Swedish Finance Minister Elisabeth Svantesson appeared impatient at yesterday’s meeting of EU finance ministers in Brussels. She said it was time to move on from discussing the frozen Russian assets and finally take action. “Ukraine needs the money, and Russia must pay,” she said.
This action is now in sight. In mid-February, the EU Council decided that the revenue from the frozen Russian assets must be held in separate cash accounts. This primarily affects the Belgian company Euroclear, whose accounts hold a large proportion of the Russian assets.
Towards the end of this week or, at the latest, at the beginning of next week, the Commission will present a corresponding proposal. “We are fully committed to moving forward with the next step, to allow redirecting these revenues to the EU budget for the benefit of Ukraine. This will now be discussed with Member States,” said Commission Vice-President Valdis Dombrovskis after the meeting of the finance ministers.
According to sources in Brussels, the revenues could be redirected to the EU budget in the form of a tax. It is unclear whether this tax will siphon off the entire revenue. Dombrovskis did not want to comment yesterday on whether the money could also be used to buy weapons and ammunition for Ukraine.
Nevertheless, the answer seems fairly obvious. Next week, the European Council summit will be held in Brussels. The current draft of the conclusions states that concrete next steps regarding the use of Russian revenues for Ukraine’s benefit are being examined, “including the financing of military support.”
Your János Allenbach-Ammann
Feature
EU summit to call for stronger EIB commitment to security and defense
The EU heads of state and government want to call on the European Investment Bank (EIB) to spend more on security and defense. The European defense industry must have better access to private and public funding, “including through the European Investment Bank, inter alia by reconsidering the definition of dual-use goods and the lending policy to the defense industry,” according to a draft of the conclusions for next week’s EU summit in Brussels, available to Table.Briefings. However, there is no call for dedicated funding for weapons and ammunition.
At the informal Ecofin in February, the new EIB President Nadia Calviño had already signaled the willingness of the EU house bank to “do more and better to contribute to joint projects that boost European industry and reinforceour capacity to protect and also our deterrence vis-a-vis third countries.” The EIB’s financing is currently limited to the dual-use sector, namely to projects where the majority of revenue comes from the civilian sector. Nevertheless, projects that are used in war, such as drones, are already eligible for funding. According to the bank, the term dual-use is often misinterpreted.
Dual-use restriction could fall
“We need to clear up this misunderstanding: dual-use are things that can be used on the battlefield – and this also happens with drones, radars or advanced sensor and communication systems.” The EIB is now in close contact with the European Commission and other stakeholders to adapt the definition and scope of its mandate. “We are actively discussing with the Commission to align ourapproach: We can do more, up to and including missile defense capabilities, for example by developing early warning capabilities with detection and identification.”
The aim, as announced by Calviño at the meeting of finance ministers in Ghent, is to presentthe bank’s strategy for a stronger commitment in the area of security and defense as early as next month.
According to information from Table.Briefings, the Bank’s internal deliberations aim to drop the current dual-use approach. Instead, the areas of “weapons”, “ammunition” and “equipment”, which are still not financed by the EIB, are to be defined specifically and in detail. Anything uncovered by these three areas could then be financed by the Investment Bank.
Transparency policy could slow down project
These could be, for example, projects to decontaminate objects that have come into contact with biological or chemical warfare agents. Financing for fire protection equipment or bulletproof vests would also be possible. This could, it was said, accelerate the flow of funds from the bank as part of its Strategic European Security Initiative (SESI). In the past, the EIB has provided the initiative with a total financial framework of €8 billion. However, only €2 billion of this has been used to date.
However, informed circles also warned against too much euphoria regarding increased EIB involvement and pointed out three points: Firstly, there is generally little demand from the industry for SESI financing. Secondly, a revised strategy would have to be in line with the bank’s four public policy goals (innovation; SME and mid-cap financing; sustainable cities and regions; sustainable energy and natural resources). Thirdly, the bank’s transparency policy is a brake.
Accordingly, the bank must inform the member states and the Commission about its projects. The European Court of Auditors also has access to this “If you tell a defense company that all these institutions have extensive insight into the project, then there is a very high risk that the company will back out,” it continued. With Reuters
Armor
Defense Policy
EIB
European Defense
Financial policy
Finanzpolitik
Weimar Triangle: Ukraine war welds Poland and France together
The security policy unity that Europe would like to see in the face of Donald Trump’s possible re-election as US President in November is a long way off. But the revitalization of the Weimar Triangle of France, Germany and Poland could play a decisive role on the way to ending the war in Ukraine.
Poland as a mediator between Germany and France
French parliamentarian Natalia Pouzyreff from Macron’s Renaissance party hopes that a Weimar format could ease the difficulties between French President Emmanuel Macron and German Chancellor Olaf Scholz. “The Weimar Triangle is a good way to strive for a broader consensus and escape the current delicate Franco-German confrontation,” she told Table.Briefings. With Poland, Germany and France could “stabilize processes and enable better material support for Ukraine.” A large part of the training of Ukrainian soldiers takes place in Poland.
More concrete steps seem difficult. “Truly ambitious Weimar cooperation is not possible in the area of defense precisely because Germany and France do not agree on fundamental issues,” says Gesine Weber, a visiting scholar at the Saltzman Institute of War and Peace Studies in New York. There are the public disputes between Scholz and Macron, ponderous Franco-German armaments projects such as the Future Combat Air System (FCAS) fighter aircraft project or the tank counterpart Main Ground Combat System (MGCS), or fundamental decisions in weapons procurement: do you produce in Europe or do you prefer to buy quickly outside Europe from the USA?
Weimar Triangle could pave the way into NATO for Ukraine
Macron and Scholz publicly demonstrated that their respective red lines are far apart when they disagreed on the deployment of ground troops in Ukraine. On Friday, Macron received backing from Polish Foreign Minister RadosławSikorski, who welcomed his move. If the three states were to agree on common conditions and red lines for peace talks with Russia, they could play a central role in negotiations with Russia, argue the authors of a paper that runs through scenarios of dwindling US support for Ukraine. The paper, prepared by the Polish Institute of International Affairs and the Hanns Seidel Foundation together with French, German and Polish think tanks, makes recommendations to the Weimar Triangle.
A unified position from Germany, France and Poland could promote more support for Ukraine at a European level and pave the way for Ukraine to join NATO, the report continues. A “Weimar Assistance Package”, including training Ukrainian troops and increasing production capacities, and joint weapons production and deliveries could also compensate for dwindling US support.
Cooperation currently more in foreign policy
However, cooperation is currently more about foreign policy, says Weber. The relationship between Foreign Minister Annalena Baerbock and her counterparts Stéphane Séjourné (France) and Radosław Sikorski (Poland) is better than that between the heads of government.
