Euroopa kaitsetööstuse strateegia ja programm

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EUROPEAN COMMISSION

HIGH REPRESENTATIVE OF THE UNION FOR

FOREIGN AFFAIRS AND SECURITY POLICY

Brussels, 5.3.2024

JOIN(2024) 10 final

JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL,

THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE

COMMITTEE OF THE REGIONS

A new European Defence Industrial Strategy: Achieving EU readiness through a

responsive and resilient European Defence Industry

INTRODUCTION

On 14 and 15 December 2023, the European Council, in line with the Versailles

Declaration1 and the Strategic Compass for Security and Defence2, underlined that more

needs to be done to fulfil the Union’s objectives of increasing defence readiness3. The

European Council also emphasised the need to strengthen the European defence

technological and industrial base (EDTIB), including SMEs, and to make it innovative,

competitive and resilient. A stronger and more capable EU in security and defence will

contribute positively to global and transatlantic security and is complementary to the North

Atlantic Treaty Organization (NATO), which remains the foundation of collective defence

for its members.

EU Defence readiness can be defined as a steady state of preparedness of the Union and

its Member States to protect the security of its citizens, the integrity of its territory and

critical assets or infrastructures, and its core democratic values and processes. This

includes an ability to provide military assistance to its partners, such as Ukraine. In line

with the Strategic Compass, it encompasses the ability to act more quickly and decisively

when facing crises, secure our citizens against rapidly evolving threats, invest in the needed

capabilities and technologies and partner with others to achieve common goals. This

Strategy also responds to proposals made by citizens in the Conference on the Future of

Europe4.

A strong EU defence industry is an essential pre-requisite to achieve defence readiness.

This European Defence Industrial Strategy, based on the findings of the defence

investment gap analysis presented in the Joint Communication of 18 May 20225, and

following a comprehensive stakeholder consultation process, proposes an ambitious

approach underpinned by a European Defence Industry Programme (EDIP), together with

a set of flanking measures and alongside the European Defence Fund (EDF), to strengthen

the industrial pillar of EU defence readiness. This effort should be steadily pursued beyond

the current Multiannual Financial Framework (2021-2027), with EU funding delivered

through future instruments whose scope and design will draw upon the experience gained

through the implementation of the different defence programmes.

1 Informal meeting of the Heads of State or Government Versailles Declaration 10 and 11 March 2022,

20220311-versailles-declaration-en.pdf (europa.eu)

2 A Strategic Compass for Security and Defence - For a European Union that protects its citizens, values

and interests and contributes to international peace and security, Brussels, 21 March 2022, 7371/22, pdf

(europa.eu)

3 European Council meeting, Brussels, 15 December 2023, EUCO 20/23, europeancouncilconclusions-

14-15-12-2023-en.pdf (europa.eu). Conclusions read: “Having taken stock of work carried out to

implement its previous conclusions, the Versailles Declaration and the Strategic Compass, the European

Council underlines that more needs to be done to fulfil the Union’s objectives of increasing defence

readiness and increasing defence expenditure in a collaborative way, including enhancing defence

investment and capability development, and to achieve an effective and integrated market for defence”.

4 EU public opinion surveys confirm the strong interest and high expectations of Europeans about more

cooperation in defence matters. According to the Standard Eurobarometer 100 (December 2023), 79%

of Europeans believe that co-operation in defence matters at EU level should be increased, and 69%

consider that EU need to reinforce its capacity to produce military equipment.

5 Joint Communication on the Defence Investment Gaps Analysis and Way Forward. Brussels, 18.5.2022

JOIN (2022) 24 final.

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The steep increase of regional and global threats and security challenges and in particular

the return of high-intensity conventional warfare in Europe requires an urgent step-change

in the speed and scale at which EDTIB can identify, develop and produce the requisite

military equipment across the full spectrum, starting from the most urgent needs. Further

strengthening and streamlining the tools and instruments that the Union has put in place

over the past years is necessary in this respect. Defence industrial readiness must be

strengthened across the Union, paying particular attention to the specific implications that

this has for those Member States most exposed to the risk of materialisation of

conventional military threats.

Defence industrial readiness can only be achieved if the Member States’ continued increase

of defence spending is enabled, through the appropriate tools and incentives, to actually

prioritise collaborative investments. This will reinforce both their military capabilities and

the defence industrial base on which the EU and its Member States can rely. This will also

directly reinforce NATO, as Member States, including those who are NATO Allies6, have

a single set of forces that they can make available in different frameworks. It also

contributes to the Union’s wider economic security, as the EDTIB is a key driver of

technological innovation and resilience across our societies.

This strategy intends to enhance and support the Member States’ efforts to invest more,

better, together, and European (Section 2). The increased availability of defence

products and systems should be achieved thanks to a more efficient and responsive

EDTIB, relying on enhanced security of supply (Section 3). It is important to develop

the financial means to underpin EU defence industrial readiness (Section 4). In addition,

a defence readiness culture should be mainstreamed including across all EU policies

(Section 5). Finally, partnerships should be leveraged to enhance readiness and resilience

(Section 6).

1. ACHIEVING DEFENCE READINESS THROUGH A MORE RESPONSIVE AND RESILIENT

EUROPEAN DEFENCE INDUSTRY

1.1. Defence readiness: imperative in the current geopolitical environment

Faced with the return of high intensity warfare in Europe, following Russia’s unprovoked,

full-scale invasion of Ukraine in 2022, the Union must swiftly enhance its defence

readiness.

The rules-based global order is challenged to its core, and countries in the Union’s vicinity

and beyond are increasingly affected by tensions, instability, hybrid threats and armed

conflicts. Strategic competitors are investing heavily in military capabilities, defence

industrial capacities and critical technologies, whilst the integrity of our supply chains and

unimpeded access to resources can no longer be taken for granted.

The EU and its Member States are also confronted with widespread hybrid threats,

illustrated by a growing number of cyberattacks, sabotage, hacking of critical infrastructure

and assets, disinformation, and foreign information manipulation and interference. They

also face the contestation of Europe’s access to strategic domains such as the space, cyber,

6 22 out of the 27 Member States are currently NATO Members, with Sweden expected to join the

Alliance imminently.

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air and maritime domains. These developments are challenging our security, prosperity,

and democratic values.

The defence of the Member States’ territory and citizens is primarily a national

responsibility, including through allies’ commitments in the context of NATO. Against

that background, the geopolitical developments point to a compelling need for Europe to

take increased strategic responsibility for its own security, including to assist key partners

such as Ukraine. Under the guidance of the Strategic Compass, the EU is and must continue

to be a stronger player in security and defence, thus a more reliable security provider and

capable defence actor not only for its own citizens but also to the benefit of international

peace and security.

A stronger and more capable EU in the field of security and defence will also contribute

positively to global and transatlantic security and is complementary to NATO. For those

Member States, who are also members of NATO, the Alliance remains the foundation of

their collective defence. Defence readiness requires the planning, development and

operational availability of the necessary defence capabilities and strategic enablers, the

mastery of critical technologies and the ability to procure, operate and protect the required

full spectrum of capabilities, infrastructures and assets.

Achieving defence readiness therefore requires investing massively, in a coordinated

manner, in the required defence capabilities, including in relevant critical infrastructure.

This requires the agility to constantly integrate innovation that increasingly originates from

small and non-traditional players, which all too often struggle to see their potential

contribution recognised. Adversaries have engaged in a global race for technological

supremacy requiring from all actors ever faster and increasingly costly investment cycles:

the EU cannot afford falling behind.

Even those Member States with the largest defence budgets in the Union at their disposal

are increasingly facing difficulties to invest at the required levels on a standalone basis,

exposing the EU to widening capability and industrial gaps and to increased strategic

dependencies. The same goes for prime manufacturers and their supply chains. Defence

readiness therefore calls for more cooperation and collective action. In times of high

intensity warfare, this requires the ability to mass produce a large set of defence equipment

such as ammunition, drones, air defence missiles and systems, deep strike and intelligence,

surveillance and reconnaissance capabilities, as well as the ability to ensure its swift and

sufficient availability.

To enable this mass production, the organisation of the defence industrial sector needs to

evolve.

7 Against a historical low of EUR 171 billion in 2014. See European Defence Agency Defence Data 2022,

key findings and analysis.

Box 1. Defence acquisitions in the EU: buying predominantly alone and from abroad

As highlighted by the Defence Investment Gap Analysis and Way Forward, had all

Member States spent 2% of their GDP on defence, with 20% dedicated to investment,

since 2006 until 2020, this would have resulted in approximately an additional EUR 1,1

trillion for defence, of which around EUR 270 billion on investment.

In 2022, defence expenditures of the Member States increased for the eighth year in a

row, amounting to EUR 240 billion7. 78% of the defence acquisitions by EU Member

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1.2. Defence Readiness requires a strong, responsive and innovative EDTIB

As highlighted in the Strategic Compass and the EU Heads of State and governments’

Granada Declaration11, strengthening EU’s defence readiness and capability investments

requires a strong, agile and resilient technological and industrial base.

The EDTIB is an essential and integral element to ensure that our societies are secure and

prosperous today and in the future. A responsive and competitive EDTIB is the foundation

of any credible European role in its own defence and security.

EU defence industrial readiness, today and in the future, requires public and private

investments across the full spectrum of needs, to enable the defence industry’s

responsiveness in time and scale to the needs of Member States. Innovation must be a

constant focus of attention, while resilience to external shocks and disruptions should be

ensured.

8 Jean-Pierre Maulny, THE IMPACT OF THE WAR IN UKRAINE ON THE EUROPEAN DEFENCE

MARKET, IRIS, September 2023, 19_ProgEuropeIndusDef_JPMaulny.pdf (iris-france.org)

9 2022 Coordinated Annual Review on Defence.

10 Established by the EDA Ministerial Steering Board in 2007.

11 European Council, the Granada Declaration, 6 October 2023.

12 Data source: SIPRI estimates for the European Commission.

States between the start of Russia’s war of aggression and June 2023 were made

from outside the EU, with the US alone representing 63%8.

Between 2021 and 2022, there has been a 7% increase in the procurement of new

equipment, but only 18% of the total equipment spending was devoted to EU

collaborative defence equipment procurement in 20229, far below the current 35%

collective benchmark set by Member States10.

Box 2. The EDTIB today: a strong potential, to be further tapped into

The Union’s defence technological and industrial base today consists of a combination

of a large set of prime contractors, with mid-caps and a large number of small and

medium-sized enterprises (SMEs).

Besides European leaders producing world-class advanced systems, mostly located in a

handful of Member States, a no less crucial role is played by a wealth of smaller, but

often critical platform manufacturers, equipment suppliers, consumables - such as

ammunitions – producers, sub-suppliers, and niche producers, spread all across the

EU.

The Defence Joint Procurement Task Force industry mapping showed that prime

manufacturers for the 46 most urgently needed items were located in 23 Member States.

The EDTIB is competitive at global level, with an estimated annual turnover of

EUR 70 billion and strong export volumes (more than EUR 28 billion in 2021). Overall,

the EDTIB is estimated to employ around 500,000 people12.

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Notwithstanding its overall competitiveness, the EDTIB’s ability to unleash its full

potential is undermined by years of underinvestment, despite the progress made over the

last years. This is the consequence of Member States’ policy and budgetary choices in the

past decades, and in a different geopolitical context, to allocate the dividend of peace to

other societal uses. Persistent industrial fragmentation along national lines also acts as a

hindrance to the optimum efficiency of defence investments. These trends have led to a

significantly smaller comparative size of the EU defence market and presence on the global

stage, increased dependencies on third countries, impairing the EDTIB’s ability to punch

at its weight.

