In an era of mounting geopolitical instability, Europe must strengthen its defence capabilities. Russia’s war in Ukraine has highlighted Europe’s fragmented, inadequate investment in its military industrial complex, and its overreliance on the US.
The European Defence Industry Programme (EDIP), proposed by the European Commission earlier this year, is a bold initiative aimed at enhancing the EU's strategic autonomy and industrial resilience. But to meet the pressing challenges of today, we must do more to boost defence spending ahead of the 2027 Multiannual Financial Framework (MFF).
The US presently allocates approximately 3.7% of its GDP to defence. Most EU states have struggled to meet the NATO benchmark of 2%. This imbalance is becoming unsustainable, as recent global tensions have shown.
At the same time, the US military-industrial complex demonstrates an ability to swiftly transition into a wartime economy – a capability Europe must replicate. During the Second World War, America’s industries pivoted from civilian goods to producing military equipment at scale. EDIP must enable Europe to build a similarly agile and robust defence infrastructure that can respond to crises without delay.
To achieve EDIP’s potential, we must couple its ambitions with bold funding mechanisms, reallocating unspent funds from the pandemic Recovery and Resilience Facility (RRF), issuing EU defence bonds, and incentivising private investments through joint procurement guarantees.
The RRF was established in 2021 under the NextGenerationEU package, which aims to aid economic recovery after the pandemic. Through joint borrowing, the EU raises funds on capital markets and makes them available to member states to fund economic reforms related to the green and digital transition, or to stabilise their energy markets following Russia’s invasion of Ukraine.
This facility holds significant unspent resources, but the RRF regulation prevents them from being spent on defence-related measures. Given the nature of the strategic threat posed by Russia, the regulation should be revised to remove this restriction.
Amending the regulation would necessitate unanimous agreement among member states, a proposal from the European Commission, and approval from the European Parliament. Though procedurally complex, this reallocation is politically feasible and should be pursued urgently as a solution to address Europe’s defence funding gap.
The EU could use EDIP’s €1.5bn allocation as collateral to issue defence bonds, allowing it to raise significant capital from financial markets at favourable interest rates, in a similar fashion to the RRF.
This would enable long-term investments in critical defence infrastructure. By spreading costs across decades, the EU could finance urgent projects and begin working on longer-term needs, all while safeguarding economic stability.
The private sector is a vital partner in enhancing defence capabilities. Long-term joint procurement guarantees would provide industry players with the confidence to scale up production. By securing predictable demand for military equipment, the EU can stimulate private investments, boosting both production capacity and innovation. Transparent procurement frameworks will be essential to ensure efficiency and trust between public institutions and private enterprises.
Joint procurement is the cornerstone of a unified European defence strategy. By consolidating demand, member states can reduce costs, enhance interoperability, and strengthen industrial competitiveness. Recent projects under the European Defence Industry Reinforcement through Common Procurement (EDIRPA) instrument illustrate the benefits of this approach. Such initiatives allow the EU to negotiate better deals and ensure fair distribution of resources, avoiding disparities among smaller member states.
Moreover, streamlining procurement processes fosters collaboration and trust, key elements for creating a cohesive European defence framework. Expanding joint procurement mechanisms can also address inefficiencies such as Europe’s overreliance on external suppliers, which account for 78% of defence procurement. By fostering stronger co-operation within the European defence industry, while maintaining access to advanced technologies from trusted allies, Europe can enhance its strategic autonomy and reduce dependency on external suppliers.
The stakes are clear: a fragmented, underfunded approach is no longer viable. EDIP must serve as the foundation for a secure, competitive, and resilient Europe – one capable of defending its values and its future.