European Defence Industry Strategy (KIVI proposals)
Titled "The future of juste-retour, compensation and Industrial participation"
European Union Defence industry
The proposal states that in the 21st century interdependence in the EU has risen to a level that strategic autonomy of a single Member State is impossible. Even when export boosts a Member State industry, a certain level of dependence on (sub)systems from other Member States cannot be avoided. Therefore the EU policy is aimed at achieving strategic autonomy of the European Union as a whole.
To reach this goal it is important to change the current market-distorting practice of compulsory offset or industrial participation into a more open market. For this purpose, a new structure is necessary to recognise European companies and allow them to participate within Europe and for exports on an equitable basis.
Technology and capability development
This could be achieved by concentrating Defence capability development in a limited number of clusters in Europe. Each ‘cluster’ dedicated to a specific defence technology area. A few clusters for each technology area, spread across the continent. This structure limits the abundance of different systems in Europe and supports the harmonisation of requirements and technical standards.
Production
For the production of capabilities and supplies, we recommend spreading production throughout Europe to allow continued manufacturing in times of crisis and war. The concept should be flexible to allow easy scale-up and scale-down production whenever required. Military capability production by these companies should be based on manufacturing licenses. To allow for strong changes in demand, production companies should be supported to be able to quickly convert from civil to military production and vice versa. This will also smooth out price fluctuations.
Conclusions and recommendations
This new concept of concentrated technology clusters and production facilities spread across the European continent could be a new and modern European Defence industry policy. A policy that recognises the needs of Member States and companies, and is beneficial for the strategic autonomy of Europe. In peace and war.
It should lead to a more stable and prosperous defence industry and a better long-term focus of Member States and the Commission on clearly defined areas of defence technology and production.
However, to fully profit from these improvements political control of budgets and procurement procedures needs to be aligned too. For this reason, we recommend developing a European Defence Equipment Directive (EDEM Act) for this new cluster structure.
Picture: EmDee, CC BY-SA 4.0