We Must Move to a War Economy Mode, Suggests Breton
The European Commission has announced its first-ever plan-valued at €1 billion per year – to rapidly enhance EUS industrial production capacity for large-calibre ammunition. The move is aimed at providing additional supplies to Ukraine and strengthening EU security – as well as shifting the bloc’s economy from a peace to a war footing.
“The EU defence industry should see how we can move into war economy mode, [as] it is not ready for that yet,” stated Internal Market Commissioner Thierry Breton, although the bloc “still [has] a real production capacity. […] which is there from the past” albeit in need of refurbishment. Breton is currently touring EU countries whose industries can produce 155mm, other NATO calibres and Soviet calibre ammunition: Bulgaria, Croatia, Czech Republic, France, Germany, Greece, Italy, Poland, Slovakia, Spain and Sweden.
The EU plan, dubbed ‘Act in Support of Ammunition Production’ (or ASAP, fortuitously highlighting its urgent nature) aims to co-fund European ammunition manufacturers to boost and modernise production, and to build new or convert old plant. ASAP also favours public-private partnerships to secure access to raw materials, boost supply chains, and re-skill the workforce. The proposal mandates munitions manufacturers be EU-based, though components can be sourced from non-EU elements of the supply chain.
Delivering weapons to help Ukraine has depleted national stocks and highlighted low production capacity after decades of a peace economy. Consequently, amid increasing global security concerns, the EU is seeking to press the pedal to the metal. On 20 March, the EU Council agreed on a three-track approach to jointly provide one million rounds for Ukraine. ASAP is the third part of this approach, which also looks at the future of the EU defence industry and security.
According to the proposal, the €1 billion will come from various sources, mainly in the form of grants. The EU budget will furnish €500 million, the European Defence Fund €260 million and €240 million will come from EDIRPA mechanism, a measure proposed in 2022 for EU common procurement and never used. An additional 10% could be leveraged in the case of partnerships. The rest should come from private investments or the EU Cohesion Fund – as some of the targeted countries are in less-developed regions, a top EU official said.
As for the length of the plan, it should apply until mid-2025, but its duration might “be based on European security conditions,” the official added. Other ASAP measures include priority orders, through which the Commission can speed-up the acquisition of urgently needed components, as well as permitting factories to run 24/7, if necessary. The official said that ASAP will be pushed forward as soon as possible by trying to find agreements with the European Council and Parliament by June through “a fast-track adoption” procedure.
Results are uncertain, however uncertain, and reaching agreements on the issue might not be all that simple. Some companies have recently cast doubt on the possibility of ramping up production quickly, aand an Estonian document in February highlighted the gap between EU production capacity of 25,000 rounds/month and the 60.000-210,000 rounds currently being used by Ukraine.
Scepticism is extant at EU level, too. MEP Michael Gahler, who leads the European Parliament’s EPP Group in the Foreign Affairs Committee, stressed that funding should come from sources other than instruments such as EDF and EDIRPA, which are “already underfunded. […] Instead of weakening the effectiveness of other instruments through redistribution, we urgently need to rethink our priorities and adapt to the needs of the crisis”.
Caterina Tani reporting from Brussels for MON
