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EU aims to shift European arms industry to ‘war economy mode’

EU aims to shift European arms industry to ‘war economy mode’

Tuesday, March 05, 2024, 15:40 GMT+7
EU aims to shift European arms industry to ‘war economy mode’
A detail of ammunition at a production line as German Chancellor Olaf Scholz and Defence Minister Boris Pistorius visit the future site of an arms factory where weapons maker Rheinmetall plans to produce artilleries from 2025, in Unterluess, Germany February 12, 2024. Photo: Reuters

BRUSSELS -- The European Commission will propose on Tuesday ways for the European Union to boost its arms industry so it can shift to "war economy mode" in response to Russia’s attack on Ukraine.

Thierry Breton, the European industry commissioner, will lay out proposals to encourage EU countries to buy more weapons together from European companies, and to help such firms increase production capacity, according to EU officials.

"We need to change the paradigm and move into war economy mode. This also means that the European defense industry must take more risks, with our support," said Breton, previewing the package.

Breton, a French former tech company CEO, has also said the possibility of another U.S. presidential term for Donald Trump - who has questioned Washington's commitments to NATO - means Europe has to do more to protect itself.

"In the current geopolitical context, Europe must take greater responsibility for its own security, regardless of the outcome of our allies’ elections every four years,” Breton said.

Russia’s attack on Ukraine has prompted many European countries to increase defense spending.

But EU officials argue purely national efforts are less efficient and want EU bodies to play a greater role in defense industrial policy.

The EU High Representative for Foreign Affairs and Security Policy Josep Borrell speaks with acting Spain's Minister of Defence Margarita Robles and European Commissioner for Internal Market Thierry Breton ahead of posing for a family photo with other attendees during the informal EU ministerial meeting on defence in Toledo, Spain August 30, 2023. Photo: Reuters

The EU High Representative for Foreign Affairs and Security Policy Josep Borrell speaks with acting Spain's Minister of Defence Margarita Robles and European Commissioner for Internal Market Thierry Breton ahead of posing for a family photo with other attendees during the informal EU ministerial meeting on defence in Toledo, Spain August 30, 2023. Photo: Reuters

Analysts say the attack has made clear that European industry was ill-prepared for some major challenges, such as a sudden surge in demand for large amounts of artillery ammunition.

Breton’s proposals include creating a European version of the U.S. Foreign Military Sales scheme under which the United States helps other governments to buy from U.S. arms companies.

Another proposal would allow the EU to compel European weapons firms to prioritize European orders in times of crisis.

To become reality, the proposals will need approval from the EU’s 27 national governments – which have often been reluctant to cede power on defense and military matters – and the European Parliament.

The proposals will also be studied closely by NATO, which has said it welcomes EU efforts to help European defense but warned they must not duplicate or clash with the transatlantic alliance's work.

Funding questions

Breton’s package is expected to include some 1.5 billion euros ($1.63 billion) in new money through the end of 2027 – a modest sum in the world of large-scale defense procurement.

But officials say the package will create a legal framework that would allow much greater coordinated spending in years to come, if the EU is willing to stump up the cash.

Breton has called for a special EU fund of 100 billion euros for defense projects.

Commission officials say they want Kyiv to take part in the proposed new schemes to boost joint procurement and production capacity, even though Ukraine is not part of the EU.

Ukrainian soldiers stand in line at a training site as they undergo maintenance training on Leopard 1 A5 tanks, at the German army Bundeswehr base, part of the EU Military Assistance Mission in support of Ukraine (EUMAM UA) in Klietz, Germany, February 23, 2024. Photo: Reuters

Ukrainian soldiers stand in line at a training site as they undergo maintenance training on Leopard 1 A5 tanks, at the German army Bundeswehr base, part of the EU Military Assistance Mission in support of Ukraine (EUMAM UA) in Klietz, Germany, February 23, 2024. Photo: Reuters

"Our mission here is to treat Ukraine as almost equivalent to a member state," said one official, speaking on condition of anonymity ahead of the launch of the package.

Agreeing on the proposals will take some time, particularly as a new European Parliament will be elected in June, followed by the appointment of a new European Commission.

Disagreements within the current Commission give a foretaste of some of the power struggles ahead.

While Commission President Ursula von der Leyen has said she will create a post of defense commissioner if she serves a second term, Breton has argued there is no need for such a role.

"If the question is that of a Defense Industry Commissioner, it seems to me that we already have one,” he said.

($1 = 0.9210 euros)

Reuters

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