Introduction
The EU Commission presented recently (3 May, 2023) a Proposal for a Regulation (COM(2023) 237 final ) which establishes an Act for the Support of Ammunition Production (“ASAP”). The Act aims at assisting the European industry to boost the production of ammunition and missiles and thus replenish the Member States stockpiles which have been depleted because of the war in Ukraine.
This blog piece contains my first thoughts regarding this new instrument. A more detailed working paper is under way.
“ASAP” Regulation Background
The “ASAP” Regulation proposal is the latest instalment of regulatory initiatives that the EU has taken in the aftermath of the Russian invasion in Ukraine. It should be remembered that the EU Commission has presented in July 2022 a Proposal for Regulation aiming at the European Defence Industrial Reinforcement through Common Procurement Act (EDIRPA) (COM(2022) 349 final). The proposal of the “ASAP” Regulation constitutes a complementary instrument to EDIRPA and is aimed at fast-tracking some of the intended outcomes of EDIRPA, namely the joint procurement of 155mm ammunition and if requested missiles for Ukraine before the 30th September 2023. The proposal is the EU Commission’s response to the Council’s three track plan (here) for speeding up the delivery of ammunition to Ukraine and joint procurement.
“ASAP” Content: First Glance and Key Points
The new “ASAP” framework aims at strengthening the responsiveness of the European Defence Industrial Base for crises like the one witnessed in the war in Ukraine. The Proposal points out correctly that the war in Ukraine changed dramatically the assumptions on security of supply planning, timing and capabilities.
The “ASAP” Proposal contains three main lines of actions:
First, it creates a mapping mechanism/process to improve the responsiveness of the European Defence Industry by anticipating bottlenecks in the supply chains for example as a result of abrupt spikes in demand.
Second, it provides a pathway of financial support for the reinforcement of the European Defence Industrial production capacities. “ASAP” provides for an initial €500 million investment until 2025. €240 million are earmarked from the EDIRPA budget and €260 million come from the European Defence Fund (EDF) (See “ASAP”’ – Legislative Financial Statement para. 3.2.1). In addition, the Proposal foresees ways for the EU Commission to facilitate other streams of finance including private finance for instance via debt financing, (“Ramp-up Fund”).
“The “ASAP” Proposal has the potential of opening up new institutional, substantive and more importantly, I would argue, financial pathways to strengthen the European Defence Industrial Capabilities in this field.”
Third, the establishment of a temporary regulatory framework to facilitate the faster response to the supply crisis of ammunition procurement.
A thorny issue that consumed considerable energy during the negotiations at the Council was whether third country entities (firms) or EU entities controlled by third countries entities should have access to the new mechanisms especially those linked with the EU budget. Anecdotal evidence suggest that there was a split between Member States on the matter with some Member States arguing against the inclusion of such access for the benefit of third country entities because this would undermine some of the stated aims of the new instrument/framework namely the reinforcement of the European Defence Industrial Production Capabilities/ Capacities.
The compromise reached in the Proposal entails that the primary beneficiaries of the new financial support mechanisms will be the European Defence Industry and Norway but third country entities (and controlled entities) would be allowed to participate in the procurement supply chains. However, such participation is subject to some conditionalities -for example the products of the third country entity or controlled entity should not be subject to constraints by the third country [see “ASAP” Regulation Proposal, Article 10 para. (3) (b)] – and provided that the security and defence interests of the EU and of its Member States are not undermined.This perhaps would be the case for products subject to the US International Traffic in Arms Regulations (ITAR) regime.
Preliminary Thoughts
The “ASAP” proposal has the potential of opening up new institutional, substantive and more importantly, I would argue, financial pathways to strengthen the European Defence Industrial Capabilities in this field. It also has the potential of furthering the process of “Europeanisation” of this sensitive policy field.
In this regard there are are clear parallels with the EU’s response in COVID19 Joint Procurement (discussed here) particularly connected with the realisation of the need to creating complementary and mutually supporting instruments, mechanisms that may function as efficiency multipliers.
Interestingly, the justification for the adoption of the measure in the Explanatory Memorandum demonstrates, unwittingly perhaps, the limits and the risks for the European Defence Industrial Production capacity from the legalistic approach that has been pursued by the European Commission regarding the application of the EU defence package (especially the Defence and Security Procurement Directive 2009/81/EC) as I have argued time and again, for instance here, here and here ). There seems to be a new wind for a more pragmatic engagement but only time will tell whether this impression is correct.
“…the justification for the adoption of the measure in the Explanatory Memorandum demonstrates, unwittingly perhaps, the limits and the risks for the European Defence Industrial Production capacity from the legalistic approach that has been pursued by the European Commission regarding the application of the EU defence package (especially the Defence and Security Procurement Directive 2009/81/EC) as I have argued time and again”
Furthermore, another interesting point to observe is the prima facia contradiction, namely on the one hand basing the legitimacy of the new instrument on a “securitisation” argument, in other words a logical proposition which argues that EU’s and Member States core security is at stake, as a result of the Russian aggression against Ukraine and therefore there is an urgent need to swiftly replenish the depleted stockpiles of ammunition and the fast rearmament of Ukraine, and on the other to be “picky” about the sources of procurement and exclude third country entities who could in fact provide quickly the desired and “urgently needed”, according to the first part of the argument, supplies.
At a second level though one may find a merit in the response/compromise included in the “ASAP” Regulation proposal, in the sense that the security interests of the EU and its Member States require strengthening of the European defence industrial production capabilities-capacities, an objective deliverable in medium and long term, which nevertheless requires a change of mindset now and this crisis is an opportunity to do so.
As always feedback and comments most welcome!!!
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