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Speech: Strengthening Europe security and defence sector

European Commission - SPEECH/14/177   04/03/2014

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European Commission

[Check Against Delivery]

José Manuel Durão Barroso

President of the European Commission

Strengthening Europe security and defence sector

High-level conference on the European security and defence sector

Brussels, 4 March 2014

Dear Minister Avramopoulos, dear Minister Dunne,

Honourable members of the European Parliament,

Ladies and Gentlemen,

And of course my dear colleague Antonio Tajani,

First let me express my appreciation to Vice-President Antonio Tajani and to Commissioner Michel Barnier for organising and hosting this high-level conference.

I want to thank in particular the Minister of defence Dimitrios Avramopoulos, representing the Greek presidency of the European Union, thank you for coming; and I would like also to thank all the distinguished guests from the public and private sectors who are attending the conference.

It is a pleasure for me to join you for this discussion on a key issue: the future of the European security and defence sector. I believe it is vitally important to the European Union, to its lasting stability and prosperity as well as to its role and projection on the world stage.

As shown in our regular Eurobarometer surveys, a strong and credible Common Security and Defence Policy (CSDP) features high among our citizens' legitimate aspirations; and a credible CSDP must be underpinned by a competitive and efficient security and defence sector.

This is why, I have been pleading over the past years for a strengthening of our CSDP and of our security and defence sector. I have been doing so for instance in the European Parliament, in the State of the Union speeches and also in many other occasions. And I am happy to see that progress has now been achieved.

Today, I will focus here on two questions. First, why does the security and defence sector matter to the European Union? And second, how to do more and better with less?

Let me start with a few words on Europe's industry as such.

If we are serious when we speak about competitiveness, sustainable growth and job creation, then we need to pay more attention to our industry.

Figures show the strong resilience of the sector. Industry still accounts for over 80% of Europe's exports and generates around a billion euros a day (365 billion euros a year) of trade surplus in manufactured goods; 75% of trade within the single market is in industry, almost every fourth private sector job is in industry, and industry accounts for over 80% of private research and innovation.

Yet this resilience is put to a test by relatively weak internal demand, shrinking investment and the subsequent declining share of industry in Europe's GDP, currently at 15.1%.

That is why we have called for what we have called the "European Industrial Renaissance", with concrete actions to be debated in the upcoming European Council, this very month of March.

The proposals we have presented earlier this year aim at bringing the share of industry in Europe's GDP to 20% target by 2020 and better taking into account industrial competitiveness in other policy strands.

Now when it comes more specifically to the security and defence sector, figures are very compelling as well.

This is a major industrial sector, which directly employs 400.000 people and indirectly generates another 960.000 jobs in Europe, with a turnover of 96 billion euros in 2012 alone, and 23 billion euros of exports in 2011.

It is also a key driver of innovation, centred on high-end engineering and technologies. Its cutting-edge research has generated important indirect effects in other sectors, such as electronics, space and civil aviation and provides thousands of highly skilled jobs. Many of what have become everyday technologies, from microwave to internet, as you know, have their roots in the defence industry.

So clearly our security and defence industrial sector matters for economic reasons. It significantly contributes to the growth of the wider economy. And by strengthening this industrial sector we can also strengthen our economies.

But it does of course matter for strategic reasons too.

It is a key element of our capacity to ensure that every European has access to security, economic prosperity, political freedom and social well-being. It is therefore at the core of Europe's "raison d'être".

But it is also at the core of Europe's role and ambition on the international stage, in an increasingly interdependent and interconnected world.

The strategic and geopolitical environment is constantly evolving and we are witnessing a wide range of new and complex security challenges of trans-national nature. To name a few, international terrorism, organised crime, cyber threats, piracy, human rights violations, all this challenges can only be tackled in a comprehensive approach combining different policies and instruments, underpinned by a large range of civil and military capabilities.

Recent events from Afghanistan to Africa and even more recently Ukraine have shown that for the sake of its own stability and security, Europe has to pay attention to old "frozen conflicts" and other potential new flashpoints.