The triangle could help to articulate the European position ahead of the NATO summit, which will take place in Washington in July 2024. And: “I think that we must always think of European security as Weimar plus Great Britain,” says Weber. Especially in a scenario with Trump, “the United Kingdomis also an important player in European security policy.”
European defense industry hopes for Polish orders
Sikorski’s support for Macron is an indication of another option. “If the Franco-German tandem doesn’t work, I could imagine Franco-Polish leadership,“ says Weber. “Especially in the area of Ukraine.” Since the start of the war in Ukraine, “the strategic convergence between Poland and France has tended to increase”. Macron’s willingness to engage in dialog with Russia at the start of the war has given way to clear, confrontational rhetoric. And unlike Scholz, Poland’s Prime Minister Donald Tusk is responding to Macron’s invitation to engage in dialog on French nuclear weapons. Following a meeting with Scholz in Berlin, Tusk said that Macron’s willingness to engage in dialogue on the Europeanization of nuclear weapons should be taken “really seriously.” Nevertheless, there are still central differences between the two countries. Especially when it comes to procurement.
Up to now, Poland has mainly purchased from the USA. It was only at the end of February that Polish Defense Minister Władysław Kosiniak-Kamysz signed a contract to purchase $2.5 billion worth of air defence systems from the USA. Poland orders tanks for the troops with 1,000 K2 Black Panther tanks from South Korea and M1 Abrams from the USA. The local industry would also be pleased if more of the tanks were procured in Europe, as France in particular is demanding. In 2023, Poland spent 3.9 percent of its GDP – €35 billion – on defense. It wants to increase the number of its armed forces to 300,000 by 2035. However: “For Poland, it’s simply about mass, which is also up to date,” says Weber. That’s why she doesn’t see “Poland buying exclusively European or French now.”
Trump 2024
News
EU states agree on five billion package for Ukraine
Ukraine can hope for new military aid from the EU. The ambassadors of the EU member states are likely to agree today to increase the defense fund for Ukraine by €5 billion. There is a consensus among the member states, according to diplomats. Now the ambassadors still have to formally agree.
The decision has been delayed for months, in particular, due to differences of opinion between France and Germany. According to French ideas, only military equipment “made in Europe” should be co-financed from the fund. According to diplomats, the compromise provides for the principle to remain, but that it can also be procured from third countries if there is a lack of ammunition capacity, as was recently the case in Europe. Cooperation with suppliers in third countries should also be possible.
Berlin also insisted that bilateral military aid with armaments or money for Ukraine be taken into account when making payments into the European pot. Germany was largely able to assert here, although bilateral aid should not be counted in full. EU High Representative for Foreign Affairs Josep Borrell had originally called for €20 billion over the next four years to put the support on a stable footing and was rebuffed by the member states with this proposal.
The fund is part of the so-called European Peace Facility, from which the EU states have so far also co-financed support for Ukraine with military equipment. The funds of the Peace Facility have practically been used up because Hungary has been blocking the addition of an eighth tranche for months. sti
Verteidigungspolitik
Romania’s President wants to become NATO Secretary General
Romania’s President Klaus Iohannis is running for the post of NATO chief. “I have decided to enter the competition for the position of NATO Secretary-General,” he said in a televised speech on Tuesday.
The outgoing Dutch Prime Minister Mark Rutte is currently considered the favorite for the role of the new NATO Secretary General. The United States, Great Britain, France and Germany support the Dutchman as the successor to Jens Stoltenberg.
On Tuesday, however, Iohannis declared that he would apply for the post, as the Eastern European states need to be better represented in the leadership positions of the transatlantic alliance. “The time has come for our country to take greater responsibility within the euroatlantic leadership structures,” Iohannis told reporters.
‘Eastern Europe makes a valuable contribution’
“I think NATO needs to renew its view on its mission. Eastern Europe has a valuable contribution in NATO’stalks and decisions. With a balanced, strong and influential representation from this region, the Alliance will be able to make the best decisions to answer all member states’ needs and concerns,” Iohannis continued.
NATO leaders areappointed by consensus, which means that all members must agree on a final decision. The alliance has 32 members following Sweden’s recent accession. Romania, which shares a 650 km border with Ukraine, hosts a US missile defense system and a permanent NATO battle group. rtr/dpa
Verteidigungspolitik
EU Parliament sues EU Commission over Hungary funds
In the dispute over the rule of law in Hungary, the EU Parliament is clashing with Commission President Ursula von der Leyen. The Parliament’s Legal Affairs Committee has spoken out in favor of taking legal action before the European Court of Justice against the release of €10 billion from the EU budget approved in December. Von der Leyen had not sufficiently justified the disbursement and was endangering the rule of law, it said.
The EU Commission replied that it had acted “in full compliance with EU law.” Hungary had submitted all the documents required for the payment. They showed that the conditions set by the Commission regarding the independence of the judiciary had been met. The announcement of the complaint has been noted and Hungary will defend itself before the ECJ.
Parliament wants to clarify the Commission’s discretionary powers
From Parliament’s perspective, the case is of fundamental importance. It is a matter of clarifying the Commission’s discretionary powers, said MEPs involved in the complaint. The Brussels authority can freeze large sums of billions from the EU budget if there are concerns about the rule of law, but can also release them again if necessary. The EU Parliament has no right of co-decision.
The Commission does have discretionary powers in the management of EU funds, explained SPD MEP and European law expert René Repasi. However, in order to protect the rule of law and the EU’s financial interests, this discretion must be limited. “We now want to have this clarified by the ECJ. The lawsuit is an important step towards holding the Commission to account in its dealings with inner-European autocracies.”
Three years ago, Parliament had already filed a complaint against von der Leyen. At the time, it accused the CDU politician of not using the rule of law mechanism and leaving violations in Hungary and Poland unanswered. However, the proceedings were discontinued because EU funds were frozen after all. The new complaint still has to be countersigned by Parliament President Roberta Metsola. However, this is considered a formality. ebo
Climate risks: EU Commission wants clarity on responsibilities
On Tuesday, the EU Commission presented its strategy to tackle the problems ofEurope’s lack of climate resilience. This was in response to the report published on Monday by the European Environment Agency (EEA) on climate risks in Europe. In its communication, it identifies the following areas for action:
Improved governance: Member states should identify those responsible for climate risks (“risk owners”) and provide them with resources to increase resilience. Political decision-makers, companies and investors should set market signals through long-term financing strategies in order to close resilience gaps.
Structural policy measures: The management of climate risks should be better coordinated across sectors. This includes better spatial planning in the member states, the inclusion of climate risks in the planning and maintenance of critical infrastructure and the linking of solidarity mechanisms at the EU level. Disaster management and civil protection systems should also be made future-proof and increasingly geared towards climate risks.
