Updated assessment: Memo to the commissioner responsible for defence

First glance

Updated assessment: Memo to the commissioner responsible for defence

Publishing date: 30 January 2025
Authors: Guntram B. Wolff

Published alongside Heather Grabbe and Jeromin Zettelmeyer's paper, 'Not yet Trump-proof: an evaluation of the European Commission’s emerging policy platform'.

The following text provides a follow-up to the memo to the commissioner responsible for defence, originally published on 4th September 2024. All Memos to the European Union leadership were collected in the book, 'Unite, defend, grow'.

The central security challenge for the European Union is to meet the threat posed by Russia while reducing security dependence on the United States. This requires increasing support for Ukraine to ensure that Putin’s war of aggression fails, expanding military production, improving procurement and creating a single market for defence production.

What changes as a result of Trump? The return of President Trump and the situation in Ukraine have added urgency to this agenda. Trump has named a Ukraine-Russia envoy, General Keith Kellogg, who has stated he wants to achieve a peace deal quickly while excluding Ukrainian NATO membership. While US foreign policy remains to be defined, Vice-President Vance and security analysts close to the administration have suggested the US should reduce military support for Ukraine and prioritise instead other strategic theatres (Asia in particular). Trump has stated that he will insist that NATO members raise defence spending to 5 percent of GDP¹ Piero Cingari, ‘Trump at Davos: NATO 5% push, tariff warnings for Europe’, Euronews, 23 January 2025, . . While NATO expects military spending in 2024 to surpass 2 percent of GDP in 23 of its 32 members, only five countries – Poland, Estonia, the US, Latvia and Greece – are expected to exceed 3 percent (Lithuania is very close)² See NATO press release of 17 June 2024, ‘Defence Expenditure of NATO Countries (2014-2024)’, . .

The European Commission’s approach. The structuring of the 2024-2029 European Commission has settled the discussion on the division of labour between the High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission (HRVP) Kaja Kallas, and the Defence and Space Commissioner, Andrius Kubilius. The HRVP retains overall responsibility for security, support for Ukraine, sanctions and the EU-NATO partnership, while the defence commissioner is responsible for creating the industrial and regulatory conditions and the physical infrastructure to boost defence production, making military procurement more efficient, incentivising public and private investment in defence and strengthening military mobility. At the heart of this effort will be the creation of a “true single market for defence”. The steps to achieve this will be set out by the end of February 2024 in a plan for the future of European defence, for which the defence commissioner and the HRVP are jointly responsible (Mejino-López and Wolff, 2024).

Assessment and updated recommendations. The Commission’s new focus on defence is off to a strong start. The division of labour gives the defence commissioner an important portfolio without diminishing the HRVP’s role. This is a consequence of the Commission setting for itself defence-related regulatory and coordination tasks, including the development of a defence production single market. These tasks are new in scope and ambition.

Meeting these challenges involves three priorities:

Mobilise funding nationally and supranationally (if EU-level funding proves too difficult for legal or political reasons, an intergovernmental mechanism could be designed). After years of underinvestment, additional funding needs now total around €500 billion over the next five years.
Reduce fragmentation in defence markets. The European defence industrial base remains small, and lack of scale translates into lower production capacity and high costs. Raising scale and efficiency requires a much higher degree of standardisation of military hardware, common procurement and specialisation. Apart from the common threat, the best argument supporting this approach is budgetary savings for taxpayers.
Effective collaboration with key allies, in particular the United Kingdom with its significant military-industrial capabilities, and Ukraine, which can produce much more cost effectively than most, if not all, EU countries, and which has a substantial defence industrial base.

References

Mejino-Lopez, J. and G. Wolff (2024) ‘A European defence industrial strategy in a hostile world’, Policy Brief 29/2024, Bruegel, available at /policy-brief/european-defence-industrial-strategy-hostile-world

About the authors

Guntram B. Wolff

Guntram Wolff is a Senior fellow at Bruegel. He is also a Professor of Economics at the Université libre de Bruxelles (ULB).

From 2022-2024, he was the Director and CEO of the German Council on Foreign Relations (DGAP) and from 2013-22 the director of Bruegel. Over his career, he has contributed to research on European political economy, climate policy, geoeconomics, macroeconomics and foreign affairs. His work was published in academic journals such as Nature, Science, Research Policy, Energy Policy, Climate Policy, Journal of European Public Policy, Journal of Banking and Finance. His co-authored book “The macroeconomics of decarbonization” is published in Cambridge University Press.

An experienced public adviser, he has been testifying twice a year since 2013 to the informal European finance ministers’ and central bank governors’ ECOFIN Council meeting on a large variety of topics. He also regularly testifies to the European Parliament, the Bundestag and speaks to corporate boards. In 2020, ranked him one of the 28 most influential “power players” in Europe. From 2012-16, he was a member of the French prime minister’s Conseil d’Analyse Economique. In 2018, then IMF managing director Christine Lagarde appointed him to the external advisory group on surveillance to review the Fund’s priorities. In 2021, he was appointed member and co-director to the G20 High level independent panel on pandemic prevention, preparedness and response under the co-chairs Tharman Shanmugaratnam, Lawrence H. Summers and Ngozi Okonjo-Iweala. From 2013-22, he was an advisor to the Mastercard Centre for Inclusive Growth. He is a member of the Bulgarian Council of Economic Analysis, the European Council on Foreign Affairs and advisory board of Elcano. He is also a fellow at the Kiel Institute for the World Economy.

Guntram joined Bruegel from the European Commission, where he worked on the macroeconomics of the euro area and the reform of euro area governance. Prior to joining the Commission, he worked in the research department at the Bundesbank, which he joined after completing his PhD in economics at the University of Bonn. He also worked as an external adviser to the International Monetary Fund. He is fluent in German, English, and French. His work is regularly published and cited in leading media.