Questions and Answers: Commission contribution to European defence in the context of the Strategic Compass

Source: European Commission (EC) i, published on Tuesday, February 15 2022.

What do today's announcements include?

Today we present a Communication on the Commission's further contribution to European defence and a Roadmap on critical technologies for Security and Defence. This is a Commission contribution to the Strategic Compass on Security and Defence that is currently being discussed by the Member States. A stronger EU on Security and Defence also reinforces NATO. It follows the announcements by President von der Leyen on Defence in her State of the Union Speech 2021 as well as the by the European Council of 26 February 2021.

How will these initiatives benefit the EU?

The European Union needs to act now to strengthen its defence capabilities in the present context and enable the EU to face present and future threats, with a new generation of state-of-the-art technologies, such as: cyber, hybrid, space collaborative and autonomous systems based on connectivity and Artificial Intelligence (AI).

At the same time, the industrial ecosystem that defence forms together with the aerospace and the security sector constitutes a high-tech industrial ecosystem that is not only an essential driver for Europe's open strategic autonomy and technological sovereignty, but also a major contributor to growth and innovation.

On top of contributing to the security of the European Union's citizen, the European defence sector contributes significantly to the sustainable economic recovery following the pandemic and given its overall innovative nature, the defence ecosystem also has the potential of greatly contributing to the green transition and result in positive spill-overs for civilian use.

Communication “Commission contribution to European defence”

How will investments for defence research and capabilities developed in EU cooperative frameworks be stepped up?

The European Defence Fund (EDF), with a budget close to €8 billion for 2021-27, is already a game-changer in supporting collaborative defence research and development projects meeting EU armed forces' operational needs. By the end of 2022, the EDF will have invested €1.9 billion in such projects to be implemented by consortia of defence companies - entities - belonging to several different Member States.

Joint procurement can significantly enhance interoperability between armed forces. However, Member states still collectively fail to meet the longstanding benchmark of 35% of their total defence equipment dedicated to procurement in cooperation with other Member States. In order to address this negative trend, the defence package explores new options:

  • By early 2023, the Commission will propose a VAT waiver to support the joint procurement and ownership of defence capabilities developed in a collaborative way within the EU, while ensuring compliance with World Trade Organisation rules.
  • By mid-2023, the Commission will build on the work of the Expert Group of the Financial Toolbox with a view to propose new financing solutions to facilitate Member States' joint procurement of EU strategic defence capability priorities building upon already available expertise.
  • Following the interim evaluation of the EDF, the Commission will consider a possible amendment to article 13 of Regulation 2021/697 establishing the European Defence Fund, to reinforce the EDF bonus system when Member States are able to commit to jointly acquire and/or own the developed capabilities.

The Commission will present observations on developments, barriers and opportunities related to multinational defence capabilities projects in the Annual Single Market Report, usually published with the European Semester Autumn package.

While Member States are in charge of issuing export licences for military equipment, the Commission invites them to bring forward ongoing work to streamline and gradually converge arms export control practices, especially for those defence capabilities that are jointly developed, in particular in an EU framework. The Commission invites Member States to seek an approach according to which, in principle, they would respectively not restrain each other from exporting to a third country any military equipment and technology developed in cooperation. This work should ensure that EDF-funded products will profit from adequate and competitive access to international markets without prejudice to Member States' sovereign decisions.

Why and how will the defence dimension of space be strengthened at EU level?

Space is a strategic area for EU's freedom of action and security. At the same time, it is an increasingly congested and contested area, marked by a growing power competition. There is an urgent need to tackle these challenges. A new EU space strategy for security and defence, currently under consideration by Member States in the context of the Strategic Compass, should help build a common understanding of space-related risks and threats, develop appropriate responses to react better and faster to crises, strengthen our resilience and make full use of the benefits and opportunities linked to the space domain.