Financing climate resilience: The Commission wants to support member states in financing the minimization of climate risks from national budgets. Stakeholders from industry and public and private financial institutions are also to work on financing options in a working group. Countries should take resilience into account in public procurement.
Poor implementation in the member states
In particular, the question of responsibility for minimizing climate risks appears to be unresolved. The Commission wants to examine how responsibilities are distributed between the EU and the Member States. Apparently, the distribution of risk responsibility varies depending on the policy area.
Although most EU measures also contain rules to take climate risks into account, there are shortcomings in implementation in the member states, writes the Commission. It calls for “improvements at all administrative levels” and specifically for “existing commitments on climate adaptation to be fully implemented.”
Germany is leading the way with the first federal law on climate adaptation, said Federal Environment Minister Steffi Lemke (Greens). “We are enshrining protection against the consequences of the climate crisis as a central task for all levels of government in a law.” Local authorities, federal states and the federal government must now develop strategies on how to deal with the challenges of the climate crisis locally, said Lemke. The federal government is also working on a new “precautionary climate adaptation strategy,” which is to be presented this year. luk
Europäische Kommission
Buildings Directive: EU Parliament votes for climate-neutral building stock by 2050
The European Parliament confirmed the trilogue result on the Energy Performance of Buildings Directive (EPBD) in Strasbourg on Tuesday. 370 MEPs voted in favor, 199 against and 46 abstained.
The law introduces minimum standards for the energy efficiency of buildings to gradually improve them and make the entire building sector climate-neutral by 2050. New buildings are to be emission-free from 2030, and new public buildings from as early as 2028. 16 percent of non-residential buildings with the poorest energy efficiency must be renovated by 2030 and 26 percent by 2033.
Although there is no fixed renovation obligation for residential buildings, the member states must ensure that average primary energy consumption is reduced by at least 16 percent by 2030 and by at least 20 percent by 2035. There is also a requirement for member states to install solar panels on the roofs of new buildings where possible.
There are exceptions for agricultural and listed buildings.
Many votes against from the EPP
The many votes against, especially from the ranks of the Christian Democratic EPP, show the critical attitude of many MEPs towards the new rules. Angelika Niebler, co-chair of the CDU/CSU group, commented that it was a great success to have prevented forced renovations for owner-occupied homes. However, the directive is too detailed. “We don’t need new requirements for bicycle parking spaces and pre-cabling for charging points on this scale at the European level,” says the CSU politician.
Parliamentary rapporteur Ciarán Cuffe (Greens) believes the law is urgently needed in light of the European Environment Agency’s report on climate risks for Europe published on Monday. It will reduce energy costs, prioritize renovations for vulnerable households and improve the protection of tenants. In conjunction with social guarantees and financial support, the quality of housing should be improved, dependence on imports reduced and energy poverty combated, said the Irish Green MEP.
The member states will vote on the EPBD on April 12, after which the law can be published in the Official Journal and thus enter into force. luk
Green claims: EU Parliament votes for improved verification of environmental claims
MEPs agreed on their report on the Green Claims Directive on Tuesday, with 467 votes in favor, 65 against and 74 abstentions. The law is intended to prevent greenwashing by prohibiting companies from using certain environmental advertising claims without external verification – including claims such as “environmentally friendly” or “biodegradable.”
Parliament has spoken out in favor of such advertising claims and the supporting documents having to be reviewed within 30 days. Environmental claims based solely on the purchase of carbon certificates (“offsetting”) should remain prohibited.
Sanctions may be imposed for non-compliance
If companies fail to comply with these requirements, they may face sanctions, including temporary exclusion from public tenders or fines of at least four percent of their annual turnover. Micro-enterprises are to be exempt from the rules, while small and medium-sized enterprises (SMEs) are to be given an additional year to implement the new rules.
Environmental claims on products containing hazardous substances should continue to be possible for the time being, but MEPs call on the Commission to consider a complete ban in the near future.
The Council is expected to determine its general direction in April. The trilogue negotiations cannot begin until after the 2024 European elections in June. luk
Greenwashing
Industrial emissions: Commission to consider inclusion of cattle in 2026
The European Parliament has approved the political compromise on the Industrial Emissions Directive. The directive tightens emission limits for industrial operations affecting air, water and soil. The rules also apply to larger agricultural operations raising pigs and chickens. Pig farmers with more than 350 livestock units (LSU) are affected. Organic farms are exempt. Poultry farms with more than 300 laying hens (LSU) or with more than 280 broilers (LSU) are also covered by the EU law. For farms with pigs and poultry, the threshold is set at 380 LSU. Farms with cattle are not subject to the regulation.
The Commission is obligated to submit a review of the directive by the end of 2026. Here, it will clarify whether farms with cattle should be included in the future. Additionally, the question arises of whether agricultural enterprises in third countries must also comply with emission limits. Companies failing to meet the limits could face penalties of up to three percent of their annual turnover for serious violations. The Council still needs to approve the political compromise. mgr
Europäisches Parlament
Climate action contracts: much praise and some open questions
After a long preparatory phase, things are finally underway: On Tuesday, the Federal Ministry for Economic Affairs initiated the auction procedure for the so-called climate action contracts. This allows companies emitting more than 10,000 tons of CO2 per year to apply for government grantsif they switch their production to more climate-friendly methods. The contracts will be awarded to those companies that demand the least amount of money per ton of CO2 saved compared to a reference value.
The contracts concluded with the BMWK run for 15 years, during which companies initially receive funding. If the new technology becomes cheaper due to developments in energy and CO2 prices, they must repay the money. However, this applies only for three years, after which the contract can be terminated.
Economy Minister Robert Habeck has high expectations for the new instrument. “It’s really something new, fantastic,” he said. Instead of waiting two years for funding approval, as was previously the case with EU notification, companies will receive it after just four months with climate action contracts.
Other countries are working on similar programs
Other member states are working on similar programs; however, according to the BMWK, Germany is the first member state to start the bidding process. The EU Commission approved the climate action contracts in mid-February. This followed a lengthy coordination process during which the funding guidelines were adjusted in many areas.
The Federation of German Industries (BDI) also praises the new instrument. “Extensive government support is necessary if the politically desired transformation towards climate neutrality is to succeed in a short time,” said President Siegfried Russwurm. And Martin Kaiser, Executive Director of Greenpeace, who was specifically invited by the BMWK for a press statement at the ministry, also welcomed the climate action contracts in principle. He said it was right for the government to “not skimp, but rather to invest heavily”. However, Kaiser criticized the specific design: It was wrong to also promote CCS projects and blue hydrogen with the climate action contracts.
