27 March 2019

The European Defence Fund and the implementation test

Niculae Iancu | Gheorghe Tibil

Image source: Mediafax

There have been almost two and a half years since Jean-Claude Juncker, the president of the European Commission, has announced the European Defence Fund (EDF) and 18 months since its public launch in Brussels, which was aiming to “help member states spend more effectively taxpayers’ money, reduce costs overlaps and get a better price-quality ratio”, yet no important progress has been made for its actual implementation.

From the 590 million euro allocated for testing EDF’s work mechanisms, there were signed financing agreements only for 25 million euro, to which we can add another 40 million euro for the agreements which are about to be signed. In the forthcoming period, we are expecting the launch of EDF’s capability component, that has a 500-million-euro budget for 2019-2020. Another 13 billion euro are to be used in the EU’s 2021-2017 Multiannual Financial Framework, for maturity period of the Fund, whose regulation should be adopted in the following weeks, under Romanian Presidency of the European Union Council.

European Defence capabilities – Germany as a case study

A news story appeared in Washington at the beginning of this month mentions that Germany’s National Defence Ministry has disqualified the famous F-35 multirole aircraft from the competition for the future systems, launched by the German officials in order to replace the current 90 Tornado aircraft fleet, which is seen as “old-fashioned”. The analysts of the American publication Defence News were saying that “the move is not that surprising”, despite the fact that F-35 is seen by its producer, Lockheed Martin company, as the “most advanced and effective capability from all multirole aircrafts on the market in terms of lifetime costs”. Furthermore, according to Mike Friedman, the spokesperson of Lockheed Martin, F-35 would be “the foundation of NATO’s next air power generation”.

Mentioning the Alliance in this context cannot just go unnoticed given the tense and complicated debates existing across NATO on the need for an immediate increase of the defence costs to at least 2% from GDP, especially on Atlantic’s European rim. In the past couple of year, Trump’s Administration has been very effective in following its policy for fair burden and a real and efficient distribution of the financial efforts between the allies. Its methods and messages were not elusive at all.

President Donald Trump has basically modified NATO’s summits agendas priorities by bringing defence costs’ mercantilism to the highest level of political-military debate and has scolded on this matter, sometimes harshly, the traditional allies’ leaders wherewith Washington has built, during decades, the current international security system. Therefore, the planning mechanisms for increased defence budgets have started across European capitals, existing the risk to increase political and social discontent due to the possible negative implications for social budgets, which are now more important than ever in the entire European area, in a society challenged by a growing distrust against the current political systems. At the same time, the current conceptions for the acquisition of new weapon systems are reviewed by different politico-military strategic leadership, and major defence capabilities are being evaluated more than just listing the technical characteristics, but on the basis of the huge political, economic and military impact of millions of euro allocated to this destination.

These are the circumstances, “not at all surprisingly”, wherein Berlin is thinking to renew the fight aircraft fleet through a European solution, with a Eurofighter Typhoon improved fourth generation platform, made by a consortium composed of the Airbus, the Leonardo Italian company and Great Britain’s BAE Systems. According to Defence News, the justification of such an option comes from the necessity to support the European aeronautical industry, especially the production of the aircraft fighters. However, more important than supporting the European industrial defence base, it could be the “commitment to promoting the French-German cooperation in the armaments domain”, specified in the recent Aachen Treaty, seen by many as a real relaunch of the European Union.

This scene’s background is full of lights and shadows. On one hand, we can see the grey of the tensions between the United States and the European Union due to the divergences in defence, and on the other hand there is the desideratum of Brussels’ vision on Union’s strategic autonomy and the implementation of concrete mechanisms needed to develop the common defence capabilities for the future European Defence Union and, why not, for the creation of the future European army, which everyone is talking about lately.

However, for a better understanding of the Trans-Atlantic’s security complexity, we must mention that Berlin thinks of sharing the new aircraft fleet in two “packages”. Along with Eurofighter Typhoon will remain also the F/A-18E/F Super Hornet from Boeing. The technical argument for this approach would be that the second platform is dedicated to carrying nuclear armament, as NATO’s Bundeswehr’s strategic profile demands.

Yet, Germany’s political message for the EU and NATO European member states starts to crystallize through its own example. The European defence industry must be supported in a realistic manner. EU’s member states investments in this field must grow. Brussels created work mechanisms. Those who want to be part of this future common Security and Defence policy architecture (CSDP) have to join them concretely. We are speaking mainly about the Permanent Structures Cooperation (PESCO), the Coordinated Annual Review on Defence (CARD) and the European Defence Fund (EDF). Of course, all of these must ensure the continuity of the Trans-Atlantic bound, and Berlin has shown that it can find concrete solutions to that end and everyone knows how difficult these decisions are to Reichstag, partly because of Germans’ historical security burden and partly because of Germany’s social-economic focus of the internal policies.

The implementation phase of the European Defence Fund

In times of deeply realistic power relations reaffirmation between states, Brussels’ security and defence dilemma is tied to the future military pillar of the European Union, a more integrated Union than it is today in defence, with a smaller number of complex armament systems in use, with a combined logistic and a real planning and conduct capacity of missions and operations. Is this going to be the development framework of a common army for EU member states or of an EU common army? Regardless of which of these two scenarios will be feasible to materialize the strategic ambitions, Unions’ determination remains essential to prove that PESCO and EDF have the ability to come with consistent and sustainable results.

