Press Releases Defence: Remarks by High Representative/Vice-President Josep Borrell at the press conference to present the European Defence Industrial Strategy

Defence: Remarks by High Representative/Vice-President Josep Borrell at the press conference to present the European Defence Industrial Strategy

Thank you. Thank you, Margrethe [Vestager, Executive Vice-President of the European Commission].

I am going to talk more on the perspective of my role as High Representative for the Security and Defence Policy and Head of the European Defence Agency. Thank you for the good cooperation in order to make this [Joint] Communication.

Maybe, you will remember that, two years ago, when presenting the Strategic Compass, I said “Europe is in danger”. Well, I am sorry, I was right. Europe was in danger and [today] is still [even] more in danger.

Peace is no more a given, unhappily. The war is at our borders.

Russia’s war of aggression has brought a great sense of urgency to step up our industrial defence capacities.

At the beginning, the war was fed by stocks. Now, we go to an industrial production war. Because the war has lasted two years, it does not seem it is going to be finished soon and the needs of military equipment have been increasing, exhausting stocks and increasing the capacity of our industrial production.

Certainly, the European Union has answered in an unprecedented manner. This war has changed the way we look at our defence capabilities.

The European Union is not a military alliance, but the Treaties express [the will] to build a Common Security and Defence Policy. And part of this Common Security and Defence Policy is to have good [and] efficient industrial basis.

We have done a lot through the European Peace Facility to supply what we have. Now we have to move from [an] emergency mode – urgency – to a medium and long-term vision that strengthens our defence industrial readiness, to continue providing military support to Ukraine.

It is no longer a matter of looking at the stocks but being able to produce a continuous flow of production.

On ammunition, for example, the industry has answered quickly to the emergency. The European defence industry has increased its industrial capacity by 50% since the start of the war. And I want to thank Commissioner [for Internal Market, Thierry] Breton for pushing the industry. And the industry has answered: 50% increase of capacity since the beginning of the war is a remarkable increase.

And today, what we lack is not production capacity, [it] is financing. In the short term, we have production capacity, [but] we need financing. But looking a little bit ahead, we need more production capacity.

We increased [it by] 50%, it has to still increase more and quicker – but funding is fundamental. We do not have a Pentagon in Europe. We do not have an institution that has a strong buying capacity driving the market and driving the industry.

But we have to cooperate and coordinate the way the Member States react in order to provide funding for the industry and the capacity for the industry in order to answer the increasing demand.

We need to do more, not only on ammunition. In the medium term, we need to increase – as Margrethe has said and Commissioner Breton will explain more in detail – the strength and resilience of the European defence industry.

We need a defence industrial policy, because the defence industry is unique. You do not go to the supermarket to buy defence products. There is a single buyer – the Governments. And there is a variety of producers but 90% of the industrial defence capacity is being concentrated in a few Member States.

Our defence industry, before the war, secured about 40% of the defence needs of our armies and export about half of its production. So, our industry is competitive – half of its production goes to exports. But since the beginning of the war, the amount of our need to buy outside has been increasing. But keep in mind that Governments are the buyers – they set the priorities based on operational needs. Working together with Member States is crucial because they are the masters of their armies.

This Strategy tries to match supply and demand, through procedures to invest more, better, together and European. We have to overcome fragmentation by cooperation.

Our demand is fragmented – obviously, because we have different national armies. As I said, we do not have an institution that concentrates the capacity to demand and drive the industry.

We are divided in 27 Member States, with 27 different armies. So, this has to increase our cooperation.

Keep in mind one figure: in 2022, the defence investment of our Member States amounted to €58 billion – fragmented among 27 “demand centres” (Member States). In the United States, a single one – the Pentagon – was asking the market for $215 billion, almost four times more.

As I said, since the beginning of the war, we have to request more imports because our industry was on an increasing demand.

Our cooperation is still very low. Only 18% [in 2022] of our procurement [was] done in a cooperative manner. The target is 35%.

The European defence industry is following closely this degree of cooperation, and we [have not] improved in the last years. This Strategy will try to incentivise joint procurement of defence capabilities and projects of common European interest.

Fragmentation needs to be addressed with cooperation. Fragmentation is the logical consequence of the fact that we are not a single State, but it has to be overcome by cooperation if we want to spend not more, but better. I will push for the Permanent Structured Cooperation (PESCO) to work in this direction.

You mentioned also our cooperation with NATO – for sure. And also, about the financial capacity, and that is related also to the discussions about frozen Russian assets. If we agree that these assets could be used in order to support Ukraine’s reconstruction, it could also be used to avoid Ukraine’s destruction. And it means to increase military capacities or the defence technological base of Ukraine.

But for that, we still need an agreement of the Member States. We need a unanimous agreement based on a Common Foreign and Security Policy proposal that can [be tabled]. But for the time being, we continue working with the Member States in order to get an agreement on that.

It has certainly advantages, and also some inconveniences. But the key idea is that if we can use this money to support Ukraine on the reconstruction process, we should also be able to use it to avoid the destruction of Ukraine by increasing their defence capability.

Thank you.

Link to the video (starting from 7:30):

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