Armament | Armament with EU funds

The European Union is at a turning point in its security and defense policy. On July 16, the EU Commission plans to present its new multi-billion euro budget. Many stakeholders want a piece of the Multiannual Financial Framework (MFF) pie. The European trade association Business Europe, which also represents the interests of the defense industry, is calling for massive investments in the defense sector. The EU should also advance defense integration to standardize fragmented procurement and facilitate private investment.

Lúcio Vinhas de Souza, Chief Economist at Business Europe, called for defense spending to be classified as a European public good during a discussion at the European Economic and Social Committee (EESC) on Friday. "A strong and competitive European security and defense industry is essential for the EU's strategic autonomy, industrial resilience, and global competitiveness," the Portuguese economist explained. Classification as a public good is crucial for the allocation of EU funds. Most recently, the EU defined the procurement of COVID-19 vaccines as a public good.

Billions for defense

The defense industry is already benefiting from extensive national and European investment programs. Germany alone spent over €77 billion on defense in 2024. For the EU member states, the total costs amounted to €330 billion. Added to this is the EU's Readiness 2030 program, which earmarks €800 billion for defense expansion, financed in part by loans from the European Investment Bank (EIB). The Commission is planning an additional €150 billion in debt for joint procurement projects under the Safe name, which will be secured through the current EU budget. Similar mechanisms are expected in the new budget.

The declared goal of the EU and its member states is to increase defense spending by 2035 to the NATO target of five percent of their respective gross domestic product (GDP) – of which 3.5 percent is for military purposes and 1.5 percent for so-called dual-use projects. These are projects that can also be used for civilian purposes, such as satellite systems or communications infrastructure. Since the EU merely provides the funds and guarantees the loans, but procurement is ultimately carried out by the member states, they are included in the respective national calculations for the NATO target. "It's a lot, but is it enough?" asks Business Europe Chief Economist de Souza. By comparison: according to official figures, Russia invested just under 150 billion euros in 2024 – around seven percent of its GDP.

Dark threat scenario

Alexandr Burilkov, a defense expert at the think tank Globsec Geotech, warns of Russia's growing military strength. Not only has production now been shifted to war, so that the high material losses in Ukraine can be offset, but the expert also estimates that Russia's army will grow both quantitatively and qualitatively by 2030. He anticipates up to 16 new brigades, each consisting of 3,000 to 5,000 personnel. The army is expected to grow to a total of 1.5 million active soldiers.

According to Burilkov, it's not just about money, but also about actual capabilities. And in this area, according to the expert, Europe still has significant deficits. There are gaps in ground troops, artillery defense, aircraft, and long-range missiles, as well as in strategic capabilities such as artificial intelligence. At least 25 new EU brigades are needed, each equipped with 1,400 tanks, 2,000 infantry vehicles, and 700 artillery pieces. The estimated cost for the equipment alone: ​​€250 billion.

Social concerns: a peace project in danger?

Isabelle Barthes of the industrial union Industrial Europe recognizes the necessity of defense efforts, but warns that Europe must remain a peace project. "Resilience is not only built through deterrence, but through unity," she said on Friday. Unity and democratic cohesion are at risk if defense spending crowds out other important investments—for example, in ecological transformation or social projects. Barthes criticizes the possibility that, in the next EU budget, funds from the Cohesion Fund for Regional Development and the European Social Fund could be diverted to defense projects.

She also warns of further deindustrialization if civilian companies switch to defense production. A strong industrial base is essential, for example in steel, chemical, and semiconductor production, which are also needed for defense and strategic autonomy. The rising demand for defense equipment is also increasing the pressure on workers. Given staff shortages and a lack of qualifications, they are forced to work additional night shifts. Temporary workers are being used more and more frequently. She described the EU Commission's proposed exemption for the defense sector from the Working Time Directive, which stipulates a maximum weekly working time of 48 hours, as a "red line" from the union's perspective.

Barthes, on the other hand, calls for a comprehensive approach that combines defense with economic stability and social and environmental goals. She therefore demands that the EU Commission grant the same fiscal flexibility for green and digital investments as for defense spending. However, the debate is miles away from that.