New defence R&D pilot programme to be announced before end of the year

EU Commission president Jean-Claude Juncker confirmed that plans for the EU to move into defence R&D will soon be unveiled, in his annual state of the union address to the European Parliament on Wednesday.

“For European defence to be strong, the European defence industry needs to innovate. That is why we will propose before the end of the year a European Defence Fund, to turbo boost research and innovation,” Juncker told MEPs.

The programme is likely run from 2017-2019 and start with a budget of around €25 million, an EU official said.

While nothing has been officially decided, the glint in the eye within the Commission is that the trial could eventually grow into a permanent programme worth €3.5 billion, run separately from the EU’s traditional research programme.

"Europe needs a strong and high-performing industrial base, which in turn requires investment in innovation," said Lucia Caudet, research spokeswoman with the Commission. "This is also true in the defence industry, in particular in the light of our increasingly unstable neighbourhood, a changing security environment and shrinking national defence budgets."

The proposal is part of a broader push to forge closer military co-operation in Europe and - with the UK having always staunchly opposed the idea - to capitalise on Britain's vote to leave the EU.

Juncker also floated a proposal to build an EU military headquarters.

The Commission will not get unanimous support for its defence plans from members of the European Parliament.

Peter Lundgren of the anti-migrant Sweden Democrats noted his country had always been neutral. "We don't want to be forced into this type of military co-operation," he said.

More money for the Juncker Plan

Juncker also announced plans to top up the existing €315 billion EU European Fund for Strategic Investments, often referred to as the Juncker Plan, which provides easier access to loans for companies.

“Today, we propose to double the duration of the fund and double its financial capacity,” Junker said. “With your support, we will make sure that our European Investment Fund will provide a total of at least €500 billion of investments by 2020.”

With policymakers keen to avoid a repeat of the consternation seen last year after €2.2 billion was lifted from the Horizon 2020 R&D programme for the Juncker plan, it was stressed that the fresh instalment to the fund will not hoover up money earmarked for research.

The new money will instead be recycled from unspent bits of the EU budget and the Connecting Europe facility, a budget for infrastructure.

Economists agree that the fund has had a successful first year, mobilising around €116 billion.

There are lingering questions about the quality of investments, however. “The original idea behind the fund remains a good one,” says Gregory Claeys, an economist with Bruegel, a Brussels think tank. “But I see a lot of projects that could have happened without the fund.”

Protecting the research budget this time around is a positive step however. “It shows they are learning from experience,” Claeys said.