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EU plans EUR 5 billion defence fund

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EU plans EUR 5 billion defence fund

Federica Mogherini - Photo EC

(BRUSSELS) - The EU Commission set out proposals Wednesday to strengthen Member States' joint defence capabilities, defence spending efficiency and a EUR 5 billion European Defence Fund.

The election of Donald Trump has for many highlighted the importance of a strong Europe able to defend and protect its citizens at home and abroad.

"If Europe does not take care of its own security, nobody else will do it for us", said the Commission president Jean-Claude Juncker: "A strong, competitive and innovative defence industrial base is what will give us strategic autonomy."

Europe is the world's second largest military spender, behind the US. However, defence budgets in Europe have been shrinking in recent years, while other global actors (China, Russia and Saudi Arabia) have been upgrading their defence sectors on an unprecedented scale.

Over the last decade EU Member States have decreased defence spending by nearly 12% in real terms, but this has not been compensated by more European cooperation, says the Commission. The lack of cooperation between Member States in the field of defence and security is estimated to cost annually between EUR 25 billion and EUR 100 billion.

More European defence cooperation would have a positive spill-over effect on the European economy.

"A strong European Defence Industrial and Technological base as well as increased cooperation amongst Member States are both essential to develop and maintain the key capabilities that are needed for Europe's security," said the EU's foreign policy chief Federica Mogherini.

The European defence industry generates a total turnover of EUR 100 billion per year and 1.4 million highly skilled peopled directly or indirectly employed in Europe.

 

The European Defence Action Plan includes proposals to:

1 - Set up a European Defence Fund to support investment in joint research and the joint development of defence equipment and technologies: a "research window" would fund collaborative research in innovative defence technologies such as electronics, metamaterials, encrypted software or robotics, while a "capability window" would act as a financial tool allowing participating Member States to purchase certain assets together to reduce their costs.

2 - Foster investments in SMEs, start-ups, mid-caps and other suppliers to the defence industry, with support from the European Structural and Investment Funds and the European Investment Bank (EIB) group already provide financial support for the development of a number of dual-use activities. The Commission will promote EU co-financing of productive investment projects and the modernisation of the defence supply chains, as well as support cooperation in the defence sector to ensure people have the right skills and technological ability to generate innovation.

3 - Strengthen the Single Market for defence. with the Commission pushing ahead with the effective application of the two Directives on defence and security procurement and on EU transfers, facilitate the cross-border participation in defence procurement, support the development of industry standards, and promote the contribution of sectoral policies, such as EU space programmes, to common security and defence priorities.

The Commission will now present and discuss the proposals with all stakeholders, with the EU summit on 15-16 December a key milestone.

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