Defence technologies - Time to Think Big Again

PRINT

12.10.2024 Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy / Vice-President of the European Commission

HRVP Blog - Discussing Europe's technological sovereignty has become quite fashionable. It has been an important part of my role as High Representative. Recently, I attended a conference ontechnological sovereignty in defence in Spain. In a world of renewed conflicts and geopolitical rivalries, defence requires visionary leadership-including in advanced technologies. Europe's industrial defence sector has great potential; our task is to unlock it.

© eeas

On 20 September, I participated in the COTEC conference in Las Palmas, Spain, discussing the nexus between technology and defence with Cristina Garmendia, a former Spanish Minister of Science and Innovation. The Foundation for Technological Innovation (COTEC) promotes innovation as an economic and social driver and is co-presided by the King of Spain, and the Presidents of Italy and Portugal. Here are my three main takeaways from that discussion:

1. Despite some progress, we still have a long way to go in Europe

Many of the world's greatest innovations have emerged from the defence industry. Radar was born in the UK in 1935, while the Internet, computer chips and GPS were developed in the US for military use in the 1960s and 70s. All of these were later put to service for civilian use. In more recent decades, much of this innovation has taken place in the United States, and not without reason.

EU and its Member States are spending €14.4 billion annually on military research and development (R&D) compared to €130 billion in the US, ten times more. Worse still, this limited amount is spent in a fragmented way, with each Member State setting its own priorities and carrying out a rather solitary kind of work. This fragmentation is further mirrored in the way Europeans buy military equipment: only 18% of defence equipment is procured in cooperation, the rest on a national basis. The consequence is a European defence industry that is too small, too fragmented, and lacking innovation.

To address this issue, we have started pooling European expertise in common R&D projects. With the European Defence Fund (EDF), which has a budget of €8 billion over the 7-year period of the Multiannual Financial Framework, we are incentivising pan-European cooperation, bringing together industry, SMEs, research organisations, the European Defence Agency and our Armed Forces. These projects include, for example, ARTURO, a state-of-the-art radar project coordinated by the Leonardo S.p.A. from Italy or ECOBALLIFE, led by the Spanish company Tecnalia, to develop durable, yet lightweight protective materials for soldiers and vehicles.

We have also taken steps to help innovative European start-ups and SMEs enter the very competitive defence market. The Hub for EU Defence Innovation (HEDI) in the European Defence Agency helps our Armed Forces identify gaps and specify innovation needs. In parallel, the European Commission has set up the EU Defence Innovation Scheme to support innovative smaller players meet those needs. This year, this scheme awarded €225 million to about 400 companies.

But of course, much more remains to be done. We need to provide EU defence companies with access to European innovation funds and encourage collaboration with research institutes and universities. We must also strengthen cooperation among European defence companies themselves, not only in R&D but also in the next steps of the process, starting with joint production. To encourage this, we will need stronger financial incentive on EU level. And we should be careful not to overuse a treaty provision (Art. 346) that allows Member States to bypass EU rules on procurement if they believe it threatens national security.

1. Technological sovereignty in defence is a must

While many great innovations have emerged from the defence sector, we are increasingly witnessing the reversal of this logic: technologies used in military equipment are often initially developed for commercial use. Take, for example, the most advanced computer chips: their development costs billions. Such vast investments are often only feasible because of their initial commercial applications-from computer games to artificial intelligence.

Russia's war of aggression in Ukraine has provided a clear illustration of this trend. It began with a large-scale cyber-attack. It was Microsoft - a commercial entity - that was able to, and stepped in, to safeguard Ukraine's digital infrastructure. When Russia targeted Ukraine's internet infrastructure, it was Starlink, another commercial operator, which kept the Ukrainian armed forces connected. And as the battle increasingly turned to drone warfare, commercial drones provided the blueprint for the drones the Ukrainian army is currently using to target tanks.

The war against Ukraine has provided a window into the future of warfare: ground robots will do everything, from reconnaissance to direct attacks. Russia has already deployed unmanned vehicles that can launch antitank missiles, grenades and drones. Ukraine has used robots for casualty evacuation and explosive disposal.