1.3. Too little cooperative investment in the EU keeps the EDTIB punching below

its weight

In a complex market in which national governments are the only buyers, Member States

are still insufficiently coordinating, pooling and joining their defence planning and

procurement decisions despite the range of European tools and frameworks at their

disposal. Hence, demand is still largely organised along national lines, with most

investment decisions arising from domestic considerations, and based on national

programming, often failing to factor in broader strategic and efficiency considerations. As

a result, and despite certain phases of consolidation in the past decades, the supply side

remains also essentially organised along national lines, with Member States opting where

possible for national solutions, because of industrial and security of supply considerations.

This results in a scattered EDTIB, acting in different, too narrow defence markets, rather

than in a single, much larger and integrated one.

This weakens the EDTIB. First, the demand side does not express itself collectively in an

optimal way. This results in duplications and foregone opportunities to mutualise and

synchronise investment in commonly needed equipment or infrastructure. Second, the

supply side is not incentivised to cooperate or even integrate to match a more efficient

expression of demand. It suffers from lack of predictability and critical mass in the orders

placed, thereby failing to seize economies of scale. Third, especially recently, Member

States tend to acquire off-the-shelf from third countries, thereby drying up internal demand

and investing European taxpayers’ money in jobs and key technologies abroad rather than

in Europe.

This obliges in turn the EDTIB to focus on exports to ensure its viability, resulting in a risk

of excessive reliance on third countries’ orders, with the consequence that responding to

Member States’ orders may be less a priority than honouring third country contracts in

case of crises and related shortages.

Security of supply is undermined by the combination of the above patterns. The single

market has become a reality at lower tiers where supply chains span widely across borders.

However, this is not reflected in a collective strategic governance at the EU level that

would support security of supply in crisis scenarios. The trend of overreliance on third

countries’ supplies further undermines security of supply and freedom of action in case of

crises.

1.4. Helping Ukraine withstand the Russian aggression: a decisive Union

contribution, but strong potential for improvement

The EU and its Member States have demonstrated their capacity to swiftly mobilise

support for Ukraine’s armed forces, including from the EDTIB. As of late January 2024,

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the EU and its Member States collectively delivered more than EUR 28 billion worth of

military equipment to Ukraine.

Thanks to the European Peace Facility (EPF), the EU supported Ukraine within a few days

of the Russian full-scale invasion of February 2022, by reimbursing Member States who

sent military assistance to Ukraine. The EPF is incentivising further deliveries of lethal and

non-lethal equipment to Ukraine. With the three-track ammunition initiative13, the Council

agreed an ambitious framework to incentivize the delivery and procurement of artillery

ammunition and ground-to-ground missiles, as well as industrial ramp-up.

Through this initiative, Member States have placed orders in the EU and Norway to

procure additional artillery ammunition, including by using the framework contracts14 that

the European Defence Agency negotiated on their behalf with the European defence

industry. The Union’s support delivered through the Regulation on supporting ammunition

production (ASAP)15 is increasing and speeding-up its capacity to support Ukraine and

replenish national stocks.

The EDTIB has also demonstrated its ability to effectively sustain these efforts. Since the

beginning of the war, the EDTIB has increased its production capacity in artillery

ammunition by 50%. It is already capable of producing one million artillery rounds per

year and is anticipated to reach a capacity of over 1.4 million by the end of 2024 and 2

million by the end of 2025.

Beyond the donations from Member States’ stocks and from EPF-funded procurement, the

EDTIB has also provided a significant amount of artillery ammunition through direct

contracts with Ukraine, displaying its ability to contribute to its fight against the invading

forces.

The EU also put in place new initiatives such as the Regulation on establishing an

instrument for the reinforcement of the European defence industry through common

procurement (EDIRPA)16. Still, much more needs to be done, both at industrial and

governmental level.

1.5. From emergency responses to readiness: time for a paradigm shift

It is time to move from emergency responses to structural EU defence readiness across all

time horizons. The EU needs to secure the availability to its Member States and partners

of consumables in the requisite volumes, including during crisis times, while ensuring the

timely development and delivery of next generation high end critical capabilities in the

coming years. This also takes into account the Ukrainian defence needs. Additionally,

secure access to contested domains such as cyber, space, maritime and air, cannot be

protected effectively by a single Member State. Therefore, the EU needs to develop its

13 Delivery and joint procurement of ammunition for Ukraine, Brussels, 20 March 2023, 7632/23, pdf

(europa.eu)

14 As of today, 60 framework contracts have been signed by the EDA with European industry.

15 Regulation (EU) 2023/1525 on supporting ammunition production (ASAP), OJ L 185, 24.7.2023, p. 7–

25.

16 Regulation (EU) 2023/2418 on establishing an instrument for the reinforcement of the European defence

industry through common procurement (EDIRPA), OJ L, 2023/2418, 26.10.2023.

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capacity to ensure its access to these areas collectively, through the necessary investment

in European level solutions.

A competitive EDTIB contributing to the security of Union’s citizens means an industrial

sector capable of maintaining its technological excellence while delivering what is needed,

when it is needed, without restrictions stemming from excessive external dependencies or

bottlenecks17. An industry investing in new capacities and ready to shift to a ‘wartime’

economic model whenever needed, is essential.

This implies a collective public and private engagement. The EU is ready to support both

Member States and the EDTIB by de-risking investments, contributing to a more ambitious

defence industrial policy at EU level. To achieve this, the Union needs to maximise the

benefits of competition, cooperation and consolidation. By the same token, the

competitiveness of the EDTIB and its ability to export must be preserved, whilst

nonetheless ensuring that Member States can rely fully on their defence industry to deliver

on their needs in a timely manner and in the requisite volume, when the security of EU

citizens is at stake.

This strategy introduces measures i) to support EU defence industrial readiness, based on

an increased coordination of Member States’ defence needs, ii) to strengthen the EDTIB

to produce more, while ensuring its security of supply, iii) to develop the financial means

to underpin EU defence industrial readiness and iv) to mainstream a defence industrial

readiness culture, while v) working effectively with partners. As a first immediate

initiative, the Commission is proposing a new Regulation establishing EDIP, to ensure

continuity of support to the EDTIB in the current Multi Annual Financial Framework

(MFF), while testing new forms of support in view of the next programming period.

The proposed EDIP will expand in time and scope the support to the competitiveness of

the EDTIB brought by EDIRPA and ASAP. It will incentivise cooperation in the

procurement phase of defence products manufactured by the EDTIB, support the

industrialisation of products stemming from EDF funded actions or other EU cooperative

frameworks and more generally support the defence industrial ramp-up in the Union. It

will also establish an EU Security of Supply regime to enhance solidarity and effectiveness

within the Union in response to crises.

2. LEVERAGING READINESS THROUGH INVESTMENT: MORE, BETTER, TOGETHER,

EUROPEAN

Ultimately, the realisation of the defence industrial ramp-up depends on an increased

volume of orders from Member States, which cannot be placed without increased defence

budgets. Member States have started to increase their budgets at an extraordinary pace

since February 2022 (see Box 1). However, significantly greater investment at national and

European level is required to structurally adapt the EU industry, make it more innovative

and competitive, to face the new security reality. It is now vital that the Union collectively

makes the most out of this ongoing budgetary increase to achieve defence industrial

readiness. To that end, the Commission and the High Representative / Head of the Agency

17 The EDTIB would benefit from a more resilient EU Single Market through the implementation of

measures, especially in times of crisis, laid out in "Updating the 2020 New Industrial Strategy: Building

a stronger Single Market for Europe’s recovery " COM(2021) 350.

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are ready to support Member States to continue investing more, but also to do that better,

together, and European.

2.1. Investing better

Investing better means targeting investments where it matters the most, avoiding

duplication and increasing efficiency. This requires enhanced coordination of Member

States’ investment plans and efforts.

2.1.1. A new joint programming and procurement function

As announced within the Joint Communication on Defence Investment Gaps Analysis and

Way Forward, a structured approach to programming and procurement will reinforce

transparency, coordination and consistency between Member States, and between the latter

and EU institutions. It will complement and streamline existing initiatives in the capability,

industrial, research and defence infrastructure realms, allowing for refined and shared

prioritisation, as well as sustained cooperation efforts.

A Defence Industrial Readiness Board (hereafter ‘the Board’) will bring together

Member States, the High Representative/Head of the Agency, and the Commission, in

different formats 1) to perform the EU defence joint programming and procurement

function envisaged in the Joint Communication on Defence Investment Gap Analysis and

2) to support the implementation of EDIP.

To perform the EU defence joint programming and procurement function, building on

the successful work of the Defence Joint Procurement Task Force, the Board will provide

a forum, to be convened by the Commission and the High Representative/Head of Agency,

to discuss and refine identified priorities at EU level, without prejudice to their respective

roles and responsibilities. In this format, to be established by this strategy, the Board shall

also support the coordination and de-confliction of Member States procurement plans and

provide strategic guidance in view of more effectively matching demand and supply. In

this regard, the work in the context of the Board should enable a common understanding

among Member States of the EDTIB composition and promote a shared awareness on

production capacities in the Union. Based on a consolidated view of current industrial

capacities, the members meeting in the context of the Board should assess the required

production capacities to meet identified procurement needs and suggest corresponding

defence industrial production objectives, in particular for the most critical capabilities.

As regards this EU defence joint programming and procurement function, meetings in the

context of the Board will be prepared and co-chaired by the Commission and the High

Representative/Head of Agency.

Furthermore, for the purpose of supporting the implementation of EDIP, the Board will

be formally established within the EDIP Regulation notably to ensure security of supply

at EU level but also inform and assist in the implementation of the different supporting

measures to the EDTIB developed in EDIP. In this configuration, the Board itself will be

chaired by the Commission, with the participation of the European External Action Service

(EEAS) and of the European Defence Agency (EDA).

Complementing this effort, to ensure an effective government-to-industry co-operation and

to establish a closer dialogue and engagement, a high-level European Defence Industry

Group will be established. This Group will meet in specific configurations (e.g. sector-

specific), depending on the issue at hand, and will function as a privileged interlocutor of

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the Board to consult with industry and to increase consistency between Member States’

plans and what the EDTIB can deliver, without prejudice to applicable competition rules

within the Treaty on the Functioning of the European Union.

2.1.2. From strategic programming to Projects of common interest

One of the roles of Board, acting as the new EU level joint programming and procurement

function will be the joint identification of possible Projects of common interest to focus

EU effort and funding programmes. The new programming and procurement function

will be based on the existing instruments and initiatives, notably the Capability

Development Plan (CDP), the Coordinated Annual Review on Defence (CARD) and the

Permanent Structured Cooperation (PESCO).

In view of increasing its defence readiness in the current security context, the Union should

identify, within the EU Capability Development Priorities, European Defence Projects

of Common Interest on which to focus efforts and resources. By investing more, better,

together and European, Member States will be able to maximise the impact of their

investments to develop and operate full-spectrum capabilities. This will contribute to

secure access to strategic domains and contested spaces, including by developing

appropriate systems that would serve as European defence infrastructure of common

interest and use. This would furthermore contribute to ensuring the availability of strategic

enablers required for missions and operations, as well as for the EU Rapid Deployment

Capacity.

