EU-NATO relations: time to step up a gear (or two)

A Chinese proverb says “may you live in interesting times” but what makes a particular time interesting are the risks and dangers, as much as the opportunities. There is always the capacity of things to get worse but also the chance that a deteriorating security situation will rally political leaders into action, help them to break through barriers and bureaucracy and lead to more and better forms of cooperation and joint action. Once the crisis is past, we have emerged stronger whereas all the circumstances looked set to divide us.

Of course, the bigger the challenge, the greater the opportunity but also the need for decisive measures. That certainly is the situation in Europe today. A number of European intelligence agencies, defence ministers and military chiefs (and not just those along Russia’s borders in Eastern Europe) have warned of the possibility of a Russian aggression in as little as 5 to 10 years. This may not come in the form of a Russian mass attack against NATO but more a limited incursion to seize territory and test NATO (and particularly the US) resolve to activate Article 5 of the NATO treaty and fight back. At the same time, Russian attempts to destabilise Europe through hybrid warfare, political interference and disinformation will continue. Poland has just shuttered the Russian consulate in Krakow in reaction to a Russia-directed arson attack against a shopping centre in Warsaw. And Lithuania has blamed Moscow for a similar fire at the Ikea store in Vilnius. Two small examples among many of the provocative incidents that punctuate the European security landscape today and that are constantly testing the continent’s resilience, and toolbox of responses.

Three years on, the outcome of the war in Ukraine remains highly uncertain. Putin has just demonstrated by his no-show in Istanbul that he sees peace talks with Ukraine essentially as a means of playing for time while he pursues his real objective of gaining more Ukrainian territory and imposing a Carthaginian peace on Kyiv. Yet even the most optimistic scenario of a military stalemate on the battlefield leading to a cessation of hostilities (at least for now) still presupposes that Russia will make territorial gains that will only increase Putin’s appetite for further aggression. The Russian war economy, where defence industries work 24/7 and churn out 2000 tanks, 2000 ballistic missiles, 3000 armoured vehicles and millions of drones each year will allow Russia to quickly rebuild its army for whatever Putin decides to do next. Even while he is engaged in Ukraine, Putin is building new military bases along the border with Finland and planning a major combined arms exercise, Zapad-25, in Russia’s Western Military District for this autumn.

The new European security environment would be challenging enough if it were business as usual and Europe could still count on unlimited US military support, advanced weapons and rapid troop reinforcements. Under those circumstances, deterrence could be maintained with NATO’s current force structure remaining largely unchanged. But the US Secretary of Defense has told the European allies that they have to assume the burden of the continent’s conventional defence themselves. The Trump administration has linked continuing US support for NATO more tightly than ever to greater European burden sharing and higher levels of defence spending (demanding 5% of GDP as the new NATO target). This, at a time when uncertain US support for Ukraine means that Europe has to take on the main responsibility for arming Kyiv, supporting its state budget, helping with the humanitarian crisis and financing the country’s post-war reconstruction. So, business as usual will not suffice. A more root-and-branch restructuring of NATO is required, built around a European defence plan backed by a still-to-be-determined number of US capabilities and reinforcements. The NATO defence plans must be coupled to a stronger EU role in European security and defence to ramp up industrial production, spearhead investment, innovation and technology and deliver the high-readiness forces and state-of-the-art equipment that Europeans currently lack. The two institutions have their comparative advantages and their distinct but complementary roles. With 23 of 27 EU members being NATO allies, they increasingly overlap. But they will need to work harder and better together to fill the capability gaps and give Europe over the next 5 years the defence and resilience that it will need.

But if this goal is to be realised, five things have to happen.

First, Europe has to generate the finance needed for capital investment in defence and consistently over a five-year initial cycle to increase industrial output and produce a step change in both the quantity and quality of armaments. The financial envelope has to be geared to the new defence spending pledge that the NATO allies will commit to at their upcoming summit in The Hague (at least 3% of GDP and perhaps as much as 5%) and help the EU member states that are also NATO allies to generate the money to meet the targets (most likely by 2032).

Second, a coherent plan and industrial strategy are required to turn the financial investment into the highest category capabilities, using collective procurement as far as possible to avoid duplication and a proliferation of different platforms and weapons systems. Industry must be stimulated to form the industrial partnerships that can deliver capabilities at scale, on time and at cost.

Third, Europe needs to create a defence eco-system where it builds the core military capabilities, domestic industrial capacity, diversified supply chains, raw materials security, and an innovation and technology base that will give it the right level of strategic autonomy. At the same time, Europe’s security requires bringing NATO allies and global partners into this effort where they are willing and able to contribute, for instance, in joint defence projects, maritime security and enhancing resilience and supply chains. Finding the right balance between autonomy and partnership will be crucial to a cost-effective future European defence.

