Commissioners overseeing the portfolio, or parts thereof
- Andrius Kubilius, Commissioner for Defence and Space
- Henna Virkkunen, Executive Vice-President (EVC) for Tech Sovereignty, Security and Democracy
The next European Commission has prioritized its defense industrial base and has committed to creating a European Defense Union. For the first time, a dedicated Commissioner for Defence has been established, although the challenges facing this portfolio are steep and varied. Europe’s defense industry is highly fragmented, dependent on external suppliers, and massively underinvested in at a time when an active war is taking place on the EU’s doorstep. The short-term measures undertaken by the previous Commission towards making the Union a security provider are in the process of being translated into deeper, long-term measures to make the EU’s defense industrial base capable of the production needed for the future.
Core Priorities
As outlined by the Political Guidelines 2024-2029 prepared by then-incumbent European Commission President von der Leyen, Europe’s past has been defined by war, division, and conflict. In light of the deteriorating security environment following Russia’s invasion of Ukraine in 2022, the EU has renewed talks of bringing Europe’s Defence Union to life. For the first time in its history, a Commissioner for Defence has been appointed to steer work towards this goal of a true European Defense Union. Barriers to creating this defense union are numerous, from investing in and streamlining the EU’s fragmented defense industry, reducing dependencies on external suppliers and spending smarter as a collective bloc, and strengthening EU-NATO cooperation.
Commissioner Andrius Kubilius, who served as Prime Minister of Lithuania twice, has a daunting task ahead of him of reforming and streamlining the fragmented and underinvested European defense industry. Combined EU spending on defense has fallen short; from 1999 to 2021 it increased by 20% while Russia’s defense spending increased by almost 300% and China's by almost 600%. The European defense industry landscape is fragmented along national lines and highly dependent on non-EU companies, chiefly American-made armaments. Between mid-2022 and mid-2023, an estimated 78% of total procurement spending went to non-EU suppliers, with 63% destined for the US.
In the first 100 days of the Commission’s mandate, a White Paper on the Future of European Defence will be released, identifying investment needs and gaps. The paper will suggest a number of ways forward, including how to spend more and smarter, how to rebuild and replenish national armed forces, how to create a true European defense industry and incentivize common procurement, and fund joint EU projects on defense. The next EU budget cycle begins in 2028, with talks expected to take place in the next year. Among the increased budget priorities for defense will include a €500 billion air-defense system covering the entire EU. Furthermore, some €200 billion will be needed in the next decade for upgrades to military mobility within the EU (including investing in bridges, railways, and roads). By Kubilius’ estimates, the EU will need to spend at least €10 billion through 2028 to provide for baseline defense. This spending will be in addition to member state investments in their armed forces.
At the EU level, several joint projects will be prioritized by the new Commission. The European Defence Fund will receive renewed emphasis, prioritizing investing in high-end defense capabilities in critical areas such as naval, ground, air combat, space-based early warning systems, and cyber capabilities. More funding will also be allocated for joint European Defence Union projects that encourage cross-border cooperation and common threats. These Defence Projects of Common European Interest will be developed in cooperation with NATO and will include, among other projects, a European Air Shield and cyber defense. The next Commission will work towards a Single Market for Defence products and services, thereby enhancing production capacity and fostering joint procurement.
The last Commission took considerable strides towards strengthening the EU’s role as a security provider, and conducted a frank analysis of the state of Europe’s defense industry. As a first step in identifying the problems with its defense industry, a European Defence Industrial Strategy (EDIS) was presented in early March 2024. In identifying challenges, the EDIS proposes a toolkit aimed at better coordinating and strengthening cooperation among European industries. To implement the toolkit suggested in EDIS, the European Defence Industry Programme (EDIP) was established. EDIP provides €1.5 billion in financial support from the EU budget over the period 2025-2027. EDIP exists as a more long-term mechanism to replace short-term programs Act in Support of Ammunition Production (ASAP) and European Defence Industry Reinforcement Through Common Procurement Act (EDIRPA) and ensure the EU’s defense industrial readiness for the future.
Recent reports prepared by former Finnish President Sauli Niinistö, former European Central Bank President Mario Draghi, and former Italian Prime Minister Enrico Letta inform the upcoming defense industry portfolio priorities. In Letta’s Report, focused on the Single Market, an entire chapter is dedicated to Europe’s defense industry and how the EU can leverage its common market towards bolstering integration. The fragmentation of Europe’s defense industry leads to a loss of economies of scale and costs the bloc more than €100 billion annually. The Draghi Report on the future of competitiveness also highlights the lack of focus and R&D as hindrances to its defense industry. In Europe, total funding for defense R&D was €10.7 billion in 2022 ($11.3 billion – 4.5% of total defense spending) while the US prioritizes R&D in defense spending; in 2023, the US allocated €130 billion ($140 billion – about 16% of total spending). Lastly, the Niinistö Report on preparedness seeks to extend the definition of defense beyond military equipment to a whole-of-society approach, including climate events as part of the threat landscape, and improving trust between EU member states to facilitate the flow of intelligence.
The President of the new European Commission has set concrete and very specific goals for the European defense industrial base that will not be easy or straightforward to achieve. They will require strong political will, capable leadership, and masterful diplomatic skills on behalf of the Commissioners. It is an important starting point that the new Commission seems to understand the problem of different threat perceptions among EU member states and can direct its efforts at convincing the national governments of the importance of its defense industrial base strategy and justifying the high financial resources needed to achieve it. These efforts will be accompanied by obtaining a strategic understanding of the place of the EU in transatlantic relations, as well as clarifying EU-NATO cooperation and partnership.
Transatlantic Cooperation & Engagement
- Buy European? For US decision-makers, the prevailing takeaway from the new European Commission for the defense industry is Europe will be buying less armaments from the United States and instead supporting domestic and EU industry. This will be an awkward transition for US providers of armaments to Europe, but will also allow US defense industry production to catch-up as orders for high-end equipment such as HIMARS and ATACMS outpace production capacity. An unfortunate knock-on effect of this shift is it might lead to less US engagement in European security, or a growing rift in the Atlantic when it comes to security matters.
- More capable allies: Conversely, the EU and its member states will see a considerable transformation in their capabilities, offering more to the United States as allies. This will come in handy to address growing instability in the Middle East and potential aggression in the South China Sea. As the incoming Trump administration evaluates threats and focuses its attention on China, Europe will need to demonstrate it is capable of being a security provider, not just a beneficiary. This will allow the US to re-allocate resources to best respond to threats worldwide.
- EU-NATO cooperation: Bolstering EU-NATO cooperation will be an important topic for the new Defense Commissioner, and a long overdue advancement at bridging the divide between the two Brussels-based organizations. US policymakers and outgoing NATO Secretary General Jens Stoltenberg have warned of duplication in capabilities, however EU officials repeatedly defer to NATO for standards and best practices. The lack of communication and coordination between the EU and NATO–there is virtually none at the time of writing–is a major institutional shortcoming that must be addressed and underpin the work of the new Commission as it invests in its defense industry.
