Commissioner Kubilius, you are the first ever European Commissioner for Defense Industry and Space. Were there any surprises for you when you started in this new role?
Well, for me at least, becoming a European Commissioner was a surprise. And when you look back to late last year, there was quite a lot of skepticism about whether the European Union needed a commissioner for defense in the first place. That decision, of course, was taken by European Commission President Ursula von der Leyen, and I believe she needed to convince a few member states. Her decision was based on her understanding of the challenges in security and defense the EU is facing.
What are your biggest challenges?
There is the threat of Russia, and a challenge is the possibility of a diminishing US presence on the European continent. This is why my position was established and why the EU is becoming active in defense issues, which had not been the case until now.
What are your key tasks?
Our activities are clearly focused on where we can bring added value both to NATO and to EU member states, in order to strengthen their defenses. We are not creating any kind of defense plans or capability targets—this is all done by NATO and the member states. But we are looking at how we can use industrial policy to assist our European defense industry and member states to rapidly increase defense readiness in the best possible way.
And the EU can bring some instruments to the table, which are very much needed and which NATO does not possess. For example, we can raise additional funds or we can implement special regulations with regard to defense programs, which again are targeted at all member states to develop their capabilities. That, in short, is my task.
In her mission letter to you, President von der Leyen wrote, “We must hit the ground running on day one.” Six months in, what progress have you made?
If you compare the current situation with that of 2024, I think it’s fair to say that there have been big changes both in the mindset of the European people and European governments. And the task of assisting member states in their defense readiness has begun.
Within the first 100 days in office, we produced the White Paper, a task set out in my mission letter. We’ve been setting out the very important ReArm Europe program with new financial instruments. Just before our interview started, we heard the good news that the “Security Action for Europe” (SAFE) fund, a €150 billion loan instrument for arms purchases, has been approved by EU capitals. So, there’s speed, big decisions are being taken, and implementation is starting.
Today, we hosted a big event, an “implementation dialogue” with representatives of the defense industry. We are looking into several big steps to be taken before the June European Council. One is about simplification. Then we are looking into how to create a picture of aggregated demand. We’ve approached member states to share the capability targets they’ve agreed with NATO. This will then allow us to look into the supply side and to talk with the industry about what they can produce, what are the obstacles—bureaucratic hurdles, but also supply chain issues.
All told, we created the possibility for member states to spend around €800 billion over the coming four years additionally on defense. And we hope that very soon we shall see practical outcomes.
Most European states still produce and procure their weapons nationally, which has led to issues, including poor interoperability and also economic inefficiencies. What steps are you taking to promote greater cooperation among member states?
In the White Paper we were quite descriptive as to what we need to do. A first practical step, which can be quite effective, is to incentivize member states to opt for joint procurement. That’s also what we're doing with the SAFE regulation, because it proscribes that EU member states should go for joint procurement with other member states. We also want to encourage this when it comes to supporting Ukraine, by jointly procuring military hardware, including from the Ukrainian defense industry. Joint procurement will really allow us to overcome implementation issues.
Then we're waiting for the European Council and the European Parliament to agree on a new program called the European Defense Industry Program. That program will also create additional possibilities not only for joint procurement, but also for joint weapons development programs. In general, we want to incentivize member states to do much more collaborative work in defense that can help us to overcome problems the Draghi Report has pointed to. Currently, our defense industry is unable to use all the power of the single market, also when it comes to improving global competitiveness.
Large-scale manufacturing well beyond current levels will be essential. What steps are needed to enable this kind of scale-up?
First of all, we need to look very carefully into the obstacles that currently exist when it comes to scaling up production. There are quite a lot of different regulations, environmental permits and so on, where we really need to keep a balanced approach. I was told today by a representative of the French defense industry that for his company, getting permits sometimes takes five years. Only then it can build a new factory or expand an existing one. Well, we cannot expect Russian President Vladimir Putin to be prepared to wait until we are ready, if you allow a dose of irony. We need to remove those obstacles.
Second, seeing the aggregated demand numbers will help scaling up as well. It will incentivize industries to go for consolidation. And we are already seeing evidence that this is starting to happen.
Joint procurement, which I already mentioned, will also help. Companies will get bigger and more long-term contracts, and that would be for them some kind of assurance, making it easier to expand. Large-scale contracts are also attractive for EU member states, because they will reduce prices.
