Pillar 3: Invest
In line with the Versailles agenda, and in view of the challenges we face and in order to better protect our citizens, while acknowledging the specific character of the security and defence policy of certain Member States, we must resolutely invest more and better in defence capabilities and innovative technologies, both at the EU and national levels. We need to strengthen our defence capabilities and equip our military forces for the challenges of the world we face.
We must be bolder and faster in filling critical capability gaps, overcoming fragmentation, achieving full interoperability of our forces and strengthening a resilient, competitive and innovative European Defence Technological and Industrial Base throughout the Union, which also ensures cross border participation of small and medium enterprises. We recognise that investing more in collaborative capability development ensures more efficiency by increasing economies of scale and greater effectiveness when acting. It also supports European innovators and manufacturers.
Achieving technological sovereignty in some critical technology areas, mitigating strategic dependencies in others, and reducing the vulnerability of our value chains are critical if we are to meet the challenges of a more dangerous world and be more resilient. Cooperating with like-minded partners around the world, on a reciprocal basis, is essential for enhancing the EU’s resilience and security of supply, while reducing strategic dependencies and increasing mutual benefits.
In line with commitments already made through PESCO and in view of the strategic challenges we are facing, it becomes urgent to spend more and better. We will therefore substantially increase our defence expenditures, with a significant share for investment, focusing on identified strategic shortfalls.
We will ensure a coordinated and collaborative European approach for such enhanced expenditures at Member States’ and at EU level, to maximise output, increase interoperability and make full use of economies of scale. To this end, we will define strategic orientations on the resources that are necessary to match our security needs and the full use of EU tools to incentivise collaborative defence investments.
In line with our agreed level of ambition, we will work together to swiftly adapt our military forces and civilian capacities so that they are capable to act rapidly, contribute to securing our interests and values, enhancing our resilience and protecting the Union and its citizens. To this end, we will further develop full spectrum forces that are agile and mobile, interoperable, technologically advanced, energy efficient and resilient.
In line with the single set of forces principle, these forces remain in the hands of the Member States and can also be deployed in other frameworks. We will adapt the EU’s defence capability planning and development, notably by revising the capability planning scenarios of the Headline Goal process, to better reflect operational realities, strategic foresight and provide the necessary capabilities for CSDP missions and operations.
Such scenarios include military rapid deployment in a non-permissive environment, as well as responding to hybrid threats, securing access to strategic domains such as high seas, air, cyber and space, and providing military assistance to civilian authorities. We will further detail strategic planning elements, such as response time, duration, environment, distance and simultaneousness of operations that are needed to adapt the capability planning scenarios. The results of the Headline Goal process will continue to be an essential contribution to the Capability Development Plan, which encompasses future defence capability trends and technological perspectives.
We must ensure that all EU defence initiatives and capability planning and development tools are embedded in national defence planning. We will continue to ensure that the results of these processes remain coherent with those of the respective NATO processes. This will enhance the readiness, robustness and interoperability of our single set of forces.
To increase the effectiveness of our civilian CSDP missions, we will develop a civilian capacities and capability process to better structure and collectively address the needs for civilian CSDP missions, based on scenarios that also respond to new threats.
The introduction of the Strategic Warehouse and the Mission Support Platform has contributed to our ability to provide equipment and services for civilian CSDP missions. In addition to ensuring high quality and well trained staffing, we will ensure that necessary equipment can be delivered to civilian missions even more rapidly, including equipment that allows missions to operate in less permissive environments.
Coherent and ambitious capabilities
In a bilateral or multilateral framework, a number of Member States have embarked on the development of key strategic capability projects, such as next generation aircraft systems, a Eurodrone, a new class of a European naval vessel and a main ground combat system. These will make a tangible difference to European security and defence in the future and will lead to convergence over time. The implementation of the recommendations agreed under the Coordinated Annual Review on Defence will be essential in this regard.
In addition to investing in future capabilities and innovation, we need to make better use of collaborative capability development and pooling endeavours, including by exploring tasks specialisation between Member States. We will build on successful examples such as the European Multinational Multi-Role Tanker and Transport Fleet.
