It’s published update
Investing tens of millions of defence spending in joint EU funds could help EU countries to expand the gap between funding and capabilities of needed flagship projects faster.
Micael Johansson, CEO of Swedish defense and security firm Saab, said on Wednesday that the European Commission has taken steps to turbocharge defence spending in the EU in the right direction, but it is more necessary to promote countries and businesses that develop and acquire new systems.
The EU Executive’s “Preparation 2030” defense plan, announced in March, relies on two major financial pillars. It is relaxing the fiscal rules for defence spending, which the committee estimated that 650 billion euros will be poured into the sector over the next four years. And a A 150 billion euro loan instrument known as Safe.
Johansson, who has been at the helm of the Association of Aerospace, Security and Defense Industry (ASD), which represents around 4,000 companies since June 15, said these funding options are primarily in the hands of each government and are based on their own direct needs.
“Maybe it’s a hopeful way of thinking, but if the country is actually ready to spend a portion of its defense budget on the fund (…), it will create a common fund that can work in terms of launching a flagship project,” he told Euroneus about the bystanders of the European Defence and Security Summit in Brussels.
He suggested that the European Defense Industry Programme (EDIP), the regulation originally submitted in early 2024, remains in the EU’s legal production process, could be a good place for the fund.
The regulations currently plan to 1.5 billion euros from the EU budget to be spent on strengthening European defense industrial bases over the 2025-2027 period, but Johansson said “10 billion euros” might be more appropriate.
However, he admitted that this was a “big step.” “I really don’t know how to achieve that. Of course, it’s a political decision.”
Defense is a highly sensitive topic, falling into the national capabilities of the EU, with member states fiercely protecting their own champions in the sector. However, this has led to a deep, fragmented market, with serious interoperability between different systems and less agile industries that respond to crises.
The EU and its member states, 23 of them, are currently in a hurry to cram holes into the bloc’s defenses, identifying seven priority areas of capability, including ammunition, drones, proof and defense, military mobility, and electronic warfare.
European companies can meet most of the continent’s needs, Johansson said, but they are lagging behind their US counterparts in several key areas, including integrated air missile systems, long-range strike capabilities and autonomous systems such as advanced high-end drones.
As Washington is increasingly sending mixed messages about its long-term commitment to Europe’s defense to pivot some of its Indo-Pacific resources, these “flagship” projects could benefit from a more European approach and joint funding, Jonathon said. This can be done through member states or businesses that create so-called coalitions that are willing to develop a common system.
“But this is not easy because there is a trade-off between the sovereignty of the state and the creation of interdependencies,” he told Euronows.
The committee’s defense proposals planned for more cooperation between member states, some of which had to pool orders together to access funding through secure equipment.
Meanwhile, EU executives are scheduled to announce new proposals for the defense sector next week, with the aim of reducing the deficit.
