On Tuesday, 5 March 2024, the European Commission put forth the EU’s first ever European Defence Industrial Strategy (EDIS) for 2025-2027, with the hope of strengthening European defence collaboration. Since Russia’s full-scale invasion of Ukraine, the EU has had to troubleshoot its way through determining how best to assist Ukraine, while Member States realised the urgent need to ramp up their own defence capabilities to signal strength and deter further Russian aggression. The EDIS seeks to address both issues, proposing a greater degree of leadership by the EU on defence issues in response to the full-scale invasion.

The Strategy is timely as both the EU and the US have struggled to garner unanimous  support to continue sending aid to Ukraine, and particularly, as the Strategy highlights, given that the EU faces challenges to procure equipment in the face of dwindling arms supplies. In March the EU missed a significant benchmark, delivering only 30% of ammunition pledged to Ukraine by the start of the month. Additionally, as the upcoming US Presidential Election poses the possibility that Donald Trump—who some fear will seek a quick end to the conflict by cutting US aid—may be re-elected, reevaluating EU defence needs to develop the EU’s strategic autonomy in the sphere of defence becomes more imperative.

Proposed Implementation of the Strategy

The strategy focuses on creating a collaborative defence industrial base within Europe which is built around collective security needs, as opposed to the largely individualised defence planning system which prevails today. Specifically, its stated goals are that by 2030:

• The value of intra-EU defence trade should represent at least 35% of the value of the EU defence market
• At least 50% of Member States’ defence budget should be devoted to procurement from the European Defence Technology and Industrial Base
• Member States should procure at least 40% of their defence equipment in a collaborative manner

This would primarily be accomplished by promoting investment aimed at revitalising defence manufacturers situated across Europe and urging Member States to purchase European equipment. The broader aim of this initiative is to create a crisis-ready defence industrial base capable of competing with leading suppliers and reducing EU dependency on the US. This vision is a notably more protectionist one, but the Strategy frequently references the EU’S 2022 Defence Investment Gaps Analysis (DIGA) joint communication to underscore the many ways in which the European defence industrial base is struggling in order to justify the EU-centric plan. For example, the Strategy raises that non-EU suppliers have made up 78% of EU defence acquisitions since the start of Russia’s invasion, a lofty 18% increase from between 2007 and 2016.

While the EDIP is only the most recent in a series of recent EU initiatives designed to improves defence cooperation, it differs significantly in scope, covering every area of defence from planning to delivery. The Strategy calls for the establishment of a European Defence Industrial Programme (EDIP), which would serve as the overarching mechanism for ensuring the implementation of the proposals in the EDIS. A Defence Industrial Readiness Board is also proposed, an evolution of the DIGA’s former proposal of a Defence Joint Procurement Task Force and would be responsible for providing strategic guidance and supporting ‘the coordination and de-confliction of Member States procurement plans. Many elements of the EDIP are designed to expand upon and bolster the 2023 European Defence Industry Reinforcement through Common Procurement Act (EDIRPA), which earmarked €300 million of EU funds to support joint procurement by Member States. To support projects previously faltering in the framework of the EDF and PESCO, the EDIP proposes the creation of the Structure for European Armament Programme (SEAP). SEAP would support collaborative defence programmes by creating a framework for incentivizing joint ownership of procured defence material through SEAP—acting as an international organisation—by providing VAT exemptions and a “bonus” for collaboratively agreed defence exports. Finally, and reaffirming the EDIP’s intent to make EU defence competitive with nations like the US, the EDIP proposes replicating the US’ Foreign Military Sales Model, in which nations can purchase defence products directly from the US government, instead of from a defence contractor.

