From Soft Talk to Hard Power

It is no surprise that security and defense are top priorities for the new EU legislature. Russia’s brutal war on Ukraine has dragged into its third year, with no end in sight. Putin’s regime keeps issuing nuclear threats and launching aggressive hybrid attacks on EU and NATO members. While Russia has shifted into full war economy mode, European nations are grappling with depleted stocks and shrinking fiscal space. Decision-makers and analysts have warned that Russia could expand its war effort into NATO territory within five to eight years.^[1] Russia’s aggressive revisionism has underscored NATO’s primacy in European defense. However, the real possibility of Donald Trump returning to the White House means that Europeans may soon have to seize a much larger share of the burden, both in supporting Ukraine and deterring Russia.^[2] A strong European Defence Union, based on the EU’s regulatory powers, ability to pool resources, and large single market, can become an important enabler of a more robust European pillar within NATO.

In her political guidelines, European Commission President Ursula von der Leyen promised to build a “real European Defence Union” and to “create a true Single Market for Defence.”^[3] While her rhetoric strikes the right tone, Europe’s security and defense policy suffers from a chronic gap between promise and delivery. Despite taking unprecedented steps since February 2022, EU member states are still sitting on the fence regarding a real European Defence Union.^[4] They promised to spend better together on defense but have consistently failed to meet the self-imposed target of spending 35 percent of their total defense equipment procurement jointly.^[5] They pledged to bolster Europe’s defense industrial base, but in 2022–2023, nearly 80 percent of their defense acquisitions came from outside the EU.^[6] They committed to provide Ukraine with one million rounds of ammunition within a year but delivered only half.^[7] This gap between promise and delivery is exacerbated by the need to simultaneously address three partly clashing objectives: providing urgent military support to Ukraine, replenishing national stocks, and strengthening Europe’s defense industrial base for the long term.

The new beginning in Brussels presents an opportunity to bridge this gap between soft talk and hard power. Europeans should not wait for the next US presidential election to provide the necessary impetus. Structural trends mean that Europe’s place in US grand strategy is diminishing, regardless of the election outcome.^[8] In bringing the European Defence Union to life the EU’s new leadership team will face both old and new constraints. The EU’s legal competences and financial means in the field of security and defense are limited. The vitality of the European Defence Union will thus greatly depend on the member states’ willingness to pool power and resources. While a vast majority of EU citizens want more European security and defense cooperation,^[9] the European Parliament elections revealed a growing minority, mostly from the Eurosceptic far right, that fiercely defends national sovereignty while often displaying Russia-friendly attitudes. In the coming five years, the EU’s role in security and defense will thus be more relevant, but also more contested than ever. Navigating these trends and constraints will require leadership, bold yet practical approaches, and a clear sense of priorities. European decision-makers in Brussels should use the coming weeks to settle on an ambitious security and defense to-do list and get member states behind it. The following presents ten priority items in four areas: strategy, institutions, partnerships, and funding.

Three strategy documents will be decisive for the European Defence Union. The first is the European Defence Industrial Strategy (EDIS), agreed upon in March 2024, which aims to promote better and more European spending while strengthening the European defense technological and industrial base (EDTIB).^[10] Negotiations on the draft regulation, which translates EDIS into concrete measures – the European Defence Industry Programme (EDIP) – are to be finalized in the first half of 2025.^[11] EDIS and EDIP build on recent EU defense initiatives that seek to provide incentives for joint development, procurement, and industrial ramp-up. Their impact will crucially depend on the member states’ willingness to sign up to large-scale cooperation projects. This is where the White Paper on the Future of European Defence that von der Leyen announced for her first 100 days may come in.^[12] The Commission should use it to present member states with a menu of cooperation priorities and make a compelling case for addressing them collectively. This menu must align with NATO’s capability targets, the EU’s Capability Development Plan, and member states’ needs. The European Air Shield, first proposed by Poland and Greece, and later endorsed by von der Leyen, is a concrete example.^[13] The white paper should outline what this could entail and how it would relate to other measures, notably the German European Sky Shield Initiative. Clearly explaining the added value of European cooperation – or of a consolidation of member state initiatives – will be key to gaining the member states’ support.

