Dear Commission President, a good speech on the State of the Union but what about defending it?

Last week witnessed one of the high points on the annual agenda of the European Union; namely the State of the Union speech given by the EU Commission President to the European Parliament in Strasbourg. This was the fourth such speech by Ursula von der Leyen during her mandate. By next September, the European elections will have taken place. There will be a new European Parliament with a new alignment of political forces, a new Commission and possibly a new President of the Commission.

Von der Leyen has not yet made clear if she will be seeking a second five-year term as EU Commission President or if she will be looking to move across Brussels to NATO. Her name has long been in the ring as a leading candidate to succeed Jens Stoltenberg as NATO Secretary General when he steps down in October 2024. Yet her State of the Union speech last week certainly came across as the starting gun for a re-election campaign. There was something in it for all the EU’s key social partners. Business was reassured by the word “competitiveness” being used nearly 20 times in the speech as well as von der Leyen’s announcement that the Commission will open an investigation into the subsidies China is providing to its electric vehicle industry. She was at pains to tell businesses, which are increasingly worried at the extra costs and regulations that her EU green agenda is imposing on industry standards and production, that cutting carbon emissions is perfectly compatible with the EU’s competitiveness on global markets and ability to attract inward investment. As popular discontent with ultra-low emissions zones in inner cities intensifies, motorists need to buy expensive electric cars and households face high costs to install heat pumps to replace oil-fired boilers, von der Leyen’s own European People’s Party has become more sceptical about EU environmental policies. A forthcoming report by Mario Draghi, the former president of the European Central Bank, will recommend how the bloc’s competitiveness can be further enhanced in a low or zero-carbon economy – although von der Leyen’s speech offered no future plan of action yet.

The farmers were also praised for ensuring the EU’s food security at a time of global food supply chain disruptions. This was a sop to a sector that has been unhappy at the level of EU support under the Common Agricultural Policy (CAP) as seen in the recent farmers’ demonstrations in the Netherlands and France. A special EU summit under the forthcoming Belgian Presidency will look at the issue of food security. Looking back at the greatest crisis of her time as President, the COVID pandemic, there was a push for a greater EU role in health and pandemic prevention. For the environmentalists, there were commitments to achieve carbon neutrality in the EU by mid-century; and for those worried about the rapid advance of artificial intelligence (AI), a promise to lead the world on AI regulation – although far less on how the EU could lead on the innovative development of the technology itself. Von der Leyen gave a robust defence of EU enlargement to Ukraine and the Western Balkans indicating that there was no going back, but going forward would be a difficult journey. She gave no timetable for enlargement contrary to the EU Council President, Charles Michel, who a few days beforehand had surprised von der Leyen by suggesting that the next enlargement could take place in 2030. She said that all the major Commission programmes, such as the Green Deal, the CAP or Next Generation EU, could be carried out with 30+ member states as successfully as with the current 27. Yet extending an olive branch to the enlargement sceptics, the Commission President added that there should be pre-enlargement reviews of each major EU policy area to assess the impact of enlargement on those policies. Yet in the final analysis what von der Leyen wanted to do above all else was to defend her record. She claimed that 90% of the mandate that she had taken on four years previously had been implemented.

All well and good. But in a speech lasting over an hour and entitled ‘Answering the call of History’, there were surprisingly almost no references to security and defence, the area where the EU is currently facing the greatest challenge to “answer the call of History”. If the speech had been focused less on past accomplishments and more on the EU’s position in the more competitive and confrontational world of the future, the omission of security and defence would not merely have been strange but frankly inexcusable, particularly by a Commission President who was formerly a German defence minister and is being talked about as a future NATO Secretary General. Moreover, the omission of security and defence is perplexing because this is the area where arguably the EU has made the most progress and been the most innovative over the past year.

