Tue. Feb 7th, 2023

The European Union (EU)’s geopolitical context has changed dramatically in the last decade. The situation, globally and in its neighbouring regions, is unstable and it faces a complex and challenging environment in which new threats, such as cyber-attacks and other hybrid threats are emerging, whilst more conventional challenges are also returning.

European defence, and the European defence industry face significant market inefficiencies, linked to untapped economies of scale (fragmentation of national markets with a single buyer) and resources overlaps at national level. The demand comes almost exclusively from Member States, but their defence budgets, in particular for research and development (R&D), have seen important budget cuts in the past 10 years. The sector is largely fragmented across national borders, with substantial duplications and resulting inefficiencies in terms of failure to capture economies of scale and learning. Despite the combination of increasing costs and stagnating or shrinking defence budgets, planning, R&D spending and the procurement and maintenance of equipment have remained largely matters for individual Member States, with very limited cooperation between them. This lack of cooperation between Member States further weakens the ability of the EU defence industry to sustain the industrial and technological capabilities necessary to preserve the EU’s strategic autonomy and meet its current and future defence and security needs.

The European Defence Fund is intended as an instrument to foster the competitiveness and innovativeness of the European defence technological and industrial base, thereby contributing to the EU’s strategic autonomy. It aims to trigger cooperative programmes that would not happen without an EU contribution and, by supporting research and development activities, to provide the necessary incentives to boost cooperation at each stage of the industrial cycle.

Collaborative projects with significant cross-border participation by small and medium-sized enterprises will be particularly encouraged. This will ensure that the Fund remains open to participants from all Member States, based on their ability to contribute to its objectives and regardless of their size and location in the Union.

[…]

Source: COM(2021)143/F1 DEFIS (DG Defence Industry and Space) 19/03/2021 – Communication on Council position

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the position of the Council on the adoption of a Regulation of the European Parliament and of the Council establishing the European Defence Fund

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