Fourth, preserving NATO (or as much of it as we can) is crucial because Europe still requires an alliance with the US and Canada for its security and a strong NATO has a deterrence value far beyond what Europeans can achieve by themselves in the short-term, even with a larger European defence effort. Yet the US will be less engaged in the ‘grey zone’, providing long-term security and stability to those non-NATO and non-EU countries on the periphery of Europe. Ukraine already underscores this point as the Western Balkans, Libya and the Sahel did in years gone by. So, this is a responsibility that Europeans must be politically ready and militarily able to take on themselves.

Fifth, and finally, resilience against disruptions, shocks, catastrophic system failure or hybrid interference campaigns is still a national responsibility and the afflicted state is the first responder. The EU and NATO can provide assistance in a crisis or help to develop preparedness through intelligence sharing, training and exercises. Yet domestic security and homeland defence are areas where Europe cannot expect much help from third parties outside the continent given the need for immediate response, and most of the international assistance comes from neighbouring states across borders. So, Europe has to develop its own capabilities and arrangements, as well as a culture of European joint responsibility and solidarity as we witnessed during the COVID-19 pandemic. Articles 14.7 and 222 provide the legal basis for mutual assistance here but 14.7 has only been invoked once (by France in 2015 in response to the Paris terrorist attacks) and so both Articles need more precise definition and guidelines for operational implementation.

What do these priorities mean for the NATO-EU relationship and their respective roles going forward over the next five years? Clearly that the two institutions need a more rational division of labour where they recognise each other’s comparative advantage. There needs to be a division of labour where both the EU and NATO concentrate their efforts on a limited number of key areas rather than dissipate their energies and time by trying to establish cooperative activities across the board and in everything that they do. The 74 areas for cooperation indicated in the three Joint Declarations that they have signed thus far are far too many to achieve decisive results and suggest an inability to prioritise or plan together strategically. The impression is one of process, of a relationship largely based on information sharing and practising the symbolism of cooperation rather than delivering real and measurable results. It is encouraging that both the EU and NATO today refer more effusively to each other’s importance in their summit communiqués but the priority now is defence industry production and a common set of military capabilities. Each institution must take on its own set of tasks and responsibilities and commit to delivering these to the other institution. What could this look like?

In first place, the role of the EU is to generate the financial resources, something that it can do institutionally but that NATO – which sets the targets – cannot do. The European Commission has established the goal of generating €800bn for defence investment over the next four years. It has offered EU member states the option of investing up to 1.5% of their GDP without this counting against their EU-set deficit targets, thus incurring financial penalties as debt limits are exceeded. So far, 16 EU member states have expressed an interest in taking up this option, although some like Italy, are concerned at the greater long-term indebtedness and risk to credit ratings. More European competitiveness and economic growth have to go hand in hand with military spending if the European social model is to avoid collapse over time. Thus, a key challenge for EU leaders will be to use higher military spending for more than just defence equipment, for instance stimulating employment, infrastructure development, and science and technology. This is certainly what Poland is currently trying to do with its defence spending rising to just under 5% of GDP. Germany under the new government of Friedrich Merz, has shown willingness to accept more EU collective debt obligations to finance defence investment along the lines of what was done by the Commission for COVID-19 and post-pandemic recovery grants and loans. This could produce around €650bn of additional finance. A SAFE mechanism will allow loans from a fund of €150bn to be accessed quickly for urgent defence projects. The EU has also prevailed upon the European Investment Bank (EIB) and other banks to loosen their investment criteria to allow investment in defence projects, or at least dual use technologies. It also is allowing member states to re-assign funds under the EU Cohesion and Next Generation EU programmes for defence infrastructure projects, for instance to enhance military mobility, port capacity and secure communications. There have been proposals for defence funding outside the EU institutions to provide more speed and flexibility, for instance a European Defence Bank and an Investment Initiative based on the current ‘Coalition of the Willing’ (including the UK, Norway, Canada and Turkey) or alternatively the enlarged Weimar Group that brings Europe’s largest military powers together and has the advantage of uniting Eastern and Central Europe with its Western allies. What is required is a formal agreement on these various proposals and to get the funds flowing to industry in the form of long-term contracts as soon as possible. This said, defence is an area where it is easy to waste money and the EU must be mindful that it can generate more capability with 3% of GDP spent collectively than with 5% of GDP spent in fragmented national stovepipes or maintaining the 176 different types of weapon systems currently in EU national arsenals.