The war in Ukraine has induced the bloc to finance collectively the procurement and transfer of weapons for the first time, using the off-budget funds in the European Peace Facility, which have been increased from €5 to €8 bn. This money is also being used to train 40,000 Ukrainian soldiers in Germany and Poland. Half a billion euros have gone to defence companies to help them reopen production lines for the repair and upgrading of tanks and infantry fighting vehicles or to produce ammunition. Just before the summer break, the EU leaders agreed to spend €2 bn on procuring one million 155 mm artillery shells, which Ukraine needs in particular for its current counter-offensive. Following a decision by the G7 on the margins of the NATO Summit in Vilnius last July to provide Kyiv with long-term security guarantees, the EU High Representative for the Common Foreign and Security Policy, Josep Borrell, is now pushing for the European Peace Facility to be boosted to €20 bn. This will help finance EU military assistance to Ukraine to deter further Russian aggression after the current war is over. In addition, the Commission has started to implement an EU Defence Investment Fund with €8 bn to support multinational research and development projects in key areas such as AI, robotics, cyber defence and data processing. The Permanent Structured Cooperation Programme (PESCO), launched five years ago, now has dozens of cooperative defence capability projects. The most significant is one on military mobility, led by the Netherlands, which invests in infrastructure and transport to speed troops and equipment across the EU borders. This project directly contributes to NATO’s capacity for collective defence, particularly through combined arms exercises. Meanwhile, the EU’s latest security and defence policy document, the Strategic Compass, published in the spring of 2022, contains a joint threat assessment for the first time, raises the level of ambition of the EU across the spectrum of defence tasks and announces the establishment of an EU Rapid Response Force of 5000 soldiers. It should reach initial operational capability in 2024. The EU has also initiated a bilateral defence dialogue with the United States and appointed a military attaché to its mission in Washington.

Moreover, the past year has seen a multitude of smaller, regional initiatives by EU member states to pool and share their defence assets. Germany is leading a European Sky Shield to integrate air and missile defence systems and make them fully interoperable. Sweden and Finland have announced that they will choose their future air defence missiles precisely to fit into the new Europe-wide systems architecture. The Scandinavian member states are coordinating the patrols of their fighter aircraft and developing a common air recognition and awareness network. Sweden and Finland have merged their navies and are now integrating Norway into a Nordic group as well. Other member states have sent ships to the Gulf of Guinea to fight piracy as part of a Coordinated Maritime Presence. Denmark, the Netherlands and Romania have taken the lead on F16 pilot training for the Ukrainians while EU member state, Denmark, is working with European partners such as Norway and the UK to develop a new generation of cruise missiles. The EU also launched a new training mission in Mozambique and is now preparing a Common Security and Defence Policy mission to help Western African states with capacity building. NATO may well still be the primary organisation for the collective defence of the EU space; but all these EU-sponsored initiatives undoubtedly help NATO when it comes to assisting Ukraine, improving capabilities, reopening production lines, improving military mobility and helping to stabilise the Global South across the Mediterranean. When it comes to internal security and resilience, a new EU law on cyber security will considerably increase the resources that Brussels can make available to a stricken member state and von der Leyen has herself proposed that the EU jointly procure a fleet of water tanker aircraft to help member states fight wildfires. These contributions to the EU’s fundamental task, protecting its own citizens, certainly deserved a mention in the Strasbourg speech.

Memorable speeches, however, are more than box-ticking of past accomplishments or doffing the hat to important political stakeholders. They point the direction to the future, and propose ideas and solutions to make the world a better place. They are calls to action and announce turning points in the normal course of events when international institutions, governments, companies and individuals need to raise their game and abandon business-as-usual approaches. Years later, we may remember only a few inspirational words such as “I have a dream” or “Mr Gorbachev, tear down this wall”, but the best speeches contain more than just skilful rhetoric – they set out a vision and mobilise people across government and civil society. By this yardstick, von der Leyen’s State of the Union address fell short. She skipped the thorny issue of new EU treaties and institutional reform, which seem inevitable sooner or later if the EU is to function with nearly 40 member states. This task has been left for the time being to the member states, particularly France and Germany, which have just submitted a proposal for a four-speed EU. In the area of security and defence, there were some critical challenges that she could have outlined. The Spanish king, Alfonso XIII, famously said that if God had put him in charge of the universe instead of Divine Providence, he would have ordered things somewhat differently. If, in a similar vein, I had been entrusted as the speechwriter of von der Leyen’s Strasbourg address, how would I have had the impertinence or temerity to redraft the text my way?