The second key document is the Preparedness Union Strategy, due next year.^[14] It is to address civil and military dimensions of preparedness, including cyber defense, sanctions against hybrid attacks, the protection of critical infrastructure, and health. There is a risk that “preparedness” becomes a buzzword with vague boundaries. However, there are at least three ways the strategy could add value. First, it could help connect the dots between the EU’s multiple crisis response and emergency centers. Second, it could build on the Commission’s regulatory work and set national minimum standards for prepared ness while taking NATO’s baseline requirements for resilience into account.^[15] Third, it could spark a substantive debate on operationalizing the EU’s solidarity and mutual assistance clauses. This issue tends to raise concern about duplication with NATO’s Article 5. However, concrete reflections on the EU’s potential civilian and military contributions in different crisis scenarios – both below and above the threshold of Article 5 – are long overdue.

The third key document is the Strategic Compass for Security and Defence, agreed upon in March 2022, shortly after Russia’s invasion of Ukraine.^[16] Its level of ambition largely reflects the pre-February 2022 zeitgeist, with all its deliverables due by 2025. The Compass needs updating and upgrading. Its revision should be based on an update of the joint threat assessment, which should be launched without further ado. This should be followed by a fairly short consultation period with member states to allow for finalization by mid-2025. The revised Compass should include a new list of deliverables and set clearer priorities, for instance regarding capabilities and crisis management scenarios.

Finalizing or revising all of these documents by mid-2025 means they can be closely coordinated and be taken into account during negotiations on the EU’s next multiannual financial framework (2028–2034), due to begin next summer. The fact that they originate from different EU institutions and partly overlap could, however, also lead to ugly turf wars. The European Commission and European External Action Service (EEAS) should thus agree on a clear logic between these documents from the outset. The joint threat assessment should inform all documents. The revised Compass that would be agreed upon after the white paper and Preparedness Union Strategy should incorporate elements from the other documents and commit member states to a clear timeline. Co-signing these documents could help ensure joint ownership and pave the way for coherent delivery.

Coherent delivery will also depend on the institutional setup. Von der Leyen announced the creation of a new defense commissioner post.^[17] The scope of the portfolio was still unclear at the time of writing but informed sources suggested two potential directions. The first option is a smaller portfolio focused on defense industrial matters. In the previous legislature, the Commission created the Directorate-General (DG) for Defence Industry and Space (DEFIS) under the single market portfolio, led by Thierry Breton. A dedicated defense commissioner would cement the Commission’s role in driving defense industrial consolidation and provide member states with a clearly identifiable interlocutor. DG DEFIS could be expanded to include Commission units dealing with military mobility and cybersecurity. The second option would broaden the portfolio to include various aspects of preparedness as outlined in the upcoming strategy. This approach would align with efforts to streamline the respective civil and military measures. It would, however, also entail significant and time-consuming institutional reshuffle as relevant units are spread across a wide range of Commission DGs. Given the urgency and the likely expansion of the Commission’s role in defense industrial matters in the coming years, starting with a more clearly delineated DG focused on defense industrial matters could be the more sensible option. A broader project team of commissioners could instead work to ensure coherence within the Preparedness Union.

Von der Leyen’s proposal to create a defense commissioner has sparked controversy in national capitals. Several member states, including major defense industrial players, have expressed opposition, fearing a Commission power grab in the field of defense.^[18] At this year’s Munich Security Conference, High Representative for Foreign Affairs and Security Policy and Vice-President of the Commission (HR/VP) Josep Borrell emphasized that there could only be a commissioner for defense industry due to the division of competences enshrined in the EU treaties.^[19] It remains an open question how the defense commissioner would interact with the HR/VP. Competence overlaps between the new DG on the one hand and the EEAS and European Defence Agency (EDA) – both led by the HR/VP – on the other could fuel bureaucratic infighting. One way to ensure coherence would be to place the defense commissioner under the lead of the High Representative in her capacity as Commission vice-president.^[20] This would align with the HR/VP’s mandate to ensure consistency between the EU’s external action and other policies and upgrade her role. Moreover, it could alleviate member states’ concerns about a perceived Commission power grab.

The EU’s approach to security and defense partnerships has long been ambiguous. While emphasizing the need for “tailored partnerships,” it has shied away from differentiating between categories of partners or offering enhanced partnerships.^[21] While underlining mutual benefits, it has often refrained from clearly articulating them. EDIS strikes a more concrete tone, emphasizing that cooperation should help secure supply chains and reduce strategic dependencies.^[22] The EU’s new leadership team should concretize and deepen cooperation with key partners, starting with Ukraine, the UK, and NATO.