By 2035, the EU should have in place, or at a mature stage of development, projects for

capabilities that are European by nature. Subject to Member States’ agreement, these could

include: capabilities related to integrated European air and missile defence (whose

criticality has been confirmed during Russia’s unprovoked military aggression against

Ukraine), Space Domain Awareness, a network of cyber defensive capabilities

commensurate to the need to effectively protect the Union, as well as properly dimensioned

maritime and underwater protective assets.

2.2. Investing together

Investing more together is the pre-requisite of a stronger EU defence readiness. Member

States must cooperate more throughout the capability life cycle, starting at the research,

development and procurement stages. Instruments to identify capability priorities (CDP)

and collaborative opportunities (Coordinated Annual Review on Defence) already exist. It

is imperative to ensure that they are effectively used to plan for, invest in and ultimately

deliver concrete defence capabilities.

2.2.1. Common procurement as the norm whenever relevant: expanding the intervention

logic developed under EDIRPA

To further contribute to an effective expression of demand to support the competitiveness

of the EDTIB, the Commission is proposing to expand the EDIRPA intervention logic

and intensify the support to the common procurement of defence products stemming from

the EDTIB. This window of the EDIP will offset the financial costs associated with the

complexity of cooperation, going beyond the most urgent and critical defence products,

thus broadening the intervention area of EDIRPA.

The joint procurement support window of EDIP will help speed up in a collaborative

manner the adjustment of industry to structural changes. It will also incentivise solidarity

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between Member States by enabling them to increase efficiencies in public spending and

contribute to interoperability and interchangeability.

The Commission and the High Representative/Head of the Agency will measure progress

achieved in the consolidation of defence demand following the adoption of this strategy.

Collaborative research, development (R&D) and procurement of defence equipment

should progressively become the norm in the EU.

To date, Member States have not been able to meet the benchmark they agreed first in

2007, of spending 35%, of their total equipment budget in European collaborative

equipment procurement18.

To shift towards a sustained, long-term demand signal to the EDTIB, it is proposed to

Member States, to achieve the goal of procuring at least 40% of defence equipment in

a collaborative manner by 2030.

With the fulfilment of this goal, ongoing and upcoming additional defence investments by

Member States will deliver more efficient outcomes, thereby decisively boosting the

resilience and security of the EU. The significant incentives provided at EU level by

EDIRPA and EDIP, combined with experience in the context of the EPF and the greater

sense of necessity, urgency and solidarity resulting from the current geopolitical situation,

make this both essential and realistic.

2.2.2. Acting more systematically in support of interoperability and interchangeability

Ukraine’s experience in its fight against Russia’s unjustified aggression evidenced the

value of interoperable and interchangeable defence capabilities. Lessons learned from the

battlefield showed the challenges of using multiple similar, but not truly interoperable nor

interchangeable weapons systems, including ammunition of the same calibre produced in

different Member States. In addition to presenting an acute operational challenge, this

reduces competitiveness, economies of scale and hence limits the functioning of the

internal market. The current and unsustainable limitations in this respect find their root

causes in issues related to national requirements, the uptake of standards, and certification.

To defragment the market, three elements are equally important: the definition by Member

States of common requirements, the use of existing standards or the generation of new

ones, and a greater mutual recognition of certifications.

Box 3: Suboptimal technical requirements, standards and certifications undermine EU

defence readiness

Past European collaborative programmes have been too often plagued by Member States’

tendency to over-customise and over-use national requirements stemming from

national capability planning processes. This has generally resulted in multiple versions

of the same capability, increasing R&D, procurement and maintenance costs, suboptimal

supply-chains use and generated delays, as well as reduced possibilities for common

training, logistics and other collaborative opportunities.

Whilst rigorous standardisation can help overcome such issues, there is ample evidence

that standards alone cannot fully avert interoperability and interchangeability issues.

Despite the Standardisation Agreements (STANAGs) adopted in the framework of NATO,

the voluntary uptake of these standards remains an issue. Another challenge stems

from the fact that currently agreed standards often do not sufficiently deliver the requisite

18 Established by the EDA Ministerial Steering Board in 2007.

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real interoperability and interchangeability in operational terms since they do not cover all

defence systems, nor are they systematically detailed enough.

Finally, certification also remains an issue to be addressed. Certifications are currently

delivered by dedicated authorities at national level and not mutually recognised, often due

to safety protocols, which de facto fragments the market and hampers logistics.

Defence standards are a key enabler for the interoperability of the materiel and equipment

that armed forces use. The EU, notably through activities implemented by EDA, supports

the Member States in the identification of standardisation requirements and the use of

standards in the context of the collaborative projects, while using STANAGs as the main

reference.

Many EDF projects already support increased standardisation of equipment at EU level,

with a view to ensuring interoperability and interchangeability within any coalition. Thus,

the EDF requires Member States to define common functional requirements through the

call harmonisation process in which all Member States can participate. However, further

efforts should focus on incentivising the use of the most common existing standards in

armament production and procurement, building on, and complementing existing

initiatives. In particular, the EDA-managed European Defence STAndards Reference

system (EDSTAR), which identifies Best-Practices Standards (BPS) in support of

programmes, organisations and agencies, should constitute the basis for further work.

EDSTAR is complementary to the NATO STANAGs and aims at optimising effectiveness,

efficiency, and interoperability of standards application for defence and security products

and services. EU defence industrial programmes and tools should incentivise further and

prioritise projects that contribute to standardisation and harmonisation of requirements.

The Commission will therefore, within its defence industrial programmes and in

particular in EDF, promote the use of agreed civil – in line with the EU standardisation

strategy19 - or defence standards such as NATO STANAGs.

Certification can be defined as the formal recognition that an equipment complies with the

applicable requirements guaranteeing that it can be used without significant hazard to

operators. In the defence sector, where equipment could significantly endanger the life of

operators, Member States ensure safeguards by mandating authorities (usually Agencies

within Ministries of Defence) to certify equipment before it can be used. A lack of mutual

recognition of certifications results into the impossibility to offer a product throughout a

certain market, even within the EU.

To address certification-related issues, the Commission will also support swift cross-

certification activities, including associated testing when necessary. Such a cross-

certification is already a reality, on a voluntary basis, within the airworthiness sector in the

framework of EDA. The Agency will also seek to further facilitate other certification,

testing and evaluation activities. In particular, reinforcing EDA’s work on defence testing

and evaluation would facilitate the coordination of testing activities aimed at ensuring

cross-certification of similar equipment across platforms.

In addition, under specific circumstances during crisis times, the Commission proposes to

allow mutual recognition of national certifications, under the provisions of the EDIP.

19 EU Standardisation Strategy, COM(2022) 31.

12

2.2.3. Towards robust cooperative full life cycle armament programmes: the Structure

for European Armament Programme as a new powerful tool

Cooperative armament programmes by Member States have been facing significant

challenges. They are being mostly set up on ad hoc basis and undermined by a lack of tools

commensurate to their complexity. This has often resulted in delays and cost overruns.

While the EDF and PESCO have offered incentives and frameworks to remedy this

situation, the commitment of the Member States towards cooperation throughout the whole

life cycle of defence capabilities needs to be further encouraged and powered up. To make

this happen, the Commission will make available a new legal framework – the

Structure for European Armament Programme (SEAP) – as a vehicle to underpin and

strengthen defence cooperation, including in the context of PESCO, if so agreed by

Member States.

Within this new legal framework, Member States will benefit from standardised

procedures for initiating and managing cooperative defence programmes. Subject to

specific conditions, Member States will be able to benefit from an increased funding rate

in the context of EDIP as well as simplified and harmonised procurement procedures.

Where Member States jointly own the procured equipment through the SEAP (acting as

an international organisation), they will be able to benefit from a VAT exemption.

Moreover, EDIP will provide for a bonus for products developed and procured in the

context of a SEAP if the concerned Member States agree on a common approach to exports

for defence. In addition, the international organisation status will also allow Member

States, if they so wish, to issue debt-titles to ensure the long-term financing plan of

armament programmes. While the Union would not be liable for debt issuance by Member

States, contributions under EDIP to the functioning of SEAP might improve the conditions

for financing by the Member States of the armament programmes, which are eligible for

Union support.

This new tool will also help to intensify Member States’ cooperation efforts, in line with

the capability priorities commonly agreed by Member States within the framework of the

Common Foreign and Security Policy (CFSP), notably through the CDP. It should

facilitate and support the implementation of PESCO projects and contribute to the

fulfilment of the more binding commitments undertaken by participating Member States.

In the context of the ongoing PESCO Strategic Review, the High Representative could

recommend the participating Member States to strengthen the more binding commitments

related to the EDTIB and to consider possible new commitments, notably on joint

procurement from the EDTIB, in line with the ambition of the present strategy. These could

also be taken into account in the establishment and implementation of the PESCO projects.

As described in section 3 of this Joint Communication, the SEAP could also support the

development of prototypes stemming from collaborative R&D actions funded by the EDF

towards industrial production.

2.3. Investing European

Investing more, better, and together will increase the Union’s defence readiness only if the

increased investments resulting from larger national budgets benefit the Union’s defence

industry. Nevertheless, channelling Member States’ investments into the EDTIB is highly

dependent on the capacity of the latter to demonstrate its ability to meet the demand from

the Member States in both speed and volume.

13

The urgent acquisition decisions made by Member States in view of the dramatically

deteriorating security environment were undertaken against the backdrop of an EDTIB still

constrained by limited, peacetime-sized production capacity. The surge in acquisitions

benefited mostly non-EU industry. Availability in time and in volume is therefore a new

parameter of the competitiveness of EDTIB and of the security of the Union, especially

during periods of heightened security tensions.

The intensification of that trend has resulted in increasing existing dependencies or

generating new ones, thereby limiting the potential virtuous circle of increased investment

resulting in a strengthening of the EDTIB. The volume of acquisitions made through the

US Foreign Military Sales (FMS) in the EU has increased by 89% between 2021 and

202220. Moreover, emerging armament manufacturers from other third countries have also

penetrated the EU market. This trend undermines the competitiveness of the EDTIB and

results in EU taxpayers’ money creating jobs abroad and must thus be reversed.

To that effect, the Commission, in cooperation with the High Representative/Head of the

Agency, aims at the creation of a European Military Sales Mechanism, facilitating the

availability of defence products from the EDTIB and increasing awareness of such

availability. The Commission proposes to test such a mechanism through a pilot project

within EDIP with a view to co-building with Member States and industry a fully-fledged

mechanism from 2028 onwards. The pilot mechanism will be organised in four pillars: 1)

a catalogue of defence products, 2) financial support for the creation of pools of defence

capabilities being quickly available, 3) provisions to ease procurement processes, and 4)

capacity building measures for procurement agents.

First, by building on existing tools21, the Commission, in cooperation with the High

Representative/Head of Agency, will work towards the establishment of a single,

centralised, up to date catalogue of defence products developed by the EDTIB. The

ammunition crisis in the context of the war in Ukraine revealed that the Union had at its

disposal an important production capacity, but the widespread underestimation of this

capacity resulted in increased attention on third countries producers. Such misperceptions

are prejudicial to the EDTIB and should be corrected. To increase the visibility of EU-

made solutions, the Commission, working closely with the High Representative/Head of

the Agency, will provide a single-entry point allowing for the identification of defence

products produced by the EDTIB. Such a catalogue will be fed voluntarily from industry,

through dedicated calls for expression of interest.

