National governments would retain control of military assets bought by a new European Defence Fund, under plans unveiled by the European Commission on Wednesday (30 November).

The proposed fund is to have two elements - a military research and development (R&D) budget worth about €500 million a year and a joint procurement budget worth €5 billion a year.

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Katainen: "Member states cannot afford to defend our citizens without deeper ... cooperation" (Photo: European Parliament)

It would be steered by a “coordination board” made up by delegates from EU states, the EU foreign service, the commission, and private defence firms.

EU institutions, including MEPs, would have a say on how to allocate the R&D funds.

These would come from the EU budget and would be used to develop high-tech items, such as robotics, satellites, or cyberdefences.

The question of who owns the patent of items to be rolled out into production is still under discussion.

On the procurement side, groups of two or more EU states would also pool money to issue joint tenders for items such as drones or air-lift equipment in order to force down manufacturers’ prices.

Each group would coalesce and dissolve around a single tender and the assets that it bought would go to national forces.

The EU commission would act as a form of “treasury” that provided secretarial services for managing about €5 billion worth of various tenders each year.

The defence fund is part of wider EU military integration plans, which have taken on added urgency due to Brexit and to the victory of Donald Trump, a Nato-sceptic, in the recent US elections.

The fund is designed to stand alongside a new military HQ in the EU foreign service and alongside battlegroups - forces of about 1,000 men each - that could be parachuted into African or Middle Eastern countries.

The new HQ would only conduct military training operations, while combat operations would be run out of national military HQs.

The battlegroups would fight under an EU flag, but would be composed of soldiers from coalitions of EU states and commanded by the participating countries.

The plans are part of a political balancing act between member states, Nato, and EU institutions.

Britain, the Baltic countries, and Poland had previously complained that EU defence union would compete with Nato and would infringe on national prerogatives.

Jyrki Katainen, the EU commissioner in charge of jobs and growth, said on Wednesday that those “who were quite critical of EU defence cooperation have, to some extent, changed their minds”.

“It’s clear that our member states cannot afford to defend our citizens without deeper and better cooperation in defence … or without deeper cuts in other parts of their [national] budgets”, he said.

No European Commission army

“We’re not here to propose that we have an EU army, or a European Commission army … this is not about spending on the military instead of social security,” he added.

Federica Mogherini, the EU foreign service chief, said she had lost count of how many times she had already issued the same assurance in press briefings.

She said EU capitals would choose which kind of materiel to buy using the EU fund, that they would retain the assets they purchased, and that they would decide whether to use them in EU-flagged military operations.

Elzbieta Bienkowska, the industry commissioner, who aims to shake up single market laws to make the joint purchases easier, said “this is not about taking over any competence from member states”.

Some EU countries, including Germany and Italy, do see EU military integration as leading to a joint European armed forces down the line.

Defence bonds

The commission said the new defence fund could broaden its scope in future.

Katainen said EU states could, if they chose to, pool capital in the fund, which would then issue “defence bonds” that participants could draw on.

He said the commission could also pay “leasing fees” for jointly bought items, for instance, for surveillance drones, that would be owned by member states, but used by the EU’s border control agency.

He said if there was enough “political will”, the commission could also draw up EU-wide industrial standards for defence equipment.

Joint command

Poland had in the past said that if there were to be joint EU forces, then they would have to be under joint command and not be led, in practice, by powerful EU states such as Germany.

The new defence fund is to be governed by all 28 EU members.

Mogherini said that could also change, however.

She said on Wednesday that if a smaller coalition of willing EU states wanted to move ahead on the military HQ and battlegroups ideas, then that coalition might also end up running the joint procurement fund.

The HQ and battlegroups vanguard would have “implications” for the “governance of the capability windows [joint procurement projects]”, she said.