Deepening ties with Ukraine is an imminent priority. The EU’s joint security commitments with Ukraine stress the need to bolster the country’s defense industry.^[23] The EDIP proposal effectively treats Ukraine as a member, granting access to joint procurement and funds to ramp up industrial production. However, it will take time for EDIP to be finalized and implemented. Immediate actions are required to address Ukraine’s pressing needs. Providing additional air defense systems, as promised by the US, Germany, Italy, Romania, and the Netherlands in July, will be key.^[24] Moreover, EU members should follow the Danish and Canadian examples by directly investing in Ukraine’s defense production.^[25] Ukraine has the potential to significantly expand its own production, for instance of drones, but lacks the necessary funding.^[26] Promoting joint ventures between EU-based and Ukrainian companies is another crucial measure. Good examples include the joint venture between Rheinmetall and Ukrainian Defense Industry JSC providing service and maintenance on Ukrainian soil. Establishing joint ventures in neighboring EU countries is another viable, less risky option. The EU should incentivize these collaborations by setting up a dedicated funding line under the European Peace Facility (EPF), the intergovernmental fund that has been used to partially reimburse equipment donations to Ukraine and to co-finance joint ammunition procurement. In March, the Council decided it could also be used to promote joint ventures.^[27]

The EU should also embrace the new British government’s offer to forge an ambitious EU-UK security and defense pact. While there has been pragmatic EU-UK cooperation in response to Russia’s war on Ukraine – including on diplomacy, sanctions, and training of the Ukrainian armed forces – this cooperation remains ad hoc.^[28] Rather than pursuing a comprehensive and formal agreement that would take years to negotiate, the EU and UK should deepen cooperation gradually. They could start by signing a high-level joint statement by the end of this year, outlining cooperation areas of mutual interest and establishing consultation mechanisms, notably annual leaders’ summits, regular thematic dialogues, and invitations to relevant EU Council meetings. The British Foreign Secretary’s participation in the October Foreign Affairs Council meeting is a promising start.^[29] The EEAS could quickly follow up by negotiating a security and defense partnership agreement with the UK setting out concrete deliverables. This could include fairly low-hanging fruit, notably an administrative arrangement with the EDA, a framework participation agreement for UK contributions to EU missions and operations, and regular invitations to projects under the EU’s Permanent Structured Cooperation. A more complex issue is UK access to the EU’s defense industrial initiatives. Currently, thresholds for non-associated third countries are high, and the EU has resisted granting the UK a special status. Given the UK’s significant support to Ukraine and the size of its defense industry, these red lines should be reconsidered. This could involve creative “pay-to-play” approaches, similar to the UK’s participation in the EU’s Horizon Europe research program.

Leadership changes in both the EU and NATO present an opportunity to elevate their partnership. While informal EU-NATO cooperation has reached unprecedented levels since Russia’s invasion of Ukraine, persistent tensions between Greece and Cyprus on the one hand, and Türkiye on the other continue to hamper formal cooperation. The inability to share confidential information and conduct joint exercises prevents synergies. Recent months have also seen new beauty contests emerge in areas of institutional overlap, such as defense innovation, joint procurement, and standardization. Instead of engaging in wasteful rivalry, the transatlantic partners should renew efforts to move past old red lines. Closely linking the respective planning processes must be a foremost priority. NATO could set multinational requirements in addition to national ones while the EU could provide financial incentives for cooperation.^[30] The exchange of classified information is a second priority. Perhaps upgrading the EU’s security and defense partnership and reinstating a respective high-level dialogue with Türkiye could generate the necessary goodwill.^[31] If a comprehensive EU-NATO agreement remains unattainable, an information-sharing agreement between the EDA and NATO’s Support and Procurement Agency could be a useful first step. A third priority is standardization. The EU’s new leadership should be crystal clear about NATO’s primacy in setting defense standards to counter persistent fears (and myths) about duplication. With its financial incentives and legislative power the EU can help enforce NATO standards. The EU and NATO should also rapidly set up a structured dialogue on defense industrial matters, bringing together relevant actors on both sides, to deconflict initiatives and pave the way for synergies.^[32]

Since February 2022, EU members have significantly increased their defense spending. Two thirds of those that are also in NATO are expected to spend at least two percent of their GDP on defense in 2024, up from just one quarter in 2022. Yet, these increases are still inadequate given the massive challenges facing the EU. The European Commission estimates that approximately 500 billion euros of additional defense investment will be needed over the next ten years, with 80 percent going to the EDTIB and the remaining 20 percent to the Ukrainian defense industry.^[33] The Commission did not disclose the exact calculation behind this estimate. Even so, NATO’s recent pledge to continue providing Ukraine with military assistance worth roughly 40 billion euros annually illustrates the magnitude of potential costs.^[34] Further increasing national defense spending will be crucial for sustaining support to Ukraine and bolstering the EDTIB, yet many member states lack the fiscal leeway to do so.^[35] In addition, a purely national approach to the defense industry will further fragment the market, prevent economies of scale, and increase defense inflation. Therefore, member states must do more to spend more efficiently together.