Calculation could become complicated
According to the BMWK, a “medium double-digit billion amount” is planned for the climate action contracts for the next 15 years. In the first round of tenders, which is now beginning, the funding amount is initially up to four billion euros, with the maximum amount per company being one billion. In the second round, scheduled to start in the autumn, up to 19 billion euros will be awarded. These sums are already budgeted as commitment authorizations in the Climate and Transformation Fund. The money for the further rounds of tendering must be provided in the coming years.
The procedure is quite complex: The formulas for calculating the funding requirement and the amounts paid out extend over 15 pages in the funding guidelines. Given the many unknown variables, it is likely to be a significant challenge for companies to accurately assess their needs. The BMWK is relying on a learning process. “In the first bidding round, we will learn a lot together with industry and with support from science,” according to an FAQ paper on the procedure. “Whether adjustments are needed for the second bidding round remains to be seen.” mkr
Surprising ruling: Romania not obligated to pay compensation to mining company
In a surprising turn of events, an international arbitration tribunal has decided that Romania is not obligated to pay compensation of at least four billion euros to the mining company Gabriel Resources. The Canadian firm had filed an investor protection lawsuit with the World Bank’s ICSID arbitration tribunal to seek damages after the state revoked the concession for exploiting a gold mine in Roșia Montană. The government announced this last Friday.
“The Romanian government welcomes this decision and thanks all those involved in defending the interests of the Romanian state,” stated the cabinet of socialist Prime Minister Marcel Ciolacu. In recent weeks, rumors had circulated that the arbitration tribunal would rule against Romania. In response, the government had already considered reissuing the concession to Gabriel Resources to avoid bankrupting the state budget. Now, Gabriel Resources must even bear the procedural costs of all parties involved, ruled the arbitration tribunal. Since Friday, the company’s stock price has plummeted from 0.87 Canadian dollars to 0.02 Canadian dollars. Dragos Tanase, CEO of Gabriel Resources, warned on Monday that the company’s continued operation was not guaranteed.
Controversial arbitration tribunals
The lawsuit filed by Gabriel Resources in 2015 was based on a bilateral investment protection agreement between Romania and Canada. The arbitration procedures provided therein are controversial as they mostly take place behind closed doors. The EU recently decided to withdraw from the Energy Charter Treaty. Many investor protection lawsuits have been filed through this treaty in recent years against regulations related to ecological transformation. av
Raw materials
Opinion
Lucas Hellemeier: utilizing non-Western artillery production capacities
Lucas F. Hellemeier
Lucas Hellemeier is a Ph.D. candidate at the John F. Kennedy Institute at Freie Universität Berlin and a Fulbright Visiting Researcher at Boston University.
The expansion of the Rheinmetall plant in Unterlüß was completed with great fanfare on February 12. With the symbolic ground-breaking ceremony, German Chancellor Olaf Scholz, Danish Prime Minister Mette Frederiksen, Defense Minister Boris Pistorius and Rheinmetall CEO Armin Papperger sent out important signals after the EU clearly missed its delivery target of one million artillery shells for Ukraine by March 2024.
In order to improve Ukraine’s strategic military position, investments in ammunition production should have happened sooner. The Zeitenwende in procurement involves a new focus on mass. The use of military equipment in a superpower conflict fundamentally differs from international crisis operations, which were previously the military focus of the West.
ASAP had a birth defect
However, it is doubtful whether these mass-produced goods should be produced in Western countries. Even if European defense spending increases, resources for military procurement remain tight and should be spent as efficiently as possible. The 500 million-euro EU ammunition package ASAP already contained a birth defect in that orders could only be placed in EU countries and Norway. French President Emmanuel Macron has since realized that it was misguided protectionism instead of a long-term European defense strategy.
From a technological standpoint, ammunition in the defense sector is a simple product. There are more sophisticated variants, such as the SMArt 155 SubMunition for Artillery produced jointly by Rheinmetall and Diehl, which offers greater accuracy thanks to sensor technology. Nevertheless, compared to complex defense products such as fighter aircraft, many countries around the world can produce this mass-produced ammunition. Western countries should utilize these production capacities.
That is why consistently implementing the 155mm NATO standard is more important than constructing ammunition plants on Western territory. Admiral Rob Bauer, Chairman of the NATO Military Committee, recently criticized that 14 NATO states grant themselves the right to deviate from the 155mm standard. This is a luxury that the EU and NATO can’t afford in times of peace or war. Ammunition should be interchangeable in an alliance to allow it to become a mass-produced commodity. As in other industries, standardized mass-produced defense products promise price advantages for consumers.
EU and NATO states should shape the ammunition market
If the EU and NATO countries buy standardized ammunition worldwide on a large scale, they have market power and can condition the production of third countries to their needs and use their purchasing power to shape the market. Applied to the market for artillery ammunition, this would mean, for example, enforcing the 155mm standard instead of the Russian 152mm standard in production by third countries.
Procurement in third countries can be more efficient due to lower production costs, which means that Western forces and, indirectly, Ukraine get more ammunition for less or the same money. This leaves more financial resources in the EU defense budgets for necessary investments in future technologies to strengthen European competitiveness. Europe should focus on protectionism in this market segment.
At the Berlin Security Conference in November 2023, Airbus Helicopters CEO Stefan Thomé demanded that the rules of the free market must not be allowed to dictate arms procurement. He criticized the German government’s tendency to increasingly buy from US competitors. However, the extent to which market forces should be allowed in procurement depends on the type of armaments products in question. For simple products, the EU states should give the market more freedom, i.e., procure based on economic efficiency. In contrast, technologically more sophisticated products require greater state intervention in the interests of strategic autonomy. On-shoring the production of mass-produced defense products, although seemingly attractive, is not a long-term European defense strategy.
Lucas Hellemeier is a Ph.D. candidate at the John F. Kennedy Institute at Freie Universität Berlin and a Fulbright Visiting Researcher at Boston University. His research focuses on European defense policy decisions in the transatlantic context.
European Defense
Executive Moves
René Repasi is the new chairman of the SPD delegation in the European Parliament. MEPs unanimously elected the 44-year-old as the successor to Jens Geier, who is stepping down after seven years in the post. Repasi only joined the Parliament in 2022, but the professor of European law quickly gained a good reputation. tho
Udo Zolleis is taking over as acting press spokesman for Manfred Weber, the EPP group and party leader. Zolleis has been one of Weber’s closest advisors for years, heads the EPP Group’s Strategy Unit and holds an honorary professorship at the Institute for Political Science at the University of Tübingen. Dirk Gotink, previously the spokesperson, is running for the Omtzigt list for the European Parliament. mgr
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Swedish Finance Minister Elisabeth Svantesson appeared impatient at yesterday’s meeting of EU finance ministers in Brussels. She said it was time to move on from discussing the frozen Russian assets and finally take action. “Ukraine needs the money, and Russia must pay,” she said.