There is also beyond Europe a growing demand for Europeans to dispatch their military forces on mission abroad.

We must have the capabilities to defend and uphold our values and interests in our neighbourhood and beyond, and to promote our commitment to a multilateral, rule-based approach to international affairs.

The reality is that in today's rapidly evolving security environment, the need for further efforts in security and defence is increasingly seen as a matter of political credibility of the European Union.

So a strengthened and credible CSDP underpinned by a competitive and efficient security and defence sector is a key political, strategic and economic priority.

Ladies and gentlemen,

Now how can we do more and better with less?

And I say less because we are living under financial constraint, as we all know.

Because indeed we have to do more with less: expectations for more action from Europe worldwide have been rising since the 1990s, but defence budgets have substantially been reduced over the same period.

This has adversely affected public R&D spending in the defence sector. Between 2006 and 2010 R&D spending in this sector has declined by 14% while the overall budgets diminished by 3.5%. The US alone today spends seven times more on defence R&D than all 28 Member States together.

At the same time, the cost of modern capabilities has steadily increased: the growing technological complexity of defence equipment and reduced production volumes are having a knock-on effect on the industry.

What does this mean for us?

This means that with shrinking defence budgets we have to think differently about how we work together. This must serve as a catalyst for a more co-operative work.

We need to take a hard look together at what we need to improve and how to do it.

There is room for Member States to get better value from their existing defence budgets. There is room for an improved coordination of equipments and requirements and more efficient collaborative programmes.

Indeed there is a lot we can do together to overcome the current fragmentation of the European defence market, to avoid duplication of capabilities, to achieve greater cost-effectiveness and ultimately to enable Europe to maintain a competitive defence industrial and technological base.

Of course, this is primarily for the Member States to define the ambition, degree of autonomy and scope of CSDP and future work on capabilities.

But Member States and European institutions have to work together to adapt and respond to these new challenges. Indeed, this effort is already being pursued through the so-called "pooling and sharing" approach in the European Union in complementarity with the so-called "smart defence" concept in NATO.

This is the reason why the European Commission, in full respect of the Member States' competences, has come with some ideas. And we have, within our competences, taken bold initiatives and will continue to do so. I am particularly pleased that the December European Council has broadly endorsed our proposals of last July for a more efficient and a more competitive defence and security sector.

Let me recall them briefly.

First, we have proposed to reduce the current market fragmentation by tackling market distortions and improving security of supply on the basis of the two directives adopted in 2009: one on intra-EU transfers and the other on public procurement.

Second, we also propose to strengthen the competitiveness of Europe's Defence Technological and Industrial Base (EDTIB) by promoting standardisation and common certification; by improving access to raw material; and by properly ensuring SMEs' role in the supply chain, notably through the development of industrial clusters with SMEs.

Third, we propose to fully exploit potential synergies between civil and defence sectors by developing more dual-use products and capabilities. We are notably looking at ensuring as many synergies as possible between our civil research programme, Horizon 2020, and those co-ordinated by the European Defence Agency.

Horizon 2020 was conceived for civilian purposes but there is a lot of dual use potential in key enabling technologies. There is also a specific theme "Secure societies" with many potential and spill over effects on defence.

And we are working on a preparatory action to support defence related research outside Horizon 2020.

To deliver this ambitious agenda, the Commission, through the Defence task Force set up in 2011, continues to work in close consultation with the External Action Service, of course under the leadership of our representative and Vice-president of the Commission Cathy Ashton, with the Member States and the European Defence Agency.

Ladies and gentlemen,

I am glad that the Commission's proposals have been one of the pillars of the European Council discussions and conclusions in December.

But clearly this is not the end of the road. It is the beginning of a new chapter, a new dynamic for CSDP. Let's not forget that the European Council will address concrete progress on all issues in June 2015.

The Commission is now working on a roadmap with concrete actions and timelines, to be adopted by the summer.

And today's conference is an opportunity for us to hear your views on the way ahead and on how we could best add value to European-level action; as defence is clearly one of the new frontiers of European Union cooperation

I thank you for your attention.


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