31st May 2023

Auditors find 'scarce results' of EU defence fund projects

  • The European Defence Fund is worth around €8bn (Photo: Simon Ballantyne)
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Tests on using the EU budget to support defence research have delivered scarce results, says the EU's financial watchdog.

"We found that the EU currently still lacks a long-term strategy on defence spending," said Luxembourg-based EU auditor Viorel Ştefan.

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Speaking to reporters on Wednesday (26 April), Ştefan said that pilot projects aimed at demonstrating EU support in defence research "have yielded limited results so far."

The pilots followed the 2017 announcement of a multi-billion euro European Defence Fund (EDF).

At the time, the fund was described as a catalyst for a European defence industry, largely dominated by France, Germany, Italy, Spain, and Sweden.

The fund is part of the EU's vision to become less dependent on the United States on defence. It is also supposed to create incentives for EU states to work together in developing military equipment and technology.

To test the theory, €90m was set aside for 18 pilot projects, known in EU parlance as Preparatory Action on Defence Research or Padr. Some 80 percent of the Padr funding went to Germany, Spain, France, and Italy.

These projects were spread out between 2017 to 2019 and in the lead up the 2021 launch of the €8bn EDF.

But according to an 82-page report by the EU court of auditors, drafted by Ştefan, the Padr projects were wrecked by delays, lack of European Commission staffing, and other issues, such as Covid-19 restrictions.

By the time the first EDF call launched in June 2021, only two Padr projects had been closed.

"The results of completed projects were therefore not available in time to prepare the launch of the EDF," notes the report.

One project had its end-date extended to April 2025. It also appears difficult to attract new talent, with most deciding to work with known partners.

"We noted that the same combinations of companies participated in several projects," said the auditors.

The verdict is an embarrassment for the European Commission, which was responsible for managing Padr.

In a statement sent to the auditors, the commission agreed all its recommendations.

"Padr was new for many defence companies," it said, noting that time-to-grant took an average of 18 months. One took 30 months.

The European Defence Agency, tasked with monitoring implementation of the projects, also comes out looking bad.

It said most delays were due to obtaining security clearance, especially for small firms without previous experience in the field.

But the auditors also say that EDF is itself hamstrung by one-year programmes, making it difficult to plan ahead.

This poses additional questions on whether the EDF can deliver anything to alter the strategic balance in Europe, as Russia's war in Ukraine enters its second summer.

"It's really too early to say," said another EU auditor, who asked not to be name, when pressed.

"It's true that for the Padr, we saw that the big players were very present, but for the EDF, we cannot say yet how this will be evolving," he said.

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