This action is now in sight. In mid-February, the EU Council decided that the revenue from the frozen Russian assets must be held in separate cash accounts. This primarily affects the Belgian company Euroclear, whose accounts hold a large proportion of the Russian assets.
Towards the end of this week or, at the latest, at the beginning of next week, the Commission will present a corresponding proposal. “We are fully committed to moving forward with the next step, to allow redirecting these revenues to the EU budget for the benefit of Ukraine. This will now be discussed with Member States,” said Commission Vice-President Valdis Dombrovskis after the meeting of the finance ministers.
According to sources in Brussels, the revenues could be redirected to the EU budget in the form of a tax. It is unclear whether this tax will siphon off the entire revenue. Dombrovskis did not want to comment yesterday on whether the money could also be used to buy weapons and ammunition for Ukraine.
Nevertheless, the answer seems fairly obvious. Next week, the European Council summit will be held in Brussels. The current draft of the conclusions states that concrete next steps regarding the use of Russian revenues for Ukraine’s benefit are being examined, “including the financing of military support.”
Your János Allenbach-Ammann
Feature
EU summit to call for stronger EIB commitment to security and defense
The EU heads of state and government want to call on the European Investment Bank (EIB) to spend more on security and defense. The European defense industry must have better access to private and public funding, “including through the European Investment Bank, inter alia by reconsidering the definition of dual-use goods and the lending policy to the defense industry,” according to a draft of the conclusions for next week’s EU summit in Brussels, available to Table.Briefings. However, there is no call for dedicated funding for weapons and ammunition.
At the informal Ecofin in February, the new EIB President Nadia Calviño had already signaled the willingness of the EU house bank to “do more and better to contribute to joint projects that boost European industry and reinforceour capacity to protect and also our deterrence vis-a-vis third countries.” The EIB’s financing is currently limited to the dual-use sector, namely to projects where the majority of revenue comes from the civilian sector. Nevertheless, projects that are used in war, such as drones, are already eligible for funding. According to the bank, the term dual-use is often misinterpreted.
Dual-use restriction could fall
“We need to clear up this misunderstanding: dual-use are things that can be used on the battlefield – and this also happens with drones, radars or advanced sensor and communication systems.” The EIB is now in close contact with the European Commission and other stakeholders to adapt the definition and scope of its mandate. “We are actively discussing with the Commission to align ourapproach: We can do more, up to and including missile defense capabilities, for example by developing early warning capabilities with detection and identification.”
The aim, as announced by Calviño at the meeting of finance ministers in Ghent, is to presentthe bank’s strategy for a stronger commitment in the area of security and defense as early as next month.
According to information from Table.Briefings, the Bank’s internal deliberations aim to drop the current dual-use approach. Instead, the areas of “weapons”, “ammunition” and “equipment”, which are still not financed by the EIB, are to be defined specifically and in detail. Anything uncovered by these three areas could then be financed by the Investment Bank.
Transparency policy could slow down project
These could be, for example, projects to decontaminate objects that have come into contact with biological or chemical warfare agents. Financing for fire protection equipment or bulletproof vests would also be possible. This could, it was said, accelerate the flow of funds from the bank as part of its Strategic European Security Initiative (SESI). In the past, the EIB has provided the initiative with a total financial framework of €8 billion. However, only €2 billion of this has been used to date.
However, informed circles also warned against too much euphoria regarding increased EIB involvement and pointed out three points: Firstly, there is generally little demand from the industry for SESI financing. Secondly, a revised strategy would have to be in line with the bank’s four public policy goals (innovation; SME and mid-cap financing; sustainable cities and regions; sustainable energy and natural resources). Thirdly, the bank’s transparency policy is a brake.
Accordingly, the bank must inform the member states and the Commission about its projects. The European Court of Auditors also has access to this “If you tell a defense company that all these institutions have extensive insight into the project, then there is a very high risk that the company will back out,” it continued. With Reuters
Armor
Defense Policy
EIB
European Defense
Financial policy
Finanzpolitik
Weimar Triangle: Ukraine war welds Poland and France together
The security policy unity that Europe would like to see in the face of Donald Trump’s possible re-election as US President in November is a long way off. But the revitalization of the Weimar Triangle of France, Germany and Poland could play a decisive role on the way to ending the war in Ukraine.
Poland as a mediator between Germany and France
French parliamentarian Natalia Pouzyreff from Macron’s Renaissance party hopes that a Weimar format could ease the difficulties between French President Emmanuel Macron and German Chancellor Olaf Scholz. “The Weimar Triangle is a good way to strive for a broader consensus and escape the current delicate Franco-German confrontation,” she told Table.Briefings. With Poland, Germany and France could “stabilize processes and enable better material support for Ukraine.” A large part of the training of Ukrainian soldiers takes place in Poland.
More concrete steps seem difficult. “Truly ambitious Weimar cooperation is not possible in the area of defense precisely because Germany and France do not agree on fundamental issues,” says Gesine Weber, a visiting scholar at the Saltzman Institute of War and Peace Studies in New York. There are the public disputes between Scholz and Macron, ponderous Franco-German armaments projects such as the Future Combat Air System (FCAS) fighter aircraft project or the tank counterpart Main Ground Combat System (MGCS), or fundamental decisions in weapons procurement: do you produce in Europe or do you prefer to buy quickly outside Europe from the USA?
Weimar Triangle could pave the way into NATO for Ukraine
Macron and Scholz publicly demonstrated that their respective red lines are far apart when they disagreed on the deployment of ground troops in Ukraine. On Friday, Macron received backing from Polish Foreign Minister RadosławSikorski, who welcomed his move. If the three states were to agree on common conditions and red lines for peace talks with Russia, they could play a central role in negotiations with Russia, argue the authors of a paper that runs through scenarios of dwindling US support for Ukraine. The paper, prepared by the Polish Institute of International Affairs and the Hanns Seidel Foundation together with French, German and Polish think tanks, makes recommendations to the Weimar Triangle.
A unified position from Germany, France and Poland could promote more support for Ukraine at a European level and pave the way for Ukraine to join NATO, the report continues. A “Weimar Assistance Package”, including training Ukrainian troops and increasing production capacities, and joint weapons production and deliveries could also compensate for dwindling US support.
Cooperation currently more in foreign policy
However, cooperation is currently more about foreign policy, says Weber. The relationship between Foreign Minister Annalena Baerbock and her counterparts Stéphane Séjourné (France) and Radosław Sikorski (Poland) is better than that between the heads of government.
