« L'Europe se fera dans les crises et elle sera la somme des solutions apportées à ces crises »—Jean Monnet
The EU has a security problem: it has common borders, but it lacks Common Defense, common Intelligence, and communality of intents. Plus, the EU has a budgetary problem: the current, seven-year Multiannual Financial Framework (MFF) does not include important EU level resources for defense. Finally, the EU has a problem of fiscal rules: member-states are under strict surveillance for their overall spending, in the attempt to permanently bring down public deficits.
The combined effect of these three problems has been severe cuts to defense budgets across the continent in the last years. As noted by David Keohane, the European defense is in fairly bad shape: instruments at EU level are neglegible, national budgets have been cut and they are increasingly expended on manpower, and NATO is seen even more as an “umbrella of last resort”, as shown, lately, by French’s own reticence to activate articles 4 and 5 of the Treaty. Europeans are, in part, alone.
Now, the ideal solution would to pursue Scale Economies and share existing defense assets at EU level, as suggested by President Juncker himelf earlier this year. We all know, however, that this is not to come in the short run: existing assets have never been used, and the European Defense Agency has just failed to secure an increase in budget.
It comes to no surprise, then, that the French Government (along with the Belgian and Italian ones) has asked for “budgetary flexibility” concerning security. Budgetary flexibility exists since some time in the EU fiscal rules, but only recently has been politically codified by the Juncker Commission. However, flexibility- in the way it has been conceived by Juncker- is not a free lunch for member-states: it requires either strong coordination of macroeconomic policies or pooling of resources through the European Fund for Strategic Investment, better known as “Juncker Fund”.
The logic of the Juncker Fund is clever. It basically sends a very clear message to Member States: you are allowed to spend as much as you want in your current expenditure budget, as long as you put an equal amount of money for investment in the Commission’s hands for strengthened coordination. The Commission offers strong flexibility in exchange for coordination and control over investment projects.
Now, a similar approach should be used for defense spending. By setting-up a European Fund for Intelligence and Security (EFIS), the Commission could offer the same bargain to member-states: letting expenditure for security purposes to increase, but under a strengthened coordination framework. The resources pooled through the Fund would à la fois grant flexibility space to member-states, and provide resources that would be invested in European or domestic projects where it is more needed. Such a fund would replicate the governance scheme of the EFSI, with military technicians in the governing board. The EFIS would have four main purposes: provide funding to mobilize police and security assets within states and eventually across states to deal with emergency situations; provide funding for control of the common borders; finance convergence and sharing of information between intelligence agencies, pointing towards a step-by-step creation of a EU Intelligence Agency later on; and provide additional funding for the European Defense Agency. A main difference from the EFSI would be in the internal flexibility of the instrument. The Commission should be enabled to call urgent meetings of the participants’ defense ministers to release funding in case of emergency.
Such scheme would allow to push forward towards a strengthened coordination of defense policies and, simultaneously, creating the incentive at domestic level for such coordination (the attached flexibility clause). This, without requiring a Treaty Change nor an increase of the already-overstretched MFF. Finally, being the scheme fully voluntary, it would not constitute any violation of national sovereignty, but would still lay the groundwork for the eventuality of a truly joint European army past 2025. President Juncker, what are you waiting for?
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