Firstly, by insisting on the need to spend all the extra euros that EU member states are now spending on defence – in line with the NATO commitment of 2% as a minimum of GDP – wisely. Since Russia’s illegal annexation of Crimea in 2014, Europeans have spent an additional €450 bn on defence over their 2014 baseline budgets. The Ukraine crisis has revealed the urgent necessity for EU member states to restock their arsenals of ammunition, shells, missiles and spare parts both to help Ukraine over the long term but also to meet their own greater commitments to NATO’s collective defence. These new investments are timely but the Chairman of NATO’s Military Committee, Admiral Rob Bauer, recently warned that much of this extra money would be gobbled up by inflation running at between 10 to 20%, particularly as increased demand chases limited available stocks and production capacity and supply chains are slowly re-established. So, as in the field of 155 mm shells, the EU and its European Defence Agency need to negotiate bulk purchase agreements and fixed price contracts with the industry to drive unit prices down. The extra defence funding – for instance the €100 bn special budget which Germany is devoting to the modernisation of the Bundeswehr – needs to do more than simply replace equipment and ammunition sent to Ukraine, thereby returning NATO stocks to the status quo ante. It needs to ensure that all EU member states have at least 30 days of reserve supplies and a surge in industrial capacity. After all, Ukraine has been firing up to 10,000 artillery rounds a day during its counter-offensive. To quote Stalin, in military affairs “quantity has a quality all of its own”. Investment in defence industries outside of government, as the usual sole customer, would also be useful, for instance from banks and pension funds. These sometimes steer clear of defence companies as if they break ethical investment codes of conduct. But defence is not unethical nor on the same level as tobacco companies or the carbon-emitting oil industry. It is about the ability to prevent or withstand aggression. So, there is a case to be made here by the EU leadership.

A second challenge is to ensure that the extra defence funding helps to develop the EU’s defence technology and industrial base. Defence companies in the EU currently employ over 400,000 skilled workers and are at the forefront of innovation, and research and development. The defence sector ensures Europe’s strategic autonomy. Yet the Ukraine conflict has also revealed supply chain vulnerabilities as in the limited domestic production of explosives or the dependency on China for chips and other electronic components. So, the EU, in addition to the bulk long-term purchasing of ammunition, needs to develop an industrial critical materials strategy to ensure sufficient stockpiles and diversification of supply of the means of defence production, avoiding bottlenecks or single points of failure. At the same time, a balance has to be found between buying foreign equipment off the shelf or weaponry produced within the EU or where the EU gains access to key military technologies. Poland, for instance, awarded a contract two weeks ago to purchase 4artillery systems from the US for €12 bn. This is in addition to Poland’s purchases of US Abrahms M1 tanks and Patriot air defence systems as well as US helicopters and the US F35 fighter jet. Poland has also given major contracts to South Korea for tanks and aircraft. These acquisitions will naturally benefit NATO’s collective defence, but if an EU member state like Poland – which aims to spend 4% of its GDP on defence – spends all this money abroad, the European defence technology and industrial base will soon atrophy. So, Europe needs to develop more collaborative capability programmes of its own. France and Germany have tried to lead the way by launching a sixth-generation fighter jet programme (FCAS) and a new infantry fighting vehicle. Yet different design concepts and incompatible industrial strategies have resulted in this latter project becoming stillborn to the point of abandonment. The EU using the European Defence Agency needs thus to develop a strategy of what it can procure abroad and what it needs to develop within its own borders to sustain a viable defence industry and to support European Strategic Autonomy. Fifth-generation fighter jets or maritime patrol aircraft will be dominated by Lockheed Martin and Boeing for the foreseeable future, but there is no reason why Europe cannot develop world-class warships or drones, cruise missiles, long-range precision artillery and air defence systems.

