EU external policy

• Author: Directorate-General for Parliamentary Research Services (European Parliament)
• Pages: 218-240

EPRS | European Parliamentary Research Service

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EU EXTERNAL POLICY

47. Less duplication in security and defence policy

Potential efficiency gain: €22 billion per year

Key proposition

Geopolitical and strategic shifts in the European Union's global environment have prompted a

rethinking of Europe’s role in the world. The EU operates in an increasingly volatile security

environment, characterised by growing instability in its neighbourhood and wid er threats of

terrorism, cyber-attacks, climate change and hybrid warfare. Released in 2016, the EU Global

Strategy (EUGS) marked the beginning of a series of important defence integration initiatives by the

EU and its Member States. Although together EU countries are the second largest defence spender

in the world991, with a combined budget of €220 billion, in today’s connected, contested and

complex setting, individually they are too small to secure their defence and security goals by

themselves. Increased cooperation in defence can generate considerable added value and greater

efficiencies, since countries can achieve better synergies and economies of scale through joint

programmes and joint action. Such cooperation can facilitate a division of labour in military tasks,

allowing individual countries to specialise, instead of attempting to cover the entire spectrum of

defence activities992.

Defence policy strategists in Europe are seeking to draw on some of the lessons of their US

counterparts in terms of more efficient spending and defence research and development (R&D).

Organisational structures, investment and budget management in the US Department of Defense

suggest that a defence-ambitious Europe has considerable potential to achieve greater efficiency

and productivity gains while decreasing waste rates. Setting aside technical and political

constraints, aspiring to a more harmonised European defence market and more integrated forces

could potentially generate financial savings and efficiency gains running to several tens of billions

of euro, while also contributing to a stronger European posture in the international arena.

While still very far from achieving comprehensive defence integration, the EU has recently made

considerable progress in this direction and could still do more. One component of this has been to

complement traditional defence expenditure with a new tier of common, EU-level, security and

defence expenditure, which is itself due to rise by 22 per cent in the future Multiannual Financial

Framework (MFF) for the financing period 2021-27.

Research by the European Added Value Unit of EPRS suggests that the cost of non-Europe in defence

amounts to at least €22.15 billion per year.

991 SIPRI, Trends in world military expenditure, 2017.

992 Frederic Mauro, PESCO: European defence’s last frontier, GRIP, 2017.

Europe’s two trillion euro dividend: Mapping the Cost of Non-Europe, 2019-24

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More detailed analysis of potential benefits

As defence has traditionally been closely associated with notions of national sovereignty and power,

it is inevitably a sensitive topic for Member States. Defence markets are unlike traditional markets,

being closely connected to governments, which usually fund most of the R&D expenditure. The lack

of cooperation in European defence markets has generated fragmentation and costly duplication

of military capabilities. Causes may include lack of mutual trust, protectionist industrial interests,

and a desire to preserve domestic intellectual property and skills. It is expensive and inefficient for

each country to attempt to cover the entire spectrum of defence capabilities. With fewer

cooperative programmes in 2016 than 20 years ago993, the challenge is to generate cost efficiency

and greater sustainability.

Figure 16: Categories of European defence expenditure and amount in € billion

Source: European Defence Agency, 2017.994

The cost of non-Europe in defence is estimated partly on the projected spending in the 2021-27

Multiannual Financial Framework (MFF)995 - €1.5bn per year for the European Defence Fund (EDF)

and nearly €1bn per year for Military Mobility - and partly on existing estimates. In 2016, EU Members

(27 European Defence Agency members plus Denmark) spent approximately €220bn on defence,

out of which around €50bn or 20 % on investment (equipment procurement and R&D) and

infrastructure. The €2.5bn stemming from the EDF and Military Mobility represent 5 % of the €50bn

which Member States can save through Commission action in the two areas of defence expenditure.

This percentage can be augmented by considering other largely acknowledged diffusing benefits

of defence collaboration, such as, but not limited to, increased interoperability, reduced duplication,

a more competitive industry, more efficient use of public money, lower risk, reduced off-the-shelf

purchases, standardisation, optimised production capacity, lower production costs and security of

supply. A modest increase of 15 % can be calculated by assuming that the benefits above will lead

993 European Defence Action Plan, European Defence Action Plan, 30 November 2016.

994 European Defence Agency, Defence Data 2006-2016, 2017.

995 Authors’ calculations based on 2021-2017 MFF projections and SWD Impact Assessment establishing the European

Defence Fund.