The area where the EU and NATO do need to come together is in defining the priority capabilities for investment. EU leaders have agreed that EU defence investments must conform to NATO standards and requirements. Usefully, six EU countries have so far agreed to voluntarily share their NATO agreed 2024-2028 capability targets with the EU. This should become a formal obligation of all NATO allies that are also EU members and other allies for reference too. NATO’s goal is a 30% increase in these capabilities targets during the next cycle. European capability priorities should be agreed jointly with NATO and this could be an objective for the NATO Summit at the end of June in The Hague to be reconfirmed by the European Council afterwards. So far, the EU defence ministers have listed priority areas (such as air defence systems, long-range artillery, drones and counter-drone technology, ammunition stocks, cyber defence, bio-technology, quantum computing and AI exploitation). Thus far, this generic list has not been translated into specific projects. There must also be a balance between re-investing in old production (tanks, armoured vehicles and artillery) and the new electronic warfare technologies and massive use of cheap commercial equipment that has been so prevalent in the war in Ukraine. So, NATO’s involvement and guidance here is essential. The US also has a key role to play in giving Europeans a long-term and more reliable perspective of where the US will continue to supply NATO with key enablers (for instance intelligence, satellite capability, air and ballistic missile defence) and where it may withdraw capabilities (and troops) from Europe and look to the European allies to fill the gaps. There is little sense for the Europeans to spend on things that the US is willing to continue to provide to NATO or to individual European allies through bilateral basing and host-nation support agreements. Nuclear deterrence, air and missile defence, reinforcements and joint planning and concept development through US participation in the integrated NATO command structure are the essentials here. When Europeans identify the priority capabilities for investment, the EU must avoid the Christmas Tree approach, whereby member states add too many pet products to the list. In 2024, the Pentagon spent $250bn on procurement,t focusing on eight main platforms. EU member states spent €100bn but stretched over 30 different platforms. Thus far, less investment in each individual programme has led to delays and outdated technology.

The EU also needs to consult NATO on its European Defence Industrial Development Programme (EDIDP), which is its medium-term strategy (beyond the immediate funding from the SAFE fund) to ramp up defence production. Some industry programmes are going well. For instance, the EU has increased ammunition and shell production 20-fold over the past two years. Space launch and observation satellite capability have also progressed. But other areas, such as sixth-generation aircraft, medium and long-range advanced drones, air and missile defence, long-range artillery and the whole suite of data processing and fusion, real-time surveillance and electronic warfare are more problematic. Nations like to protect their defence companies and getting them to consolidate at home or merge internationally to build European champions is difficult, as the experience with EADS, BAE and Dassault to build a European aerospace powerhouse showed in the past. A better approach is to help them to forge partnerships and consortia that is what several have been doing to help Ukraine. For instance, Rheinmetall and Leonardo have been collaborating on armoured vehicles, Naval Group and Fincantieri on ship design or Denmark, Sweden, Norway and Finland on medium-range missiles. Some companies specialise in platforms, others in electronics and weapons systems. The EU White Paper proposes an ambition for Europe to produce at home at least 50% of its key military enablers by 2030. That leaves plenty of scope for partnerships with non-EU countries and the Commission has identified 15 partners that it could team up with on the basis of bilateral EU-partner security agreements. These exist already with Norway and Canada and one with the UK is in its final stages of negotiation. Turkey is also important, given its advanced defence and aerospace industry and naturally the US, currently the recipient of over 60% of Europe’s external military procurement, should be on the EU’s list too. Recent worries expressed by European defence officials regarding the reliability of US equipment and deliveries have reinforced fears in Washington regarding a bout of Buy European industrial protectionism. The EU has to allow member states to source their capabilities in the consortiums they wish to pursue, especially when the participating countries can point to economies of scale, the best performance, interoperability with allies and the best prices. All weapons supply chains are incredibly diverse and complex. An F35 jet has 50,000 different components sourced from around the globe. Third countries that produce in the EU must be eligible to participate in European multinational programmes. Last year, 30 UK companies took part in 56 projects under the EU’s European Defence Fund, and 27 US companies were involved in 33 projects. The SAFE fund should be open to partner participation. For too long, ‘buy alone, buy abroad’ has been the mantra of EU member states. The challenge now is again to find the right balance between building up the EU’s domestic defence industry, generating employment, skills and the stimulation of the civilian economy, with a simultaneous strengthening of vital external partnerships as force multipliers.

NATO is the right place for the EU to have that debate, also in view of the Alliance’s growing defence partnerships with the Asia Pacific democracies. NATO and the EU need a joint defence industry staff to identify the barriers to increasing defence production rapidly and the ways of forming industrial partnerships and helping them to perform better. They need a joint strategy to remove (or at least lower) those barriers both within Europe and across the Atlantic, leveraging Europe’s higher defence spending to persuade the US to open up its own market to more joint production and European defence sales. The EU is working on a Rapid Adoption Action Plan for Defence, which it should coordinate with NATO. EU certification rules for military equipment, export controls, different military requirements for equipment and slowness in adjusting supply chains (for explosives and electronic components) are topics that the EU and NATO need to tackle together.

