“Regularly increasing defence budgets in real terms.” It’s the very first of a list of 20 commitments that 23 European Union member states signed on 13 November in Brussels. The joint declaration calls upon the European Council to adopt in the next meeting, due to be held on 14 and 15 December, a decision establishing a Permanent Structured Cooperation (PESCO) on defence, which would allow both to increase the volume of investments on military technologies and to step up the level of coordination in this area within Europe.
The commitments signed by the 23 EU countries include a “successive medium-term increase in defence investment expenditure to 20% of total defence spending (collective benchmark) in order to fill strategic capability gaps,” “increasing the share of expenditure allocated to defence research and technology with a view to nearing the 2% of total defence spending” and a “commitment to the intensive involvement of a future European Defence Fund.”
On 7 June, the European Commission launched the proposal of establishing a European Defence Fund. Under the proposal, backed by the European Council in December 2016, the Fund will coordinate, supplement and amplify national investments in defence research, in the development of prototypes and in the acquisition of defence equipment and technology.
The target is to include in the European budget, from 2020 on, €1.5 billion under the defence sector: €0.5 billion to be destinated to military research and €1 billion for development and acquisition. The intention of the Commission is for the projects to be co-financed by national budgets and therefore generate a total investment in defence capability development of €5 billion per year after 2020.
The Fund will start with €90 million available under the research chapter for the period 2017-2019 and €500 million for 2019 and 2020 under a dedicated defence and industrial development programme.
According to the Commission, “the lack of cooperation between member states in the field of defence and security is estimated to cost annually between €25 billion and €100 billion. 80% of procurement and more than 90% of research and technology are run on a national basis. Up to 30% of annual defence expenditures could be saved through pooling of procurement.”
The possibility of a PESCO in the area of defence security and defence policy was introduced by the Lisbon Treaty. It foresees the possibility that a number of EU member states work more closely together in the area of security and defence. “This is the first time that that provision of the Lisbon Treaty, that the Treaty of the European Union, is used. So it’s quite an historic day,” said High Representative of the Union for Foreign Affairs and Security Policy Federica Mogherini, adding that this is an achievement “that was just inconceivable one year, one year and half ago, and that today is reality.”
Federica Mogherini press conference in Brussels on 13 November
The countries that so far did not sign the commitments are UK, Denmark, Ireland, Malta, and Portugal. But some of them will sign it soon: “Not only we have 23 member states, but we can have other member states that are currently not part of this notification joining in the coming weeks,” said Mogherini, telling reporters also that “it was a bit of an emotional moment, which is not always the case when you work on European defence, that sometimes is tough and technical.”
“Today we are taking a historic step,” Germany’s Foreign Minister Sigmar Gabriel told reporters. “We are agreeing on the future cooperation on security and defence issues … it’s really a milestone in European development,” he said. While the chief EU Commission spokesperson Margaritis Schinas wrote on Twitter (https://twitter.com/MargSchinas/status/930047390660382721): “The sleeping beauty of the Lisbon Treaty; the awakening. A small step for Brussels, a giant leap for Europe.”
The increase of the European defence budget has been a US request for a long time, as the majority of EU countries do not meet NATO’s target of 2 percent of GDP. On
25 april 2016, the then president of the United States Barack Obama accused Europe of being “complacent” about defence by failing to meet the NATO spending target. And Donald Trump as well called on Europe to increase its defence spending (https://www.washingtonpost.com/world/europe/trumps-calls-for-europe-to-increase-defense-spending-could-force-other-upheaval/2017/02/15/fe257b44-efc1-11e6-a100-fdaaf400369a_story.html?utm_term=.61625c97f690).
The only European countries that met the 2% target, as of June 2017 (https://www.nato.int/cps/en/natohq/news_145409.htm), are Greece (2.32%), the UK (2.14%), Estonia (2.14%), Romania (2.02%) and Poland (2.01%).
The expenditures in Germany, France, Italy, and Spain amount respectively to 1.22%, 1.79%, 1.13% and 0.92% of each country’s GDP. Nonetheless, according to NATO estimates, all European countries but three (Greece, Belgium and UK) are increasing in real terms their defence budget. The fastest growth has been registered in Romania, where an impressive +49.7% is going to be spent on defence this year over 2016, bringing the total national expenditure to over €16 billions. Bulgaria is registering a +25.9%, Lithuania +22.5%, Latvia +22.4%, Czech Republic +13,4%, and Poland +4,2%. But also older EU members are increasing their budget: Spain +17.5%, Portugal +5,1%, Germany +4,1%, France +2,4%, and Italy +1,7%.
In absolute terms, excluding UK (that will spend 54.8 billion pounds this year, roughly 61.4 billion euros, -0.28% over 2016), France has the greatest budget (€40.9 billion), followed by Germany (€39.5 billion), Italy (€20.8 billion) and Spain (€10.7 billion).
Europe is participating in what seems to be a new worldwide arms race. According to the Stockholm International Peace Research Institute (SIPRI) (http://money.cnn.com/2017/04/24/news/russia-military-spending/index.html), in 2016 Russia boosted its military spending to $69.2 billion (5.3% of its economy), with 5.9% increase, landing behind only the United States and China in the ranking of top spenders (overcoming Saudi Arabia, that spent $63.7 billion). China spent in the same year $215 billion (+5,4%), while the US spent $611 billion (+1,7%). And according to a 2016 report by IHS Jane’s (http://money.cnn.com/2016/12/12/news/china-military-defense-defence-spending/index.html), China’s defence spending will rich $233 billion in 2020, up from $123 billion in 2010, nearly doubling in ten years.