Given that defense touches on core national competencies, does this make it more difficult to build consensus and foster cooperation among EU member states?
Definitely, we need to operate within the treaties. Then again, the European defense industry has become so fragmented because EU member states have exercised their right not to follow single market rules in some areas maybe a little too often, and the effect has often been that companies only serve their respective national governments. Some defense companies are only starting to realize this now, but once they only work in their national silos, they lose the chance to become globally competitive. We are now having very different discussions, and I hope that it will bring real changes in general.
This fragmentation of European industry and defense policies occurred only in recent decades, when we were enjoying the so-called peace dividend, in the belief that NATO and the Americans will take care of our defense. Now things are changing, and I see that this is bringing a deeper understanding with it.
My mission letter set out very clear goals—that Europe needs to be ready to take the responsibility of European defense on its own shoulders and that we need to look into a new European security architecture. The discussions on the latter will come, and I hope that in those discussions we will be able to understand why much greater unity inside of the European Union on defense is needed to defend ourselves. On the European continent, our most valuable security resource is collective defense. We all need to be ready to defend ourselves; no single country alone can be assured of its own defense capabilities.
The EU aims to mobilize €800 billion under the Readiness 2030 initiative, and that includes, as you said today, €150 billion in cheap loans offered through the SAFE fund. Do you think that this will be sufficient to meet Europe’s rearmament goals?
The overall number is based on the assumption that during the next four years, EU member states will spend an additional 1.5 percent of their GDP on defense. So, if the upcoming NATO summit will agree on, say, a spending goal of 3.5 percent of GDP for core defense expenditure, then European countries will collectively spend €600 billion per year, or €2.4 trillion over four years. This is quite a big amount of money.
Of course, we cannot predict to what extent member states will take advantage of the SAFE loans and the escape clause, pushing defense spending up to 3.5 percent. The European Council, when taking note of the White Paper and the proposed financial measures, was prudent enough to ask the European Commission to look into additional possibilities, including one important decision the Commission already took, allowing member states to reallocate unspent cohesion funds for defense industry purposes, but that’s a voluntary decision on the part of individual governments. We’ve also convinced the European Investment Bank to narrow very much the definition of so-called prohibited areas where they were not investing. Now dual-use defense investments are becoming part of what the EIB finances.
So much is moving, but we know that we are way behind what we need to have. We need to increase our defense production. As NATO Secretary-General Mark Rutte keeps repeating: Russia is now able to produce in three months more than all NATO member states combined are producing in one year, the United States included. So, we have a huge task ahead of us, and I'm always saying that I can well imagine that we may spend even more money than we’ve allocated so far.
Are EU defense bonds or a multilateral bank for joint weapons purchases viable options?
That’s for member states to decide. Discussions are ongoing. When it comes to defense bonds, we need to remember that we have a real issue repaying the bonds the EU issued during the COVID-19 pandemic: There is debt of €750 billion, partly distributed as grants to member states, which were very helpful overcoming the deep economic crisis. But now, when we are discussing the EU’s next Multiannual Financial Framework (MFF), i.e., its budget for 2028 to 2034, we may need to allocate up to 20 percent of the next MFF to pay back that debt. Against this background alone, more joint debt is a complicated issue.
Do you think the European public supports this large-scale rearmament, including the high expenditure?
This much depends on the leadership of national governments. Of course, perceptions vary from country to country and society to society. It's natural that those EU member states that are closer to Russia and closer to Ukraine perceive the threat Russia poses more acutely than those further away. Then again, back in 2015, when the Mediterranean countries were hit by the refugee crisis, in my country, Lithuania, quite a lot of people said: That’s not our problem. And then we were hit by the regime of Alexander Lukashenko “weaponizing” migration. And understood why it's so important to have EU solidarity in solving these kinds of problems.
And people are quite prudent. They understand that our not being ready to defend ourselves can hit all of us in a very painful way. Even a minor Russian aggression would have a big impact on the whole European Union—on the financial markets, on the economic situation. That is what everybody needs to remember.
What role should Germany play in all of this?
Germany is presently setting an example that we would be very happy for all EU member states to follow. The decisions to allocate big funds for defense and infrastructure investments are really very important. I can only congratulate and hope that the German government will convince other member states to move ahead without hesitation with the development of their own defense capabilities.
The interview was conducted by Anna Brugger, Henning Hoff, and Tim Hofmann.
