EU ‘must spend big on joint defence projects to end reliance on US’

Fears over Europe’s security further exacerbated by possibility of second Donald Trump presidency

European Union governments must spend big on joint defence projects because they can no longer rely on the US for their security, a landmark report said on Monday.
The EU report said national competition within the bloc’s defence industry had weakened Europe’s ability to act as a cohesive power.
It comes as Nato allies warned that Russia was arming at an alarming rate and said Europe had as little as three years to prepare for an invasion.
There is also a shifting focus in Washington towards countering China as the main White House foreign policy goal.
Fears over Europe’s security have been further exacerbated by the prospect of a second Donald Trump presidency after his threats to let Russia attack European Nato allies not hitting spending targets.
The long-awaited report – ordered by Ursula Von der Leyen, the European Commission president – demanded a wider “industrial strategy for Europe”, involving €800 billion in annual investment to prevent the bloc from falling behind the US and China.
It is likely to set the agenda for Mrs von der Leyen’s next five years in office, which will be blighted by war and economic stagnation.
The report was authored by Mario Draghi, a former president of the European Central Bank and ex-Italian primer minister, who was largely credited with saving the euro during the financial crisis more than a decade ago.
“The safety of the US security umbrella freed up defence budgets to spend on other priorities,” he wrote. “In a world of stable geopolitics, we had no reason to be concerned about rising dependencies on countries we expected to remain our friends. But the foundations on which we build are now being shaken.”
Washington has slowly shifted its focus from the Euro-Atlantic area to the Indo-Pacific over the last two decades. The Trump White House further accelerated the transition by framing the rivalry with China as a great power competition.
Joe Biden, the US president, identified countering Beijing as his main foreign policy challenge at the start of his administration, although his efforts were made difficult by the Russian invasion of Ukraine in February 2022.
“US strategic doctrine is shifting away from Europe and towards the Pacific Rim – for example in the format of Aukus – driven by the perceived threat of China,” wrote Mr Draghi. “As a result, a growing demand for defence capability is being met by a shrinking supply – a gap which Europe itself must fill.”
The EU collectively is the world’s second-largest spender on defence, but it only forks out a third of Washington’s outlay, according to the report. Just 10 member states, which are also part of Nato, hit the two per cent spending goal set by the Western military alliance.
Many countries have announced significant increases in defence spending in response to Vladimir Putin’s attack on Ukraine. The European Commission has previously estimated that member states would need to invest at least €500 billion to secure the bloc over the next decade.
Mr Draghi warned that the continental rearmament would be plagued by difficulties if the EU’s defence industry was not sufficiently centralised in Brussels. His report highlighted that the EU’s 27 member states operate 12 types of battle tanks, while the US produces a single model for its armed forces.
A sudden splurge on defence could also trigger a “supply crisis”, he wrote, because individual companies have not sufficiently scaled up production lines to meet demand.
Mr Draghi argued that greater use of joint procurement in the defence sector could be used to mitigate the risks of shortages.
“This lack of co-ordination creates a vicious circle for the EU defence industry,” he said. “Without demand aggregation among member states, it is more difficult for the industry to predict longer-term needs and increase supply, in turn decreasing its overall capacity to meet demand and depriving the industry of orders and opportunities.”
He recommended that EU competition policy be overhauled sufficiently to ensure that defence spending was focused on the bloc’s companies, rather than flowing overseas to countries such as the US and UK.
He denied that his wider report, which spans some 400 pages, was “do or die”, but warned: “It’s ‘do this, or it’s a slow agony’. We have reached the point where, without action, we will have to either compromise our welfare, our environment or our freedom.”