In the EU framework and notably through Permanent Structured Cooperation and the European Defence Fund, we are already developing command and control systems, armoured vehicles, missile systems and artillery, patrol corvettes, unmanned air and maritime systems, electronic warfare capabilities, space surveillance, cyber rapid response and high-tech training systems.
We will invest further in strategic enablers, and more generally in the capabilities necessary to conduct the full range of missions and operations as set out in our agreed level of ambition. We will enhance our efforts to mitigate critical capability shortfalls such as strategic airlift, spacebased connectivity and communication assets, amphibious capabilities, medical assets, cyber defence capabilities and Intelligence, Surveillance and Reconnaissance capabilities and Remotely Piloted Aircraft Systems.
We need to reduce fragmentation and develop next generation capabilities. For this purpose, we commit to taking forward the recommendations of the first-ever Coordinated Annual Review on Defence Report published in 2020, including the agreed six capability focus areas that would benefit from enhanced defence cooperation among Member States. These are Main Battle Tank, Soldier Systems, European Patrol Class surface ship, Anti Access Area Denial capacities and Countering Unmanned Aerial Systems, Defence in Space and Enhanced Military Mobility.
To act rapidly and protect our citizens, we will work together to overcome critical gaps. We will make full use of Permanent Structured Cooperation and the European Defence Fund to develop interoperable high-end systems and advanced technologies. We commit to developing the following strategic capabilities through collaborative projects, in particular:
1. In the Land domain, the ability for the Union to conduct crisis management operations and ensure its technological advantage in the field, including in high intensity threat environment, will be key. A comprehensive land capability cluster will be initiated leading to the upgrade, modernisation and progressive replacement of current major platforms and related logistic systems. The focus areas Soldier Systems and Main Battle Tank will be important contributions to these efforts.
2. In the Maritime domain, to ensure a more assertive Union presence at sea as well as the ability to project power, high-end naval platforms, including unmanned platforms for surface and underwater control, are required. The focus area European Patrol Class Surface Ship will be an important step in this direction.
3. In the Air domain, establishing and maintaining our advantage requires the development of next-generation and fully interoperable capabilities, notably future combat systems as well as air defence systems. We will progressively integrate the foreseen future combat systems, including Remotely Piloted Air Systems, into existing fleets of combat air systems in an interoperable manner. Efforts on key enablers also need to be pursued, notably the Strategic Airlift capability. The focus area Anti Access Area Denial capacities and Countering Unmanned Aerial Systems contributes to the air defence dimension of these efforts.
4. In the Space domain, we will develop new cutting edge technology sensors and platforms allowing the Union and its Member States to improve its access to space and protect its spacebased assets. This entails notably the development of Space Based Earth Observation, as well as technologies for Space Situational Awareness and space based communication and navigation services, which are key to providing independent decision-making. The focus area Defence in Space represents a first step in this direction.
5. In the Cyber domain, our forces need to operate in a coordinated, informed and efficient manner. We will therefore develop and make intensive use of new technologies, notably quantum computing, Artificial Intelligence and Big Data, to achieve comparative advantages, including in terms of cyber responsive operations and information superiority. Cyber defence is paramount in ensuring that the focus area Enhanced Military Mobility unfolds its full potential as essential enabler.
We commit to intensifying our cooperation on capability development, particularly through Permanent Structured Cooperation. Concretely, this means that by 2025 Member States participating in Permanent Structured Cooperation must fulfil all more binding commitments that they have undertaken. In 2025, one third of 60 ongoing Permanent Structured Cooperation projects will deliver the expected capability and meet their objectives.
Beyond these concrete results, our goal is to go further by implementing the agreed capability priorities and developing new ambitious projects. We will closely review the fulfilment of these commitments in order to be able to agree on new commitments in 2025 to further deepen defence cooperation.