Aerial drones have already been successfully complementing tanks. Maritime drones have neutralised much of Russia's on-paper advantage at sea, reopening the Black Sea. Drones have also made warfare much more asymmetrical: a swarm of cheap drones (€500 per unit) can immobilise a battle tank, and even a much costlier F-35 would struggle to fight them.

Artificial Intelligence is already used in autonomous weapons, cyber ​​operations and surveillance. AI models in drones help avoid obstacles and identify potential targets in Ukraine. And AI systems can use data gathered by sensors in robots and drones to map the battlefield and predict points of attack. And there is increasing dependence on space assets: a modern soldier relies a staggering 80% on space services for communication, positioning and operating various weapon systems.

The next milestone in this trend may well be quantum technology. It will have enormous military applications: from decrypting secure communications to enabling GPS-independent navigation, thereby overcoming jamming devices. Fortunately, European research institutes are among the global leaders in this technology.

To protect Europe's technological sovereignty, we must avoid excessive dependencies in all these critical technologies, such as importing from a small number of same suppliers, which are furthermore not strategically aligned. For instance, just one Chinese company (DJI) controls an estimated 70 percent of global commercial drone production.

But this does not mean autarky: we should expand, and leverage better our partnerships with trusted third countries.

And we need to invest more to develop our own advanced technologies. Europe's absence from the top 15 global tech companies is alarming. This must be addressed by substantially increasing public funding and by unifying Europe's capital markets and expanding the role of non-banking finance, such as venture capital. In 2023, €62.5 billion of private investment went into US Artificial Intelligence, while Europe (EU and UK) attracted only around €9 billion; China €7.3 billion. We should follow the recommendations of Enrico Letta to build a Savings and Investments Union to direct more of Europe's private savings - amounting to a staggering €33 trillion - towards European technology development.

1. Defence contractors can foster Europe's competitiveness

While the EU is lagging on tech giants, it has strong champions in the defence sector. The EU is home to 5 of the 15 largest global defence contractorsby market capitalisation, such as Safran from France, Leonardo from Italy or Rheinmetall fromGermany. But the European defence industry landscape remains populated mainly by national players operating in relatively small domestic markets. They lack scale for innovation and for winning big contracts. Fragmentation also often leads to a lack of interoperability of equipment.

To change this, we need to better coordinate demand on the military side and provide stronger supply-side support to industry. On the demand side, we have the European Defence Agency, whose already significant role could be expanded to develop more military research projects, encourage companies to collaborate, and improve coordination in the procurement of equipment for European armies. To address the supply side, I have proposed, together with the Commission, the first-ever European Defence Industrial Strategy. We canimprove Europe's competitiveness through defence industrial policyexploiting synergies with other sectors for technologies with dual use potential.

However, to do that effectively and rapidly, we need to mobilise much more funding at EU level. The Draghi report points to very substantial funding needs. What remains open is the way to meet them. We cannot wait until the 2028-2034 Multi-Year Financial Framework. It would be detrimental to the EU's own interests.

Instead, we should immediately strengthen the European Investment Bank's role in financing defence initiatives. And we should consider issuing joint debt to fund the expansion of the European defence industry, as we did during the Covid-19 pandemic. This would certainly raise a number of delicate political questions, including whether it is fair to use common debt to equip the armies of member states that have so far made little effort to develop their defence capabilities. However, if Russia's aggressive imperialism was truly seen as an existential threat to the Union, the choice of joint debt would be made quickly.

Resorting to joint debt to finance a major military effort in support of Ukraine, in order to force Putin to the negotiating table, would certainly be in accordance with the treaty. It would also boost Europe's competitiveness in the crucial industrial defence sectors and ensure we do not fall irreparably behind Russia and others.

Europe stands at a critical juncture. While we have made progress with initiatives like the European Defence Fund and the Hub for EU Defence Innovation, we need to act more boldly. In a world full of war and unrest, we must think big again; investing heavily in key technologies like AI, drones, and space capabilities, and helping our defence industry unlock its potential.