Second, the Commission will support the creation of defence industrial readiness pools,

to increase availability and to speed up delivery time of EU-made defence products. By

producing in limited quantities for smaller national markets, our industry suffers from a

competitive disadvantage vis-à-vis non-EU players. While EU manufacturers have similar

or shorter delivery lead-time compared to non-EU manufacturers, the fact that non-EU

products can often be made readily available from within existing non-EU stocks results

in an increased speed to market, rendering these non-EU solutions more attractive. Within

EDIP, the Commission proposes to financially support the purchase of additional

quantities of defence capabilities for which Member States have decided to jointly procure

within the SEAP. This would allow the creation of strategic reserves that could quickly be

made available for additional customers resulting in an attractive Government-to-

Government scheme. The governance on the use of equipment in reserve will be

20 Center for International Policy, Security Assistance Monitor, securityassistance.org.

21 Such as the EDA’s EUCLID database.

14

established by those Member States that are part of the Structures for European Armament

Programme.

Third, the Commission proposes to introduce a standard regime applicable to future

defence contracts and framework agreements with EU-based manufacturers. EU law

already allows Member States to open their contracts and framework agreements to other

Member States, when this possibility is foreseen from the outset of the procurement

procedure. However, Member States only very rarely use this possibility. As a

consequence, procurement through such contracts and framework agreements by other

Member States is very limited. To remedy this situation in a structural manner, this

standard regime would provide that, unless expressly otherwise stipulated, a defence

contract/framework agreement could be opened to any other Member State under the

same conditions as for the procuring Member State (subject to the agreement of the

Member States in question). Furthermore, based on the practice of Member States since

the beginning of the Russian full-scale war of aggression against Ukraine, it appears

necessary to allow Member States to also use existing national framework contracts with

EU-based manufacturers to procure additional quantities on behalf of others (lead nation

framework). Therefore, the Commission proposes, in the context of EDIP, an extension

of the temporary derogation from Directive 2009/81/EC, as provided within the ASAP

Regulation. By virtue of this ‘Industrial Solidarity Clause’, Member States would be able

to benefit from other Member States’ contracts, diminish their administrative burden (as

well as the industrial one), and obtain equipment with a reduced delivery lead time.

Fourth, to facilitate procurement from the EDTIB, Member States could request support

under existing EU instruments, such as the Technical Support Instrument (TSI) 22 for

administrative capacity building, as well as for the implementation of relevant

reforms. Notably, Member States’ national procurement agencies could request support

for the simplification of procurement procedures, reorganisation of governance structures,

information exchanges, education and training, with the objective of improving joint

procurement in the Union. EDA will further support this administrative capacity building

by providing forums for sharing good practices and envisioning further cooperative actions

within the scope of its Defence Acquisition Expert network.

As in the case of collaborative procurement, it is essential that the Commission and the

High Representative/Head of the Agency are able to measure progress together with the

Member States, stemming from this strategy, thanks to data provided by Member States.

Increased investments in defence will achieve their purpose only through increased

cooperation, as the precondition to overcoming persistent inefficiencies. To achieve

resilience commensurate with threat level, Member States should tap the full opportunities

offered by the EDTIB by cooperating across the full range of investment and acquisition.

Two indicators can serve to measure progress deriving from the implementation of this

strategy.

First, between 2017 and 2023 the EU defence market has grown by 64% while defence

trade between Member States has only marginally increased and it now represents only

15% of the total value of the EU defence market23. This trend should be reversed. Member

22 Regulation 2021/240 of 10 February 2021 establishing a Technical Support Instrument, OJ L 57,

18.2.2021, p. 1–16.

23 Data from the EEAS annual reports and database on EU Member States’ Arms exports provides useful

information on the trends affecting the European defence market and industry. It allows to measure in

15

States are invited to ensure that, by 2030, the value of intra-EU defence trade represents

at least 35% of the value of the EU defence market.

Moreover, recent data indicate that nearly 80% of Member States’ defence investments

since 2022 have been implemented with non-EU suppliers, against approximately 60%

before the war. Whilst possibly justified by reasons of urgency, this worrying inflexion can

be addressed by greater transparency and concrete progress availability and lead times of

products from the EDTIB.

In pursuit of the shared ambition embodied by this strategy, Member States should reverse

the current trend and gradually bring their procurement level from the EDTIB first to the

pre-war level, and increase it as far as possible beyond that point. Member States are

invited to make steady progress towards procuring at least 50% of their defence

investments within the EU by 2030 and 60% by 203524.

Reversing current trends and meeting those benchmarks would tangibly increase the

resilience of the Union and the security of our citizens. Additional support to European

cooperation brought by EDIP and EDF, as well as by successor programmes from 2028

onwards, combined with strong political will and commitment by Member States, make

those benchmarks realistic and achievable.

Way forward:

In order to help Member States invest more, better, together and European, The

Commission and High Representative/Head of the Agency:

➢ will set up a new joint programming and procurement function, by creating a

Defence Industrial Readiness Board, as well a high-level European Defence

Industry Group with a consultative role.

The Commission:

➢ proposes to extend, within EDIP, the EDIRPA logic of supporting cooperation

in procurement of products stemming from the EDTIB.

➢ proposes to enable, within EDIP, a rapid mutual recognition of certification,

during crisis times.

➢ proposes to make available to Member States a new legal framework, the

Structure for European Armament Programme (SEAP), to strengthen defence

cooperation, in full complementarity with the PESCO framework.

particular the intensity of intra-EU trade flows, which provides indications on the intensity of both cross-

border procurement of final products and cross-border flows in the supply chains of the EDTIB. Indeed,

when it comes to defence procurement by Member States, data on products’ origin is not collected in a

centralised manner. Commission services, together with EEAS and EDA, will work with the Member

States to develop a methodology to measure the share of procurement from the EDTIB compared to the

one benefitting third countries entities.

24 Within the Defence Investment Gap Analysis Communication, the Commission indicated, based on a

scientific publication by D. Fiott (using import/export figures of the US State department) that between

2007 and 2016 over 60% of European defence procurement budget was spent on non-EU military

imports. As indicated in Box 1, during the period from the start of Russia’s war of aggression to June

2023, 78% of the defence acquisitions by EU Member States were made from outside the EU, US alone

representing 63% of this share.

16

➢ proposes the gradual creation of a European Military Sales Mechanism aimed

at encouraging the availability of EU equipment in time and in volume.

➢ proposes, through EDIP, the launch of European Defence Projects of common

interest to contribute – at EU level – to secure and protect the Union’s and

Member States’ free access to the contested areas such as cyber, space, air and

maritime, and to the implementation of the EU Capability Development

Priorities.

Furthermore, the High Representative:

➢ will recommend the PESCO participating Member States, in the context of the

PESCO Strategic Review 2023-2025, to strengthen the more binding

commitments in relation to the EDTIB (or consider possible new ones), and

make use of PESCO projects to fulfil the ambition of the present strategy.

3. SECURING AVAILABILITY: A RESPONSIVE EDTIB UNDER ANY CIRCUMSTANCES AND

TIME HORIZON

The EU can already rely on an overall competitive, world-class EDTIB. But in a

dramatically changed geopolitical context where the EU and its Member States must take

responsibility for the security of their citizens, partnering with a more responsive and more

resilient EDTIB is more important than ever. This is about creating the conditions for the

EU’s industry to meet Member States’ demand in time and scale. While Member States

are responsible for placing firm and long-term orders ensuring the necessary market

predictability to defence industry, the Commission is ready to use its prerogatives and

relevant programmes to support this endeavour.

3.1. Supporting a more rapid response and versatile adaptation to urgent needs

As vividly illustrated in the wake of Russian military aggression against Ukraine, the

Union’s security and its ability to effectively support its partners depend on its capacity to

swiftly mobilise defence equipment. As the threat level is likely to remain high for the

foreseeable future, the EDTIB must be able to deliver what is needed, in the right quantities

And places, and at the right time. To achieve this, the EDTIB needs to undergo a paradigm

shift, and take more risks to be more responsive to the needs of all the Member States.

The mobilisation of the EDTIB should be done with a view to increase resilience and

security of supply across Europe, in full consideration of the specific needs of those

Member States objectively the most directly exposed to the risk of materialisation of

conventional military threats. This also requires addressing bottlenecks to the swift,

efficient and unimpeded movement of defence equipment and capabilities through further

investments in military mobility.

The EU will accompany this change of mindset and contribute to de-risking its defence

industry’s efforts, to enhance its readiness by supporting the ramp-up of production

capacity in the EU, in areas collectively identified by Member States and the Commission,

with a particular attention to SMEs and small Mid-Caps. To do so, the Commission

proposes to expand the intervention logic of the ASAP programme, beyond ground-

to-ground ammunition and missiles, for the EU to be able to accelerate productive

investments in the EDTIB for the products that are most needed. The EU financial support

should provide for an increased volume of production of relevant defence equipment, help

reduce their delivery lead-time and address potential bottlenecks and factors that could

delay or impede their supply and production. Insofar as possible, such financial support

17

should also encourage cross-border industrial partnerships and collaboration of relevant

companies in a joint industry effort, in full respect of relevant financial and competition

rules.

Nevertheless, supporting ramp-up also requires dealing with the industrial consequences

of a ramp-down once the surge in demand has been met. Investing now in the development

of ‘ever-warm’ facilities and the possible repurposing of civilian production lines

would contribute to the security of the Union’s citizens, whilst preserving the flexibility of

EDTIB manufacturing capacity and preserving its overall competitiveness.

The Commission will contribute via EDIP to the building up of ‘ever-warm’ spare

industrial capacities that allow for the necessary flexibility to ramp up in response to urgent

spikes in demand. This would be particularly appropriate where critical supply shortages

were identified by Member States.

It will be possible to provide for the funding, for instance, of machine tools and relevant

personnel costs to ensure that in case of a major crisis the EDTIB can mass produce what

is needed in a short time frame, by having enhanced the availability of production

capacities, while modernising production technologies where possible. This will ensure

that an immediate ramp-up can take place in case of need.

The Commission will also explore with Member States measures to rapidly mobilise

production lines from civilian industry for defence production purposes, and to ensure that

the requisite qualified workforce is available under such scenarios (e.g. preparing staff in

terms of security clearance and training). These effective, practical solutions will enable

the EDTIB’s production to be ready to adapt without delay to a fluctuation in the demand

expressed by Member States.

Box 3. A case for greater responsiveness: achieving the mass production of defence

relevant drones against the backdrop of ongoing efforts to tap their potential

Unmanned systems are playing a decisive role in air, sea and land domains of the war

theatre in Ukraine, being widely used for reconnaissance and intelligence, fire support,

and also as effectors. Ukraine is estimated to use up to 10.000 aerial drones per month

on the battlefield while producing 40.000 new ones per month.

Most of them are low-cost consumables, often repurposed commercial civilian drones,

nonetheless capable of destroying far more costly equipment. Whilst they do not

diminish the use case of a broad range of special purpose military drones, they have

proven to be of considerable tactical and strategic value.

Whilst the EDF and its precursors have since 2017 been financially supporting defence

R&D actions in relation to unmanned systems, developing a capacity to swiftly ramp up

and achieve the mass production of such equipment, can be identified as a key

element of EU defence readiness vis-à-vis high intensity conflicts. This could be the

subject matter of actions under the future EDIP, and any critical dependency or

bottleneck should be identified and eliminated. Support to joint procurement of drones

or counter Unmanned Aerial Systems is also possible within EDIRPA.

