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The European armaments industry should be able to produce one million artillery shells for Ukraine within 12 months. In order to achieve this goal, the EU Commission has now launched another initiative. In addition, the EU Internal Market Commissioner, Thierry Breton, visited Rheinmetall in Unterlüß, Lower Saxony, as part of his arms tour through the Union on Thursday to get an impression of the production capacities.

In order to meet the target of delivering 1 million artillery shells to Ukraine over a period of 12 months, the EU plans to use three avenues.

Firstly, the member states should continue to supply Ukraine with ammunition from their stockpiles. Secondly, the member states should jointly order new ammunition from the industry in order to deliver it to Ukraine, and thirdly, the Commission wants to create incentives for the armaments industry to expand its production capacities in the long term (ES&T reported).

To implement the third way, the Commission has now drawn up a legislative proposal called the "Act in Support of Ammunition Production" (ASAP). The abbreviation ASAP, which commonly stands for "As Soon As Possible", should not be a coincidence. It is intended to suggest speed, which, as the EU's High Representative for Foreign Affairs and Security Policy, Josep Borrell, emphasizes, is of the essence. “We need to speed up the delivery of ammunition to Ukraine. Time is of the essence.”

Money for ammunition manufacturers

The Commission's proposal provides for a budget of 500 million euros, monitoring supply chains and introducing a temporary legal framework to support the production of artillery ammunition in the form of shells and rockets, including their precursors. Financial support for companies of up to 40 percent of the costs should be covered by ASAP, insofar as at least one of the following criteria is met by the respective ammunition manufacturer:

  • Optimization, expansion, modernization, improvement or reuse of existing production capacities;
  • Creation of new production capacities;
  • Development of cross-border industrial partnerships, also within the framework of public-private partnerships, for example to secure or reserve access to strategic components or raw materials;
  • Establishing and providing reserved capacity for the production of excellence;
  • testing or refurbishing (to eliminate obsolescence) processes to make existing munitions and missiles usable;
  • Retraining and upskilling of the relevant workforce.

According to the Commission's proposal, additional cost coverage of ten percent each can also be granted if the following two criteria are met:

  • Creation of new cross-border cooperations between manufacturers
  • Prioritization of orders by a group of states of at least three member states or associated members or by a member state that forwards the order directly to Ukraine.

Overall, ASAP could reimburse ammunition manufacturers for up to 60 percent of the costs of ammunition production.

In addition, under certain conditions, the Commission should be able to intervene in the prioritization of orders from ammunition manufacturers. The Commission could thus specify to manufacturers which orders they have to implement, provided that the Member States involved agree. Violations by the company concerned, without justification, can lead to penalties.

The Commission's proposal is designed for a limited time and is intended to be valid no longer than 30 June 2025.

First criticism of ASAP

The Commission is now hoping that the proposed law will be passed quickly. However, this still needs to be approved by the Council and the European Parliament. However, at least from the latter one can already hear criticism of ASAP, for example from Michael Gahler, the foreign policy spokesman for the EPP Group. Gahler says: "The initiative of the Commission is an important signal that we can only master the 'turning point' together. Therefore, on the one hand, we have to bundle measures at the European level, but on the other hand, we also have to adapt our regulations to the crisis. However, since the European bundling of orders has been a long time coming, the Commission's coercive measures against the industry appear excessive."

In addition, Gahler criticizes the financing of ASAP. To this end, the Commission wants to reallocate 260 million euros from the budget of the defense fund for 2024 and a further 240 million euros from the planned budget for the EDIRPA program (European Defense Industrial Reinforcement through common Procurement Act), which is currently in the legislative process.

Gahler says: "It also cannot be the right way that this package of measures is at the expense of already underfunded instruments such as the defense fund or the planned instrument to promote joint procurement. Instead of weakening the effectiveness of other instruments through redistribution, we urgently need to rethink our priorities or adapt them to the needs of the crisis.”

It remains to be seen whether ASAP will be able to move through the European legislative process as quickly as possible, as the Commission would like. For this, things would have to be very different from EDIRPA, which should have been in force since last December, but will probably only come into effect at the end of June (ES&T reported).

According to the Commission, both EDIRPA and ASAP should complement each other should they both come into force. EDIRPA should act on the demand side and encourage member states to jointly procure ammunition, and ASAP should act on the supply side by encouraging manufacturers to ramp up their production. However, it is unclear whether the Commission can fund both instruments sufficiently, as it is already planning to shift funds from one to the other.

Commissioner on armament tour

Internal Market Commissioner Thierry Breton is on an armaments tour of the Union to get an impression of Europe's manufacturing capacities. On Thursday he stopped at Rheinmetall in Unterlüß, Lower Saxony. There he had the CEO of the German armaments company Armin Papperger show him the production facility. State Secretary Benedikt Zimmer from the Ministry of Defense was also present from the German government. Following the visit, Rheinmetall announced that it was ready to massively increase production capacities in order to provide the European states with the best possible support.

 

It is unclear how high the current production capacities in the EU for artillery ammunition are. While the Estonian government, according to media reports, is assuming a capacity of around 300,000 shells per year, Rheinmetall, the EU's largest ammunition manufacturer, says that it currently has a capacity of up to 450,000 shells per year.

This discrepancy in the numbers alone shows how confusing the situation is. But they also show that a lot still needs to happen for the EU member states to be able to deliver one million artillery shells to Ukraine by March next year.

Ole Henckel

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