Why the EU needs a wartime investment plan

EU member states moved quickly to provide support to Ukraine after Russia’s invasion in February. However, now that a protracted conflict seems likely, the EU can no longer rely on short-term ad-hoc measures, writes Peter Haroche. Instead, European leaders should establish a coherent wartime investment plan (WIN) to support Ukraine and provide coordinated investments in the military capabilities of EU member states.

On May 25, Dmytro Kuleba, Minister of Foreign Affairs of Ukraine, stated the following: “What we saw are some revolutionary and innovative decisions made by the European Union, which they themselves did not expect to make. And we see NATO as an alliance, as an institution, sidelined and literally doing nothing.”

Indeed, since the beginning of the Russian invasion of Ukraine in February, the EU has certainly reacted as a major defense actor. Already on February 28 began to use a financial instrument established in 2021, the European Fund for Peace (EPF), to support the delivery of weapons to Ukraine. In addition, on July 19, the European Commission proposed a new regulation, the Reinforcement of the European Defense Industry through the Common Procurement Law (EDIRPA), which seeks to subsidize the replenishment of military stocks of member states through joint acquisitions.

These initiatives illustrate a new division of labor between the EU and NATO, with the two organizations working to defend Europe against Russia through their respective comparative advantages. While NATO focuses on the operational dimension, the EU is based on financial and industrial policies. However welcome these EU initiatives may be in principle, they share a major practical weakness: they seek to respond to a wartime situation using peacetime funds.

While the EPF is capped at €5.6 billion for the 2021-2027 period, €2.5 billion has already been used for Ukraine alone, through five successive tranches of €500 million. This pace is unsustainable in the perspective of a long war in Ukraine, much less if the EU wants to continue helping other partner countries in the rest of the world. Similarly, to finance EDIRPA, the Commission was only able to find €500 million from the margins of the EU budget, a symbolic sum compared to what is at stake.

Initially, it may have been rational to respond to the emergency with short-term, ad hoc measures. Today, we are clearly reaching the limits of this logic. Wartime requires not only rapid and substantial investment, but also consistency and planning ahead.

Instead of a series of small measures, the EU should adopt a military investment plan designed for the medium term. This would give more clarity and predictability to EU policy, but it would also send a strong signal of determination to the outside world, in particular to Russia.

A good example of such a medium-term strategy is the $40 billion aid package for Ukraine voted on by the US Congress in May. This initiative clearly demonstrated the credibility of the United States’ commitment to Ukraine. A medium-term approach is all the more necessary as the EU is currently preparing a training mission for the Ukrainian army, which will require anticipation of needs and will need to be closely coordinated with the arms delivery policy.

Therefore, an EU Wartime Investment Plan (WIN) should be established to cover not only support for the Ukrainian armed forces over the coming months, but also coordinated investments in the pressing military needs of member states. through joint acquisitions. Like the EPF, the WIN plan would be funded by all member states based on their GDP. At €10 billion, it would constitute the EU’s flagship military initiative in response to the war.

Linking support for Ukraine to the rearmament of member states in the same package would be logical because these policies are two sides of the same coin. First, the weapons that member states need to strengthen their defense posture, particularly within NATO, are the same ones that Ukraine needs to fight today. Secondly, the urgent need for member states to rearm is also, in large part, precisely to replace the arms and ammunition they send to Ukraine.

Politically, the WIN plan could be adopted not only by the countries on the eastern flank, which are highly committed to strengthening EU support for Ukraine, but also by France, which would see it as a step forward for European defense cooperation. For frugal countries, the WIN plan could be a way to rationalize spending that will be needed anyway, avoiding duplication and favoring economies of scale through joint procurement.

The war in Ukraine has turned into a war of attrition, with little or no decisive breakthrough. In this context, two factors are crucial: renewing military capabilities and maintaining long-term political resolve. The WIN plan would allow the EU to strengthen Ukraine in both respects and thus contribute directly to the final victory.

Note: This article offers the views of the author, not the position of EUROPP – European Policy and Politics or the London School of Economics. Featured Image Credit: european council

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