EU Commission President Ursula von der Leyen calls for the development of a European arms industry. The European taxpayer and the labor market should benefit from the investments.
EU Commission President Ursula von der Leyen wants to use the EU states’ growing investments in weapons, ammunition and soldiers to build a new European defense industry. “We have a very fragmented defense market and that has to change,” von der Leyen told the Financial Times (“FT”). “We have to invest more, we have to invest better and we have to invest in Europe,” said von der Leyen. European tax money should also be spent in Europe.
According to the EU politician, who wants to remain Commission President for another five years, the Commission is currently developing a strategy for the defense industry based on the experience of using taxpayers’ money to support the production of Covid-19 vaccines and for joint energy purchases.
As the “FT” further writes, the Commission’s plan to arm Europe’s military-industrial complex in the face of the threat from Russia should be published this month.
Armament as a job and growth engine
Von der Leyen also emphasized on the sidelines of the Munich Security Conference that “investing in Europe” means telling taxpayers in Europe that the billions for the defense industry will be invested in such a way that “good jobs will also be created here in Europe.” It is important to her to coordinate these investments in close coordination with NATO.
According to NATO Secretary General Jens Stoltenberg, NATO’s European members – not all of them are in the EU – will together spend a record $380 billion on armaments this year. The spending of the European allies and Canada was increased by eleven percent in the previous year 2023. According to Stoltenberg, this is unprecedented. In 2022, military spending by all NATO members was $1.175 trillion. 822 billion were contributed by the USA.
Where do they end up? Billions in armaments?
Germany’s defense companies will want to play a role in the consolidation of the European military sector and the distribution of billions in defense budgets mentioned by von der Leyen. Rheinmetall boss Armin Papperger recently commented on the topic. According to Pappberger, size is necessary to compete in international business.
He is firmly convinced that Germany needs a player worth between 20 and 30 billion euros in order to be able to keep up with US defense companies. Pappberger wants to double Rheinmetall’s sales to 20 billion euros in seven to eight years. In addition to Rheinmetall, Thyssenkrupp, KMW, Hensoldt and Renk, among others, earn their money in the defense industry in Germany.
USA dominates Defense industry
The industry is dominated worldwide by US defense companies. In 2022, according to data from the peace research institute SIPRI from December 2023, five US companies took the first places among the largest corporations. Lockheed Martin was at the top with sales of $59 billion.
With sales of twelve billion each, the Italian defense company Leonardo and the Airbus defense division are far behind. For the past year 2023, Rheinmetall expects sales of well over seven billion euros without any acquisitions.