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The EU has been muscling its way into military matters in a major way over recent years. Sidelined in the process has been the European Parliament, with MEPs so far mostly stuck looking on as key capitals and the Commission reshape defence policy for the bloc.

But now the Parliament is fighting back. Sources tell Firepower that a widely anticipated legal challenge to the EU’s €150 billion SAFE joint procurement programme will be announced on Monday.

Parliament negotiators are also digging in their heels over strict rules on non-European defence firms participating in the Commission’s flagship European Defence Industrial Programme (EDIP), and preparing for a showdown over the next seven-year EU budget (more on that below).

The stakes? Whether MEPs will have any sway in shaping the EU’s moves into the defence space. Stay tuned.

Also in today’s edition:

Shortages of key explosives like TNT has become a major bottleneck holding up European efforts to boost ammunition production. Opening new production lines is costly and requires gruelling permitting processes. Some companies are reopening mothballed Cold War-era factories, but retrofits take time there as well. More here.

Rheinmetall CEO Armin Papperger told Firepower that Europeans should pool together more military orders to avoid skyrocketing prices and achieve better economies of scale.

Papperger, visiting Brussels on Wednesday, said that a lead nation approach has worked well with ammunition and air defence systems, with one country coordinating orders on behalf of a larger group of purchasers.

BUNDLING: He contended that the same “Europeanisation of contracts” should be used for vehicle systems as well.

“We need to bundle [orders] so that fair prices can be achieved,” Papperger told Firepower after meeting Ursula von der Leyen along with other CEOs from the German state of North Rhine-Westphalia.

The European Commission and NATO have both been pushing countries to place joint orders together to fight price inflation. Prices for 155mm artillery ammunition, for instance, have quadrupled since the beginning of the war in Ukraine as exploding demand strained supply chains for critical components such as TNT.

ON THAT NOTE, Rheinmetall announced the largest order in company's history yesterday. An unspecified European NATO country finalised a multi-year deal for 155mm artillery ammunition and bimodular propellants worth several hundred million euros.

LONG-TERM COMMITMENT: Papperger didn’t say so explicitly, but plenty of defence industry executives have tried to make clear in recent years that large, long-term contracts make it much easier for companies to invest in expanding production facilities and forging tighter relations with suppliers.

During his stop in Brussels, Papperger said he also lobbied for a new raft of industrial subsidies and incentives – modelled on the EU’s just-expired ASAP ammo programme – to boost the production of long-range missiles. ASAP’s core is replicated in the European Defence Industrial Programme (EDIP), still under negotiation.

EDIP, SEASON THREE. Trilogues started this week on EDIP, with a first technical talk yesterday and another this morning. Negotiators from the Parliament and the Council hope to reach a deal by October, but at least two substantive obstacles stand in the way: Disagreements over rules for non-European countries participating in the programme, and the (diminutive) size of the programme’s proposed budget, just €1.5 billion.

ARTILLERY AMMO FOR UKRAINE. “We will deliver 2 million shells to Ukraine by the end of the year,” von der Leyen said on Thursday. Her remark anticipates that EU countries will end up coming through on the artillery funding initiative pushed by Kaja Kallas, even though (last we checked) it’d only collected pledges for about two-thirds of the cash needed to buy that many rounds. The Europeans will now be racing to increase military support to Ukraine, with reports that the US will halt its own aid.

ICELAND WANTS DEFENCE PARTNERSHIP. Reykjavík is the latest capital looking to negotiate a “Security and Defence Partnership” with the EU, a key prerequisite for accessing joint weapons procurement contracts under the EU’s SAFE programme. Eight other countries have already signed such deals, to increase cooperation in areas including cyber defence and military exercises.

The Commission pitched a quantum strategy on Wednesday to develop and commercialise the EU-made technology key for security of communications and encryption, as competition from the US and China heats up.

€100 BILLION FOR DEFENCE IN THE NEXT EU BUDGET? That’s how much EPP MEP Christophe Gomart, the co-chair of the Security and Defence Committee, is hoping to see in the EU’s next seven-year budget. He told Firepower that the EU could break 12 digits for defence if EU countries increase their direct contributions for a defence budget in the MFF. Current contributions to the EU budget are set at about 1% of GNI. Some back-of-the-envelope maths: If countries agree to increase that contribution by 0.5 percentage points to 1.5%, that works out to around that extra €100 billion.

NOT THE FIRST IDEA. Other prominent voices have previously pitched the same big, round figure for defence. Among them? Current Defence Commissioner Andrius Kubilius, former Defence Commissioner Thierry Breton, the chair of the main European defence industry lobby ASD and several Eastern European countries.

BUDGET FIGHTS COMING UP. The €100 billion idea is not outside the realm of possibility, considering Ursula von der Leyen’s ambitions to make defence a top EU priority.

Defence industry representative David Luengo told Firepower that the figure “makes sense in a security paradigm shift” and called high-level discussions around it “serious”.

