European Capability Development Planning

Written by Sebastian Clapp.

Defence planning (including capability development planning) is the process of establishing the military forces and equipment that a state or alliance determines are required to meet its objectives or to counteract threats. There are three major capability development processes within the European Union: each Member State’s national planning; the NATO defence planning process, where applicable; and the EU’s planning, which has evolved gradually since the 1999 Helsinki European Council meeting and now consists of numerous components.

EU capability development planning

Rather than having one tool that determines its defence planning, the EU has set up several different processes. The EU’s capability process is neither cyclical nor linear, and is difficult to comprehend because it lacks a name and no formal document fully explains it. Furthermore, it involves a multitude of actors (see Annex I). These processes have evolved gradually since 1999.

The Capability Development Mechanism (CDM), which was established in 2003, is specifically mentioned in the Treaty on European Union (TEU) and is solely under the control of the military structures, but has fallen ‘into obscurity‘. EU Military Staff, the source of military expertise in the European External Action Service (EEAS), identify the military requirements necessary to meet the EU level of ambition and highlight shortfalls.

To address long-term security and defence challenges, the European Defence Agency (EDA) has been creating Capability Development Plans (CDPs) since 2008, which draw on the CDM process. It examines potential security scenarios for the future and offers suggestions for the capabilities that European armies should have in order to respond to a range of possible events. Defence planners from Member States can use it to determine opportunities for cooperation and priorities. The latest CDP review, of 2023, contains 14 priorities across five military domains (land, air, maritime, space, cyber), and eight priorities categorised under strategic enablers and force multipliers. The EU introduced Permanent Structured Cooperation (PESCO) in December 2017, which is an additional tool for enhancing defence capabilities through collaboration. The Member States have since launched 68 projects, in areas such as maritime, cyber, space and air. They have made 20 legally binding commitments coordinating defence-planning initiatives. The Coordinated Annual Review on Defence (CARD) provides an overview of the EU defence landscape and promotes collaboration by pointing out collaborative opportunities. Launched in 2017, CARD is a key instrument in advancing EU capability development. It is designed to enhance coherence and act as a guide for defence collaboration. The second CARD cycle was completed in 2022. It concludes that increased EU defence budgets in the wake of Russia’s war against Ukraine pose both a challenge and an opportunity for European defence. The announced additional funding may even close long-standing capability gaps.

The 2022 Strategic Compass called for adaptation of the EU’s defence capability planning and development and annual defence ministerial meetings on EU defence initiatives, addressing capability development, the first of which was held in November 2022, within the Foreign Affairs Council (Defence). It also calls for a reduction in critical gaps by 2025 on strategic enablers such as strategic airlift, space communication assets and cyber-defence capabilities, and emphasises next generation capabilities – for example, a main battle tank. An important element added by the Defence Investment Gap Analysis is the Commission’s suggestion to move progressively towards a joint EU defence programming and procurement function to enable Member States to better define capability priorities with the greatest urgency.

One of the major efforts undertaken by the Commission in the area of capability development has been the European Defence Fund, launched in 2017 with a budget of €8 billion for 2021-2027 (which is set to be increased to €9.5 billion) to incentivise joint defence research, innovation and capability development. A more recent addition, following Russia’s invasion of Ukraine in 2022, has been the Commission’s efforts to incentivise joint procurement. The 2023 European Defence Industry Reinforcement through Common Procurement Act (EDIRPA) seeks to address the EU’s most urgent and critical defence capability gaps and incentivise Member States to procure defence products jointly, with a budget of €300 million. It will serve as the basis for a more long-term European defence investment programme (EDIP), a proposal for which is expected on 5 March 2024 as part of a broader European defence industrial strategy (EDIS). Furthermore, to incentivise the ramping-up of production of missiles and ammunition, the EU has established a €500 million fund, the Act in Support of Ammunition Production.

EU defence planning has been notoriously difficult. According to experts, ‘defence planning remains stuck at the national, rather than at the European or even Atlantic level’. The reason for this is broadly the lack of political will to change it. EU defence planning is even more crucial because, in the absence of coordinated action to acquire strategic enablers – which is prohibitively expensive for smaller Member States – Member States will continue to rely on US assistance, whose future is far from certain, for the foreseeable future.

EU-NATO capability development cooperation
From the inception of the EU’s Capability Development Mechanism, coherence between EU and NATO capability processes has been a priority. As such, as early as 2003 a NATO-EU capability group was set up to ‘ensure the coherence and mutual reinforcement’ of both organisations’ efforts to close capability gaps, but progress was hampered by political blockages. Defence capabilities is one of the strategic areas of cooperation between NATO and the EU and its importance is stressed in all three EU-NATO declarations. The third EU-NATO declaration (January 2023) speaks of ‘tangible results’ in the field of defence capabilities; this is where the ‘single set of forces principle’ is important – the notion that capabilities are owned by the Member States and can be used for NATO, the EU and other purposes rather than being limited to use in one organisation, which should ensure efficiency and avoid duplication. Many of the EU’s capability priorities correspond to NATO capability priorities; air-to-air refuelling is one specific example of how EU and NATO capability priorities complement each other. Moreover, many PESCO projects correspond to relevant NATO priorities, such as military mobility. There are also overlaps between CARD and the NATO Defence Planning Process (NDPP), and efforts have been made to guarantee coherence between the two processes, adhering to the logic of complementarity and avoiding duplication. For instance, inviting EU staff to NDPP consultations and NATO staff to CARD meetings has become common, even though the membership, scope and responsibilities differ. Standardisation is another important area of cooperation, with complementary efforts in this area and cross-participation in the relevant NATO and EU standardisation committees.

NATO Allies have agreed to develop and maintain the full range of capabilities necessary to deter and defend against potential enemies. The main tool for determining and prioritising the capabilities needed for the Alliance is the NATO Defence Planning Process (NDPP). It aims to provide a framework within which national and Alliance defence planning activities can be harmonised to enable Allies to provide the necessary forces and capabilities in the most efficient manner. The NDPP is a four-year programme that consists of five steps (political guidance, determine requirements, review results, apportion targets and facilitate implementation), which are typically completed sequentially. The NDPP focuses on capabilities in the short and medium term (up to 20 years). The responsible committee in NATO is called the Defence Policy and Planning Committee (DPPC). It is in charge of creating policies pertaining to defence planning and overseeing the coordination of all NDPP operations. The DPPC supervises the work of NATO bodies and committees responsible for defence planning on behalf of the North Atlantic Council. NATO also actively supports the identification and implementation of multinational cooperation in capability development and procuring capabilities. For instance, NATO commonly procures and operates a fleet of airborne warning and control systems (AWACS), one of the few military assets that are owned and operated by the Alliance rather than its members. NATO bodies and agencies also support national capability development initiatives in line with the NDPP. NATO’s High Visibility Projects (HVPs) support Allies and partner nations in identifying opportunities for multinational capability cooperation in critical areas like air-to-air refuelling and ammunition. The NATO Support and Procurement Agency offers NATO Allies and partner countries acquisition, logistical, operational and systems support, and related procurement.

European Parliament position

Parliament welcomes the EU’s ambition to strengthen its defence capabilities, stresses the need to make better use of EU initiatives and budgets, and calls for increased budgets. MEPs underline the importance of developing coherent, complementary and interoperable defence capabilities with NATO, and stress the need to ensure coherence of output between EU and NATO capability development planning processes.

Read this ‘at a glance’ note on ‘European Capability Development Planning‘ in the Think Tank pages of the European Parliament.