The Commission will explore how to further enhance the protection of EU space assets, notably through additional Space Surveillance and Tracking (SST) services, improved performance of EU SST and by making full use of the potential of the EU industry. It will promote a ‘dual use by design' approach for EU space infrastructures, with a view to offering new resilient services that address governmental needs, including in the area of defence. An appropriate governance for EU space infrastructures will be set up in close coordination with Member States, building on the model of the Galileo public regulated service. Work towards reducing strategic technological dependencies and enhancing the resilience of space infrastructure related supply chains will also be intensified.

The Commission and the High-Representative will also explore the possibility of activation of solidarity, mutual assistance and crisis response mechanisms in case of attacks originating from space or threats to space-based assets.

How will cybersecurity be enhanced?

The EU has already put forward ambitious initiatives to protect citizens, businesses and EU interests from malicious cyber activities in the Cybersecurity Strategy of December 2020. A number of important instruments are already in place, notably:

The Commission has also presented a recommendation for a Joint Cyber Unit (JCU) and has made a proposal to revise the NIS Directive in December 2020, which is now under consideration by the co-legislators.

To complement those instruments and further reduce the attack surface and exposure to risk, the security and standardisation of products and services related to information and communication technology should be strengthened. In 2022, the Commission will propose the Cyber Resilience Act to strengthen the security and standardisation of products and services related to information and communication technology.

The Commission will work with Member States on stepping up preparedness for large-scale cyber-incidents through enhanced coordination, including identifying potential needs and resources to manage response. Together with the High Representative, it will continue supporting Member States in setting up the JCU, in particular its mutual assistance mechanism, and will encourage civilian military cooperation to facilitate information exchanges and coordination between defence experts and other communities (i.e. civilian, law enforcement and diplomacy).

In 2022, a Strategic agenda for the Cybersecurity Competence Centre will be proposed, including on dual use technology and civil-military synergies to be enshrined in a coordinated manner with relevant actors.

How is the impact of the defence sector on climate change addressed?

While maintaining operational effectiveness remains a priority, the defence sector needs to meet the challenge of adapting to the security effects of climate change including operation under more extreme climatic conditions, as well as contribute to mitigation under the EU's climate change policies, in particular the European Green Deal. Improving energy efficiency and reducing emissions in this sector should become an integral part of the collective efforts towards climate neutrality by 2050 as well as the protection of biodiversity and a strengthened circular economy. €133 million have been dedicated to a specific call to support research and development of defence technologies and products addressing these topics.

In this context, the Commission is committed to the implementation of the 2020 Joint EU Climate Change and Defence Roadmap on which the Commission will present a first annual progress report together with the EEAS and the EDA in the first half of 2022.

As similar work is being stepped up within NATO, the UN and by the United States and other partners, the EU will intensify its staff-to-staff dialogues on climate, security and defence.

Roadmap on critical technologies for security and defence

Why are you setting out the ‘Roadmap on critical technologies for security and defence' now?

The Roadmap on critical technologies for security and defence responds to a request from the Members of the European Council of 26 February 2021 to outline a path for boosting research, technology development and innovation and reducing the EU's strategic dependencies in critical technologies and value chains for security and defence.

How does this plan link to other initiatives, such as the Action Plan on synergies between civil, defence and space industries?

The roadmap builds on the Updated Industrial Strategy and the Action Plan on synergies between civil, defence and space industries. It proposes to widen the scope of these initiatives by inviting Member States to work more closely with the EU to boost research and innovation and reduce strategic dependencies on critical technologies and value chains, notably to:

  • identify technologies critical for EU security and defence, boosting them through European (RTD&I) programmes;
  • ensurethat defence considerations are better taken into account in civilian European RTD&I programmes and industrial and trade policies, as appropriate, while possible civilian uses of technologies are also better considered in defence RTD&I programmes;
  • promotefrom the outset an EU-wide strategic and coordinated approach for critical technologies for security and defence, to make the best use of EU and Member States' RTD&I programmes, achieve synergies between civilian and defence RTD&I communities and mitigate strategic dependencies from external sources; and
  • coordinateas much as possible with other like-minded partners, such as the United States and the North Atlantic Treaty Organization (NATO), under mutually beneficial conditions.