Barriers to Success

An important pillar of success for the EDIS will be the ability to procure the necessary funding to carry out the project. The strategy proposes a budget of €1.5 billion to fund investments in European defence, but that budget can only be finalised after negotiations between EU Member States and the European Parliament and, according to the Carnegie Endowment for International Peace, is not likely to move forward before 2025, even on the assumption of Member State support. Disagreements over the best route for funding the programme have already begun, and some go so broad as to examine whether the language prohibiting the use of the EU budget for ‘operations having military or defence implications’ deserves a reinterpretation. In recent weeks, EU defence financing proposals have included joint bonds modelled off the Pandemic Recovery Response, repurposing frozen Russian assets, and using the EIB. In general, Europe’s wealthier states have taken issue with the notion of more shared borrowing, and Irish Finance Minister Michael McGrath said “sharing the debt burden in relation to investment in defence is not something” Ireland supports. Moreover, the programme will certainly need continued funding to meet its stated aims and given that the strategy is a significant expansion in the EU’s previous role in collective defence industry procurement, gaining approval for this funding is likely to be a controversial prospect.

Other struggles will likely stem from the political implications of what the Strategy is proposing. One such debate amongst Member States over the level of protectionism promoted by the strategy. In the days following the strategy’s release, Swedish Prime Minister, Ulf Kristersson defended continued cooperation with countries outside of the EU such as the US and UK, in part because of an economic necessity to keep trade barriers lowered. Some anonymous sources, talking to the Financial Times, expressed criticism, accusing the EC of a “power grab” in defence, and upheld the capacity for EU Member States to make defence procurement decisions individually.

Implications for Ireland

Irish officials have not yet commented on the Strategy, but it seems unlikely that Ireland will seek to involve itself significantly in any EDIS proposals. While the Strategy sets no hard line for the percent of GDP Member States must dedicate to defence expenditures, it does refer to the NATO defence spending standard of 2 percent of GDP and that this spending, if applied to the EU between 2006 and 2020, would have resulted in an additional EUR 1,1 Trillion for defence. Ireland, however, only spent 0.2 percent of their GDP on defence in 2022. Since 2015, Ireland has held the status of lowest EU-spender when it came to defence. Still, in recent years Ireland has committed itself to making defence a much greater priority, and although subject to political concerns about maintaining its neutrality, it is domestically already following the course of EU defence posturing. In 2022, the Commission on the Defence Forces released its High Level Action Plan (HLAP), a framework to implement much needed improvements in the Irish defence sector. The same year, HLAP’s ‘Level of Ambition 2’ was approved, which means by 2028, Ireland plans to have raised its defence budget by nearly 50% to sponsor other defence readiness efforts outlined in the plan.

The new Irish defence manoeuvring has involved moving closer to the EU, as well, prompting renewed conversations about what Irish ‘neutrality’ means in the context of Europe under threat. On 25 March, Taoiseach Simon Harris said in a speech that Ireland’s neutral status “did not excuse any complacency on defence and security issues.” This follows course with Ireland’s recent collaborative efforts with EU defence; Ireland has pledged to contribute approximately €150 million to the European Defence Fund (EDF), has joined 5 PESCO projects, and nominated its own candidate, head of the Defence Forces Lieutenant General Sean Clancy to the opening position of chair of the European Military Committee. Likewise, if Irish officials can successfully navigate concerns about breaking neutrality, and the Strategy moves forward successfully, it could reap benefits from the EDIS. For example, greater involvement could allow for Ireland to be considered in the Strategy’s proposed SME-targeted investment following similar funding initiatives with the EDF.

Despite insecurity spurred by Russian aggression and gradual dips into EU defence cooperation, Ireland has much left to navigate with the respect to the EDIS itself—whether successful or not—and the issues it takes with broader European security planning. If the EDIS is to meet its goals, it requires a dedication to defence by Member States that Ireland may not be prepared for and that would very likely reignite debates about Ireland’s ambiguously neutral stance. If NATO-style complaints about who is bearing the fiscal burden of regional security erupt in the EU, Ireland will yet again face accusations of “freeloading” off the security provided by other nations unless it makes genuine signals of taking collaborative efforts more seriously. Regardless, Ireland, like the rest of Europe, must reevaluate its posturing and determine if its legacy ideas of defence are compatible with the needs of the future.