Event Summary: Paying for Power: What is the price for European Defence?

Fortifying Europe: Delivering on Europe’s Defence Priorities  

The first panel discussion focused on European defence priorities, challenges, and opportunities in light of the Russian threat. Featuring former defence ministers Kajsa Ollongren (Netherlands) and Martin Sklenár (Slovakia), along with Ann Mettler (former European Commission official), the conversation explored Europe's defence industrial capabilities, funding mechanisms, regulatory barriers, and the urgent need for reform. Participants agreed that despite increased budgets, Europe's defence industrial capacity remains fragmented and inadequate compared to Russia's war economy. The panel emphasized the need for joint procurement, regulatory reform, and fostering innovation ecosystems to strengthen European security autonomy while maintaining NATO commitments. 

Main Takeaways: 

1. Europe's defence industrial capacity lags significantly behind threats - Despite budget increases, production capabilities remain insufficient, fragmented along national lines, and slow to deliver (e.g., Russia produces 4 million artillery shells annually versus Europe's 1 million). 

2. Regulatory and systemic barriers hinder progress - Defence companies face obstacles including ESG restrictions that classify defence alongside tobacco/pornography, complicated intra-EU licensing requirements, and procurement procedures that move too slowly for modern innovation cycles. 

3. Europe must transition from peacetime to wartime mentality - While maintaining defensive posture, Europe must recognize Russia's intent to break up NATO/EU, not just pursue territorial gains, requiring greater urgency across all policy domains. 

4. Innovation ecosystem development is critical - Europe needs to develop comprehensive defence tech capabilities beyond a few champion companies, fostering scale-up potential and preventing startups from leaving for the US market. 

5. Political leadership must balance national interests with European defence imperatives - Increasing defence spending to 5% of GDP requires public support, equitable industrial distribution across countries, and framing defence as an investment in growth and sovereignty rather than just territorial defence. 

Investing in Europe’s Security: Breaking Barriers to Defence Financing 

This panel discussed the evolving landscape of defence financing in the EU, highlighting the significant shift in European attitudes following Russia's aggression. The discussion explored how the EU is developing new financing instruments like the €150 billion SAFE scheme, approved in record time, alongside national initiatives to boost defence spending. Participants addressed challenges including fiscal constraints, market perception of defence investments, and tensions between buying European versus prioritising speed and efficiency. The panel featured representatives from Poland's government, Poland's national development bank, the European Investment Bank (EIB), and security research, who collectively emphasised that current initiatives represent just the beginning of a fundamental transformation in European defence policy and funding. 

Main Takeaways: 

1. There has been a genuine "awakening" in European defence consciousness, with 22 NATO members now meeting the 2% GDP spending target (up from just 4 a decade ago), and increasing pressure to reach 3-5% in coming years. 

2. The European Investment Bank has progressively relaxed its restrictions on defence financing, now allowing support for military equipment and infrastructure (though not yet weapons and ammunition) while carefully maintaining its AAA rating. 

3. Fiscal constraints remain a significant challenge, with some EU members reluctant to increase defence spending despite exemptions from fiscal rules, necessitating innovative financing approaches at both national and EU levels. 

4. The upcoming NATO summit in June will be crucial, as European leaders must demonstrate to the US (particularly the Trump administration) that Europe is seriously committed to self-sufficiency in defence to maintain American engagement. 

5. Developing a common European defence market requires addressing barriers in procurement, balancing "buy European" preferences with efficiency needs, and creating sustainable financing frameworks that maintain defence as a long-term priority. 

Watch both discussions on our YouTube channel.