European Commission Explores Transition to 'War Economy Mode'

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Facts

• The European Commission met on Tuesday to propose plans for the EU's transition to 'war economy mode' and ways to boost the bloc's arms industry in response to the Russian war in Ukraine.¹
• The €1.5B ($1.6B) EU defense industry proposal will call on the member states to acquire at least 40% of their collective defense equipment by 2030 with the goal of making intra-state trade of defense equipment worth at least 35% of the EU's total defense market.²
• The proposed program would be funded by the EU budget for 2025-2027. The commission also proposed funding arms shipments to Ukraine using the profits of frozen Russian assets.²
• The proposal aims to address vulnerabilities in the EU's defense readiness and improve the bloc's arms manufacturing capabilities. European Commission Vice President Margrethe Vestager has emphasized the need for the EU to reduce its reliance on the US for defense.³
• The European Commission also asked for the European Investment Bank to adapt its policies and begin funding defense projects. The Bank is the world's largest multilateral financial institution but its rules explicitly prevent it from funding the production for military usage.⁴
• To be instituted, the proposal will now need the approval of all 27 EU member state governments as well as the approval of the European Parliament. NATO has said it will also closely study the proposal to ensure it does not conflict with its work.¹

Sources: ¹reuters.com, ²Dw.Com, ³WION and ⁴Al Jazeera.

Narratives

• Narrative A, as provided by Al Jazeera. The Russian invasion of Ukraine uncovered numerous vulnerabilities within the EU's defense sector and the huge extent to which the bloc is reliant on the US. It's high time that the EU increases its self-reliance and rises to meet the threats it faces. For years the EU has underspent on defense, instead counting on the US to provide protection. The EU needs to better meet its NATO commitments and bolster its position within the rules-based order.
• Narrative B, as provided by Denver Gazette. This proposal is nowhere near to being approved. First, it would need the approval of 27 different nations as well as the European Parliament, but also, it will likely come after the election of the new European Parliament in June, for which politicians have differing views on whether a defense commissioner post should be created. While the language of the proposal suggests urgency, this plan will likely take some time. It's unlikely that a militaristic force posture will be a near-term reality for Europe.

Predictions