Developing the Common Security and Defence Policy in war-time Europe: EPF, PESCO and crisis management activities

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By Tyyne Karjalainen

The EU has built up many new security and defence structures over the last years. But their future seems uncertain.

In recent years, the European Union’s Common Security and Defence Policy (CSDP) has achieved several concrete landmarks. With the European Peace Facility (EPF), the EU has jumpstarted capacity building for its neighbours and other partners. Novel operations and missions have been successfully launched and, after a slow start, the Permanent Structured Cooperation (PESCO) is delivering actual outputs, also in cooperation with the UK and NATO. The success seems to be based on both institutional development and external factors:

New instruments and structures for CSDP have been built up gradually over the last half-decade, including PESCO, the European Defence Fund (EDF) and the Military Planning and Conduct Capability (MPCC) in 2017, and the EPF in 2021. At the same time, the security crises in Europe – including the Russian annexation of Crimea and the start of the armed conflict in eastern Ukraine in 2014, and finally Russia’s full-scale war against Ukraine since 2022 – have been met with an unprecedented political will to overcome practical challenges and internal disputes in order to use the CSDP instruments in response.

However, the future of the currently blooming CSDP activities seems uncertain and might become compromised surprisingly shortly. The lack of a long-term vision for financing the EPF and CSDP missions and operations, as well as persistent internal conflicts (both among EU members and institutions and with allies), decrease effectiveness and limit achievable results. The following sections review the current state of the CSDP, focusing on the EPF, PESCO, and recent crisis management activities.

EPF: short-term capacity building

According to Art. 41 (2) TEU, the EU budget cannot be used for CSDP operations with a military element. Alternative funding solutions have included the Athena mechanism – to cover the common costs of military CSDP operations – and the African Peace Facility (APF), which financed capacity building, peace support operations and related activities on the African continent. Partly due to the legal barriers, equipping partners has not been a central focus of the CSDP. On the contrary, it has been considered as a weakness of the EU that it has not been able to provide the necessary equipment to the partners that it has trained.

These shortages were addressed when the Council of the EU decided to establish the European Peace Facility in March 2021, granting it a pot of five billion euros (in 2018 prices) for the period 2021-2027. Replacing the Athena mechanism and the APF, the EPF was built on two pillars, one covering the common costs of military CSDP operations and missions, and the other allowing for capacity building and support to partners and their operations.

Like the Athena mechanism, the EPF is financed by contributions from the member states based on their gross national income. The “constructive abstention” mechanism (Art. 31 (1) TEU) would allow member states with special foreign policy characteristics to abstain from voting on individual assistance measures under the EPF without blocking them.

Funding the delivery of weapons to Ukraine

While flexibility has been at the core of the EPF since its outset, it was not intended that the EPF would become the EU’s flagship tool to respond to Russia’s war of aggression. The February 2022 decision to use the EPF to fund weapon deliveries to the Ukrainian armed forces did not only pivot the EPF’s purpose away from conflict prevention, but also represented a political shift in the EU’s Eastern Neighbourhood Policy, which had persistently avoided any military element in the cooperation before. Furthermore, it changed the expectations of other partners of the EU, washing off its civilian power profile. In addition to Ukraine, EPF assistance has so far been provided to more than fifteen other partners.

The process built around the Ukraine action has allowed for relatively fast and needs-based support. Member states send materiel from stocks and then invoice the EPF. Only materiel on Ukraine’s “wish list” can be covered, and the reimbursement rate varies at around 50%. In an earlier paper, co-authored with Katariina Mustasilta, we argued that funding weapons at the EU level has had several advantages: It has demonstrated a united European front against Russia and has encouraged national leaders to make sensitive decisions concerning lethal materiel. Moreover, EU action has contributed to a certain European ownership for the assistance to Ukraine. This should allow the EU to develop a long-term strategy, based on its values, for continuing the support.

Running out of money – and materiel

But this is where the bad news starts. Hungary has been blocking the next tranche of support to Ukraine since May, first arguing that the global instrument had been overly focused on Ukraine, and then tying its approval to Kyiv removing a Hungarian bank from its list of “sponsors of war”. In contrast to Malta, Ireland, and Austria, which constructively abstained from decisions on lethal material, Hungary chose to also bring other member states’ support to a halt.

Hungary’s veto, however, is a minor issue compared to the next challenges on the way: the EPF is running out of money. It has already been topped up twice and now totals up to 12 billion euros. It remains to be seen whether the member states will be willing to further increase the EPF budget to the extent that it can meet Ukraine’s needs in the long term, especially since the EPF has other partners to back up as well. Policy options could include the establishment of a Ukraine-specific pillar within the EPF or the creation of a parallel funding tool for this purpose. A voluntary fund seems to be a risky option for many – the success of the EPF is based on the solidarity of all.

Another problem is that the EPF can only fund material deliveries as long as there is still materiel in stock. There is a growing awareness in EU capitals of the possible scenario of a prolonged war combined with continuing shortfalls in European production capacity. Much will depend on how effectively EU members will be able to spend their increased defence budgets and build up their defence industries and whether the European Defence Agency and the EDF can facilitate tangible cooperation and coordination along the way. The three-track plan to supply Ukraine with ammunition from existing stocks, support joint procurement, and produce ammunition and missiles in Europe demonstrates the potential for EU solutions. PESCO provides another potentially relevant framework – which we will delve into next.

PESCO: A wake-up call for European defence cooperation?

The sudden need to transport military assets for the Ukrainian armed forces has given a boost to resolve the long-term issues affecting military transports across the EU’s internal borders. The Permanent Structured Cooperation project on military mobility, which experienced varying success before the war, has now emerged as the key framework for harmonising practices and standards for the movement of military equipment and personnel in Europe. This development could not be taken for granted, given the difficulties that PESCO has faced in facilitating European defence cooperation before.

