Considerations on Developing the Future European Defence Industrial and Technological Base

In response to the evolving security landscape and challenges, ASD offers key considerations to enhance the European defence technological and industrial base (EDTIB). While expressing support for recent proposals, ASD emphasises the need for a comprehensive strategy to transform the EDTIB and meet the demands of a dynamic security environment.

ASD identifies the core mission of the EDTIB as supporting European armed forces through four crucial functions: delivering defence equipment and services, improving key defence technologies, reacting to technological trends, and challenging competitors through innovation. However, historical underinvestment and fragmentation have limited the EDTIB's performance, particularly in delivering at high volumes during large-scale conflicts.

With the urgency highlighted by recent events in Ukraine, ASD emphasises the role of Member States in coordinating efforts to enhance the EDTIB's performance. The paper highlights the EU's role in promoting cooperation, coordinating national efforts, and leveraging policies and programmes, such as the European Defence Fund (EDF) and the Action Plan on Synergies, to address key technologies and reduce dependencies.

ASD recommendations

Build industrial capacity

• Enhance industrial output for crisis or wartime demands.
• Sustain production capabilities during troughs.
• Coordinate and support at the EU level.

Develop next-generation capabilities

• Increase EDF budget to at least €13 billion.
• Introduce multi-annual work programs and flagship projects.
• Optimise defence transfers, harmonize IP framework, and define solutions for handling classified data.

Reduce dependencies and enhance resilience

• Utilise initiatives like the European Chips Act and Critical Raw Materials Act.
• Strengthen financial stability of lower-tier supply chain companies.
• Establish a dialogue with industry through the Observatory of Critical Technologies.

Ensure appropriate funding

• Increase budget for security and defence in the Multiannual Financial Framework.
• Support enduring investment in military and technological capabilities.

Facilitate access to private finance

• Implement political and regulatory measures to ensure sustainable finance does not negatively impact defence companies.
• Remove exclusion of core defence activities from EIB lending policy.