08/26/2024 | News release | Distributed by Public on 08/26/2024 19:01
On July 18, 2024, the President of the European Commission, Ursula von der Leyen, was reconfirmed by the European Parliament for a second five-year term. As part of the process, she delivered a speech before the Parliament, complemented by a 30-page program, which outlines the Commission's political guidelines and priorities for the next five years. The guidelines introduce a series of forthcoming legislative proposals across many policy areas, including on defence and technology security.
Defence Policies Under the 2019-2024 Commission- and a Renewed Focus on Technology
The 2022 invasion of Ukraine marked a paradigmatic change in EU defence industry policymaking with the Commission proposing bold legislation to scale-up defence capabilities and to support Ukraine's war effort. These included the Act in Support of Ammunition Production (ASAP) and the European defence industry reinforcement through common procurement (EDIRPA). More recently, the Commission released its first-ever European Defence Industrial Strategy (EDIS), accompanied by a proposed regulation establishing the European Defence Industry Programme (EDIP), which still has to go the EU's ordinary legislative procedure.
Tech policy in President von der Leyen's first term focused on broad regulatory measures such as the Digital Services Act, the Digital Markets Act, and the EU AI Act. But in parallel, the EU has begun to take greater interest in the role of cybersecurity, cyberdefense, and the security of supply of key technologies in Europe.
Ensuring Support and Security in Tech Regulation
This renewed focus on the role of tech in defence and security is deeply embedded in President von der Leyen's priorities for her second term, which include new mechanisms to enable and promote investment in key sectors. In the summer of 2025, the Commission is to come forward with a proposal for the 2028-2034 Multiannual Financial Framework. The Commission intends to ask for significantly more financing for strategic EU investments, which will face resistance from the more "frugal" Member States. The Commission also plans fundamental revisions of capital markets rules and enable the European Investment Bank to generate greater leverage to enable further investments. It would also use joint public procurement to further its defence and technology security objectives.
This new "investment Commission" intends to use some of these investment facilities to "turbo charge" European investments in technology to ensure "EU added value" and the "security of supply" of tech services. It would also allow a "preference to be given to European products" through public procurement, in line with rising protectionist trends and President von der Leyen's new economic security policy.
The EU would also invest in rolling out technology to boost productivity-in line with the Strategic Agenda-with pledges to adopt an "AI Factories initiative" in the first 100 days of the upcoming mandate. But it also sees technology as a key contributor to EU defence, and proposes a Defence Project of Common European Interest for cyber defence-to be "designed, built, and deployed on European soil as quickly as possible". The Commission also plans to strengthen European cyber defence capabilities, working with the Member States to coordinate national cyber efforts and secure national critical infrastructure, and "developing a trusted European cyber-defence industry".
Scaling up the Defence Union
For the first time, the new European Commission will also include a Commissioner for Defence. In its core defence industrial policy, the new Commission plans significant investments in the EU defence industry, and leveraging procurement-and public and private funds-for Europe's rearmament.
EDIP will be a core plank of President von der Leyen's second term aim to build defence production capacity in Europe. Once adopted by the European Parliament and the Council of the EU, it should provide €1.5 billion through the end of 2027 towards addressing the defence funding gap in Europe and enhancing the EU's defence readiness.
President von der Leyen's political guidelines also indicate that she will seek further funding for existing instruments, including the European Peace Facility (EPF) for Ukraine's future reconstruction as well as the European Defence Fund and the EDIP. The guidelines mention various priorities for this increased investment, such as building a European Air Shield.
In addition to public funding, the guidelines call for a closer collaboration with the European Investment Bank (EIB) to de-risk common defence projects. The EIB's Board of Directors recently adopted an action plan to further step-up support for Europe's security and defence industry. This plan includes an update of the definition of dual-use goods and infrastructure, as well as support to SMEs and startups, and a commitment to accelerate the deployment of funds to strengthen Europe's security and defence capabilities. The political guidelines also announce a White Paper on the Future of European Defence, to be published in the first 100 days of the Commission's mandate, introducing a series of new instruments to enhance the EU's collective defence.
These policy developments reflect unprecedented political momentum behind the European Defence Union. Indeed, beyond President von der Leyen's own proposals, Poland's Foreign Minister Radosław Sikorski has, for example, floated the idea of a "European Legion," modelled in part on the French foreign legion. It would consist initially of 5,000 soldiers, hired as volunteers outside of regular military recruitment processes, from EU Member States and candidate countries. It would be funded out of the EU common budget, and include qualified majority voting for operational decision-making once a mission is authorized by unanimity. And crucially, it would be deployable, for instance, to parts of Africa to counter Russia's Wagner Group.
Next Steps
After the nomination of Commissioners by each Member State, individual nominee hearings will take place in the European Parliament's relevant Committees before a vote in plenary session to endorse the full college of Commissioners. At that stage, it will become clear which Commissioners will take the lead on defence policy issues. The new Commission is expected to start at the beginning of November.
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The team at Covington, which cuts across a wide range of regulatory areas, is well placed to advise you on these policy developments, and how to engage with the relevant decision-makers on these questions.
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Clovis de Bryas and Pol Revert Loosveldt of Covington & Burling LLP contributed to the preparation of this article.