Unmanned Aerial Systems also figure among the priority needs of Ukraine that could

be potentially supported via the European Peace Facility, in coordination with the work

undertaken in the context of the Ukraine Defence Contact Group capability coalitions.

18

To further support the EDTIB’s versatility, the Commission is proposing, as part of the

proposed EDIP, the creation of a Fund to Accelerate Defence Supply Chain

Transformation (FAST). The fund will aim at facilitating access to debt and/or equity

financing for SMEs and small midcaps industrialising defence technologies and/or

manufacturing defence products or having imminent plans to enter those activities. FAST

could allow generating a multiple of the budget allocated to the initiative by EDIP in loans

or equity investments.

By leveraging additional public and private investments in support of the EDTIB, the

FAST will strengthen the resilience of the Union’s defence industry value chains. This

initiative should also contribute to support the development of an ecosystem of investors

focused on growth stages, investing in critical defence suppliers and supporting the

scaling-up of innovative defence companies.

3.2. Pursuing the technological forefront on defence

While securing the EU’s ability to respond in manufacturing terms to security urgencies,

it is equally important for Europe to remain at the cutting edge of innovation. A sustained

R&D effort is more necessary than ever to maintain the EDTIB competitiveness in the

longer term, notably in terms of its availability to tap the full potential of the excellence of

its scientists, engineers and innovators. In the short-term, achieving technological

breakthroughs would also support tackling current challenges, including the ongoing war

in Ukraine.

3.2.1. Support innovation and realise the defence potential of SMEs

By encouraging and supporting more structured and systematic cooperation across the EU,

the EDF has paved the way towards a more innovative EDTIB, and towards the opening-

up and Europeanisation of supply chains. However, it is essential to further increase the

EU’s ambition to efficiently foster defence innovation and the emergence of new players

in the defence supply chains. The sector needs to take full advantage of faster civil

innovation cycles for technologies with dual-use potential to maintain its competitiveness

and ensure the military’s edge on the battlefield.

To remain competitive, the capacity and autonomy to develop innovative defence products

must also be underpinned by support for research into future-proof defence capabilities,

including in disruptive technologies. The latter can have a profoundly transformative effect

on Member States’ militaries and provide a critical operational advantage. To that effect,

the EU must seek to offer innovative undertakings ‒ especially start-ups, SMEs, small Mid-

Caps and Research and Technology Organisations (RTOs) ‒ more flexible, faster, and

The Commission adopted a European drone strategy 2.0 on 29 November 2022, in the

context of which several flagship actions are being implemented. On top of funding for

relevant R&D actions under the Horizon Europe programme and the EDF, other actions

have been initiated: first, coordinated calls combining funding from EU instruments and

European Investment Bank (EIB) loans to support a new flagship project on ‘drone

technologies’; second, the development of a Strategic Drone Technology Roadmap to

identify priority areas to boost research and innovation, reduce existing strategic

dependencies and avoid the emergence of new ones, or the set-up of an EU network on

civil-defence drone testing centres to facilitate exchanges between civilian and defence

sector.

19

leaner funding cycles and facilitate better connections with military end-users and

investors.

Against this background, the EU Defence Innovation Scheme (EUDIS), developed under

the EDF with a EUR 2 billion budget25, will propose within this MFF, innovation support

services for single entities, including through matchmaking with investors, partners and

end-users, and strengthen support for innovative product and technology testing and

validation. It will work to reduce red tape, especially for SMEs and small Mid-Caps, by

exploring for instance the introduction of ‘ever-warm’ calls for projects and ways to

support promising technology transfer from civil to defence, where applicable.

The continuous and intense cooperation between the European Commission (EUDIS) and

EDA (Hub for EU Defence Innovation ‒ HEDI), allows defence innovators to take full

advantage of tailored EU support measures, including the guidance on the military end-

user capability requirements and opportunities to connect to European defence

communities. On an annual basis the EUDIS, in close cooperation with HEDI supports up

to 400 innovative start-ups and SMEs to help them break through traditional entry barriers.

The Commission services will support hackathons, after consultation with EDA (HEDI),

where young engineers and start-ups will come together and compete to find the best

solution to solve concrete battlefield issues, starting with challenges encountered on the

ground by Ukrainian armed forces. To further support the Ukrainian Defence

Technological and Industrial Base, a EU Innovation Office in Kyiv will act as a bridge

between EU start-ups and innovators and Ukrainian industry and Armed Forces. It will

help transmit technological breakthroughs that can have an impact on the battleground.

25 EUR 1.46 billion budget sourced from the EDF and EUR 500 million leveraged from other public and

private sources.

Box 4. SMEs: already at the core of the EU’s efforts in support of industrial defence

As agile players, SMEs play an ever more important role as providers of disruptive

technologies and innovation in the defence community. The Commission has therefore

taken action to support a more active contribution of SMEs to EU defence R&D, notably

by providing dedicated EDF calls targeted at SMEs whilst encouraging their

participation in all other projects. Cross-border cooperation involving SMEs is one of

the award criteria of the EDF programme, and financial bonuses apply based on the level

of involvement of SMEs for development actions.

As a result of the 2021 and 2022 EDF calls, 511 SMEs have been awarded EUR 354

million, representing respectively 40% of participants and 20% of the funding. In the

2023 EDF calls, the participation of SMEs represented around 50% of the total number

of entities, requesting 30% of total requested grant amount. For the period 2023-2027

it is estimated that EDF should fund SMEs with up to EUR 840 million.

In 2022 the EDF allocated EUR 224 million to Defence Innovation and SME support

under EUDIS, including specific activities such as technological challenges. EUDIS

measures are further developed and implemented to support SMEs throughout their

growth cycle. A major milestone was reached in January 2024, with the launch of a

Defence Equity Facility to invest, together with the European Investment Fund, part

of the EIB group, up to EUR 500 million in promising defence SMEs to accompany

20

3.2.2. Help EDF projects become a tangible reality beyond the R&D phase

With more than EUR 1 billion per year over 2021-2027, the EDF is already a powerful

instrument to boost defence industrial cooperation and incentivize cross-border defence

research and development contributing to more European defence industrial value chains26.

However, beyond the research and early development phases, the collaborations reach a

‘commercialisation gap’ at the prototyping stage, where the required level of Member State

involvement becomes significantly higher.

Moreover, diverging operational requirements and national industrial policies might lead

defence companies to terminate cooperation once the EDF action ends. To avoid this,

defence cooperative actions initially supported by the EDF and having reached the

prototype stage, based on common, harmonised functional requirements, might need

sustained support towards industrialisation.

The Structures for European Armament Programme and the extension of the EDIRPA

logic will be instrumental to maximise the uptake of projects stemming from EDF. In

addition, EDIP will provide for repayable grants for specific actions linked with the

production and commercialisation of prototypes, in particular those stemming from EDF.

The successful bridging of the ‘commercialisation gap’ after the R&D phase of

collaborative projects also requires that the involved Member States agree when the

prototype stage is reached, on the conditions for export of the jointly developed products.

Considering the ongoing review of the EU Common Position 2008/944/CFSP on arms

export control, the Commission together with the High Representative renews the call27 to

Member States to explore ways towards the streamlining and gradual further convergence

of their arms export control practices, especially for those defence capabilities that are

jointly developed. For the same purpose, Member States should also exchange best practice

on export control rules for jointly developed capabilities.

Furthermore, the Commission will take actions to facilitate the intra-EU transfers of

defence-related products in EU-funded projects and seek to simplify the management of

transfer licensing conditions and processes, in particular by introducing clauses on

transfers in the concerned Model Grant Agreement with the aim of limiting the recourse to

end-user certificates.

Several elements currently impede a correct and effective implementation of Directive

2009/43/EC, preventing the full exploitation of related benefits on the defence market. To

26 In three years, more than 145 projects involving 2618 participants have been launched, (26) forming the

backbone of the EU defence industrial ecosystem, which currently addresses a wide range of cutting-

edge defence capabilities and technologies. Cooperations involve research organisations (609

participations); SMEs (826 participations); larger entities (1113 participations), public bodies (456

participations) and higher education institutes (230 participations) that together constitute the EDTIB of

the future.

27 Communication on Commission contribution to European defence, COM(2022) 60 final.

their growth. In 2024 a defence accelerator is expected to be launched, and

matchmaking activities with investors will be organised.

21

better analyse existing challenges currently hindering its effective implementation, the

Commission will perform an evaluation of the Directive by end 2025.

3.3. Ensuring Security of Supply at the EU level

Resilience is a precondition of the EDTIB readiness and competitiveness.

The EU has already developed tools and frameworks to increase industrial readiness and

resilience to tackle future crisis situations, including within the framework of EDA28.

However, such measures are either not available or applied only to a limited extent by

Member States to support the EDTIB. An EU-wide Security of Supply regime will

therefore be put in place, warranting greater resilience and, by the same token, offering

a competitive advantage for the EDTIB and EU defence supply chains. By providing a

level of security of supply that external competitors cannot offer, EU defence supply chains

could enjoy a ‘trust dividend’ from Member States.

3.3.1. Greater security of supply to maximise the defence potential of the internal market

Within EDIP, the Commission proposes setting up a modular and gradual EU Security of

Supply regime to enhance solidarity and effectiveness in response to tensions along the

supply chains or security crises and allow for the timely identification of potential

bottlenecks. Different sets of measures are proposed to tackle two types of crises:

• Supply crises, where shortages of civilian or dual-use components or of raw

materials seriously threaten the timely availability and supply of defence

products. In this case, after activation by the Council of a “crisis state”, a toolbox

will ensure the supply of the concerned components and/or raw materials for

defence supply chains, including, where necessary and justified by the overarching

public interest, by ensuring priority over some or all civilian supplies (priority

rated orders).

• Supply crises which are directly linked to the existence of a security crisis within

the Union or its neighbourhood. To face such scenarios, the Council should be given

the possibility to activate a second, upper level of the crisis state to resort to

measures necessary and proportionate to the resolution of the crisis (mostly

focusing on the supply of products specifically designed for military use).

To underpin the effective, efficient, and proportionate use of this two-layer crisis

framework, the Commission proposes to perform an identification and monitoring of

critical products for certain defence supply chains, to be identified together with

Member States in the frame of the Defence Industrial Readiness Board.

Building upon the framework currently available in other sectors, and on the EDA Key

Strategic Activities, this identification and monitoring will primarily rely on publicly

available information and, only where needed, on data provided by undertakings (subject

to Member States national security guarantees).

28 For instance, EU Member States adopted a Framework Arrangement on Security of Supply in 2013.

This framework was meant to be implemented through the establishment of codes of conduct or

implementing arrangement, and in 2014 a Code of Conduct on Prioritization was adopted by the EDA

Steering Board.

22

3.3.2. Enabling and de-risking strategic stockpiling

To further de-risk security of supply for the EDTIB, as a long-term objective, the

Commission will consider funding strategic stockpiling by industry of basic

components such as electronic components and raw materials that are transversally used

in defence systems 29. The creation of such stocks would allow for cost reduction, in case

large orders are placed, and permit to contain the price inflation resulting from the surge

in demand during a crisis.

As part of the EDIP, the Commission proposes a small-scale preliminary pilot test, by

allowing for the support to the creation of strategic stockpiling. Such a system will

complement the crisis time prioritisation mechanism, ensuring the latter will remain a last

resort option. Ongoing work on resilience and preparedness measures as part of the Action

Plan on Military Mobility 2.0, including through existing PESCO projects on military

mobility and a network of logistic hubs could also be considered in this regard.