Significantly enhancing and harnessing the full potential of EU funding instruments, in particular the European Defence Fund, is key to strengthen our defence capabilities and also equip Member States’ forces to face the future battlefields. We will further boost cooperation and capabilities so that defence industrial cooperation within the EU becomes the norm. This will maximise the potential of broader EU financial tools to support Member States’ defence cooperation, from design to acquisition.
This also means that we should be prepared to match the increased ambition at Union level with the adequate long term financial weight of the European Defence Fund. We will enhance and leverage collaborative defence investment at the EU level, including Research and Technology. We will fully exploit the potential of synergies with other EU financial instruments, such as Horizon Europe, Digital Europe Programme, Connecting Europe Facility, the EU Space Programme, the European Innovation Council and InvestEU.
To bolster the competitiveness of the EU defence industry, we will work to further incentivise joint procurement of defence capabilities that are developed in a collaborative way within the EU. This will require further work on the Commission’s proposals, inter alia on a VAT waiver, new financing solutions and a potential reinforcement of the EDF bonus system.
We will also bring forward ongoing work towards the streamlining and gradual further convergence of our arms export control practices for defence capabilities jointly developed, in particular in an EU framework, thus ensuring European Defence Fund-funded products will profit from adequate and competitive access to international markets, in line with the 2008 Council Common Position defining common rules governing control of exports of military technology and equipment, and without prejudice to Member States’ sovereign decisions.
We will maximise coherence between the EU defence related initiatives – Coordinated Annual Review on Defence, Permanent Structured Cooperation and European Defence Fund. In this regard, the High Representative/Vice-President/Head of the European Defence Agency will chair annual Defence Ministerial meetings on EU defence initiatives addressing capability development, making full use of existing formats.
Innovation, disruptive technologies and reducing strategic dependencies
Emerging and disruptive technologies, such as Artificial Intelligence, quantum computing, advanced propulsion, bio- and nano-technology and new materials and industrial capacities are re-shaping military affairs and defence markets. We are already collectively investing in defence innovation by combining civil, space and defence research and developing new standards. However, we will step up our efforts both at the national level and through a more ambitious use of EU instruments to be better prepared for the future battlefield and the next generation technology.
We will ensure an ambitious implementation of the Action Plan on synergies between civil, defence and space industries. We will also establish a Defence Innovation Hub within the European Defence Agency, working in partnership with the Commission, to increase and coordinate cooperation on defence innovation among Member States. In this regard, we will ensure synergies with the European Innovation Council and the European Defence Fund actions in the area of disruptive technologies. The Commission, in coordination with the European Defence Agency, will develop an EU Defence Innovation Scheme to accelerate security and defence innovation for the EU and its Member States.
An innovative, competitive and resilient European Defence Technological and Industrial Base which guarantees security of supply and cutting-edge technologies is more important than ever and key for employment, trade, investment, security and research in the EU. The European defence sector can also contribute to growth and the sustainable economic recovery following the pandemic. We have to ensure that it can fully and rapidly benefit from civil innovation cycles and remove existing obstacles.
We will also invest in dual-use technologies. This is essential, as our strategic competitors are rapidly investing in critical technologies and challenging our supply chains and access to resources. As the technological landscape transforms, our new cooperative frameworks give us a chance not to repeat the fragmentation and inefficiencies of the past and pursue a European approach from the outset.
We will boost research, technology development and innovation and reduce our strategic dependencies in critical technologies and value chains. The Roadmap on critical technologies for security and defence of the European Commission proposes a methodology for addressing these challenges through closer cooperation between the EU and Member States. This could also contribute to strengthening the resilience of the European economy and supply chains in line with the EU Global Gateway.
Investing in innovation and making better use of civilian technology in defence is key to enhancing our technological sovereignty, reducing strategic dependencies and preserving intellectual property in the EU. Through the Observatory on Critical Technologies we will continue to monitor and identify such strategic dependencies in the security and defence sector.
The EDA’s Action Plan on Emerging and Disruptive Technologies will also contribute to these efforts. We will also foster synergies between civilian, defence and space research and innovation, and invest in critical and emerging technologies and innovation for security and defence. Strengthening the resilience of our supply chains and industries’ access to private funding will be necessary for our European Defence Technological and Industrial Base.
