Europe’s needs in the defence and security sectors have been well highlighted in the recent landmark reports by Mario Draghi and Sauli Niinistö. As Draghi points out, new geopolitical threats have put the spotlight back on EU’s lagging defence capacities. As uncertainty continues to rise in our surroundings, the EU must prepare to ensure it has sufficient defence assets to guarantee the safety and security of its citizens. In this regard research, development and innovations play a pivotal role.
The war in Ukraine is about to reach the miserable landmark of three-year anniversary and the way out from the battles seems complicated. At the same time the United States, Europe’s traditional security guarantor, is changing administration. Trump administration has been clear in its unwillingness to continue to pay Europe’s defence bills - many say rightly so. In this security landscape, it is expected that the EU will invest more money into defence and security sectors in the future. However, it is not evident how this money will, or should be allocated. The European Commission is expected to give its view in mid-2025 as it will set out proposals for the next long-term EU budget, covering the seven years from 2028 to 2034. As the world is not following the logic of the EU budgetary timetable, some extra financing to defence and security is already highly likely before that.
Solutions emerging from research strengthen security
Technology has gained a significant role in modern warfare. Technological advancements won’t be achieved without research and development. By investing in research and development, the EU would be able to upgrade its defence capabilities. According to the Draghi report, in 2023 the US was allocating 16 % of its military spending to defence R&D, while the same figure in Europe was 4,5%. The striking difference to the US underlines that there certainly would be room for improvement.
For the most part the issue must obviously be resolved in the Member States as they are the main spenders. On the EU level, one tool to boost defence R&D would be to enhance and speed up the European Defence Fund (EDF). The EDF incentivizes and supports collaborative, cross-border research and development in defence. EDF has been acknowledged as an important instrument to bring companies and research actors from different corners of the EU together. The EDF creates EU´s next generation defence solutions. When successful, they will increase Europe´s sovereignty - which would be an asset also for our allies -, reduce dependency from non-EU imports and enable export opportunities in the global defence market.
Innovation in defence and security tends to spill over to other sectors
Historically, technical advancements in defence have been applied to other domains as well, some of the most well-known ones being the internet and GPS positioning. Today, as we know, synergies work both ways. Many civilian technologies are developed into military applications – dual-use has become a buzzword. This paradigm change taking place can be called as “New Defence”. New Defence means a phenomenon where originally civilian technology-oriented companies arise as important new players in the defence market, who can rapidly provide solutions that can benefit also more traditional defence actors.
Regarding dual-use there are some low-hanging fruits to be picked: in the EU we need to make sure that our funding instruments support dual-use efficiently. Firstly, EU must work on a clear definition of dual use and ensure clear guidelines and coordinated approach in the upcoming funding programmes Our economy could get a boost if we manage to create a thriving dual-use ecosystem where innovations flow in both directions.
When making decisions on the EU’s spending on defence and security, let’s not forget the twofold impact of investing in research and development — not only will it enhance our deterrence, but it can also drive economic growth, tackling two challenges with one solution.
VTT is one of Europe’s leading research institutes and a significant developer of defence technologies. The dual-use of cutting-edge Finnish civilian technology that VTT develops offers a significant advantage to the defence industry. Our clientele includes major defence sector companies in Europe and the United States, showcasing our commitment to providing innovative solutions across borders. VTT also acts as an operator of the NATO DIANA Accelerator in Finland.
