Does Europe need new defence institutions?

Welcome back and Happy Easter. Does Europe need new institutions to organise its rearmament and collective defence? The question is being raised with increasing urgency given the Russian threat and possible US disengagement from European security under Donald Trump.

Before I get to that, let me share the results of our poll from Europe Express two weeks ago. That edition was about the earthquake in French politics caused by a ban on far-right leader Marine Le Pen running for office following her conviction for embezzlement. We asked you whether Le Pen should be allowed to run for president. An overwhelming 70 per cent of you said no, and only 22 per cent said yes. Thanks for voting.

I’m at ben.hall@ft.com.

Rearmament backlog

I wrote last month about the watershed moment for Germany, other European states and the EU as they pivot to higher defence spending.

The European Commission has proposed to exempt most member state defence spending from deficit limits for four years, potentially freeing up an extra €650bn each year. It also wants to create a €150bn loan programme for joint defence procurement projects, funded by borrowing on the markets and backed by its budget.

These ideas come on top of multiple, but mostly small-scale, EU programmes and bodies set up to promote joint research, procurement and defence industrial expansion.

Some experts think that the commission’s latest initiatives, while helpful, will not be sufficient to enable Europe to re-arm quickly enough while strengthening its defence industrial base. Relaxing fiscal rules will not necessarily help countries with high deficits and debts like France, Italy or Spain to borrow more. The €150bn loan programme may be too small and not financially favourable enough for governments to make a big difference to Europe’s vast rearmament backlog.

Now officials and analysts are asking whether Europe needs new institutions with much more financial firepower to accelerate defence procurement and promote the consolidation and scaling up of Europe’s defence industry.

Ed Lucas, General Sir Nick Carter and Guy de Selliers have proposed a rearmament bank, modelled on the European Bank for Reconstruction and Development. It would be able to borrow on international markets against capital paid in by all its member governments and lend to those governments or defence companies. It would be open to EU member states, but also crucial non-members such as the UK.

As my colleague Paola Tamma has reported, British officials have also floated the idea of a supranational institution to jointly purchase and stockpile weapons on behalf of a European coalition of the willing. More a set of design principles than a firm concept, the UK idea would spare member governments the upfront costs of buying arms and ammunition while promoting joint procurement at scale.

Last week, the think-tank Bruegel launched the idea of a European Defence Mechanism, modelled on the €700bn European Stability Mechanism, the Eurozone’s sovereign bailout fund. Like the proposed rearmament bank, it would be an intergovernmental not an EU body and would be open to the UK. It would borrow against paid-in capital on international markets — and it could help arm Ukraine.

Bruegel’s EDM idea has several distinctive features. First, it would act as “planner, funder and potentially owner of strategic enablers”, meaning it would buy the crucial military assets that Europe currently relies on the US to provide. That includes air and missile defence, long-range strikes, heavy lift transport aircraft and, most important of all, intelligence, surveillance and targeting. Second, its member states would agree to forfeit national preference when purchasing any of these systems, helping to create a genuinely competitive defence market. Third, frontline states that bear the heaviest burden of defending against Russian aggression could benefit from preferential financing.

Creating a US-style unified market of near-30 countries is not going to happen. But unified standards and specifications are perfectly possible; at least a clutch of (generally smaller) countries are in harmony on, say, rifle specs. That could be extended, thus enabling more efficient capacity utilisation and expanding economies of scale.

Whether France, Germany or Britain would ever agree not to favour their own defence industry champions is doubtful. But Bruegel has a point when it says that only a radical new design would allow Europeans to obtain the equipment they need, and quickly.

“We need to think about how to solve this scale issue in a really fragmented market,” says Guntram Wolff, one of the Bruegel report’s authors.

Nato forever

Europeans have in the past wasted time and effort in institutional debates about the role of the EU in defence policy. For now, even with Donald Trump back in the White House, there is a remarkable degree of consensus across the continent that there is no alternative to Nato. Even France, standard-bearer of European strategic autonomy, regards the alliance as the bedrock of collective defence. No other body has the command structures, the planning capabilities or the culture of operating together to defend the continent.

But Europeans are fast having to adjust to a prospect of a Nato with less America, if not yet without America at all. As my colleague Henry Foy and I have reported, officials from Europe’s leading military powers have begun discussing informally how to shift the burden from the US to Europe over five to 10 years.

Optimists say that if European capitals can over that period provide all the forces required to implement Nato’s regional defence plans to bolster its eastern flank, that would automatically lessen America’s burden.

The problem is the US has not yet told its Nato allies how far it intends to pull back its force commitments in Europe.

Giuseppe Cavo Dragone, an Italian admiral who heads Nato’s military committee, told the Paris Defence and Strategy Forum last month that Europe would end up taking responsibility for “regional deterrence, mainly conventional, and rapid reaction capabilities” while the US would continue to provide air power, space capabilities and the nuclear deterrent.

As Sylvie Kauffmann wrote in Le Monde earlier this month, no one knows how much damage Trump is prepared to do to the alliance, by questioning the US commitment to mutual defence, attacking other Nato members like Canada or Denmark or striking a deal with Russia that not only betrays Ukraine but weakens Nato’s position on its eastern flank to the detriment of Europe’s security.

Many European politicians talk breezily about creating a European pillar within Nato, but few can say what it means in practice or even whether it would be possible without Washington’s full consent.

In a paper for the Jacques Delors Institute, Nicole Gnesotto says Europeans need to be asking how they would defend themselves if the US withdrew from Europe, but the question is a “veritable taboo” within the EU.

“While all the member states agree the EU should be strengthened, they are all careful not to do too much to avoid precipitating the very thing they want to avoid: American disinterest in Nato and disengagement from European defence.”

More on this topic

Barney Jopson reports from Rota, southern Spain, on the “paradise” US base on alert as Europe braces for Trump’s Nato cuts

Ben’s pick of the week

Europe helped teach China to make cars. Now the tables are turning by Kana Inagaki, Edward White and Patricia Nilsson