3.3.3. Identifying upfront and addressing the most strategic dependencies

Excessive dependencies on technologies that are critical for the defence sector hamper the

freedom of action of Member States’ Armed Forces and have a potential negative impact

on the competitiveness of the EDTIB, because of associated restrictions.

The Commission has already established the EU Observatory of Critical Technologies30

to identify dependencies and develop technology roadmaps to mitigate them. Its first

classified report has just been delivered to Member States. A scaling up of the Observatory

will allow a faster identification of dependencies, monitoring of supply chains and will

create an overview of criticalities. Work to date has been started with a subset of Electrical,

Electronic and Electro-mechanical (EEE) semiconductor-based components and

autonomous systems technologies.

In parallel, cross-fertilisation between work programmes of other Union instruments, such

as the EDF and Chips for Europe programme, will be sought, to mitigate dependencies

identified and ensure that the EDTIB has at its disposal defence industrial enabling

technology and products such as trusted chips, supporting its readiness.

The Commission also supports EU Member States, in particular their regional and local

authorities, through the Technical Support Instrument31, providing tailor-made technical

support to design and implement reforms for advancing economic and technology security,

competitiveness and bolstering the resilience of supply chains in the Member States.

Way forward:

To secure availability based on a more responsive EDTIB across all time horizons, the

Commission:

➢ proposes to expand, within EDIP, the ASAP intervention logic, beyond

ammunition and missiles, and to complement it with the development of ‘ever-

warm’ facilities and possible repurposing of civilian production lines.

29 In this regard, the Commission will consider the possibility to rely on tools developed under the Critical

Raw Materials Act [COM(2023) 160].

30 Roadmap on critical technologies for security and defence, Strasbourg, 15.2.2022 COM(2022) 61 final.

31 https://commission.europa.eu/funding-tenders/find-funding/eu-funding-programmes/technical-support-

instrument/technical-support-instrument-tsi_en

23

➢ will, together with the High Representative and Member States, design a policy

proposal to support the production of drones within the EU or possibly jointly

with Ukraine by mobilising relevant instruments.

➢ proposes, within EDIP, the creation of a Fund to Accelerate Defence Supply

Chain Transformation (FAST). This new financial instrument will support

SMEs via debt and/or equity financing.

➢ will provide sustained support towards industrialisation of defence

cooperative actions initially supported by EDF, through repayable grants under

the framework of EDIP.

➢ proposes the establishment of a modular and gradual EU Security of Supply

regime to enhance solidarity and effectiveness in response to tensions along the

supply chains or security crises and allow for the timely identification of

potential bottlenecks.

The EU:

➢ will open an Innovation Office in Kyiv to ensure matchmaking between the

Union’s start-ups and innovators and Ukraine’s industry and armed forces.

4. FINANCING THE UNION’S AMBITION FOR DEFENCE INDUSTRIAL READINESS

In order for this strategy to succeed in its aim to implement a new ambition for defence

industrial readiness at EU level, it should be accompanied by a bold increase of funding,

commensurate with the challenge we are facing.

The proposal for a Regulation establishing EDIP alongside this strategy includes a budget

of EUR 1.5 billion for investment in the defence industrial readiness of the EDTIB.

This should be complemented by additional amounts for the development of the Ukrainian

DTIB and its closer integration with the EDTIB and the Union defence equipment market.

Also, the immediate defence exigencies of Ukraine call for additional financing for the

procurement of military material in support of the exercise of its right of self-defence. If

the Council were to adopt a CFSP decision under Article 29 of the Treaty on European

Union (TEU) upon a proposal by the High Representative to transfer to the Union

extraordinary cash balances of central securities depositories arising from the unexpected

and extraordinary revenues from Russia’s immobilised sovereign assets, such additional

support could be drawn from these revenues, in line with the objectives of the Union’s

CFSP. In case these additional resources were to become available, they could potentially

increase the European Peace Facility’s financial capacity for the procurement of military

equipment in support of Ukraine, or any other Union instrument. In other words, this

would entail using the windfall profits of frozen Russian assets to jointly purchase

military equipment for Ukraine.

As and when the immediate defence needs of Ukraine permit, certain amounts could also

be drawn from such extraordinary cash balances for the purposes of the medium- and long-

term development of the Ukrainian DTIB, benefiting from the provisions set out in the

proposal for a Regulation establishing EDIP, as well as for Ukraine’s general budgetary

needs for recovery and reconstruction.

This budget, given the scale of the effort needed to ensure the defence industrial readiness

across the Union, has to be considered as a bridge – limited in scale - towards the next

Multi-Annual Financial Framework. Given that the security challenges faced by Europe

24

are likely to remain, it is important that the next MFF includes an ambitious financial

envelope on defence with relevant budgets for the successors of both EDF and EDIP for

the period from 2028 onwards.

This Strategy calls for a renewed ambition in the current MFF via the EDIP, and a

strengthened budget in support of defence industries for the next MFF. Still, given the

change of the security paradigm resulting from the steep increase of regional and global

threats, representing potentially existential security challenges for the Union and its

Member States, and the fact that the next MFF will only begin in 2028, it is necessary to

launch a discussion on quantifying the EU’s financing needs for defence industrial

readiness which would be commensurate with this change of the security paradigm, and

on how to ensure such adequate financing. This calls for a joint exploration with Member

States, in a short time-frame, to assess needs and options to boost through available

instruments, such as a financially reinforced EDIP and EPF, large-scale joint defence

procurements for Ukraine and for Member States, massive and faster industrial ramp-up

of the EU defence industrial base and the launch of defence flagship projects to protect

unimpeded access to the EU’s contested areas.

5. MAINSTREAMING A DEFENCE READINESS CULTURE, INCLUDING ACROSS EU

POLICIES

The European defence industry is a crucial contributor to resilience, security, and

social sustainability. There will be no economic prosperity without peace on the

continent, and the EDTIB role in this respect needs to be fully acknowledged in the Union’s

regulatory environment and policies. The EDTIB also forms a single and critical aerospace

and defence ecosystem, whose key actors are also contributors to technologies that are at

the core of the green transition.

It is therefore crucial to make sure that the EDTIB enjoys a level of access to finance that

is commensurate to the level of investments needed, operates in the adequate regulatory

environment and is sufficiently attractive for the young generations and the most talented.

5.1. Facilitating access to finance

Ensuring sufficient access to finance and leveraging public investment for the EU defence

sector is vital given the compelling need to boost investment in this ecosystem. Therefore,

it is indispensable to involve the financial sector. To achieve this, the Commission and the

High Representative/Head of the Agency, where relevant, will work with Member States,

industry and the financial sector to improve the EDTIB access to both private and public

finance.

5.1.1. Access to private finance

The EDTIB faces persistent barriers in accessing finance, in particular private finance.

According to a recent Commission study32, SMEs operating within the defence sector face

higher barriers to accessing finance compared to companies active in other sectors. During

2021-2022, two thirds of the consulted companies refrained from seeking equity financing

32 “Access to equity financing for European defence SMEs” https://defence-industry-

space.ec.europa.eu/study-results-access-equity-financing-european-defence-smes-2024-01-11_en

25

and close to 50% refrained from seeking debt financing, a stark contrast to the 6.6%

average among SMEs in the EU during the same period.

With a view to boosting the sector’s access to financing, the Commission and EDA

together with Member States will take the initiative to reach out to banks and investors for

a high-level dialogue to discuss their intensified participation, identify difficulties and find

ways to stimulate private sector engagement to support defence investments.

Financial actors’ willingness to engage with the defence industry appears to be affected by

specificities of the defence market (including complexity of procurement or the difficulties

for them to assess the exact implications of existing international conventions on arms) or

to assumptions around Environmental Social Governance (ESG) factors.

Under the EU sustainable finance framework, no EU rule, or any EU planned rule,

impedes private investment in the defence industry. The Commission services, together

with ESMA as appropriate, will provide guidance on the application of the EU sustainable

finance framework in the area of defence. In close cooperation with EDA, the Commission

will enhance the dialogue between the defence and financial sectors and contribute to

support industry in increasing transparency. The Commission will also work towards a

better recognition of the EU’s sovereignty, resilience and security, in particular within the

EU sustainable finance framework. The Governmental Expert Network on ESG, managed

by the EDA, is one example of a platform where such mutual understanding and trust could

be further developed. In particular, this forum should strengthen the interface between

Member States’ Ministries of Defence and the financial sector.

This would allow for concrete actions to mitigate the defence industry’s current challenges

relating to access to finance, as synergies between institutional actors and private actors on

capital markets have been identified as critical in this regard.

Box 5: Defence industry and the EU sustainable finance framework

The Union defence industry is a crucial contributor to the resilience and the security of the

Union, and therefore to peace and social sustainability. Against this backdrop, the EU

sustainable finance framework is fully consistent with the Union’s efforts to facilitate

the European defence industry’s sufficient access to finance and investment. It does not

impose any limitations ono the financing of the defence sector.

EU rules on sustainability disclosures and preferences apply horizontally across all

industries and do not single out any sector. The Commission has not issued any kind of

‘social Taxonomy’ so far and there are no plans to do so. With the exception of weapons

subject to prohibitions by international conventions signed by Member States - which are

therefore deemed by the EU to be incompatible with social sustainability - the defence

industry enhances sustainability, given its contribution to resilience, security and peace.

Similarly, the fact that specific defence industrial activities have so far not been included

in the EU’s Environmental Taxonomy, does not prejudge defence industries’

environmental performance and should therefore not affect their access to finance.

5.1.2. Taking full benefit of existing horizontal EU financial instruments

The EDTIB can already, in principle, benefit from existing EU financial instruments,

implemented via InvestEU. Nevertheless, the current lending policies of the European

financial actors implementing InvestEU, including the EIB Group and National

26

Promotional Banks and Institutions, and of International Financial Institutions, represent a

major hurdle in the deployment of such financial instruments, beyond the potential

financing of dual-use technologies, in support of the sector.

This is illustrated by the inability to implement the ASAP ‘Ramp-up Fund’. Modifying

their lending policies, in particular that of the EIB Group, is thus necessary and a

major priority to ensure that the defence sector has access to and can fully benefit from

EU financial instruments. Such a modification will also have positive cascading effects,

by giving a significant positive signal to the financial market and private banks.

In addition, the EU needs to maximise opportunities offered by synergies and

complementarities between financing instruments and grants. The future MFF should, in

that respect, seek to further optimise synergies between EU instruments, as mentioned in

the Commission White Paper on options to boost investment in R&D of technologies with

dual use potential33. The public consultation on the White Paper being currently ongoing,

the content of this strategy is without prejudice to future Commission actions in this area.

Under the current set-up it is already possible for defence to tap into faster civil innovation

cycles where applicable, and vice-versa, bearing in mind that some technologies used in

defence platforms have dual-use potential.

The Commission and the High Representative/Head of the Agency invite the EIB

Group’s governing bodies and in particular the EIB Board to adapt defence-related

exclusions from the EIB Group’s Lending Policies, in line with EU policy priorities and

applicable law. This would allow the EIB to support production of military equipment and

more generally the European defence industry, as recently also called for by the European

Parliament34. An agreement on a common definition of ‘technologies with dual-use

potential’ between the Commission and the EIB Group, building on the Strategic European

Security Initiative and the Defence Equity Facility, could contribute to promote joint

investments in technologies, products and infrastructure with a dual-use potential.

