Why the EU needs to start spending on defence R&D

In recent weeks the EU has pushed defence and security to the top of its agenda, with plans being laid to spend billions of euros on new military investments.

Proposals so far include a new European Defence Fund, to start on a small scale in 2017, which will finance drone, cyber defence and maritime surveillance research. Other possibilities being aired include loosening restrictions on the European Investment Bank, so it can bankroll defence projects, and joint procurement, which would see countries team up to purchase expensive equipment such as helicopters and drones.

EU Commission president Jean-Claude Juncker confirmed plans for the EU to move into defence R&D in his annual state of the union address earlier this month saying, “For European defence to be strong, the European defence industry needs to innovate.”

The programme is likely run from 2018-2019, starting with small with a budget of around €25 million. The pilot could eventually grow into a permanent programme worth €3.5 billion, run separately from the EU’s traditional research programme.

“Everyone in the EU is thrashing around for some sign that we can move forward on something. Seeing as there’s no real takers for going deeper on the single market, why not defence?” asks Nick Witney, a senior policy fellow at the European Council on Foreign Relations.

It’s doable and sensible - and may become inevitable if US presidential candidate Donald Trump is elected, Witney said. “The world will have changed and we’ll all have to spend a bit more to defend ourselves.”

Indeed, Trump is one of a number of US officials loudly imploring the EU to invest more money in military hardware. Only four out of the 26 European members of NATO met the alliance’s objective of spending two per cent of GDP on defence last year.

“We can’t quietly console ourselves by the illusion that we’re under America’s protective umbrella,” said Witney, a former chief executive of the European Defence Agency and adviser to the European Commission on EU defence research.

“We’re not as safe as we thought we were,” he said citing threats from Islamic militants, failing states on Europe’s borders  and a resurgent Russia.

Given this, Witney believes the European Defence Fund, to be launched before the end of the year, is very timely. He is also pleasantly surprised not to have heard much resistance to the plan, despite rising Euroscepticism across the continent.

After starting out as a pilot with €25 million next year, the fund is expected to get bigger during the EU’s new budget cycle beginning in 2021.

“Eventually, you’d like the EU to be spending the same as Britain and France do every year, which is about €500 million,” said Witney.

The full range of defence research “weapons and all” should be supported, said Witney. “But the big chunk of the money will likely be spent on developmental stuff, so not necessarily on things like improved rifles.”

Although many of the EU’s grand plans for greater military cooperation have never materialised, Witney points out that EU spending on defence-related research has been stealthily building.

“We’ve had EU security research, which is a sort of a halfway house, and we’re getting to the point where the distinction between civil and military tech starts to look a bit blurry anyway,” he said.

The new fund could help member states to avoid wasteful spending on incompatible equipment that cannot interoperate and to get more out of national defence budgets by pooling of resources. “Much of what we do right now is such a waste of the taxpayer’s money anyway, we might as well do it a bit better,” Witney said.

Brexit opportunity

The UK has historically opposed greater EU military cooperation, saying NATO is much better-equipped to do the job, and the vote to leave the EU has cleared the path for greater military cooperation, Witney said.

The UK’s aerospace industry will welcome this, he believes. “You saw in the merger talks between BAE Systems and EADS [now Airbus] in 2012, a measure of the extent to which British industry realises that cooperation in defence is what needs to happen,” Witney said. “Going it alone is not an option anymore and linking up with our American cousins is not always the best option either, because they don’t share their technology.”

The new fund will provide a boost for all EU countries, not merely the obvious winners like France and Germany. “You can begin to see European defence evolving like the automotive industry – there’s the behemoths in the West but plenty of demand for Eastern Europeans to make the components,” said Witney.