In Stratfor's 2017 Annual Forecast, we wrote that defense is one of the areas where EU governments could reach agreements. Motivated by the Brexit, defense cooperation enables the European Union to demonstrate that the bloc remains united in spite of recent political and financial setbacks.
In an effort to build consistent European defense capabilities, EU member states have signed a joint defense pact that will combine their military resources to improve security cooperation. On Nov. 13, defense ministers from 23 of the 28 members of the bloc signed the Permanent Structured Cooperation on Defense agreement (commonly known as PESCO), which is part of a broader effort to wean the European Union off its reliance on the U.S. military and to showcase the bloc's solidarity in the wake of the Brexit. The pact also seeks to remove the inefficiencies of multiple EU countries spending money to develop the same thing. At a time when financial or institutional reforms are controversial, defense is one of the few areas where most EU member states can reach an understanding.
Over the past two decades, most European countries have reduced their military spending to the point that only a handful of them (Greece, the United Kingdom, Estonia and Poland) meet the NATO target of spending 2 percent of GDP on defense. Pooling resources would be an attractive option for many member states. Moreover, the United Kingdom's decision to leave the European Union forced the remaining member states to turn to military cooperation as a way to show that the bloc remains united.
Pursuing wider cooperation, however, doesn't mean that the European Union will have its own army. PESCO's goals are to coordinate defense expenditure, make national units available to EU operations, develop joint capabilities and strengthen Europe's defense industry. But member states will remain in control of their militaries, which they still consider a part of their national sovereignty. In this regard, PESCO is a more modest initiative than the European Defense Community, an aborted project from the early 1950s that proposed to create a common army in Western Europe.
The PESCO agreement also comes after the European Union announced a European Defense Fund in June, which will coordinate and supplement national defense spending. Starting in 2020, each year the fund will make 500 million euros (roughly $583 million) available for defense research, and 1 billion euros available for the joint development and the acquisition of defense equipment.
The PESCO agreement shows a compromise between France and Germany as well. France was initially interested in an agreement that would include a small number of countries committed to big defense projects, including foreign interventions. But Germany preferred a bigger alliance dedicated to more modest projects. The final agreement seems to be closer to Berlin's desires, because in addition to the United Kingdom, which has traditionally opposed a deepening of intra-EU military cooperation, only Denmark, Ireland, Portugal and Malta decided not to participate in the initiative. While the participating countries are likely to approve the PESCO agreement, it will only create the legal framework for defense cooperation. The next challenge will be to negotiate the projects to undertake together, which could once again highlight the different priorities among EU members.