(B2) The Finnish presidency proposal (negotiating box) for the Multi-annual Financial Framework (MFF) of the next seven years (2021-2027) made those that were already seeing themselves having access to the European money pot fall of their chair. This initiative has a great interest : raising the fundamental issues that have not been solved. Should we have a European Defence? At what cost? What about arms exports?
What is the style of the proposition on the EDF?
Out of the 11.5 billion euros intended for the next 7 years (in 2018 prices, 13 billion in current euros), Finland only kept half: 6 billion euros (Des nouvelles du programme EDIDP. Inquiétude pour le futur Fonds européen de défense. Le budget raboté ?). Meaning barely 1 billion per year instead of the hoped 2 billion. « With this, we can only go higher » jokes an old grumbler of the Defence Fund.
Is this cut a surprise?
No. This cut was awaited. Nobody (except some daydreamers) thought we could end up with the budget proposed by the Commission. In the Berlaymont, the European executive office, they were prepared for this ‘cutting’ exercise, which is quite normal. They overdid it on the proposal, assuming that then they could lose a little during the process without too much harm being done. Basically, with 9 billion euros over seven years (10 billion in current euros), the European Defence Fund would already have quite an ambitious course. It means between 1.2 and 1.3 billion euros per year (1.5 in current euros). If this objective was reached, we could crack open a bottle of champagne. The Finnish set their proposal much lower than that.
Was the Finnish cut made preferably on the defence field?
Yes, without a doubt. Defence (-50%) as well as border management (-33%) are the first to be targeted by the cuts in percentage (1). The entire ‘defence’ budget has gone through the ‘Finnish cut’. The military mobility budget drops to 2.5 billion euros (instead of 5.76 billion €) over seven years of the 2021-2027 term. While the European Peace Facility (planned budget for exterior crisis management) will only have 4.5 billion € (instead of the planned 9.2 billion). The Frontex agency also takes a hit: 6.15 billion instead of 9 billion (-32%). Only the Internal Security Fund does a little better, with 1.7 billion € (instead of 2.2 billion) and Space ‘only’ loses 10% !
Is it serious?
Let’s keep a clear head. We are in the middle of a budget negotiation. Everyone has to dramatise in order to gain a few additional hundred million euros on ‘their’ priorities. The proposed number is probably inadequate in order to face all the challenges that research and development (R&D) face in terms of defence. Especially after all the years of budget tightening. However, even with cuts, this budget is not negligible if we compare it to what Member States spend, cumulatively, today on R&D = nearly 9 billion euros per year, according to the European Defence Agency numbers (2), including the United Kingdom. This represents still one sixth of the Member States budget. The European budget, even cut, is therefore not insignificant. In addition, we have to take into account ‘civilian’ R&D which has now a stronger utility for Defence than in the past (3).
Is it enough for the sought ambitions?
Clearly the answer is no. Today, Europe is in front of a choice. It either develops the autonomous technologies that tomorrow will irrigate the economy, and gives a whip to research. Or it continues to suffer and use foreign technologies (American and Chinese today, Indian or Turkish tomorrow), contenting itself with being a pool of consumption and services, without controlling its industries and networks.
A few lingering questions
Developing new ‘equipment’ is without a doubt important for the European industry and armies. Nevertheless, from a purely economic perspective, this equipment is not profitable to produce without having an ‘export’ vehicle. Some manufactures do say it quite frankly (4). Here we are swimming in the midst of a taboo: should Europe develop its own exporting defence industry? What rules apply? Can we let each country ‘build’ its own rule? Should we inspire ourselves of the Franco-German agreement in order to have a European rule? A series of questions arise which Member States have been unable or unwilling to ask themselves. However, these last few months, examples of a more assertive European position are numerous: with Saudi Arabia after the Khashoggi murder, with Turkey after the intervention in North-east Syria (read: Embargo sur les armes ou coordination de la politique d’exportation d’armes ? Y voir clair). Europeans will not be able to avoid thinking and finding initiatives on this matter.
What is the objective of ‘Defence’?
We cannot just reunite the axiom: defence industry + spending = protection of citizens. It is a shortcut which nobody can decently believe. A performing defence industry does not (automatically) mean the protection of citizens. An axiom that is even more easy to very when looking at the +- fifty projects that have been submitted for the Permanent structured cooperation (out of which around ten have been submitted for European Union financing). Off the record, European leaders do recognise what everybody else figure out: certain projects are linked to common needs only from afar.
Defence, what for?
Having modern equipment, full of technology, it is a good thing. But what for? When we see that many European countries lack any desire to participate to operations, to risk their soldiers lives, the question must be asked. If we look at recent interventions, we see that countries with much more limited resources than the Europeans (Russia, Turkey for example) achieve military capabilities, and in particular use them, strategically, to acquire negotiating power, or even simply power on the global stage. To bring back everything to a budgetary issue — spending more for defence — or a techno-industrial one is a mistake. European will need to ask themselves this: defence, what for?
- The Single market is the third sector to be targeted in terms of percentages (-23%).
- Except during the financial crisis, where this number was rather around 8 billion euros (indeed a little bit lower).
- The paradigm that wanted defence R&D to trickle down on civilian R&D is now inverted with the arrival of network economy. ‘Defence’ takes just as much civilian technology, which it transforms, adapts, and ‘hardens’ for its own needs, than the opposite.
- Read in particular: Entretiens européens de la Défense (2) : Des champions européens, à l’export aussi (O. Martin, MBDA)