One way to pool resources is through the EPF and its dedicated Ukraine Assistance Fund. However, efforts to secure multi-year funding for it have failed. Moreover, every member has a veto, and Hungary has been blocking the disbursement of nearly 6.6 billion euros under the EPF for months. A temporary workaround was found in June when the EPF was topped up with the windfall profits of Russia’s frozen assets in the EU.^[36] Future profits will likely be used to service a proposed 50-billion-euro loan from the G7 to support Ukraine’s military, budget, and reconstruction needs.^[37] Part of this loan could fund measures to strengthen Ukraine’s defense industry, but the modalities remain to be clarified.

When it comes to bolstering the EDTIB, the central logic of the proposed EDIP regulation – to foster cooperation throughout the lifecycle of defense products, including the harmonization of standards, procurement rules, and export policies – is compelling. However, with a budget of only 1.5 billion euros for 2025–2027, its impact will be limited. The EU’s current multiannual financial framework, running until 2027, is depleted, leaving other critical initiatives, such as efforts to enhance military mobility, without funding.

In June, the Commission presented the European Council with funding options for European defense, including debt-based financing, similar to the EU’s pandemic fund. Leveraging the borrowing power of the EU budget could rapidly mobilize significant resources outside of national and EU-level debt rules. While this option still faces political and legal hurdles, these could drop if the situation in Ukraine worsens and US policy towards Europe shifts decisively. Several of the EU’s traditional fiscal hawks, including Baltic and Nordic countries, have already warmed to the idea, given their heightened threat perceptions.^[38] Creating a time-limited fund and clearly tying it to an emergency situation could ease legal concerns. The fund could be used to rapidly ramp up the production and joint procurement of critical defense goods, notably those identified in the White Paper on the Future of European Defence. It could also address the funding gap in the field of military mobility, essential for both Ukraine’s defense and security on the EU’s eastern flank. The fund could thus act as a bridge until the next financial framework begins in 2028.

The EU’s next multi-annual financial framework should allocate more funds to security and defense than the current one. During negotiations on the current framework, member states nearly halved the initial Commission proposal for security and defense, leaving it below one percent of the total budget.^[39] The next framework should include an upgraded European Defence Fund, incentivizing not only cooperation in research and development, but also production and joint procurement in line with the EDIP. To ensure a stable, longer term perspective for the EU’s support to Ukraine and prevent constant veto threats, the military assistance currently funded under the EPF could also be integrated into the next multiannual financial framework. Article 41(2) of the Treaty on European Union excludes “expenditure from operations having military or defense implications” from the EU budget. This has so far been interpreted as including the financing of military procurement and equipment for third countries. A task force is currently reviewing the Article’s strict interpretation and is expected to present findings this fall.

Five years ago, von der Leyen already promised a “genuine European Defence Union.”^[40] Repeating that promise in another five years is not an option. Europeans must start bridging the gap between soft talk and hard power now. Yet, various factors could cause delays. The EU institutions will need time to settle in. The Hungarian Council presidency is unlikely to be very dynamic in terms of defense and supporting Ukraine. France, typically a vigorous proponent of stronger European defense, is consumed with domestic turmoil. Other nations appear paralyzed as they await the uncertain outcome of the US presidential elections. However, the dire situation in Ukraine, ongoing Russian hybrid attacks, and the real risk of an expansion of its war effort serve as stark reminders that there is no time to waste. Preparations for ambitious next steps – whether updating the EU’s joint threat assessment, presenting priority cooperation projects, developing funding options, reviewing the boundaries of the EU treaties, or providing additional support to Ukraine – must start immediately, not in a few months. These efforts must proceed regardless of the US election’s outcome. Building a real European Defence Union will not happen overnight, but it is high time to flesh out the concept with concrete actions, lest it remain an empty promise.