The triangle could help to articulate the European position ahead of the NATO summit, which will take place in Washington in July 2024. And: “I think that we must always think of European security as Weimar plus Great Britain,” says Weber. Especially in a scenario with Trump, “the United Kingdomis also an important player in European security policy.”
European defense industry hopes for Polish orders
Sikorski’s support for Macron is an indication of another option. “If the Franco-German tandem doesn’t work, I could imagine Franco-Polish leadership,“ says Weber. “Especially in the area of Ukraine.” Since the start of the war in Ukraine, “the strategic convergence between Poland and France has tended to increase”. Macron’s willingness to engage in dialog with Russia at the start of the war has given way to clear, confrontational rhetoric. And unlike Scholz, Poland’s Prime Minister Donald Tusk is responding to Macron’s invitation to engage in dialog on French nuclear weapons. Following a meeting with Scholz in Berlin, Tusk said that Macron’s willingness to engage in dialogue on the Europeanization of nuclear weapons should be taken “really seriously.” Nevertheless, there are still central differences between the two countries. Especially when it comes to procurement.
Up to now, Poland has mainly purchased from the USA. It was only at the end of February that Polish Defense Minister Władysław Kosiniak-Kamysz signed a contract to purchase $2.5 billion worth of air defence systems from the USA. Poland orders tanks for the troops with 1,000 K2 Black Panther tanks from South Korea and M1 Abrams from the USA. The local industry would also be pleased if more of the tanks were procured in Europe, as France in particular is demanding. In 2023, Poland spent 3.9 percent of its GDP – €35 billion – on defense. It wants to increase the number of its armed forces to 300,000 by 2035. However: “For Poland, it’s simply about mass, which is also up to date,” says Weber. That’s why she doesn’t see “Poland buying exclusively European or French now.”
Trump 2024
News
EU states agree on five billion package for Ukraine
Ukraine can hope for new military aid from the EU. The ambassadors of the EU member states are likely to agree today to increase the defense fund for Ukraine by €5 billion. There is a consensus among the member states, according to diplomats. Now the ambassadors still have to formally agree.
The decision has been delayed for months, in particular, due to differences of opinion between France and Germany. According to French ideas, only military equipment “made in Europe” should be co-financed from the fund. According to diplomats, the compromise provides for the principle to remain, but that it can also be procured from third countries if there is a lack of ammunition capacity, as was recently the case in Europe. Cooperation with suppliers in third countries should also be possible.
Berlin also insisted that bilateral military aid with armaments or money for Ukraine be taken into account when making payments into the European pot. Germany was largely able to assert here, although bilateral aid should not be counted in full. EU High Representative for Foreign Affairs Josep Borrell had originally called for €20 billion over the next four years to put the support on a stable footing and was rebuffed by the member states with this proposal.
The fund is part of the so-called European Peace Facility, from which the EU states have so far also co-financed support for Ukraine with military equipment. The funds of the Peace Facility have practically been used up because Hungary has been blocking the addition of an eighth tranche for months. sti
Verteidigungspolitik
Romania’s President wants to become NATO Secretary General
Romania’s President Klaus Iohannis is running for the post of NATO chief. “I have decided to enter the competition for the position of NATO Secretary-General,” he said in a televised speech on Tuesday.
The outgoing Dutch Prime Minister Mark Rutte is currently considered the favorite for the role of the new NATO Secretary General. The United States, Great Britain, France and Germany support the Dutchman as the successor to Jens Stoltenberg.
On Tuesday, however, Iohannis declared that he would apply for the post, as the Eastern European states need to be better represented in the leadership positions of the transatlantic alliance. “The time has come for our country to take greater responsibility within the euroatlantic leadership structures,” Iohannis told reporters.
‘Eastern Europe makes a valuable contribution’
“I think NATO needs to renew its view on its mission. Eastern Europe has a valuable contribution in NATO’stalks and decisions. With a balanced, strong and influential representation from this region, the Alliance will be able to make the best decisions to answer all member states’ needs and concerns,” Iohannis continued.
NATO leaders areappointed by consensus, which means that all members must agree on a final decision. The alliance has 32 members following Sweden’s recent accession. Romania, which shares a 650 km border with Ukraine, hosts a US missile defense system and a permanent NATO battle group. rtr/dpa
Verteidigungspolitik
EU Parliament sues EU Commission over Hungary funds
In the dispute over the rule of law in Hungary, the EU Parliament is clashing with Commission President Ursula von der Leyen. The Parliament’s Legal Affairs Committee has spoken out in favor of taking legal action before the European Court of Justice against the release of €10 billion from the EU budget approved in December. Von der Leyen had not sufficiently justified the disbursement and was endangering the rule of law, it said.
The EU Commission replied that it had acted “in full compliance with EU law.” Hungary had submitted all the documents required for the payment. They showed that the conditions set by the Commission regarding the independence of the judiciary had been met. The announcement of the complaint has been noted and Hungary will defend itself before the ECJ.
Parliament wants to clarify the Commission’s discretionary powers
From Parliament’s perspective, the case is of fundamental importance. It is a matter of clarifying the Commission’s discretionary powers, said MEPs involved in the complaint. The Brussels authority can freeze large sums of billions from the EU budget if there are concerns about the rule of law, but can also release them again if necessary. The EU Parliament has no right of co-decision.
The Commission does have discretionary powers in the management of EU funds, explained SPD MEP and European law expert René Repasi. However, in order to protect the rule of law and the EU’s financial interests, this discretion must be limited. “We now want to have this clarified by the ECJ. The lawsuit is an important step towards holding the Commission to account in its dealings with inner-European autocracies.”
Three years ago, Parliament had already filed a complaint against von der Leyen. At the time, it accused the CDU politician of not using the rule of law mechanism and leaving violations in Hungary and Poland unanswered. However, the proceedings were discontinued because EU funds were frozen after all. The new complaint still has to be countersigned by Parliament President Roberta Metsola. However, this is considered a formality. ebo
Climate risks: EU Commission wants clarity on responsibilities
On Tuesday, the EU Commission presented its strategy to tackle the problems ofEurope’s lack of climate resilience. This was in response to the report published on Monday by the European Environment Agency (EEA) on climate risks in Europe. In its communication, it identifies the following areas for action:
Improved governance: Member states should identify those responsible for climate risks (“risk owners”) and provide them with resources to increase resilience. Political decision-makers, companies and investors should set market signals through long-term financing strategies in order to close resilience gaps.
Structural policy measures: The management of climate risks should be better coordinated across sectors. This includes better spatial planning in the member states, the inclusion of climate risks in the planning and maintenance of critical infrastructure and the linking of solidarity mechanisms at the EU level. Disaster management and civil protection systems should also be made future-proof and increasingly geared towards climate risks.
