Weaponising Europe? Rule-makers and rule-takers in the EU regulatory security state

ABSTRACT

In contrast to the conventional wisdom that security is governed exclusively by nation states exercising political authority to generate public security goods, the European Union can also be considered a security state: it governs security indirectly by making rules incentivising and steering the provision of public security goods. To what degree, however, does the EU govern defence markets, shape the trajectory of national defence capabilities, and direct efforts towards European strategic autonomy? This paper traces the EU’s attempts to regulate arms production and identifies critical junctures in EU authority as a market rule-maker over the means of force. It finds that market rule-takers—non-state defence firms—are shaped by EU epistemic authority and regulation. Specifically, EU rule-making shapes firm perceptions of relative defence market uncertainty. Firms perceiving future home defense markets as less risky due to regulatory oversight are incentivised to reduce their own current profits by self-funding innovation towards future defence requirements and procurement sales to their home states. By incentivising the non-state production of public security goods with its rule-making and relational market power, the EU is a modern regulatory security state, even in the defence domain where it has little political authority.

KEYWORDS:

• European Union
• regulation
• governance
• defence markets
• defence industry
• innovation

Acknowledgements

I would like to thank Moritz Weiss and Andreas Kruck, the anonymous reviewers, and the co-participants in the European Regulatory Security State workshops in Munich for helpful feedback in developing the project. For critical research support and feedback, I would like to thank Jacopo Ambrosetti, Jordan Becker, Florian Bodamer, Heiko Borchert, Rosella Cappella Zielinski, Luis Enrique Moya Canovas, Asia Cesa, Shiqi Duan, Jonathan Greenacre, Lucas Hellemeier, Catherine Hoeffler, Seth Johnston, Noora Lori, Jackson Moore-Otto, Jarle Trondal, Bontu Ankit Patro, Paul Poast, and Madison Sargeant.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 These figures result from 20 years (2002-2022) of annual reported defence firm IR&D investments from the top ten European defence firms (according to SIPRI data), European state defence R&D data from the EU Industrial R&D Investment Scoreboard (https://iri.jrc.ec.europa.eu/scoreboard/), Bloomberg terminal data on defence industry R&D expenditures (2022), and intermittent (PWC 2004, 2007, 2012, 2018, 2020) proprietary defence industry reports from PriceWaterhouseCoopers. Sampled firms include BAE Systems, Rolls Royce, Safran, Finmeccanica/Leonardo, EADS, Thales, Dassault, Saab, Meggitt, and MTU Aero Engines. Most R&D spending figures conflate public and private spending, such as data provided by the European Defence Agency Defence Data Portal (https://eda.europa.eu/publications-and-data/defence-data). Identifying firm data and then aggregating it on an annual basis isolates and identifies industry patterns, rather than total state and society R&D spending.

2 EU policy tools that generate direct military capacity include the 2004 European EDA, the 2007–2014 FP7 Research Programme, the 2014–2021 Horizon 2020 Programme, the 2017 EDF and PESCO, and the 2021 European Peace Facility. The EDA was founded to better coordinate member state defence capabilities and create modest pilot procurement projects over key capability gaps (Macchiarini Crosson, 2021). The Commission has also funded over €2B in dual-use security research since 2004, via the ‘Preparatory Action on Security Research’ (EC, 2004), the Sixth (FP6) (EC, 2007) and Seventh Framework Research Programmes (FP7) (EC, 2011), and the Horizon 2020 programme (EC, 2011). 2017 marked a leap in EU defence authority, with the EDF (2021-2027) (EEAS, 2018), PESCO, the Multiannual Financial Framework (MFF), the European Defence Industrial Development Programme, and the European Peace Fund (EPF) (€5 billion) (Council of the EU, 2018). The 2022 Russian war against Ukraine prompted the development of further security state measures at the EU level.

3 The exception was French firms incentivised by national-level regulation to start IR&D between 1997–2004 (Belin et al., 2019).