However, such a step, while welcome, would not be sufficient. The EIB, by its mandate

stemming from Article 309 of the Treaty on the Functioning of the European Union,

shall contribute to the balanced and steady development of the internal market in the

interest of the Union. The defence industry is an integral part of the internal market. To

meet the financing needs of the sector and enable the full mobilisation of EU funding

programmes, including InvestEU, in support of defence readiness, the EIB should take

all necessary steps35 to review its lending policy this year and to adapt it in line with

current policy priorities and objective needs. The public financial actors of the Member

States are invited to do likewise.

33 The European Commission, White Paper on options for enhancing support for research and development

involving technologies with dual-use potential, Brussels, 24.1.2024 COM(2024) 27 final.

34 See European Parliament resolution of 28 February 2024 on the financial activities of the European

Investment Bank - annual report 2023 (2023/2229(INI)). The report particular “calls on the EIB to

enhance its support to the Strategic European Security Initiative and to the European defence industry,

including SMEs, in particular to contribute to continued support for Ukraine; calls on the EIB to reform

its eligibility list so that ammunition and military equipment that go beyond dual-use application are no

longer excluded from EIB financing”.

35 E.g. any necessary preparatory steps, such as market analyses.

27

5.1.3. Full integration of defence and security as a strategic objective of relevant Union

funding and programmes

The EDTIB should fully benefit from Union funding designed for technological and

industrial development, including under Cohesion Policy Funds, notably the ERDF36,

ESF+37 (e.g. on skills), Cohesion Fund (e.g. for transport) and InvestEU, provided this is

in line with the respective programme and policy objectives. While the defence industry is

already eligible under these instruments, Member States should consider a stronger

steering of those EU funds that are under shared management towards the sector, where

this supports regional development and competitiveness, to mirror its prominent role as a

priority of the Union and a crucial contributor to the Union’s stability and security.

In this respect, the Commission will consider including or maintaining defence readiness,

security and resilience as an explicit strategic objective under future relevant EU

programmes to ensure that they support fully the EDTIB, and that the implementing

partners and intermediaries (in the case of indirect management) face no obstacles in

pursuing those objectives.

5.2. Ensuring that the EDTIB operates in an adequate regulatory environment

The EDTIB should be able to operate in an adequate regulatory environment. To do so,

defence considerations need to be mainstreamed in EU policies. Possible negative

impacts on the EDTIB of Union’s initiatives should be identified and mitigated as early as

possible. The Commission will therefore include in its initiatives defence industrial

readiness considerations, on a more systematic basis and where relevant. Moreover, the

Commission in cooperation with the High Representative/Head of the Agency will

continue to liaise with the Member States and the EDTIB on these issues, by building on

existing initiatives facilitated by the EDA in areas such as Regulation (EC) No 1907/2006

on Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) 38 and

the Single European Sky (SES) initiative.

The evolving security situation also requires the Commission to reflect on reducing

administrative lead times, while ensuring the necessary degree of sound financial

management. The 2024 revision of the Financial Regulation will allow the Union to take

the necessary steps under emergency conditions to support defence industrial readiness.

5.3. Improving the attractiveness of the defence sector for the young generations and

the most talented

Investing in people and their skills is key to keeping abreast of emerging technologies and

to attracting and retaining talent in the sector. The EU is supporting Member States and

facilitating partnerships to work together on understanding the current and future skills

needs of the sector (e.g. through the European Pact for Skills).

The prevailing labour and skills shortages in the defence industry have their roots in the

previous underinvestment in new defence programmes and the lack of attractiveness of the

sector, as well as restricted work force mobility and its ageing. While understanding and

mitigating the negative perceptions of the defence industry is key to improving the sector’s

36 European Regional Development Fund.

37 European Social Fund Plus

38 Including continued cooperation with the European Chemicals Agency.

28

attractiveness, also for a diverse workforce, further actions are needed by all stakeholders

to be fully able to tap into the Union’s human resource potential, including overcoming

gender-based stereotypes. To this end, the Commission’s forthcoming Action Plan to

address labour and skills shortages in the EU will aim at removing the bottlenecks for

sustainable growth that these shortages have contributed to create in many sectors, thereby

enabling the EU’s future long-term competitiveness while upholding quality jobs and a

workforce that is equipped with the right skills.

The Commission and the High Representative/Head of the Agency will, in addition to

mainstreaming defence, explore actions with the aim of improving workforce mobility

and supporting defence-related education, notably through the opportunities provided

by the EU defence industrial programmes, and cooperation between education providers,

including the European Security and Defence College.

5.4. Helping the EDTIB to contribute to the green transition

To contribute to the green transition and strengthen its resilience and cost-efficiency, the

EDTIB must continue its efforts to make its production and products more sustainable,

reducing carbon emissions and increasing circularity in line with EU policies and

ambitions. The Joint Communication on a New Outlook on the Climate and Security Nexus

recognises the importance of the defence industry for the climate adaptation and mitigation

efforts of Member States’ Armed Forces. There are further opportunities to explore

synergies and possible areas of cooperation between Member States, industry and EU

services, including with regard to innovation, analytics and standardisation for new

renewable energy sources used by the military as well as wider commercial sector.

Ensuring an appropriate visibility and recognition of efforts made by the defence sector

towards environmental sustainability could also contribute to its overall societal

acceptance.

The Commission and the High Representative/Head of the Agency will continue to

support the EDTIB’s efforts towards green transition, e.g. through the actions proposed

in the Joint Communication on the Climate and Security Nexus, including Green

Procurement.

Way forward:

In order to mainstream a European defence readiness culture, the Commission, working

with the High Representative/Head of the Agency:

➢ invites EIB Group’s governing bodies to review this year the EIB Group’s

Lending Policies, and to adapt the current defence-related exclusions, in line with

EU policy priorities and applicable law.

➢ will enhance the dialogue between the defence and financial sectors, and provide

guidance on the application of the EU sustainable finance framework.

Furthermore, the Commission:

➢ will encourage increased support to security, resilience and defence readiness

through Union funding programmes. This objective will be also considered in the

preparation of future EU programmes.

6. ACHIEVING READINESS AND RESILIENCE THROUGH PARTNERSHIPS

The ambition of the EU to swiftly achieve defence readiness should also be leveraged

through partnerships, including notably with Ukraine, as well as through enhanced

29

cooperation with NATO, strategic partners and like-minded partners – European, trans-

atlantic and beyond - and other international organisations

6.1. Developing ever closer ties with Ukraine

Ukraine is and will increasingly be a crucial partner of the Union in the defence industrial

sector. Faced with a high intensity war of aggression, the Ukrainian DTIB had to shift to a

war economy model. It will emerge as one of the engines of the economic recovery of the

country at the end of the war and a testbed of defence industrial readiness. A closer

cooperation between the EU and the Ukrainian defence industrial sectors will be part of

the EU’s future security commitments to Ukraine. The Ukrainian DTIB and the EDTIB

could therefore mutually benefit from enhanced cooperation.

The Commission and the High Representative/Head of the Agency will take forward the

following measures.

Participation in Union programme in support of defence industry:

- To strengthen ties between EDTIB and Ukraine’s DTIB, the EDIP will provide the

possibility for Ukraine to participate in joint procurement and to Ukrainian defence

companies to be supported in their industrial ramp-up and cooperation with the

EDTIB.

Stimulating cooperation between the Ukrainian DTIB and the EDTIB:

- The EDA will make full use of its existing Administrative Arrangement with

Ukraine, and together with Member States explore a possible revision of its scope

as soon as conditions allow.

- The Commission services, the EDA and the EEAS will foster dedicated

information exchange on standards and on respective lessons learned.

- In the context of the proposed Ukraine Assistance Fund within the European Peace

Facility the EEAS will explore options to further incentivise cooperation between

EU and Ukrainian defence industries.

- The EU will host an EU-Ukraine Defence Industry Forum in 2024, to bolster

cooperation between Ukrainian and EU defence industries.

Further support to Ukraine through the EDTIB:

- Through joint procurement from the EDTIB of the military equipment delivered in

the framework of the proposed Ukraine Assistance Fund within the European Peace

Facility, the EU defence industry will benefit from more predictability on the

priority needs of Ukraine

- Subject to decision by the Council, further support for procurement of military

equipment for Ukraine could be done via the European Peace Facility, drawing

from the extraordinary cash balances of central securities depositories arising from

the unexpected and extraordinary revenues from Russia’s immobilised sovereign

assets.

- The EEAS, the EDA and the Commission services will continue to regularly update

the Ukraine Defence Contact Group and promote the capacity of the EDTIB to

further support Ukrainian needs, including in the context of the capability

coalitions.

30

6.2. NATO

In line with the three Joint Declarations on EU-NATO cooperation39, enhanced staff-to-

staff talks, including the possibility of a dedicated structured dialogue with NATO, could

cover more prominently defence industry-related activities and topics of mutual interest,

including on circular economy, interoperability, industry aspects of climate change,

interoperability, standardisation cross-certification, and responses to new and emerging

threats. This will require increased information sharing, including classified information,

between NATO Staff, on the one hand, and relevant Commission services, the EEAS and

EDA on the other hand. Both organisations should continue to exchange views and explore

synergies and complementarity of efforts in the realm of supply chain security essential to

capability development and delivery.

The EU will also explore the potential for further strengthening cooperation between the

EEAS, EDA, NATO International Staff and the NATO Support and Procurement Agency

(NSPA), as well as between the Defence Innovation Accelerator for the North Atlantic

(DIANA), the EDA HEDI and EUDIS on innovation.

6.3. Teaming-up with strategic and international partners to achieve defence

readiness

The internationalisation of supply chains means that it is virtually impossible to maintain

an end-to-end control on raw materials and thousands of components of a complex system.

Strengthening mutually beneficial partnerships with strategic partners, international

organisations, and like-minded third countries, including through security and defence

dialogues, can amplify the Union’s efforts towards defence industrial readiness. This

cooperation will be flexible. It will vary in form, scope and types of participants in function

of shared interests. Such a cooperation should contribute to further secure supply chains,

reinforce the EDTIB and reduce EU’s strategic dependencies, without creating new (or

perpetuating existing) ones.

In addition, the EDA will continue to make best use of its existing administrative

arrangements, in line with the principles for cooperation with third parties agreed by

Member States.

Way forward:

The Commission and the High Representative /Head of the Agency, will:

➢ explore measures to enhance the participation of Ukraine in the Union’s

programmes in support of defence industry, including under EDIP, the possibility

for Ukraine to participate in joint procurement, support the industrial ramp-up

in Ukraine and enhance cooperation between the EDTIB and the Ukrainian defence

industry;

➢ in the context of the Ukraine Assistance Fund proposed by the High

Representative, ensure further EU military support to Ukraine, notably through

sending demand signals to the European defence industry to increase production

capacity with a view to sustaining Ukraine’s war effort in the long-term as well as

incentivising cooperation between European and Ukrainian defence industries

➢ enhance staff-to-staff structured dialogue with NATO on topics of mutual

interest.

39 EU-NATO Joint Declaration (8 July 2016); EU-NATO Joint Declaration (10 July 2018); EU-NATO

Joint Declaration (10 January 2023).

31

➢ host an EU-Ukraine Defence Industry Forum in 2024 to bolster cooperation

between Ukrainian and EU defence industries.

CONCLUSION

For decades the Union’s citizens have enjoyed an unprecedented period of peace.

