Trends And Drivers Of European Defense Industrial Cooperation In The 2020s Presented by: Dr. Varga Date: 7 March 2024 In My Brief Presentation - Strategic obstacles and enablers - The demand problem - The supply problem - What does EDIS offer for the 2020s? - As for conclusions Strategic Obstacles And Enablers - - Obstacles: • Peace dividend • Underfinancing • Operational profile, capability gaps • Fragmentation in all fields (CSDP is intergovernmental) • Strong U.S. role in defense Enablers: • Changed security environment and threat perception: direct military (and other) threats posed by Russia + challenges posed by non-state actors • Strategic imperative to support UKR Changing Threat Perception – More Resources - In the economic field • Scarce funding for defense, decreasing expenditures • Less military procurement and modernization programs • Less orders for defense industry in Europe, growing competition in the world • Decreasing funding for R&D, losing the innovative edge - • Sluggish development of lacking capabilities • Decreasing power projection capabilities in the mid term • Diminishing strategic autonomy • Diminishing capacity to enforce interests in the European neighborhood In the political field • Dynamically changing security environment • Prevailing demand for military and civilian crisis management capabilities • New crises and challenges to security emerge • Security perception is not defined by military threats • But: societies do not perceive direct threats • The short-term political interest dominates • Uncertainty undermines effective military planning • Diminishing political will and popular support for crisis management The Demand Problem - The temporal challenge: • Immediate needs (ammo, UKR) • Short-term vs. long-term goals overarching the full spectrum of R&D, production, procurement, arms exports - The question of what: • Strategic ambition, operational plans (EGS, Strat. Compass) • Prioritization of branches, services, capabilities (Gaps analysis) The Supply Problem - National champions, Tier-1 multinational companies + mid- sized + 2500 SMES - How to ensure long-term investments (beyond 2027)? - How to provide for the necessary raw materials, supply chains, workforce, venture capital/industrial loans, technology? - How to counter the known risks and deficiencies of multinational defense industrial cooperation? - How to outcompete external actors (U.S.)? What Does EDIS Offer For The 2020s? - - Activity carried out by member states or their industries • Research • Development • Production • Joint acquisitions • Possible transfers to third countries Program administered via the community system, with the Commission playing a central role - • EDF (reinforced by the STEP mechanism in 2024) • ASAP • EDIRPA • EDIP • (+ EIB) Activity managed by the intergovernmental system (the Commission is marginalized, member states decide unanimously) • EPF Track 1 • EPF (Track 2) • EDIS • Towards common military planning at EU level (?) • Towards a more coordinated export control policy (?) As For Conclusion - EDIS goals by 2030: • 35% of intra-EU defense trade • 50% of EU defense procurements from EDTIВ • 40% of EU procurements in a collaborative manner