PESCO was established by the Lisbon Treaty in 2009 as an instrument to allow deeper integration among member states whose “military capabilities fulfil higher criteria” and who have made binding commitments in the area of defence (Art. 42 (6) and 46 TEU). Activated in 2017, PESCO launched cooperation between 25 EU members, with the exception of Malta, and, until 2023, Denmark. Participating members can further decide which capability development projects they want to join. During the years that followed, many PESCO projects remained largely on paper, with member states showing little interest in implementing the 20 binding commitments that they had signed up to.

Overlapping initiatives for defence cooperation

The slow start was explained by the uncertainty about the added value of PESCO, especially in relation to the NATO framework. Moreover, several other overlapping initiatives for flexible defence cooperation had been established during these years. The 2014 NATO summit in Wales had given birth to three Framework Nation Concept (FNC) groupings, including one led by Germany, and another led by the UK, known as the Joint Expeditionary Force (JEF).

Like PESCO, Germany’s FNC focused on capability development, while the JEF built a rapidly deployable multinational force in Northern Europe. Furthermore, in 2018, France, frustrated by PESCO’s all-inclusive outlook, launched the European Intervention Initiative (EI2) to facilitate future military operations by developing a common strategic culture.

The cooperation formats sharing most of their members, PESCO’s role in the development of European defence seemed uncertain. However, PESCO continued to grow in terms of the number of projects (from 17 to 68 projects), and the academic assessment of PESCO’s potential gradually became more positive.

Successful military mobility project

The military mobility project, led by the Netherlands and involving 24 EU member states, has become the largest and arguably most important PESCO project. In a positive surprise for Brexit-torn UK-EU relations, the UK also applied for and was welcomed into the project. This was enabled by the conditions for third-country participation in PESCO, which had been negotiated a few years before.

Furthermore, the PESCO project is linked to NATO-EU cooperation on military mobility, with three non-EU NATO members – Norway, Canada and the US – officially participating in the EU project. Military mobility has slowly developed into a priority area (or “flagship”) of NATO-EU cooperation, with the EU having the legal capacity to harmonise standards and NATO contributing with military requirements. Although PESCO is not officially a partnership tool, the military mobility project has been successful in supporting defence partnerships in war-time Europe.

Keys to success

The fact that the PESCO framework is both flexible in terms of membership and member-state driven has contributed to the successful outcome. The flexible membership has two sides: on the one hand, it allows Ukraine’s two main supporters – the UK and the US – to participate in the development of military mobility in Europe; on the other hand, it takes into account the fact that not all EU members want to participate in the project (e.g. due to constitutional neutrality).

The member-state driven nature of the project supports the external partnerships in particular: the UK has avoided institutional links with the CSDP since Brexit, and EU-NATO cooperation also benefits from action at the member-state level, given that information sharing between the two organisations is limited due to the Türkiye-Cyprus conflict.

CSDP interventions: faster and more focused

The war-time development of the EU’s CSDP has not only relied on new structures and instruments. CSDP operations and missions (a.k.a. EU crisis management) remain at the core of EU security and defence policy, reflecting the implicit traditional division of labor with NATO. Three new operations and missions have been established in record time:

• First, the EU military assistance mission (EUMAM) was launched in late 2022 to provide basic and specialised training to Ukrainian soldiers and military units in Poland and Germany, and is expected to reach its goal (30,000 trained personnel) ahead of schedule. EUMAM is the third CSDP mission in Ukraine: a civilian advisory mission (EUAM) has been operating in the country since 2014, focusing on civilian security sector reform, while a border assistance mission (EUBAM) has been deployed on the Ukrainian-Moldovan border since 2004.
• Another mission (EUPM) was launched in Moldova in 2023 with a focus on countering hybrid threats.
• The third new mission was launched in Armenia (EUMA) to monitor and report on developments in the border region with Azerbaijan.

The establishment of so many new CSDP operations and missions in such a short time is an achievement of the EU’s crisis management structures: reaching a political agreement between the member states and planning the intervention has typically taken much longer. The new operations and missions signal that crisis management remains a key tool for member states to implement the EU’s security and defence policy abroad.

New initiatives to come

Still, CSDP operations and missions continue to suffer from a lack of resources and other structural challenges that have remained unresolved for years. Both the Strategic Compass and the recent Civilian CSDP Compact call for increased effectiveness of the operations and missions, but even the starting point for effectiveness – evaluating impact – remains a challenge. Furthermore, the operations and missions operate in an increasingly complex and geopolitically tense environment. If funding problems are not resolved, future operations and missions are likely to be smaller in scope and fewer in number.

At the same time, new initiatives for CSDP interventions will be materializing soon: the EU battle groups, established in 2007 with 1,500 personnel, will be replaced by a Rapid Deployment Capacity (RDC) of 5,000 troops in 2025. Like the EPF and PESCO, the RDC fills a gap in the EU’s capabilities and will hopefully enable the EU to act more autonomously in crisis and conflict situations in the future. It remains to be seen how resources will be divided between the new and traditional CSDP activities, and whether the EU will continue to pursue a comprehensive approach to conflict and crisis response.

Tyyne Karjalainen is a research fellow at the Finnish Institute of International Affairs in Helsinki and doctoral student at the University of Turku.

This contribution is part of the thematic forum “Supranational governance between diplomacy and democracy – current debates on EU reform”, published in cooperation with the online magazine Regierungsforschung.de.

Pictures: Helicopter: Rock Cohen [CC BY-SA 2.0], via Flickr; portrait Tyyne Karjalainen: Finnish Institute of International Affairs [all rights reserved]; EU flag: Arno Mikkor (EU2017EE) [CC BY 2.0], via Flickr.