The impact of the financial crisis on European defence

Abstract

The financial crisis may pose a risk as well as offer an opportunity for the European defence sector: on the one hand, it sounds plausible that shrinking budgets increase the pressure on member states to cooperate and thus overcome the EU’s problems related to capability development and restructuring of the defence industries and markets. On the other hand, national prerogatives still dominate despite a decade of rhetoric and initiatives for more cooperation and less state in EU defence. If this national focus continues to dominate under current financial circumstances, EU member states run the risk to implement cuts in their Armed Forces in an uncoordinated way. As a result, member states might end up with potentially even bigger capability gaps than they have today and hence even less opportunities to implement the Common Security and Defence Policy (CSDP). This study provides a comprehensive and detailed overview on the ongoing impact of the financial crisis on EU Member States defence spending. In addition, it examines the potential of overcoming the need to cut defence spending by greater cooperation in the framework of the European Union and by drawing upon the innovations in the Lisbon Treaty. The study highlights the need to address the challenges of the economic crisis, a growing number of initiatives by various EU countries as well as the opportunities the Lisbon Treaty offers for pursuing an effective defence sector strategy that goes beyond the current incremental approach. The study has been requested to provide Members of the European Parliament, broader defence policy community and European public a first comprehensive overview of the impact of the financial crisis on European defence and at the EU level, as well as its wider impact on the future of the Common Security and Defence Policy (CSDP). It includes recommendations to be developed by the European Parliament and decision makers at the national and EU level in order to address the economic crisis whilst ensuring Europe retains defence capabilities to respond to future security challenges.