Buy your guns, missiles and tanks at home, Draghi tells EU countries

BRUSSELS — Most EU defense spending is going to the United States, so member countries should favor the bloc’s own arms industry when buying weapons, Mario Draghi said in his long-awaited report on EU competitiveness Monday.

Bringing spending home to boost defense is one of 10 proposals made by Draghi as part of a much broader 327-page report.

Many EU countries are rapidly rearming in the wake of Russia’s full-scale invasion of Ukraine, but 78 percent of the €75 billion EU countries spent on defense between June 2022 and June 2023 went outside the bloc, with 63 percent going to the U.S., the former European Central Bank chief said.

Buying from the U.S. “may be justified in some cases because the EU does not have some products in its catalogue,” the report said. But it added that “in many other cases a European equivalent exists, or could be rapidly made available.”

While Europe does make its own equipment, such as Eurofighter Typhoon and Dassault Rafale jet fighters, and the Leopard 2 A7+ main battle tank, many countries are buying kit from abroad. Nations from the Netherlands to Germany, Poland, Romania, Belgium, Denmark, the Czech Republic and more plan to buy the Lockheed Martin F-35 Lightning II stealth fighter.

While the U.S. is the leading arms seller into Europe, South Korea is coming up fast.

Poland has bought Chunmoo rocket artillery systems, FA-50 light combat aircraft, K2 Black Panther tanks, K9 Thunder 155 mm self-propelled howitzers and more from Seoul. Now Romania is also in the market for similar systems, and South Korean companies have big plans for the rest of Europe.

European arms companies are also having a difficult time ramping up production of arms and ammunition to meet demand from national programs as well as to supply Ukraine.

The answer is a better-directed stream of cash, Draghi said.

Draghi called for “substantive incentive mechanisms,” possibly linked to EU funding, to encourage governments to buy European. One approach could be to tie funding to eligibility criteria mechanisms like those already in place in the European Defence Fund (EDF) and in the proposed European Defence Industry Programme (EDIP).

While Europe does make its own equipment, such as Eurofighter Typhoon and Dassault Rafale jet fighters, many countries are buying kit from abroad. | Yasuyoshi Chiba/Getty Images

The report also called for countries to do a better job of joint spending and joint procurement — an effort to overcome the Continent’s small and fragmented defense market. That’s why Draghi said the bloc should boost the scale of its arms firms by allowing “industrial defence consolidation to reach scale, where needed.”

As an example, he noted that since 1990 the U.S. defense industrial base had shrunk from 51 leading companies to only five, which is why it has “delivered the high capacity and scale required by the U.S. armed forces.” However, he warned that “this may also carry risks in terms of dependence on a small number of suppliers.”

The bloc’s defense industry should also get better access to EU finance “to mobilise private capital,” Draghi said. For example, the European Investment Bank’s lending policies should permit more than just dual-use projects and also back purely defense investments.

This article has been updated.