David McAllister MEP: On the European Defence Industry Reinforcement through Common Procurement Act (EDIRPA)
For the last three decades, European defence has suffered from underinvestment by EU Member States. Additionally, the market and the demand are fragmentised along national lines. Usually, EU Member States, especially the bigger ones, procure from their national industries. This results in low interoperability, higher prices and longer delivery times. By pooling the demand of EU Member States, EDIRPA will reduce fragmentation.
In the past decade, Russia has increased its military budget by 300% and China by 600%. For the same period, EU Member States have collectively increased their defence budget by 20%. As early as 2007, Member States agreed on 35% of joint defence investments. In 2021, only 18% were reached.
After the beginning of the war in Ukraine, EU Member States announced a sharp increase in their defence budgets, amounting to €200 billion.
Closer cooperation and coordination of EU Member States’ armies is estimated to generate benefits between €24 and €75 billion.
After the negotiations, the European Parliament and the Council agreed to a budget of €300 million for EDIRPA, while another instrument with a budget of €500 million that will support the European industry to ramp-up production capacities for ammunition will complement it.
We want to make EU Member States’ armed forces stronger and more efficient by creating a new instrument for joint procurement. EDIRPA will meet the most urgent and critical defence products’ needs, especially those revealed or exacerbated by the Russian aggression against Ukraine. If we want to keep up our support for Ukraine as well as strengthen our own defence, joint defence procurement is urgently needed.
EDIRPA will improve the EU’s security in a world that is becoming increasingly dangerous, will save taxpayers‘ money through economies of scale, will improve the interoperability of Member States’ armed forces and will help countries replenish their defence stocks, depleted by the transfer of ammunition to Ukraine. Joint procurement will result in better prices, shorter delivery times, and improved cooperation between European armed forces through the usage of the same equipment. It also benefits small and medium-sized enterprises that play a vital role in the supply chain.
EDIRPA will incentivise the joint procurement of EU Member States by contributing to covering the administrative costs related to the procurement, but not the actual defence product. EDIRPA does not stipulate what should be procured. This is up to the individual states to decide, as defence remains a national competence. The procurement must be carried out by a consortium of at least three Member States, involve new cooperation or an extension of existing cooperation to new Member States. EU contribution will be higher in cases where additional material is procured for Ukraine or Moldova, and if EU Member States ensure a significant SME involvement in the respective procurement.