Andy Stirnal, Berlin Putting money where the mouth is The European Defence Fund

particular to Mobile Tactical Communication (MoTaKo), which is one of the Bundeswehr’s high-priority procurement projects. Cooperation at this point would significantly improve the interoperability of both armed forces and close a capability gap on the German side that is often rightly criticised. Workshare: German-Dutch cooperation is thus already addressing very important questions regarding future European cooperation. This includes, for example, moving away from the ineffective and economically inefficient approach of maintaining equal or parallel capabilities in the armies of EU Member States, towards an efficient, cross-force leveraging of respective special capabilities and expertise. But strengthening interoperability and significantly reducing the number of weapons systems used in Europe through increased cooperation in the area of armaments also constitute additional priorities. Thus, German-Dutch cooperation today in many respects offers a blueprint for how to move forward on the path of military integration on a pan-European basis.

A European Framework – key for success It is clear that Europe will also have to play a more important role in security and defence policy in the future. Consequently, this also means that a robust security architecture will only be possible within a European framework. None of the individual European states today would be in a position to fully guarantee their own security – either in terms of having military capabilities or financing them. The statement made by German Finance Minister Olaf Scholz in a speech delivered in Paris on 29 August of this year, to the effect that he could envisage more mergers in the European arms industry, points in the right direction. The task before us now is to push ahead with the necessary political will to consolidate the security and defence industry in an effort to open up this sector and attain greater European autonomy.

Family picture of four defense ministers visiting the 1 (German/Netherlands) Corps in Münster, 22 June 2015. In the first line (left to right): Dutch Minister of Defense Jeanine Hennis-Plasschaert, U.S. Secretary of Defence Ash Carter, German Minister of Defense Dr Ursula von der Leyen, Norwegian Minister of Defense Ine Eriksen Søreide

Backing Europe’s endeavour for PESCO by a common defence fund

Putting money where the mouth is

by Andy Francis Stirnal, Berlin correspondent, The European – Security and Defence Union, Berlin

The European Union is about to launch a European Defence Fund – the EDF. The constant perceived failure of European defence marked an altered sense of mission, and the opportunity given by the negotiations of Europe´s new financial framework until 2027 was its originator. Additionally, shifts in geopolitics and alliances could cause dark clouds to sweep over Europe. But the future is bright! Incentives for research, development and acquisition foster an innovative and competitive European defence industry, stimulate the development of an “internal defence market” and a technological and industrial base that meets Europe’s security and defence needs.

Closing capability gaps At a high-level conference on the EDF that took place in Vienna in September 2018, various actors from politics, military and industry expressed their expectation that the EDF could close existing capability gaps. Conceivable, but under difficult conditions. Governments still largely plan for and invest on a national basis and they still have different capability development priorities. The path dependencies are enormous, the investment cycles in defence extremely long, the market quite fragmented with very uneven national industrial bases. A total amount of  13 billion for the 7 year period until 2027 represents, in theory, a clear and strong incentive to develop state-of-the-art and fully interoperable technology and equipment. Still, research and development of prototypes and products are particularly expensive in defence and entail significant technical and financial risks that, too often, neither companies nor Member States wish to bear on their own. As a consequence, many innovative ideas do not make it to market. This applies all the more to highly disruptive technologies. Bridging this ‘valley of death’ is a declared aim of the EDF which shall be reached via an acquisition and procurement facility that is linked directly to PESCO. Projects selected and qualified as “PESCO-projects” will benefit from increased funding rates, while Member States will have to guarantee the procurement of developed products. Using

“Many aspects of the EDF seem well done. The financial envelope is solid, the incentive system coherent, and the planned convergence with other funding programmes could help to achieve the ambitious objectives of this instrument. ”

Andy Francis Stirnal

European funding to play off national interests is an idea that has worked well time and time again, but unfortunately not always.

Member States’ commitment During the legislative process, research institutions argued for a high financial contribution of up to 100% – this reflects the US experience from the Defence Advanced Research Projects Agency (DARPA) which is offering such incentives for disruptive ideas. So the EU will join suit, by directly financing total costs during the research phase, in particular through grants. After the phase of mere research, the EU, Member States and associated countries will award and agree on collaborative prototype development projects. To ensure the credibility of Member States’ commitment to these projects, including cost-sharing and ownership, the financial assistance of the EU will only represent 20% co-financing for the development of prototypes.

Promoting market uptake To boost market uptake, the phases of product development that are closer to the market – testing, demonstration, certification and exploitation – can apply for a funding rate of up to 80% of eligible costs. For the sake of fairness, the new “Horizon Europe” research framework programme, will continue to incorporate the pillar of “safe societies”. Both programmes will be strongly interlinked to avoid duplication but allow for coherence and mutual benefits, especially with a view to dual-use research. Results from civil R&D will benefit defence R&D and vice-versa. Moreover, the financing rate of those projects that are closer to market can be further increased for consortia that have

Andy Francis Stirnal

Photo: private

is a certified European grants consultant. He worked for several years in Brussels as a public affairs consultant covering security and defence. Still attached to these topics, he is the Berlin correspondent for this magazine since 2014.

strong cross-border SME and mid-cap participation. The argument that only the big fish will benefit is thus, at least theoretically, refuted. Rather, it is precisely a question of increased cooperation and greater convergence between small and medium-sized enterprises and the European big ones. Indeed, such cooperation between unequal partners represent the value-added chain of large system integrators. This is nourishing the expectations that these cooperations will work here as well.

What projects will be funded? The final proposal of the EDF regulation is to be adopted in 2018 and it provides for a date of implementation as of January 2021. So, no concrete calls for proposals or annual operational programmes so far. However, within the framework of so-called preparatory actions – PADR, the European Commission seeks to assess and demonstrate the added-value of its support with a view of developing and further designing the EDF. These calls for proposals with limited funding with a total amount of between  25 and 40 million a year issued by the EDA will continue until the start of the EDF in 2021. The topical issues covered so far in these proposals, of a pilot nature, were among others: identifying key trends in defence technologies, enhancing situational awareness in a maritime environment by using manned and unmanned systems, complex interconnected system elements worn by soldiers, adaptive camouflage, protection against sensors or the creation of protective clothing. The scenarios where “strategic autonomy” is about to be lived out – peace enforcement, conflict prevention, stabilisation and support for capacity building as well as support for humanitarian operations, rescue and evacuation – provide reliable indicators of further topics to be expected.

Critical success factors Many aspects of the EDF seem well done. The financial envelope is solid, the incentive system coherent, and the planned convergence with other funding programmes could help to achieve the ambitious objectives of this instrument. But success will also depend on the tiny details. Administrative effort for application and project management, legal certainty, exploitation rights and IPR issues, specifics and the thematic scope of calls for proposals, award and eligibility criteria will be decisive.