industrial program aims at incentivizing Member States to increase cooperation between themselves and between their companies.

They could feel more involved on the short and long terms and it will clearly encourage cooperation on joint development and the acquisition of defence equipment and technology.

The EU will indeed offer co-financing with 500 million euros for 2019 and 2020 and has proposed more than 1 billion euros per year after 2020. For the research part, 90 million euros will be spend before 2020 and more than 500 million per year after 2020.

An unprecedented effort, which shall be confirmed by Member States. New policy, new financing. Fresh money after 2020, or money from the unallocated margin before 2020, is needed.

We cannot cut emblematic European programs like Galileo, Copernicus, ITER, the CEF, for instance, to fund it. A serious budget needs serious new sources of funding from Member States. This is a question of responsibility.

Research, innovation and competitiveness to keep the leadership

Our defence industry is not, at present, given sufficient incentives to compete globally, despite a genuine wealth of technology. It needs ‘more Europe’ to provide more reliable, more independent and less costly technology.

The competitiveness of the defence industry will be judged by its capacity to innovate and adapt to technological developments. Excellence and industrial performance are therefore essential criteria for this strategic sector.

The industry’s European regulatory environment must move further towards interoperability and improved standardisation.

Business consolidation at European level is a positive factor, so the Programme should not penalise undertakings which have been taking this approach for a long time.

What is needed is genuine European cooperation, and the requirement for common specifications is crucial for an action to be supported by the Programme. We should not repeat errors from the past in having so many different requests for different specifications. We do not want a labyrinthine system.

A pragmatic approach for more efficient capacities

The advantage of the European Defence Fund lies in the support of projects that may involve few Member States, but with clearly defined conditions and specifications.

The lack of a “geo-return” rule that would imply that each member state sees the right return of its investment through the participation of one of its companies in a project is also part of a pragmatic approach.

In other words, the supply chains of the defence industry will not have to select a company simply because it is located in a Member State of the Union. It is the technological excellence and the competitiveness of this company that will allow it to be selected on a non-discriminatory, transparent and open basis, allowing a real competition.

Towards a strategic autonomy

This Programme should be a mean of strengthening EU independence in the area of defence. That strategic autonomy is essential to ensure that the EU is free to take action worldwide.

It can only be enhanced by better cooperation between Member States and undertakings, which must be based on the Member States’ common capability priorities.

Developing the industrial and technological base of European defence is key to this autonomy. To that end, it is essential that only European companies benefit from funding.

What the programme funds should be made independently. The guarantees concerning access to sensitive information, to intellectual property rights and to management of the action funded should be very closely scrutinised.

An important role for SMEs

SMEs already play a vital role in defence and security in Europe. Big companies work with them on all their projects and they provide huge benefits for the European Union as a whole.

But it is important to promote cross-border cooperation, particularly for SMEs which lack the incentive to cooperate.

For example, all Member States with under- takings likely to contribute to technological excellence in defence and security will have the opportunity to benefit from this programme through the creation of new cooperation projects, without excessive constraints being added to what are already very complex industrial programmes.

What we need is indeed an implementable European Defence Fund, which is a real incentivize to cooperation and competitiveness of the European Union.

All Member States have to bring their best project at European level to make this industrial program a success.