EU defence industrial policy in a new era

The 2024 re-election of Donald Trump as US president, and the realignment of US security strategy that is expected to follow fundamentally changes Europe’s security outlook. The European Union (EU) cannot become Europe’s security provider, but it can, through its defence industrial policy, support the funding and organization of the rearmament effort.

The EU has over the last 10 years steadily expanded its role in European defence industrial policy, particularly in the fields of defence research and development and joint procurement. Russia’s full-scale invasion of Ukraine in February 2022 especially led to a dramatic increase in both the intensity and rate of EU-level initiatives and proposals to support Europe’s defence industrial base. Yet, the reality is that, for all the initiatives launched, so far, the EU has not been able to convince Member States of its added value in ramping up Europe’s readiness and defence industrial production capacity.

Despite the EU’s heightened involvement in European defence in recent years, the European Commission is still a relatively new player in this realm, and underlying tensions between Brussels and EU Member States remain unresolved. EU Member States and firms are reluctant to share sensitive information with each other, let alone the European Commission, and disagree on the appropriate amount of third-country involvement in European defence industrial policy. EU countries have yet to reach an agreement on how to finance any substantial increase in defence spending, although some possible funding avenues exist. Most importantly, it is not clear to Member States that channelling defence policy decisions through the EU is cheaper and/ or more effective than going it alone or working out deals between governments directly. 

All this has been true for years. Nevertheless, the re-election of Donald Trump creates openings for compromise between Europeans where before there were none. A second Trump term could provide momentum to unlock sufficient funding and shape a useful role for the EU.