However, Russia’s war of aggression against Ukraine, as well as the rising tensions at EU’s

doorsteps, call for the EU and its Member States to take up strategic responsibility and

power up the EU defence industry to address the unprecedented security threats and

challenges they are facing.

A technological cutting edge and capacity to steadily guarantee the availability of any

defence equipment are prerequisites to the ability of the Union to guarantee the

effectiveness of its Member States’s armed forces and thereby to preserve peace on the

continent. This strategy proposes ambitious measures to foster and support the EDTIB’s

transformation over the coming decade.

By expanding and complementing existing EU defence industrial policy tools and by

outlining the political, industrial, and budgetary ambition to be mobilised in support to the

EDTIB, the latter will be empowered to leverage the efficiency gains of a more genuinely

integrated defence market and to unleash the untapped potential of scale effects.

The implementation of the strategy will help the European defence industry to be

more responsive to urgent needs without sacrificing the future. From earlier and more

cooperative investment planning to greater support to industrialisation and joint

acquisition; from a more effective incorporation of innovation to greater continuity in the

efforts deployed to develop high end capabilities and strategic enablers; from stronger

security of supply to greater freedom of action, this strategy will serve as a catalyst of

what it takes to restore and preserve peace in the European continent.

The adaptation of the Union’s defence industry to the current security and market trends

has to be addressed as a matter of priority. The European Commission and the High

Representative / Head of the Agency are ready to support Member States in this endeavour.

    Resolutsiooni liik: Riigikantselei resolutsioon Viide: Kaitseministeerium /  / ; Riigikantselei /  / 2-5/24-00543

Resolutsiooni teema: Euroopa kaitsetööstuse strateegia ja programm

Adressaat: Kaitseministeerium Ülesanne: Tulenevalt Riigikogu kodu- ja töökorra seaduse § 152` lg 1 p 2 ning Vabariigi Valitsuse reglemendi § 3 lg 4 palun valmistada ette Vabariigi Valitsuse seisukoha ja otsuse eelnõu järgnevate algatuste kohta, kaasates seejuures olulisi huvigruppe ja osapooli: - JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A new European Defence Industrial Strategy: Achieving EU readiness through a responsive and resilient European Defence Industry (Euroopa kaitsetööstuse strateegia), JOIN (2024) 10; - Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products (‘EDIP’) (Euroopa kaitsetööstuse programm), COM(2024) 150.

EISi toimiku nr: 24-0123

Tähtaeg: 20.05.2024

Adressaat: Kliimaministeerium, Majandus- ja Kommunikatsiooniministeerium, Rahandusministeerium, Regionaal- ja Põllumajandusministeerium, Välisministeerium Ülesanne: Palun esitada oma sisend Kaitseministeeriumile seisukohtade kujundamiseks antud eelnõude kohta (eelnõude infosüsteemi (EIS) kaudu).

Tähtaeg: 06.05.2024

Lisainfo: Eelnõu on kavas arutada valitsuse 30.05.2024 istungil ja Vabariigi Valitsuse reglemendi § 6 lg 6 kohaselt sellele eelneval nädalal (22.05.2024) EL koordinatsioonikogus. Esialgsed materjalid EL koordinatsioonikoguks palume esitada hiljemalt 20.05.2024.

Kinnitaja: Katrin Juhandi, Euroopa Liidu asjade direktor Kinnitamise kuupäev: 02.04.2024 Resolutsiooni koostaja: Elen Nurme [email protected], 693 5201      

28.03.2024

Euroopa Kaitsetööstuse strateegia JOIN(2024) 10 ja Euroopa Kaitsetööstuse programm COM(2024)150

Otsuse ettepanek koordinatsioonikogule

Kujundada seisukoht

Kaasvastutaja sisendi tähtpäev 06.05.2024

KOKi esitamise tähtpäev 22.05.2024

VV esitamise tähtpäev 30.05.2024

Vastutav ministeerium: Kaitseministeerium.

Kaasvastutajad: Välisministeerium, Majandus- ja Kommunikatsiooniministeerium, Rahandusministeerium, Regionaal- ja Põllumajandusministeerium, Kliimaministeerium.

Seisukoha valitsusse toomise alus ja põhjendus

Algatuse vastuvõtmisega kaasneks oluline majanduslik või sotsiaalne mõju (RKKTS § 152¹ lg 1 p 2);

Seisukoha võtmist peab oluliseks peaminister või minister (VVS § 20¹ lg 2);

Sisukokkuvõte

Kaks aastat tagasi tõi Venemaa põhjendamatu agressioonisõda Ukraina vastu Euroopasse tagasi suure intensiivsusega relvakonfikti. Seniste õppetundide kogemusel on valminud EL ajaloo esimene kaitsetööstuse strateegia, milles esitatakse selge ja pikaajaline visioon Euroopa Liidu kaitsetööstuse valmisoleku saavutamiseks. Strateegias kirjeldatakse Euroopa kaitsesektori tehnoloogilise ja tööstusliku baasi arendamise üksikasju ja kasutuspotentsiaali ning seatakse suund järgmiseks aastakümneks. Euroopa kaitsetööstuse valmisoleku suurendamiseks peavad liikmesriigid investeerima rohkem, paremini, üheskoos ja Euroopa huve silmas pidades. Selleks, et toetada liikmesriike nende eesmärkide saavutamisel, esitatakse Euroopa kaitsetööstuse strateegias meetmed, millega:

· innustada liikmesriike paremini kooskõlastama kaitsetööstuse hankeid, toetudes olemasolevatele vahenditele ja algatustele, nagu võimearendusplaan, kaitseküsimuste iga-aastane kooskõlastatud läbivaatamine ja alaline struktureeritud koostöö. Meetmega stimuleeritakse liikmesriikide koostööd kaitsevõimete hankeetapis;

· muuta Euroopa kaitsesektori tehnoloogiline ja tööstuslik baas võimeliseks tagama kõigi kaitseotstarbeliste toodete kättesaadavus mis tahes oludes ja ajavahemikes. Selleks toetatakse liikmesriikide ja Euroopa kaitsetööstuse investeeringuid tipptasemel kaitsetehnoloogia ja -võimekuse arendamisse ja turuletoomisse. Samuti tehakse ettepanek tagada Euroopa kaitsesektori tehnoloogilise ja tööstusliku baasi varustamine ka kriisiperioodidel, suurendades seeläbi ELi varustuskindlust; · tagada, et Euroopa kaitsetööstuse kohandamist uue julgeolekuolukorraga toetatakse vajalike vahenditega liikmesriikide ja ELi eelarvest; · võtta kaitsevalmidusega seotud vajadusi arvesse kõigis poliitikavaldkondades, sh vaadata läbi Euroopa Investeerimispanga tänavune laenupoliitika; · arendada tihedamaid sidemeid Ukrainaga, kaasates Ukrainat liidu kaitsetööstuse toetamise algatustesse ning tihendades ELi ja Ukraina kaitsetööstuse koostööd; · teha koostööd NATO ning meie strateegiliste ja sarnaselt meelestatud rahvusvaheliste partnerite ja Ukrainaga.

Strateegias on sätestatud ka näitajad, mille alusel mõõta liikmesriikide edusamme kaitsetööstuse valmisoleku saavutamisel. Näiteks tuleks:

· hankida 2030. aastaks ühiselt vähemalt 40% kaitsevarustusest; · tagada, et 2030. aastaks katab ELi-sisene kaitsekaubandus vähemalt 35% ELi kaitseturust; · teha püsivaid edusamme, et kulutada 2030. aastaks vähemalt 50% ja 2035. aastaks 60% oma kaitsevaldkonna riigihangete eelarvest ELis.

Koos kaitsetööstuse strateegiaga esitas Euroopa Komisjon esimese kohese ja keskse meetmena seadusandliku ettepaneku Euroopa kaitsetööstuse programmi kohta ja raamistiku, mille alusel tagada kaitseotstarbeliste toodete õigeaegne kättesaadavus ja tarnimine. Euroopa kaitsetööstuse programm on uus seadusandlik algatus, mis ühendab 2023. aastal vastu võetud ja 2025. aastal lõppevad lühiajalised erakorralised meetmed struktuursema ja pikemaajalisema lähenemisviisiga kaitsetööstuse valmisoleku saavutamiseks. See tagab Euroopa kaitsesektori tehnoloogilise ja tööstusliku baasi toetamise järjepidevuse, et aidata kaasa selle kiirele kohanemisele uue julgeolekuolukorraga.

Programm hõlmab nii fnants- kui ka regulatiivseid aspekte. Ajavahemikul 2025–2027 võetakse kasutusele 1,5 miljardit eurot ELi eelarvest, et pidevalt suurendada Euroopa kaitsesektori tehnoloogilise ja tööstusliku baasi konkurentsivõimet. Programmi rahalise toetusega laiendatakse kaitsevaldkonna ühishangete lühiajalise rahastamisvahendi (EDIRPA) ja laskemoona tootmist toetava määruse (ASAP) sekkumisloogikat, et veelgi soodustada Euroopa kaitsesektori tehnoloogilise ja tööstusliku baasi

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investeeringuid. Programmist toetatakse ka Euroopa Kaitsefondist rahastatava teadus- ja arendustegevuse koostöömeetmete tulemusel välja töötatavate toodete tööstuslikku tootmist. Programmi eelarvet võib kasutada ka kaitsevaldkonna tarneahelate ümberkujundamise kiirendamise fondi (FAST) loomiseks. Uue fondi eesmärk on hõlbustada kaitsetehnoloogiat ja/või kaitseotstarbelisi tooteid tootvate VKEde ja väikeste keskmise turukapitalisatsiooniga ettevõtjate juurdepääsu rahastamisele laenu- ja/või omakapitali kaudu. Programmi eelarve toetab ka ELi kaitsetööstuse koostööd Ukrainaga ning kaitsesektori tööstusliku ja tehnoloogilise baasi arendamist. Selleks võiks programm saada lisavahendeid Venemaa riigivara kasutamise peatamisest saadavalt kasumilt (kui kõrge esindaja ettepanekul ja nõukogu heakskiidul vastav otsus tehakse).

Regulatiivsetes aspektides pakub kaitsetööstuse programm uudseid lahendusi. Luuakse uus Euroopa relvastusprogrammi õigusraamistik, millega hõlbustada ja laiendada liikmesriikide koostööd kaitsevarustuse valdkonnas, vastastikku täiendades alalise struktureeritud koostöö raamistikku. Samuti nähakse ette kogu ELi hõlmav kaitsevarustuskindluse kord, mis tagab kaitseotstarbeliste toodete tarnepidevuse Euroopas ja loob raamistiku tõhusaks reageerimiseks võimalikele tulevastele tarnekriisidele. Peale selle võimaldab programm käivitada Euroopa ühishuvi pakkuvaid kaitseprojekte vajaduse korral ELi rahalise toetusega. Tehakse ettepanek luua ka liikmesriike täielikult kaasav juhtimisstruktuur, et tagada ELi tegevuse üldine järjepidevus kaitsetööstuse valdkonnas (kaitsetööstusvalmiduse nõukogu).

Kui Euroopa kaitsetööstus on tugevam ja võimeline kiiremini reageerima, toob see kasu nii liikmesriikidele kui ka ELi kodanikele. Samuti on see kasulik ELi peamistele partneritele, nagu NATO ja Ukraina.

Kaasamine

Eesti Kaitsetööstuse ja Kosmose Liit, Ettevõtluse ja Innovatsiooni Sihtasutus jt.

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