Paul Taylor is a contributing editor at POLITICO.
PARIS — The European Union is breaking new ground with an ambitious plan to jointly procure urgently needed ammunition for Ukraine and to ramp up European defense industries for a new era of confrontation with Russia.
This has become a crucial test for the credibility of common European defense efforts — but it’s a daunting challenge for an organization that was born as an economic peace project without a military bone in its body.
And some EU members aren’t sure Brussels is up to the job.
With Ukraine burning munitions faster than the entire Western world’s arms factories can churn them out, expanding manufacturing capacity that’s shrunk for 30 years is now the bloc’s top priority. Thus, the EU has agreed to spend €1 billion to transfer more of its members’ existing munitions stocks to Kyiv, and another billion to jointly order the most frequently used 155-millimeter NATO standard artillery shells from European industry.
Eighteen countries, including non-EU Norway, have agreed to pool their orders through the EU, under a plan to send 1 million rounds of ammunition to Ukraine this year. EU leaders are due to sign off on the plan, which is loosely modeled on the bloc’s collective purchases of vaccines during the COVID-19 pandemic, at a summit beginning today.
Germany — home to one of Europe’s three biggest ammunition makers, Rheinmetall — joined the collective purchase and industrial expansion plan after some hesitation, but it is making an each-way bet, also going full speed ahead with national arms purchases and inviting European partners to join its own procurement framework.
While Thierry Breton, the European Commissioner for defense industries, toured ammunition and explosives makers in Central Europe last week and spoke of putting the EU on a “war economy” footing, the Commission admitted that it might not be able to meet Ukraine’s needs.
“Signing large contracts, consolidated at European level, will send the appropriate signal to industry to take action. But this is not a guarantee of delivery on time,” Commissioner Mairead McGuinness told the European Parliament.
To address this concern, the EU’s new Defence Joint Procurement Task Force has mapped out production capacity in the 27-nation bloc, identifying 15 manufacturers in 11 countries that make various kinds of ammunition used by Ukraine — however, the devil is in the detail.
One early challenge will be trying to harmonize military requirements to match the shells orders with the range of artillery pieces and tanks being supplied to Ukraine, as not all 155-millimeter shells are the same. Then, there’s a complex supply chain to navigate, which is already strained by global demand for raw materials. The task force has already identified key bottlenecks that will have to be overcome, especially in sourcing explosives.
There’s also the fact that BAE Systems — another of Europe’s top ammunition makers, along with France’s Nexter — is shut out of the EU program because of Brexit. So, although it has contracts with the British government to ramp up production to supply Ukraine, it won’t benefit from the joint EU orders.
According to the bloc’s plan, national orders will be partially reimbursed by the European Peace Facility (EPF), an off-budget fund that’s been topped up to €5.9 billion until 2027 to part-finance weapons supplies to Kyiv. Perhaps the most politically sensitive dispute was over who manages the joint ordering — the EU or a lead nation.
Under the strategy, put forward by Breton and High Representative for Foreign Policy and Defense Josep Borrell, the European Defense Agency (EDA) will serve as the clearing house and contracting agency for the project. But critics say the small intergovernmental body, which was created in 2004 to promote defense integration between member countries, has little in-house expertise in managing such complex contracts. A German official, speaking on condition of anonymity, said the EDA was more a think tank than a procurement agency.
Admittedly, that criticism coming from Berlin is rich. Germany’s own arms procurement is so slow and bureaucratic that Eva Högl, the parliamentary commissioner for the armed forces, reported last week that not one cent of the €100-billion special defense fund announced by German Chancellor Scholz a year ago had yet been spent.
EDA Chief Executive Jiří Šedivý did acknowledge in an interview that managing such a large collective purchase would indeed be new territory for his outfit, which had 171 staff in 2022, but he also said the organization’s coordination role would be crucial.
“It’s partially new, but we have a legal framework, and among the defined roles for the agency is the possibility to act as an acquisition agency,” he told POLITICO. And the EDA already has some experience procuring ammunition for Carl Gustaf anti-tank weapons for five nations, as well as satellite communications and imagery for member countries, “but this is not our main activity,” he said.
Šedivý noted he expected there would be parallel tracks as well, with some countries buying ammunition via the EDA and others joining a lead nation’s procurement contracts — and some doing both.
Yet that dual approach risks forfeiting economies of scale, and could lead to a bidding war for scarce resources between the EU and its own biggest member.
Meanwhile, industry is complaining that companies aren’t seeing actual long-term deals signed to enable them to expand production despite big-figure announcements by politicians. Rheinmetall’s ammunition order book had swelled by 40 percent in 2022, but it says production is now only running at two-thirds capacity while it awaits new government contracts.
“I need orders. Without orders, I won’t produce anything,” Rheinmetall CEO Armin Papperger told Bloomberg when the company announced record profits last week. “Any shortage of ammunition won’t be the defense industry’s fault,” he added.
Manufacturers wouldn’t be able to meet Ukraine’s needs unless governments increased spending to double their production capacity, Papperger said. However, the proposal for a seven-year investment plan to expand ammunition production over the medium-to-long term is the weakest of the plan’s three legs, as it depends on future funding from the common EU budget or the EPF, which isn’t assured and may be subject to lengthy negotiations.
Jan Pie, chief executive of the Aerospace, Security and Defence Industries Association of Europe, which has been advising the Commission, said many pitfalls would have to be overcome, and so far, the track record of European arms collaboration is poor.
“Regardless of how you ask industry to ramp up its production, whether it is member states in a bilateral, trilateral, multilateral agreement, whether they come with bigger procurements with or without European instruments, it is first and foremost member states in the driver’s seat,” he told POLITICO. “It’s not the EU, it’s not the Commission, it’s not the industry.”
“You can’t just pour money down into the system and expect production will increase in some way. There is a huge administrative challenge,” Pie said. Companies would need certainty that governments would make a multi-year commitment to greatly increased purchases in order to justify the business case for expanding production capacity.
so, if the EU is to gain credibility as a defense actor, this plan had better work. But the early signs are not encouraging.