Europe has become convinced that its American ally will no longer guarantee its security, and has decided to rearm massively. How does it plan to do this? Can it afford it? And what impact will this new scenario have on its geostrategic position, but also on its economic and industrial sectors?
The European Union has committed to bolstering European defence capabilities. The European Commission’s proposal, originally labelled “Rearm Europe” and now known as “Readiness 2030”, prioritises the supply of strategic equipment, like air and missile defence, artillery systems, missiles, ammunition and drone and anti-drone systems. Military expenses would be excluded from strict European fiscal constraints.
If each member state was to spend 1.5% of its GDP on defense, on average, the combined amount would be €650 billion. In addition, the plan provides for €150 billion in loansto buy defence capabilities mostly made in Europe.
Additional funding sources for defence are under study, including the mobilization of private financing.The EU is also studying the harmonisation of requirements and joint procurements to ensure a more efficient market, reduce costs, guarantee the cross-border access to supply chains and to increase the competitiveness of the defence sector as a whole.
In total, around 2500 SMEs operate in the EU defence industry. In the outskirts of Prague, Czech Republic´s capital, we visited one of them. Every year 60 staff produce here 70 Unmanned Air Vehicles.**
These UAVs have both civil and military applications. They are currently being used for surveillance, communication and intelligence operations in conflict zones in Ukraine and Iraq. Their latest model has just received a key certification that should help speed up its deployment across NATO members, claims Ladislav Semetkovský, the company´s CEO.
“The process of certification has been going on for five years with over 40 experts working on it” explains Semetkovský. “In total, they have processed more than 28,000 pages of texts and implemented hundreds of flights.”
The company´s turnover should this year amount to some 40 million euros. It has set up a partnership with European giant Airbus Defence and Space. Managers say their UAVs are totally made in Europe.
“I think that companies like us are terribly important for maintaining the security of Europe, because the domestic defence industry can ensure the stable supply and operation of any technology, whether military or civilian”, says Semetkovský. “So cooperation with European manufacturers is crucial for Europe’s defence.”
Yet this cooperation has often left them frustrated, managers say, as excessive bureaucracy and regulation have limited the signature of contracts that would effectively scale up production and create more jobs.
“I really think the biggest problem is that politics have moved away from what a truly innovative industry can do, and there is, let’s say, a gap or simply a lack of dialogue with each other”, claims Jan Sechter, Primoco UAV´s Chairman of the Supervisory Board. “And this can be a source of concern for industry, when it comes to public procurements, for instance. We need greater and better communication between the States, research, development and industry. This is quite common in the United States, and also here in Europe we have to get used to it and support it.”
Europe´s defence sector provides some 600.000 jobs. The new scenario could help deliver even more. But can debt-burdened Europe really afford this massive rearm effort in the current unsteady economic situation? In Pilsen, Zdeněk Rod, an Assistant Professor on International Security at University of West Bohemia says that, given the new geopolitical context, Europe has little options but to press ahead.
“If you look at the Cold War era, the NATO member states, they were approximately spending about four, five, even 6% on defense. So those numbers have already been here. So it’s something which is not unimaginable. Of course, in the current context, it’s slightly complicated because the national debts are pretty high. We can see more than 50% of the European Union members have some, let’s say, serious fiscal issues. So the question is, what do we get in money from”, explains Rod, who is also CEO and co-founder of think-tank Center for Security Consulting.
“We know that Europe is based on a strong welfare state. So we have to find some balance between security and the welfare we want to maintain. For instance, you can increase taxes, which I guess would be highly unpopular in most of the states. If you don´t want to borrow more money or increase taxes, then the only thing that is left is to cut something within the national budgets”, says Rod.
Europe plans to set a minimum threshold that 65 percent of the military components eligible for funding must be European.