Financing climate resilience: The Commission wants to support member states in financing the minimization of climate risks from national budgets. Stakeholders from industry and public and private financial institutions are also to work on financing options in a working group. Countries should take resilience into account in public procurement.
Poor implementation in the member states
In particular, the question of responsibility for minimizing climate risks appears to be unresolved. The Commission wants to examine how responsibilities are distributed between the EU and the Member States. Apparently, the distribution of risk responsibility varies depending on the policy area.
Although most EU measures also contain rules to take climate risks into account, there are shortcomings in implementation in the member states, writes the Commission. It calls for “improvements at all administrative levels” and specifically for “existing commitments on climate adaptation to be fully implemented.”
Germany is leading the way with the first federal law on climate adaptation, said Federal Environment Minister Steffi Lemke (Greens). “We are enshrining protection against the consequences of the climate crisis as a central task for all levels of government in a law.” Local authorities, federal states and the federal government must now develop strategies on how to deal with the challenges of the climate crisis locally, said Lemke. The federal government is also working on a new “precautionary climate adaptation strategy,” which is to be presented this year. luk
Europäische Kommission
Buildings Directive: EU Parliament votes for climate-neutral building stock by 2050
The European Parliament confirmed the trilogue result on the Energy Performance of Buildings Directive (EPBD) in Strasbourg on Tuesday. 370 MEPs voted in favor, 199 against and 46 abstained.
The law introduces minimum standards for the energy efficiency of buildings to gradually improve them and make the entire building sector climate-neutral by 2050. New buildings are to be emission-free from 2030, and new public buildings from as early as 2028. 16 percent of non-residential buildings with the poorest energy efficiency must be renovated by 2030 and 26 percent by 2033.
Although there is no fixed renovation obligation for residential buildings, the member states must ensure that average primary energy consumption is reduced by at least 16 percent by 2030 and by at least 20 percent by 2035. There is also a requirement for member states to install solar panels on the roofs of new buildings where possible.
There are exceptions for agricultural and listed buildings.
Many votes against from the EPP
The many votes against, especially from the ranks of the Christian Democratic EPP, show the critical attitude of many MEPs towards the new rules. Angelika Niebler, co-chair of the CDU/CSU group, commented that it was a great success to have prevented forced renovations for owner-occupied homes. However, the directive is too detailed. “We don’t need new requirements for bicycle parking spaces and pre-cabling for charging points on this scale at the European level,” says the CSU politician.
Parliamentary rapporteur Ciarán Cuffe (Greens) believes the law is urgently needed in light of the European Environment Agency’s report on climate risks for Europe published on Monday. It will reduce energy costs, prioritize renovations for vulnerable households and improve the protection of tenants. In conjunction with social guarantees and financial support, the quality of housing should be improved, dependence on imports reduced and energy poverty combated, said the Irish Green MEP.
The member states will vote on the EPBD on April 12, after which the law can be published in the Official Journal and thus enter into force. luk
Green claims: EU Parliament votes for improved verification of environmental claims
MEPs agreed on their report on the Green Claims Directive on Tuesday, with 467 votes in favor, 65 against and 74 abstentions. The law is intended to prevent greenwashing by prohibiting companies from using certain environmental advertising claims without external verification – including claims such as “environmentally friendly” or “biodegradable.”
Parliament has spoken out in favor of such advertising claims and the supporting documents having to be reviewed within 30 days. Environmental claims based solely on the purchase of carbon certificates (“offsetting”) should remain prohibited.
Sanctions may be imposed for non-compliance
If companies fail to comply with these requirements, they may face sanctions, including temporary exclusion from public tenders or fines of at least four percent of their annual turnover. Micro-enterprises are to be exempt from the rules, while small and medium-sized enterprises (SMEs) are to be given an additional year to implement the new rules.
Environmental claims on products containing hazardous substances should continue to be possible for the time being, but MEPs call on the Commission to consider a complete ban in the near future.
The Council is expected to determine its general direction in April. The trilogue negotiations cannot begin until after the 2024 European elections in June. luk
Greenwashing
Industrial emissions: Commission to consider inclusion of cattle in 2026
The European Parliament has approved the political compromise on the Industrial Emissions Directive. The directive tightens emission limits for industrial operations affecting air, water and soil. The rules also apply to larger agricultural operations raising pigs and chickens. Pig farmers with more than 350 livestock units (LSU) are affected. Organic farms are exempt. Poultry farms with more than 300 laying hens (LSU) or with more than 280 broilers (LSU) are also covered by the EU law. For farms with pigs and poultry, the threshold is set at 380 LSU. Farms with cattle are not subject to the regulation.
The Commission is obligated to submit a review of the directive by the end of 2026. Here, it will clarify whether farms with cattle should be included in the future. Additionally, the question arises of whether agricultural enterprises in third countries must also comply with emission limits. Companies failing to meet the limits could face penalties of up to three percent of their annual turnover for serious violations. The Council still needs to approve the political compromise. mgr
Europäisches Parlament
Climate action contracts: much praise and some open questions
After a long preparatory phase, things are finally underway: On Tuesday, the Federal Ministry for Economic Affairs initiated the auction procedure for the so-called climate action contracts. This allows companies emitting more than 10,000 tons of CO2 per year to apply for government grantsif they switch their production to more climate-friendly methods. The contracts will be awarded to those companies that demand the least amount of money per ton of CO2 saved compared to a reference value.
The contracts concluded with the BMWK run for 15 years, during which companies initially receive funding. If the new technology becomes cheaper due to developments in energy and CO2 prices, they must repay the money. However, this applies only for three years, after which the contract can be terminated.
Economy Minister Robert Habeck has high expectations for the new instrument. “It’s really something new, fantastic,” he said. Instead of waiting two years for funding approval, as was previously the case with EU notification, companies will receive it after just four months with climate action contracts.
Other countries are working on similar programs
Other member states are working on similar programs; however, according to the BMWK, Germany is the first member state to start the bidding process. The EU Commission approved the climate action contracts in mid-February. This followed a lengthy coordination process during which the funding guidelines were adjusted in many areas.
The Federation of German Industries (BDI) also praises the new instrument. “Extensive government support is necessary if the politically desired transformation towards climate neutrality is to succeed in a short time,” said President Siegfried Russwurm. And Martin Kaiser, Executive Director of Greenpeace, who was specifically invited by the BMWK for a press statement at the ministry, also welcomed the climate action contracts in principle. He said it was right for the government to “not skimp, but rather to invest heavily”. However, Kaiser criticized the specific design: It was wrong to also promote CCS projects and blue hydrogen with the climate action contracts.