Another idea is to use loans and deficit financing to kick-start the reopening of industrial production lines. Ursula von der Leyen persuaded the member states to allow the Commission to raise capital on the financial markets to fund the multi-billion euro EU recovery programme after the COVID pandemic – now known as Next Generation Europe. Admittedly, interest rates were lower just a couple of years back and last week the European Central Bank raised the Eurozone rate to 4%. Yet European defence production is now a priority and so a similar debt financing scheme is worth considering. The scheme would have two main advantages. First, to allow member states to use the EU funds to give industry long-term production contracts inducing companies to hire skilled staff and buy state-of-the-art machine tools. Second, the Commission should insist that the funds would be conditional on several member states coming together to buy the same systems incorporating NATO interoperability standards. What the Ukraine crisis has revealed is that far too many EU countries today have shells and ammunition that are not interoperable with their allies. This means that some of the equipment is useful for Ukraine but much is not, without creating an inefficient multitude of different logistics chains and maintenance arrangements. So, an EU industry fund could function as a driving mechanism to impose common standards and weapon types across the EU, facilitating bulk procurement and reducing operational and maintenance costs.

The NATO-EU relationship is also an area that requires attention. Both institutions have worked on industry production plans and launched innovation drives. In NATO’s case, this is known as Project DIANA and involves the establishment of two innovation hubs in Canada and the United Kingdom. An innovation fund of €1 bn is being administered by the Netherlands, although this pales in comparison to the €8 bn in the EU’s European Defence Fund. NATO also has a Supply and Procurement Agency in Luxembourg which is just as capable – and in reality better equipped – to procure 1 mn 155 mm shells as the European Defence Agency. Both the EU and NATO are deeply engrossed in exploring the technology of cyber defence and the potential of emerging and disruptive technologies – including space, AI, quantum computing, cryptography, robots, hypersonic missiles, loitering drones and new materials. There is the obvious danger of a lot of duplication of effort and resources here and an urgent need for the EU and NATO to sit down together and decide who takes the lead in which areas. As with the EU PESCO project on military mobility, there are many EU capability programmes which are of immediate benefit to NATO’s collective defence tasks. Perhaps also NATO could apply for funding from the European Defence Fund for its own collaborative projects or merge some of its own Smart Defence projects with very similar PESCO initiatives that are partially funded by the EU. Cyber defence, training courses, base sharing, military medicine and counter-drone technology are leading examples. Whether NATO or the EU, the money comes largely from the same governments and for the same priorities. So, NATO and the EU need to decide: where do we work separately but ‘en bonne intelligence’ (‘on good terms’) with each other? And where do we pool and merge our efforts in joint EU-NATO capability programmes?

Finally, partnerships beyond the EU. The war in Ukraine has brought the transatlantic and Indo-Pacific democracies closer together around common threat perceptions and similar security interests and challenges. Australia Japan, South Korea and Taiwan have all significantly increased their defence budgets and begun to work more closely together and with the US. As they modernise their land, air and naval forces and seek also to expand their defence technology and industrial bases, there are opportunities that the EU should grasp for joint ventures and technology transfer. Although not in the EU, the UK has shown the way with the AUKUS deal with Australia to develop nuclear propulsion technology for submarines and a broader technology research and development pillar. The UK has also secured Japanese participation in its Tempest sixth-generation fighter aircraft programme – including Italy and Sweden. The close defence partnership between Poland and South Korea has already been mentioned although we need to wait and see if this will involve South Korean investment in Poland and joint ventures with technology transfer as opposed to outright purchases. Yet this still leaves plenty of scope for EU member states to pursue more defence cooperation with their Indo-Pacific partners. They should not leave it all to the US or the UK. Washington recently signed deals with India on space and jet engines. Despite its bitter disappointment at losing a €35 bn submarine deal with Australia, France has been seeking to re-establish its close defence cooperation with Canberra, this time focusing on surface vessels. The market will be highly competitive in the Indo-Pacific, as the AUKUS pact showed, but it will be a mark of the health of the European defence industry to be able to succeed there.

That is my humble contribution to the next State of the Union speech by the EU Commission President. If Ursula von der Leyen is chosen for a second five-year term, I trust that it will be more for her capacity to deliver on the challenges that the EU is facing today than because of her accomplishments in the past, and because of her ability to mobilise the EU institutions around a clear and concrete vision of what she likes to call the “EU Defence Union”. But if she does decide to jump ship and move across town to NATO headquarters, I would most happily write her first speech as NATO Secretary General with all these proposals. I certainly do not think they would be out of place. And hopefully, they would turn a good speech into a great speech.

The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.