The EU needs to go beyond its plans for a more coordinated approach to defence capabilities by member states to draw non-member states into a European defence common market.
ReArming for a SAFEr Europe
The newly published joint European Commission and High Representative defence White Paper and the commitments under ReArm Europe Plan/Readiness 2030 create the basis for a new departure in EU defence. They promise the financial infrastructure to drive a surge in the development of Europe’s defence industries to provide the defence capabilities to secure Europe.
It marks a pivotal moment in the EU’s efforts to bolster European security and defence capabilities by providing means to replenish Europe’s military stockpiles, scale up industrial production, and reduce external dependencies.
Whether this will be sufficient to address the fragmented state of Europe’s separate national defence markets and procurement strategies across EU member states remains uncertain for now. But this will be a key determinant of whether the current rhetoric on European defence can be matched with results. There is the risk that increased European defence spending will fail to translate into meaningful industrial and military readiness due to institutional disputes, supply chain bottlenecks and industrial fragmentation. There is no guarantee that despite its scale as the world’s second-largest defence market (after the United States) there is a European defence industry capable of digesting the injection of spending that will be heading its way. Decades of underinvestment and a lack of coordination have left the European defence industry with very limited capacity to scale up production swiftly to meet demand.
ReArm Europe Plan/Readiness 2030 may provide the basis for eroding what are currently 27 separate national markets, with division and duplication the main consequences. In addition to the well-known production of multiple Main Battle Tank, fighter and air defence variants produced to meet different national specifications, Europe’s defence industry is also marked by a very large number of SME’s with significant scope for consolidation through merger and acquisition. European Commission President Ursula von der Leyen has set the very high level of ambition to create a single market for defence for the EU27: eliminating all of the obstacles that exist to create a level playing field on defence-related goods and services trade between the member states is a formidable undertaking. Importantly getting the E27 to agree on this as a political objective will give the Commission considerable room for incremental steps to improve on the current presumption that removing national barriers to defence trade is unattainable.
Drawing a dividing line in Europe
ReArm Europe Plan/Readiness 2030 sets out the ambition to build greater security for the EU. However, as currently constituted, the plans have the potential to draw lines of division within Europe. The €150-billion Security Action for Europe (SAFE) loan funding for defence capabilities acquisition restricts purchasing outside the EU to European Free Trade Association (EFTA) members of the European Economic Area (EEA) and Ukraine. By design, it places the defence industries of Türkiye and the UK outside the core circle of partnership. The logic of the exclusion of these countries is explicable in terms of a distinction being drawn between the EU27 and the third countries with existing security and defence agreements with the EU and those, like London and Ankara, who have not signed an agreement. However, it misses a major political opportunity to draw closer to the UK – which shares the EU’s view as to the centrality of securing Ukraine as the cornerstone of the future defence of Europe. Sidelining the UK at this critical moment in European security, with the US seeking to accommodate Russia in its war on Ukraine over the heads of Europeans, seems an especially unfortunate outcome.
UK media coverage, quoting defence insiders, has questioned whether a joint approach to European defence and security is possible with the EU. Whether this is a temporary stumble in an otherwise smooth run in to the EU-UK summit in May remains an open question. Instead, the security and defence relationship between London and Brussels may turn out to be more rhetorical than real. But it is a poor backdrop for negotiations on an EU-UK security and defence agreement.
Notwithstanding the question of how third countries connect to the procurement elements of ReArm Europe Plan/Readiness 2030, greater ambition is needed in linking all European states – EU and non-EU – into a shared eco-system of defence capabilities development. Europe’s defence industry will only gain sufficient mass to challenge the dominance of the US defence industry in supplying Europe’s defence equipment if there is a willingness to think at scale beyond the EU27. This means thinking as to what arrangements might be made to accommodate all European states for collective benefit. The UK and Türkiye are as much large European defence markets (with defence budgets of £53.9 billion and $47 billion respectively) as they are key defence industry players.
A common market for defence
A counterpart project to the European Commission’s EU single market for defence should be the push for a bigger and broader European common market for defence. A key imperative would be to see the elimination of any barriers that inhibit the full integration of Ukraine into Europe’s defence industrial base. The underlying rationale is simple: creating an economic space in which the organising imperative is to work to remove (the multiple) barriers to trade and investment in defence-related items between participating European states and the EU27. The creation of such a sector-specific common market would not be a panacea for the multiple inefficiencies that hinder the growth of Europe’s defence industries but, at a minimum, provides an economic space for greater economies of scale. It would also provide a platform for a subsequent push on arrangements to see defence goods, industry investments, knowledge and expertise, and security and defence-related data moving more freely.
The EU has embarked on its own project to re-arm – it must now also consider how it might contribute to a whole-European condition of greater defence readiness. Now is the best moment to create a truly common European defence market that harnesses all of the continent’s potential, ensuring Europe’s security, strategic autonomy and industrial strength for decades to come.
Richard G. Whitman is an EPC Academic Fellow, Senior Associate Fellow at the UK’s Royal United Services Institute (RUSI) and Professor of Politics and International Relations at the University of Kent.
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