White Paper: Basic Principles And Implementation

After publication of the EU White Paper on the Future of European Defence and the agenda of “ReArm Europe”, the European Union has presented the whole comprehensive package of ideas and programs of the so called “Readiness 2030” agenda, which needs to be developed and implemented before 2030.

As the first EU Commissioner for Defence and Space, I have the responsibility together with Member States and EU institutions to develop those ideas.

Now I have an urgent responsibility to steer the implementation in the most effective way of this most strategically important part of our common agenda of today.

These are several of my personal speaking points, which I (with assistance of  my colleagues)  elaborated recently (after the White Paper was published) during my numerous  presentations of the White Paper to different communities, national Parliaments, NATO and EU institutions.

I hope that those brief notes will allow those who interested in the topic to better understand where we are at the moment and where we are going to go with implementation of White Paper in the nearest future.

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Basic Principles in drafting White Paper:

1. Deterrence:

• if you want to avoid war, you need to prepare for war;
• Russia can be ready to test NATO Article 5 before 2030;

2. EU and NATO:

• no competition of EU with NATO and Member States on defence plans and defence capability targets;
• EU added value to NATO and NATO MS: with EU industrial policy, with ability to raise additional funds and with ability to introduce needed legislation in order to provide assistance to  Member States in development of their national defence capabilities and in development of EU defence industry;

3. Defence industry is not just another industry:

• Defence industry is one of the most important defence resources, which needs to be developed in European continent not far away from the war zone;
• For time being – European defence industry has a lot of structural problems – it is very much fragmented, there is no single market, because of that industry is losing global competition and EU Member States are procuring only 20% of their equipment from EU defence industry;
• Defence ministers should take care not only about development of their national defence capabilities, not only about the development of their national defence industry, but also about development of the defence industry of all the European Union.

4. Autonomy of action:

• While developing our defence capabilities we need to remember that Defence readiness means indeed our autonomy of action. We cannot develop national defence capabilities where somebody else will decide if we can use those capabilities. We should not need to ask permission to use our national capabilities.

5. Defence as solidarity:

• European defence is a common good based on the principle of collective defence.
• Collective Defence is possible only with realization of one of the most important European values – value of solidarity.
• If one country does not invest into its own defence, it makes defence of other countries weaker.

6. White Paper is about realization of those principles and goals.

Major topics of White Paper:

• Support to Ukraine; till now EU gave military support to Ukraine of around 50 billion euro during 3 years of war (equal to USA); it’s a lot, but annually it’s less than 0.1% of EU GDP; with SAFE loans come new possibilities for the EU to support Ukraine; Danish model; integration of Ukraine and EU defence industries; Ukraine and EU Joint Task Force for joint procurement and for implementation of other joint industrial projects; Expansion of EU Innovation Office in Kyiv towards Office of Industrial cooperation; Ukraine and EU cooperation in Space;
• ramp-up of our capabilities in EU: ramp up in production of the same; development of strategic enablers; implementation of defence projects of Common European Interest (including Eastern Border Defence Shield);
• Structural strengthening of EU defence industry: joint procurement, European investment;
• Financial opportunities to realize ramp-up and flagship projects;

7. Now – implementation, implementation, implementation;
8. SAFE:

• Attractive 150 billion euro of EU guaranteed loans for the EU Member States which have borrowing rating lower than EU;
• after legal approval of SAFE regulation in the Council, just 6 months for applications by Member States to Commission (2 months for initial notifications + 4months for detailed plans);
• Added value of SAFE: incentivization for joint procurement – bigger contracts, lower price for equipment; no VAT for joint procurement; possibility for effective procurement – opening of existing contracts;
• Joint procurement with Ukraine, from Ukraine, for Ukraine;

9. National Escape Clause:

• possibility for Member States to invest additional 1.5% GDP into defence and to ask Commission to allow MS to use National Escape Clause from Growth and Stability Pact Regulation in order for that additional defence spending not to be included into fiscal deficit calculations;
• if all Member States would spend additional 1.5% GDP on defence, that would bring additional 650 billion euro for defence spending on EU level;
• Commission expects that in April Member States will notify the Commission if they are going to use the possibility of the National Escape Clause; that is needed for Commission coordinated announcement to the markets in order to avoid chaotic reactions in the markets;

10. Revision of Cohesion Funds:

• Opening of possibility for Member States to voluntary invest unused EU Cohesion Funds into development of defence industry, with creation of new jobs, and to invest into national military mobility infrastructure;
• Those Member States who will use this possibility, will get access to additional benefits for additional investments into defence;

11. European Investment Bank:

• European Investment Bank recently made a decision to change their mandate and to narrow prohibited areas of investment (till now defence was prohibited area for EIB investment). From now there are new possibilities for EIB to invest into defence and dual use; there are informal notions that EIB would be interested to invest into EU flagship defence projects of Common European Interest.

12. Savings and Investment Union:

• according to Enrico Letta Report there are 33 trillion euros of untapped financial resources in the European Union, mainly in the area of personal savings and pensions, which now are not invested into European defence;
• those private European funds for the time being (because of the lack of European investment possibilities) are mainly investing into USA defence industries or financial instruments; that creates possibilities for USA entities to use resources of EU private savings and pension funds to buy-in European start-ups or SME’s in defence industry.
• Commission approved Communication on EU Savings and Investment Union in order to bring those huge untapped resources of EU private savings and pensions to the benefit also of EU defence industry.

13. Implementation of White Paper before June European Council:

• finalized negotiations on EDIP and SAFE regulations;
• Defence Simplification Omnibus Package;
• Concrete roadmaps for capability developments (together with European Defence Agency and European External Action Service): how to ramp-up production of the same; how to develop Strategic Enablers; how to move forward with implementation of Defence Projects of Common European Interest;
• Commission will just propose options, Member States will decide;

14. Before June – Strategic Dialogue with the EU Defence Industry;
15. By the end of the year:

• Roadmap of the Transformation of defence through disruptive technologies (AI and Quantum);
• Military Mobility Joint Communication, with accompanying legislative proposals;

16. White Paper – just a beginning of the road! Much more – is ahead!