The European Investment Bank should also use all its tools to contribute to that effort. It is equally important to ensure that horizontal EU policies, such as initiatives on sustainable finance, remain consistent with the European Union efforts to facilitate the European defence industry’s sufficient access to public and private finance and investment. Making full use of the Union’s framework and national mechanisms for the screening of foreign direct investment remains critical to identify and mitigate risks to security and public order, including related to investments in the defence sector. We will explore additional proposals to mitigate risks for companies which produce critical technologies and products and face non-EU acquisition. National screening mechanisms should be in place in all Member States as early as possible.
In addition, tools to counter foreign extra territorial measures and attempts at economic coercion impacting EU strategic interests and industry should be further strengthened. In the area of cybersecurity, we will swiftly operationalise the European Cybersecurity Competence Centre to develop a strong European cyber industrial and technological ecosystem, support companies specialising in cybersecurity and further increase cybersecurity and cyberdefence resources and skills at EU level.
The development of emerging and disruptive technologies is key to maintaining a military advantage, including through the dedicated budget under the European Defence Fund. Our competitors are increasingly using strategic technologies and data without respecting existing international norms and regulation. We therefore need a better analytical hold on emerging and disruptive technology trends and dependencies and how they are being increasingly used by strategic competitors. To this end, we will use the Observatory on Critical Technologies of the Commission to coordinate and get a full understanding of critical dependencies, such as semiconductors, cloud and edge technologies, quantum computing and artificial intelligence.
In this regard, we will also build on the EDA’s work on Key Strategic Activities. We will mitigate risks for the security of supply and collectively step up our efforts by commonly investing into and protecting technologies that are critical for security and defence. We will work with all partners to promote the relevant ethical and legal standards. In this regard, our cooperation in the UN framework will be essential, especially when defining and applying common norms in the Convention on Certain Conventional Weapons. Finally, we need to harness innovation to enhance the energy efficiency of the defence sector, including CSDP missions and operations, without reducing operational effectiveness. We will develop common benchmarks and standards for the increased use of renewable energy sources and the resilience of defence-related critical infrastructure. A special emphasis will be placed on innovation and standards that can help reduce the environmental footprint of armed forces and create possibilities to re-use valuable components and scarce materials.
We will substantially enhance our defence expenditures to match our collective ambition to reduce critical military and civilian capability gaps. We will also strengthen our European Defence Technological and Industrial Base throughout the Union, which also ensures cross border participation of small and medium enterprises. In line with the binding commitments under Permanent Structured Cooperation, defence spending will be regularly increased in real terms to match our collective ambition in defence. For the future, we will further increase and leverage collaborative defence investment at the EU level, including Research and Technology, through the European Defence Fund.
We will invest in critical and emerging technologies and innovation, reduce our strategic dependencies, secure supply chains and strengthen the protection of our intellectual property. We will also cooperate with like-minded partners around the world, on a reciprocal basis, to increase mutual benefits.
• By mid-2022, in full respect of national prerogatives and consistent with our commitments, including those made in other organisations, we will exchange on our national objectives on increased and improved defence spending to match our security needs, maximise output, increase interoperability and make full use of economies of scale, including through a coordinated and collaborative European approach and the full use of EU tools.
• We invite the Commission, in coordination with the European Defence Agency, to put forward an analysis of the defence investment gaps by mid-May and to propose any further initiative necessary to strengthen the European defence industrial and technological base.
• The Commission will develop additional incentives to stimulate Member States’ collaborative investments in strategic defence capabilities, notably those that are to be developed and/or jointly procured in European Union cooperative frameworks, and will report on the developments, barriers and opportunities related to multinational defence capability projects in the Annual Single Market report.
• By 2023, we will revise our Headline Goal process and bring military capability development closer to operational needs, which provides an essential contribution to the Capability Development Plan. Detailed strategic planning elements that are needed to adapt the capability planning scenarios will be developed by mid-2022.