A further task for the two institutions is to arrive at a joint plan for security spending. The NATO Secretary General has proposed that allies should spend 1.5% of GDP on “security” as well as 3.5% on more classic defence. But what does this mean in practice and where does the distinction between defence and security lie? Which projects qualify under one chapeau as opposed to the other? Undoubtedly, many of the “security” projects will be generated by the EU rather than NATO. For instance, cybersecurity, responses to terrorism or extreme weather events, police and border guards or infrastructure resilience and supply chain security. So, the 1.5% security spending pledge is hardly likely to succeed for NATO if the EU does not agree to common definitions and priorities and does not put its own resources, far more considerable than those of NATO, behind this effort.

When it comes to security in the wider neighbourhood, Ukraine will largely determine the EU’s scope for leverage in the next 5 years. From discussions among the ‘Coalition of the Willing’ regarding a European reassurance force for Ukraine, it is clear that the European strategy is quickly morphing into a plan to train and equip the Ukrainian army to deter and defend against future Russian aggression, largely by its own means. So, the role of the EU has to be to continue to train and equip the Ukrainian army using the European Peace Facility. Recently, the EU has drawn on frozen Russian Central Bank assets to support Kyiv with a further €1bn in military assistance. Also, the EU needs to bind Ukraine into the EU’s defence loans (for instance SAFE) and its multinational research and procurement programmes. Already, Ukraine has been included in 65 multinational projects under the European Defence Fund worth a total of €910mn. The EU needs to encourage its member states to shift production to Ukraine (where it is often cheaper and there is plenty of spare capacity) and to invest in joint ventures in Ukraine’s defence industry (drones and electronic warfare are an obvious example). Denmark has led the way here.

NATO can help the EU here in three ways. First, with the US in providing the supply lines that deliver the weapons to Ukraine securely. Second, in giving the EU a concept of what the future Ukrainian army needs to look like in terms of size, formations and equipment to be able to defend against Russia. For this task, NATO should carry out an audit of the Ukrainian military geared to the current level of the Russian military presence in Ukraine and to the future scenarios of Russian military reconstitution after the war. The audit should cover manpower capacity, number and quality of weapons, training requirements, reserve forces and the balance between domestic arms production vis-à-vis dependence on foreign suppliers. This audit should be presented to the recently established EU-Ukraine task force and Defence Forum. Third, NATO must analyse Russian military reconstitution in the future so that both Ukraine and Western allies will have a much more precise idea of what they need to plan against. Will Putin simply rebuild an old-style Soviet army based on mass, heavy armour, enormous stockpiles and the ability to sustain enormous losses? Will he opt for something smaller, more high-tech and agile? Getting Russia right will be fundamental to getting European defence right. Here, NATO with its intelligence, planning structures and multinational headquarters across Europe, can plot Russian exercises and military modernisation and give EU defence companies essential guidance.

Finally, the EU is in the lead in protecting the European home front against political interference, shocks and disruptions. The Baltic States and Poland are constructing a border defence line (Eastern and Baltic Shields) and increasing their civil preparedness, including plans for mass evacuations, security of energy grids, medical supplies and mass casualty treatment and protection against air attacks. Germany is building an entire Bundeswehr division to guard critical infrastructure and internal lines of communication. Yet NATO has Resilience Goals as well in its defence planning system that are geared to ensuring civil preparedness to support military forces in wartime. For instance, in continuity of government and water, food and medical supplies as well as security of transport and communications. NATO too is stepping up its role on the domestic front with its counter-hybrid warfare strategy, cyber defence cooperation and its maritime task force in the Baltic protecting undersea pipelines and telecommunications cables (Baltic Sentry). So, here the EU can help the EU-NATO allies to meet their NATO force goals in the areas of resilience, critical infrastructure and energy protection, civil defence and cyber and information security. A dialogue is also useful to exchange experiences and best practices when it comes to ways in which civilian agencies can support the military in wartime, for instance through guard duties, coping with mass displacement, responding to sabotage or power failures and controlling essential transport nodes or supply lines; and conversely the ways in which the military can help the civilian authorities in peacetime, for instance response to pandemics and extreme weather events, providing essential services like firefighting or fuel delivery in the event of industrial action or dealing with chemical or biological incidents or terrorist attacks. The whole of government and whole of society approach has to apply as much to NATO, and be embedded in the institution’s DNA, as it does to the EU.

The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.