EU Spending on Defence Research and Development is About to Accelerate

Building on the European Council’s agreement of December 2016 that the EU would provide research funding for collaborative defence work and would build a €1-billion-per-year fund for the full collaborative development of defence systems, the Commission has announced arrangements to implement the plan for 2019/20. On 19 March the Commission published the areas in which it is particularly interested both for the European Defence Industrial Development Programme and the Preparatory Action on Defence Research (PADR); and on 11 April the European Defence Agency held an Information and Brokerage day for those interested in obtaining support for research projects attended by more than 300 participants.

EU Defence Research Funding

Looking first at research, while there are some specific areas that the EU/European Defence Agency (EDA) see as priorities, it is also fishing with a large, fine-mesh net. Overall the areas specified as being of interest will not come as a surprise to defence analysts. The first area noted is Electromagnetic Spectrum Dominance, particularly regarding active electronically scanned radars. With Western thinking relying increasingly on information superiority, including networks for mission success, there is already an implicit competition between Russia, China and the US for control of the electromagnetic spectrum.

A second area refers to interoperability and unmanned systems, a broad category that covers land, sea and air equipment with both remotely controlled and autonomous elements. With many states pursuing national and collaborative programmes, there is a clear need to consider how things will work together.

The third area refers simply to ‘Disruptive Defence Technologies’ divided into ‘Emerging Game Changers’, and ‘Challenging the Future’.

In total, €25 million will be available in 2019 for this work, a modest sum given the scale of ambition, but this is to increase massively to £500 million in 2020.This is a large amount in European terms given that currently only three states (France, Germany and the UK) spend significantly on defence research, and the EU figure broadly matches what each of these countries spends.

However, the new defence research funds will present a real challenge for those required to make funding decisions. In the US, and to a lesser extent in the UK, there is increasing recognition that defence acquisition must take the risks associated with rapid decision-making and capturing the involvement of small and medium-sized enterprises if the military is to stay abreast of rapidly progressing technology. But the preparatory effort involved in putting together bids for this money appears significant, and so far the European machinery has moved cautiously, as indicated in Table 1.

Table 1: PADR Calls for Proposals 2018/2019

Year

Number of bids

Average number of entities involved

Number of countries involved

Projects already ongoing
in March 2019

2017

24

7+

25

5

2018

8

10+

20

-

Source: European Defence Agency, ‘High Interest in PADR Information and Brokerage Day’, 11 April 2019, <https://www.eda.europa.eu/info-hub/press-centre/latest-news/2019/04/11/high-interest-in-padr-information-brokerage-day>, accessed 30 April 2019.

Funding for Development Projects

For 2019 there is €500 million for the co-funding of development work in nine areas ranging from the narrow and focused to the very broad. The Commission has categorised them into the different elements of the Defence Capabilities Framework recognised in the UK, Europe and NATO, although some of the application of this categorisation is not easy to understand. Under the elements of Preparation, Protection, Deployment and Sustainability, there is interest in ‘multi-purpose unmanned ground systems’ and it must be presumed that this is about using unmanned platforms to deliver logistics materials in hazardous environments, the ‘last mile’ issue in UK terminology. The Inform and Command areas are dealt with extensively with reference to cyber, satellite-based navigations aids, the integration of unmanned air systems into air traffic control arrangements, and a ‘European Command and Control System from the strategic to the tactical level’, words that may make some NATO enthusiasts rather edgy. The Commission document then gets very open-ended in the Engagement sphere, referring to next generation ground-based precision strike, air combat capabilities and future naval platforms. The document ends with reference to money for innovative and future oriented defence solutions which is meant particularly for small and medium-sized enterprises. Overall the Commission has consulted extensively with industry where its areas of interest are recognised as salient to tomorrow’s defence challenges.

The intention of the EU defence development funding is to advance work done at the research level and to facilitate emerging collaborative projects being discussed privately by individual states. It will make multi-year money available to two or more countries that cannot raise the needed funds on their own. It therefore involves co-funding and only time will tell whether collaborative projects involving the EU take even longer to set up than those linking just member states. The ambition is that the eventual annual €1 billion of Commission money will be associated with projects valued at around €5 billion.

Clearly, these are all Commission plans that will need to be approved by the European Parliament, which will need to be restructured if, when and how the UK leaves the EU. But even within EU states, defence R&D spending is susceptible to budget changes.

Implications for the UK

For work not specifically tied to development, smaller and larger UK firms may be more drawn to the MoD’s Defence & Security Accelerator Programme, with its articulated specific areas of interest, its spending of nearly £15 million in 2017/18 and decision-making made in weeks rather than months. European money would appear most appealing to companies who know there are specific businesses on the continent which could add value to their competence.

The opportunities open to British firms in the EU arrangements are politically uncertain. There are significant British industrial and technical capabilities in many and perhaps all of the fields of interest, and the UK government made clear as long ago as November 2017, and again in the July 2018 Chequers White Paper, that it would like extensive British involvement in European defence industrial cooperative activities, including those being run by the EU/EDA. However, with so many Brexit uncertainties, the issue of UK defence industrial involvement in European cooperation projects will remain open. Clearly, major industrial players in Britain which are based in mainland Europe (including Airbus, Leonardo, MBDA and Thales) will be able to bid from outside the UK, as will British-based firms with significant subsidiaries on the continent.

If the UK is excluded from EU funding, and if the UK government works to provide extra funding to offset the money that British firms would have got from the EU, such firms are likely to find that compensation to be only partial: collaborative work brings access to a larger collective funding effort and to the knowledge and skills of a wider group of people. On the other hand, the chances of such exclusion are perhaps being diminished by the current German restrictions of defence exports to the parties in the Yemen war (including Saudi Arabia) which are making it less attractive as a defence collaborative partner.

Conclusion

To date, the Commission and the EDA have been taking baby steps and building experience in awarding grants and specifying and implementing defence projects that will meet the ambitions of the 2016 initiative: from 2020, especially in research, it will be using significant money and pressure to demonstrate tangible results will increase. Tangible results will involve getting projects established in the development phase, the timely completion of valued development work and arguably a tangible increase in the number of countries and smaller companies involved in defence research and development in Europe. The UK would prefer to have the option of joining in specific efforts, but firm plans will need to be placed on hold until the wider aspects of the UK’s departure from the EU have been settled.

Trevor Taylor is a Professorial Research Fellow in Defence, Industries and Society at RUSI.

The views expressed in this Commentary are the author’s, and do not necessarily reflect those of RUSI or any other institution.