• As of 2022, annual Defence Ministerial meetings on EU defence initiatives addressing capability development will be organised and chaired by the High Representative / VicePresident of the Commission / Head of the European Defence Agency, making full use of existing formats.
• By 2024, a civilian capability development process will be set-up to assess the capability needs, develop requirements, conduct a gap analysis and review periodically the progress made in line with the new Civilian CSDP Compact.
• We commit to using our EU defence initiatives to substantially reduce by 2025 critical gaps on strategic enablers, in particular linked to the EU Rapid Deployment Capacity, such as strategic airlift, space communication assets, amphibious capabilities, medical assets, cyber defence capabilities and Intelligence Surveillance and Reconnaissance capabilities.
• Within this decade and beyond, we will focus our capability development efforts on next generation capabilities in all domains, including at system and subsystem level along the focus areas identified by CARD, in particular:
• In the Land domain, we will modernise Soldiers Systems as the core of individual force protection and operational effectiveness across all types of operations, and develop a Main Battle Tank system as a next-generation capability for the Union in conventional high intensity as well as crisis management operations.
• In the Maritime domain, in view of enhancing maritime situational awareness and force protection, we will replace coastal and offshore patrol vessels by developing digitally networked high-end naval platforms, including naval unmanned platforms.
• In the Air domain, we will develop future combat systems as a next generation and fully interoperable capability to ensure air advantage. This will be complemented by Countering Unmanned Aerial Systems and contributes to establishing a European standard for Anti Access Area Denial capacities.
• In the Space domain, we will develop new sensors and platforms for Space-Based Earth Observation, as well as technologies for Space Situational Awareness and Space-Based communication services.
• In the Cyber domain, we will intensify our efforts to develop and connect our capabilities to provide the necessary resilience and ability to act in all domains, particularly focusing on the Enhanced Military Mobility, which is an essential enabler.
• By 2023, in order to preserve the ability to develop capabilities in Europe, we will take measures to promote and facilitate the access to private funding for the defence industry, also by making best use of the European Investment Bank.
• We will develop further incentives to stimulate Member States’ collaborative investments in joint projects and joint procurement of defence capabilities that are developed in a collaborative way within the EU. This includes, inter alia:
• By early 2023, work on a Commission proposal that would enable a VAT waiver to support the joint procurement and ownership of defence capabilities developed in a collaborative way within the EU;
• By mid-2023, work on upcoming proposals for new financing solutions to facilitate Member States’ joint procurement of EU strategic defence capabilities;
• Following the interim evaluation of the EDF, work on a possible amendment to the European Defence Fund Regulation to adjust and reinforce the EDF bonus system when Member States commit to jointly acquire and/or own the defence capabilities under development.
Strategic technologies and dependencies in security and defence
• In 2022, we will establish a Defence Innovation Hub within the European Defence Agency, working in partnership with the Commission to exploit synergies with its related workstrands, including the EU Defence Innovation Scheme. The parameters of this Hub will be defined within the framework of the European Defence Agency.
• As of 2022, we will further identify strategic dependencies in the defence sector through the Observatory on critical technologies and act to reduce them by mobilising EU and Member States’ instruments and policies, and exploring any possible gaps in those available. We will work together with the Commission and the EDA on developing an EUwide strategic coordinated approach from the outset for critical technologies relevant for security and defence. In this regard, we will also build on EDA’s work on Key Strategic Activities. We will continue using the EU Foreign and Direct Investment Screening Framework in case an investment in the EU defence sector threatens security or public order. We will explore additional proposals to mitigate such risks for the EU defence sector.
• As of 2022, we will further boost research, technology development and innovation throughout the EU and reduce our strategic dependencies in technologies and value chains critical for security and defence, on the basis of EDA’s Overarching Strategic Research Agenda and the Roadmap on critical technologies for security and defence proposed by the European Commission.
• In 2023, we will assess, together with the Commission, the risk for our supply chains of critical infrastructure, in particular in the digital domain, to better protect the EU’s security and defence interests.