Calculation could become complicated
According to the BMWK, a “medium double-digit billion amount” is planned for the climate action contracts for the next 15 years. In the first round of tenders, which is now beginning, the funding amount is initially up to four billion euros, with the maximum amount per company being one billion. In the second round, scheduled to start in the autumn, up to 19 billion euros will be awarded. These sums are already budgeted as commitment authorizations in the Climate and Transformation Fund. The money for the further rounds of tendering must be provided in the coming years.
The procedure is quite complex: The formulas for calculating the funding requirement and the amounts paid out extend over 15 pages in the funding guidelines. Given the many unknown variables, it is likely to be a significant challenge for companies to accurately assess their needs. The BMWK is relying on a learning process. “In the first bidding round, we will learn a lot together with industry and with support from science,” according to an FAQ paper on the procedure. “Whether adjustments are needed for the second bidding round remains to be seen.” mkr
Surprising ruling: Romania not obligated to pay compensation to mining company
In a surprising turn of events, an international arbitration tribunal has decided that Romania is not obligated to pay compensation of at least four billion euros to the mining company Gabriel Resources. The Canadian firm had filed an investor protection lawsuit with the World Bank’s ICSID arbitration tribunal to seek damages after the state revoked the concession for exploiting a gold mine in Roșia Montană. The government announced this last Friday.
“The Romanian government welcomes this decision and thanks all those involved in defending the interests of the Romanian state,” stated the cabinet of socialist Prime Minister Marcel Ciolacu. In recent weeks, rumors had circulated that the arbitration tribunal would rule against Romania. In response, the government had already considered reissuing the concession to Gabriel Resources to avoid bankrupting the state budget. Now, Gabriel Resources must even bear the procedural costs of all parties involved, ruled the arbitration tribunal. Since Friday, the company’s stock price has plummeted from 0.87 Canadian dollars to 0.02 Canadian dollars. Dragos Tanase, CEO of Gabriel Resources, warned on Monday that the company’s continued operation was not guaranteed.
Controversial arbitration tribunals
The lawsuit filed by Gabriel Resources in 2015 was based on a bilateral investment protection agreement between Romania and Canada. The arbitration procedures provided therein are controversial as they mostly take place behind closed doors. The EU recently decided to withdraw from the Energy Charter Treaty. Many investor protection lawsuits have been filed through this treaty in recent years against regulations related to ecological transformation. av
Raw materials
Opinion
Lucas Hellemeier: utilizing non-Western artillery production capacities
Lucas F. Hellemeier
Lucas Hellemeier is a Ph.D. candidate at the John F. Kennedy Institute at Freie Universität Berlin and a Fulbright Visiting Researcher at Boston University.
The expansion of the Rheinmetall plant in Unterlüß was completed with great fanfare on February 12. With the symbolic ground-breaking ceremony, German Chancellor Olaf Scholz, Danish Prime Minister Mette Frederiksen, Defense Minister Boris Pistorius and Rheinmetall CEO Armin Papperger sent out important signals after the EU clearly missed its delivery target of one million artillery shells for Ukraine by March 2024.
In order to improve Ukraine’s strategic military position, investments in ammunition production should have happened sooner. The Zeitenwende in procurement involves a new focus on mass. The use of military equipment in a superpower conflict fundamentally differs from international crisis operations, which were previously the military focus of the West.
ASAP had a birth defect
However, it is doubtful whether these mass-produced goods should be produced in Western countries. Even if European defense spending increases, resources for military procurement remain tight and should be spent as efficiently as possible. The 500 million-euro EU ammunition package ASAP already contained a birth defect in that orders could only be placed in EU countries and Norway. French President Emmanuel Macron has since realized that it was misguided protectionism instead of a long-term European defense strategy.
From a technological standpoint, ammunition in the defense sector is a simple product. There are more sophisticated variants, such as the SMArt 155 SubMunition for Artillery produced jointly by Rheinmetall and Diehl, which offers greater accuracy thanks to sensor technology. Nevertheless, compared to complex defense products such as fighter aircraft, many countries around the world can produce this mass-produced ammunition. Western countries should utilize these production capacities.
That is why consistently implementing the 155mm NATO standard is more important than constructing ammunition plants on Western territory. Admiral Rob Bauer, Chairman of the NATO Military Committee, recently criticized that 14 NATO states grant themselves the right to deviate from the 155mm standard. This is a luxury that the EU and NATO can’t afford in times of peace or war. Ammunition should be interchangeable in an alliance to allow it to become a mass-produced commodity. As in other industries, standardized mass-produced defense products promise price advantages for consumers.
EU and NATO states should shape the ammunition market
If the EU and NATO countries buy standardized ammunition worldwide on a large scale, they have market power and can condition the production of third countries to their needs and use their purchasing power to shape the market. Applied to the market for artillery ammunition, this would mean, for example, enforcing the 155mm standard instead of the Russian 152mm standard in production by third countries.
Procurement in third countries can be more efficient due to lower production costs, which means that Western forces and, indirectly, Ukraine get more ammunition for less or the same money. This leaves more financial resources in the EU defense budgets for necessary investments in future technologies to strengthen European competitiveness. Europe should focus on protectionism in this market segment.
At the Berlin Security Conference in November 2023, Airbus Helicopters CEO Stefan Thomé demanded that the rules of the free market must not be allowed to dictate arms procurement. He criticized the German government’s tendency to increasingly buy from US competitors. However, the extent to which market forces should be allowed in procurement depends on the type of armaments products in question. For simple products, the EU states should give the market more freedom, i.e., procure based on economic efficiency. In contrast, technologically more sophisticated products require greater state intervention in the interests of strategic autonomy. On-shoring the production of mass-produced defense products, although seemingly attractive, is not a long-term European defense strategy.
Lucas Hellemeier is a Ph.D. candidate at the John F. Kennedy Institute at Freie Universität Berlin and a Fulbright Visiting Researcher at Boston University. His research focuses on European defense policy decisions in the transatlantic context.
European Defense
Executive Moves
René Repasi is the new chairman of the SPD delegation in the European Parliament. MEPs unanimously elected the 44-year-old as the successor to Jens Geier, who is stepping down after seven years in the post. Repasi only joined the Parliament in 2022, but the professor of European law quickly gained a good reputation. tho
Udo Zolleis is taking over as acting press spokesman for Manfred Weber, the EPP group and party leader. Zolleis has been one of Weber’s closest advisors for years, heads the EPP Group’s Strategy Unit and holds an honorary professorship at the Institute for Political Science at the University of Tübingen. Dirk Gotink, previously the spokesperson, is running for the Omtzigt list for the European Parliament. mgr
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