Capitals are divided on WHETHER TO INCREASE THE OVERALL EU POT, a decisive factor in the Commission’s draft budget, which will be presented on 16 JULY. Among the other options to increase the budget: more re-purposing of EU civilian and social funds – or possibly taking up more EU debt, a controversial step taken during Covid, and for the EU’s new €150 billion SAFE joint military procurement programme.

But sources tell us there’s nothing close to consensus, at least for now, meaning the budget is likely in for lengthy and difficult negotiations.

RECAP: The 2021-27 EU defence & security budget includes just €16.4 billion, or about €2.3 billion a year (although EU countries altogether spent €326 billion on defence in 2024). By way of comparison: The Pentagon pitched nearly three times as much for next year, a whopping $961.6 billion (€818 billion).

Leaders are grappling with just how much 5% of GDP is after pledging their countries to spend that much at last week’s NATO summit.

For Canada, it comes to around C$150 billion (€93bn) per year, according to PM Mark Carney. That's almost a third of the country’s yearly budget of C$449.2 (€281.31billion).

In Germany, Europe’s biggest economy, each percentage point of GDP amounts to around €45 billion, according to Chancellor Friedrich Merz. That means 5% would come in at €225 billion per year, or a full 45% of Germany's current €476.8 billion government budget.

Credit rating agency Moody’s warned that because of NATO’s higher spending pledge, the debt-to-GDP ratios could rise by 3.5 to 5 percentage points by 2029 for Europe's four largest economies: Germany, the UK, France and Italy.

TURKEY’s air force could see major changes in the coming years. Sales of Eurofighter jets could be approved soon, according to the UK, part of the consortium behind the planes. Germany, another member, has previously been blocking the sale. The US ambassador to Turkey, meanwhile, said the dispute with Turkey over F-35 fighters could be settled by the end of the year. The US cancelled sales of F-35s to Turkey after bought Russian air-defence systems.

GERMANY plans to deepen cooperation with Israel, including to develop a ‘cyberdome’ to defend the country against drones and cyberattacks. German Interior Minister Alexander Dobrindt described the proposal as a “holistic” system that combines military and civil defence. Dobrindt also pitched increased cooperation between German intelligence agencies and Israel’s Mossad, and a new German-Israeli centre for cyber research.

UKRAINIAN defence companies plan to open production lines in DENMARK, under a €67 million deal inked on Sunday. The idea of integrating the Ukrainian defence industry into the European market is gaining serious momentum across Europe, and has been named as a key priority for the Commission and Kyiv. Just what it looks like still needs more definition, though. For EU defence chief Kubilius argued back in May that “Ukraine can benefit from EU production capacity” – while the EU will benefit “massively” from “lower production costs”.

European NATO circles are convinced that US President Donald Trump will reduce the number of forces stationed in Europe, which currently total around 80,000, and redeploy them to Asia and the Middle East.

For military planners, three key questions are driving discussions: How many US troops will leave, how abrupt will the withdrawal be and are European forces capable of replacing the departing American military capabilities?

European Union

• Next rounds of EDIP technical talks tentatively scheduled for 11, 15 and 17 July; no political trilogues scheduled before September

Council

• EU-Moldova Summit, 4 July, including to “take stock” of security and defence cooperation
• ECOFIN Council, 8 July, approve 15 EU countries to activate the national escape clause to increase deficits by 1.5% of GDP each year over the period 2025-2028 to spend more on defence
• Political and Security Committee, 8-9 July
• Coreper II, 9 July
• The Danish Council presidency updated its schedule to move a defence council gathering from 11 November (Armistice Day) to 28 November, and added a second ministerial, 6 October
• The Agenda of António Costa will be available here European Commission
• EU Stockpiling Strategy, 8 July, presentation by Commissioner for Social Rights and Skills, Quality Jobs and Preparedness Roxana Mînzatu
• Andrius Kubilius attends the Ukraine Recovery Conference in Rome, 10-11 July. Agendas of Commissioners will be available here

European Parliament

• Plenary, 7-10 July, with EU defence chief Andrius Kubilus on 7-8 July and a presentation of the Commision’s Stockpiling Strategy to MEPs on 9 July. You can find the full agenda here

NATO

• US Army Gen. Christopher G. Cavoli hands over role of NATO’s Supreme Allied Commander Europe (SACEUR) to US Air Force Gen. Alexus G. Grynkewich, 4 July

The Capitals

• Emmanuel Macron in the UK, 8-10 July, on a state visit where he will discuss the two countries’ relationship on defence at the 37th Summit co-chaired by UK PM Keir Starmer
• Macron and Starmer will also hold a “Coalition of the Willing” meeting in the UK on 10 July

Other events

• EESC Public debate on Defence-related investments in the EU budget, 4 July, watch here
• CSIS event – Denmark's role in European and Transatlantic Security, 8 July, watch here
• RUSI webinar – Addressing the persistent threat to subsea cables, 10 July, watch here

Thank you for reading,

Firepower was brought to you by Euractiv's defence team, with additional reporting from Maximilian Henning and Nicoletta Ionta. You can find the rest of our coverage here.

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