What is the ‘Observatory of critical technologies' and what will it do?

The Observatory of critical technologies is currently being set up by the Commission in line with the Action Plan on synergies. The Observatory will identify, monitor and assess critical technologies for the space, defence and related civil sectors, their potential application and related value and supply chains. It will also identify, monitor and analyse existing and predictable technology gaps, root causes of strategic dependencies and vulnerabilities.

The Commission, based on data of the Observatory, will present to Member States a classified report on critical technologies and risks associated with strategic dependencies affecting security, space and defence by end of 2022 and every two years thereafter.

The Commission will prepare technology roadmaps based on these reports, which will include mitigating measures to boost research and innovation, and reduce strategic dependencies affecting security and defence.

How do you plan to reduce strategic dependencies?

Once critical technologies for defence and security are agreed at EU level, the Commission plans to exploit the full potential of synergies, by embedding defence considerations into EU industrial and technological initiatives. The European Chips Act, considering semiconductors explicitly as a critical sector for defence, is the first example of this new approach. It is also essential that the EU protects better its critical assets. The Commission suggests strengthening the Foreign Direct Investment (FDI) screening, by encouraging all Member States to set up a national screening mechanism.

How will the Roadmap assist non-traditional players and existing innovative start-ups and SMEs to engage on critical technologies for security and defence?

The Commission recognised in its Action Plan on synergies the benefits arising from fostering synergies between civilian and defence research and innovation activities for the competitiveness and resilience of the EU's economy and society.

The Commission will set up several tools in support of innovation and entrepreneurship on critical technologies for security and defence, notably: a) dedicated EDF actions; b) a new defence investment blending facility under InvestEU; c) a new CASSINI for defence; d) a new innovation incubator on new technologies and dual-use innovation in 2022; and e) increased support to innovation networks.

These tools should assist in particular non-traditional players and existing innovative start-ups and small and medium-sized enterprises (SMEs) with overcoming the high technological, administrative, regulatory and market-entry hurdles of the security and defence sectors, as well as with complying with their high security standards, and accessing financing.

What is the ‘Defence Innovation Scheme'?

The Commission, together with the European Defence Agency (EDA), will set up a Defence Innovation Scheme to bring under one umbrella their respective initiatives in support of defence innovation and entrepreneurship.

The Commission, based on its experience in implementing the EU budget in support of defence, civil and dual-use RTD&I, will stimulate innovation for the European defence technology and industrial base.

EDA and its Defence Innovation Hub will further connect and support Member States efforts based on EDA's defence expertise, including in bringing together emerging and disruptive technologies and military capability requirements.

How does the Roadmap foresee cooperation with international partners?

Cooperating with like-minded partners around the world is essential for enhancing the EU's resilience and security of supply, while reducing strategic dependencies and increasing mutual benefits. The principle of reciprocity plays an important role in this context. The EU's traditional partners in the areas of technology, security and defence include the members of the European Economic Area (in particular Norway), candidate countries, neighbourhood countries, and other third countries (e.g. United States, Canada, Japan, South Korea), as well as international organisations (e.g. NATO).

For instance, at the first meeting of the EU-U.S. Trade and Technology Council (TTC) in September 2021, the EU and the US reaffirmed their commitment to ‘focus on advancing respective supply chain resilience and security of supply in key sectors for the green and digital transition and for securing the protection of our citizens' and its aim to ‘increase transparency of supply and demand; map respective existing sectoral capabilities; exchange information on policy measures and research and development priorities; and cooperate on strategies to promote supply chain resilience and diversification'.

Regarding the cooperation with NATO, the Commission and the High-Representative/Vice-President will monitor the progress of relevant NATO initiatives in this area through regular contacts with NATO at working level with a view to possible mutually agreeable and beneficial interaction with relevant EU initiatives in full transparency towards Member States, while avoiding creating new or increasing existing technological or capability dependencies.

More information

Commission contribution to European Defence in the context of the Strategic Compass

Communication: Roadmap on critical technologies for security and defence