For now, adopting the regulation for the governance of both current components of EDF, the Preparatory Action (PADR) and the European Defence Industrial Development Programme (EDIDP) and the management of some procedures for data collection and the testing of the work mechanisms necessary to get some concrete lessons learnt could not keep up with the rhythm predicted when the initiative was launched.

Parliament and Council’s regulation for the 2021-2017 European Defence Fund has not been adopted yet. On 12th of December 2018, the European Parliament was passing with 337 votes For, 178 Against and 109 abstains, the first set of amendments on the proposed regulation. The proposal was returned to the interinstitutional negotiations committee, according to the common European legislation mechanisms. The main negotiated amendments refer to initiative’s purpose, where mentioned that “EDF will contribute to the freedom of action of the Union and its strategic autonomy, in particular in technological and industrial terms”. There are references in addition to Parliament’s resolution from 14th of March 2018 on the next multiannual financial framework, mentioning that “the European Parliament reiterated its support for the creation of a European Defence Union, with a specific research programme in the area of defence of the Union and an industrial development programme in which the Member States invest.”

At the same time, the Work Programme for EDIDP, dedicated to financing the development of defence capabilities in 2019-2020, with a total budget of 500 million euro, is still being negotiated, although it should have been up and running from 1st of January 2019. The delay seems to be caused by the complexity of the process and the quite limited resources the European Commission (EC) has to manage this complex dossier, but also by the Member States and EC’s different interests regarding the level and the fields to receive direct awards.

The build-up action across the research Window “started to bring the first concrete results, with the first allocation agreements signed in 2018”, but “all projects are still pending”, as written in the text of the EDF regulation project, regarding the first five financed projects as a result of the 2017 competition. In the meantime, it was completed the 2018 competition wherein the three winning projects are still in the signing phase of the financing agreements. The 2019 competition is about to start. Hence, until now, no one can make real recommendations on the well-functioning of research’s financing based on the experience of concrete projects and there were signed financing agreements only for 25 of the 90 million euro allocated to the PADR.

EDF still-available opportunities

Paradoxically, postponing the adoption and refinement of EDF’s work mechanisms is a great opportunity in Bucharest to prepare the proper participation of our country at the most important, innovator and high-visibility component of European Union’s defence Package. Probably the Romanian saying “measure twice before cutting once” could not find a more objective space to be used than the European research and development architecture design of common military capabilities, which will provide strategic autonomy to the Union Brussels in a world full of great security strategies incongruences.

To follow this pathway, the European Commission is looking for the best solutions to ensure the necessary support for the member states to increase the synchronization of national procedures for defence technologies and armaments acquisition as well as for the homogenization of methodologies and work mechanisms dedicated to integrated military planning, common acquisition of complex defence systems and the increase of their effectiveness during their lifetime.

This time also, the premise of Romania’s successful participation in EDF is given by the level of trust in our country’s potential to play a key role in the European Union Defence Package context. It is already crystalizing a national integration framework of action with the participation of the military institution and the associative entities of the defence industry and from the specific research area. The benefits of a common approach will be highlighted by the improvement of the understanding level of EDF’s functioning methods, the consolidation of cooperation between different entities responsible or interested to access funds, as well as in the increase of the connection potential to European research and defence industry.

As we have highlighted in the previous articles on this topic, the most important element now is the readiness of the public-private tandem for anticipating the opportunities and an efficient preparation to get connected to the specific objectives of each EDF implementation phase, in order to have real chances to access funds from the 13 billion euro foreseen for the following multiannual financial cycle.

Despite the multiple details that are currently discussed in Brussels, the tendencies are already well-known. This is why it is the time to identify and negotiate of some relevant Romanian objectives and initiatives to get them incorporated into the EDF’s frameworks programs, by valorising the financing opportunities of competitive ideas and capacities, already existent in the defence industry and research area. Special attention must be given to the SMEs, that Brussels sees as the key for the supply and production chains of the future European defence base.

Also, it becomes really important the rollout of processes to find connections and possible collaborations with European economic and research entities, as well as with patronal associations, especially on a regional base, for the accession to consortiums which are created on the Fund’s two dimensions- research and development- or for the initiation of new ones.

Romanian Presidency at the EU Council could generate some special strategic communication and businesses opportunities on a national plan, by organizing events whereat to invite consortium leaders and leaders of important European industrial corporations, EDA and European Commission representatives involved in EDF’s management. And the list with possible actions to increase Romania’s profile across EDF can go on.

We could say, this time also, that time’s pressure became critical or that great opportunities’ time has passed. However, the determination of the involved actors should be greater than ever, as long as the European research and development infrastructure construction of the future EU common military capabilities needs time and will be paid off in the long run. It is clearer than ever that Romania cannot stay outside the resistance structure of these important future developments.

The encouragement of the Romanian participation in important projects developed under EDF’s aegis can give us some important industrial and research benefits, along with ensuring the access to the future European defence capabilities, essential both in EU and NATO context. The final result will be an intelligent play of the European Defence card, accordingly with the national security interests.