The European Commission will publish the European Defence Industry Strategy in spring 2024. The KIVI Defence and Security Department has submitted a proposal for it.
The full proposal can be found here (PDF)
The European Union's defence industry
The defence market is not a market of supply and demand. Yet many would like to see it that way, especially in Europe. With the collection of the peace dividend, interdependence has become so great in the 21st century that strategic autonomy of a single member state is impossible. Especially in the case of electronic components that underpin all products and means of production. This affects the defence industry to such an extent that dependence on (sub)systems from other countries cannot be avoided. Therefore, EU policy aims at achieving strategic autonomy of the European Union as a whole.
To achieve the goal of strategic autonomy, it is important to transform the current disruptive practice of mandatory compensation or industrial participation into a more open practice aimed at inclusion rather than exclusion. To this end, a new structure is needed that recognises Europe's defence interest and enables our defence technological and industrial base to participate on a fair basis in development or production of defence systems for Europe and for export.
For the development ..
This can be achieved by concentrating defence technology and systems development in a limited number of clusters in Europe. Each "cluster" dedicated to a specific defence technology area. Each technology area is supported by only a few clusters to keep the technological level as high as possible. The clusters are spread across the continent to reduce vulnerabilities. This structure supports the harmonisation of requirements and technical standards, thereby limiting the plethora of different systems in Europe .
and for production ..
For the production of capabilities and supplies, production plants should be spread across Europe to continue production in times of crisis and war. The concept should be flexible so that production can be easily scaled up and down when needed. Production of military capabilities should be based on production licences. To allow for sharp changes in demand, it is necessary to support companies to switch quickly from civilian to military production and vice-versa. This will also smooth out price fluctuations.
Conclusions and recommendation
This new concept of concentrated technology clusters and production facilities spread across the European continent could be a new and modern European defence industrial policy. A policy that takes into account the needs of member states and companies, and benefits Europe's strategic autonomy. In peace and war. It should lead to a more stable and prosperous defence industry and a better long-term focus by member states and the European Commission on clearly defined areas of defence technology and production.
However, to fully benefit from these improvements, political control over budgets and procurement procedures must also be aligned. For this reason, we recommend developing a European Defence Equipment Market Directive (EDEM Act) for this new cluster structure.
29 December 2023
