Need for speed: The case for a European defence production act

During the cold war, the United States rapidly established domestic aluminium and titanium industries to support the war effort, providing capital as well as interest-free loans and directing mining and manufacturing resources and skilled workers to these industries. This was a huge effort, made possible by the US Defence Production Act (DPA). The act – adopted in 1950 in response to the Korean War – enables the administration to fast-track administrative procedures in order to deal quickly with major threats. Since 1950, it has been used to finance a wide variety of national security initiatives, including the deconcentration of the country’s defence industries in the 1950s to prevent the industrial base from being destroyed by a single nuclear attack; the production of and training for Virginia-class attack submarines in 2021; and the expansion of the domestic hypersonic technologies industry in 2023.  

Recent crises have shown Europe’s inability to marshal its substantial resources quickly enough to help its – and its neighbours’ – populations. The scramble for medical equipment or vaccines during the covid-19 pandemic or the inability to place orders for military equipment in the context of Russia’s war on Ukraine, despite available production capacity, all point to an urgent need for faster European action.

Europe’s crisis response

Russia’s full-scale invasion of Ukraine revealed just how unprepared Europe was for the return of large-scale, inter-state war to the continent. The European Union’s institutions and member states have done things that would previously have been unthinkable, often at unprecedented speed, not least thanks to the commitment of thousands of officials at all levels working hand in hand: welcoming millions of Ukrainian refugees, delivering arms and funding to Ukraine, and ensuring solidarity lanes for Ukrainian imports and exports. But on many other issues – from ordering military equipment to renovating border crossings, roads, bridges, electricity interconnectors, or pipelines – the war and its effects across the continent have often outpaced the EU’s capacity to react.

Furthermore, many of the EU’s adaptation efforts have been confined to the military sphere. But there is a plethora of economic, financial, infrastructural, and legal measures the EU needs to take to be able to deal with security threats. Given that its future is unlikely to be deprived of crises, the EU needs to develop a higher degree of readiness to build a “wartime economy” designed to maintain or bring peace back to the continent or to support partners on a global scale should the need arise.

To do this, the EU needs legal and administrative toolkits that are nimbler and better suited to crisis situations. Such toolkits would be useful not just in the context of the war in Ukraine, but vis-à-vis multiple other threats that Europe faces, be they on a regional or global scale.

To this end, the next European Commission should draft and propose an EU defence production act modelled on the US DPA but adjusted to European legal and administrative realities.

The US DPA

The US DPA contains three clauses: the first allows the president to identify specific goods as “critical and strategic” and require the private sector to prioritise contracts for them; the second enables the administration to establish mechanisms to allocate materials, services, and facilities to support national defence; while the third permits it to control the civilian economy in order to make critical materials necessary for national defence available.

Over time, its use has been extended to enable the US government to respond to a wider range of security-related crises, including:

• Diversifying the US energy mix by funding the Trans-Alaska pipeline and researching liquefied natural gas (LNG) in the 1970s
• Researching and developing new technologies throughout the 1980s, including silicon carbide ceramics, semiconductors, superconducting wire, metal composites, and the mining and processing of rare earth minerals
• Limiting the risk of cyber-espionage by China in 2011 by forcing companies to disclose the use of foreign-manufactured hard- and software
• Designating ventilators and protective medical equipment during the covid-19 pandemic as essential to national defence and increasing their production  
• Boosting the production of fire hoses to fight wild fires in California in 2021
• Accelerating the energy transition and car battery production through increased extraction of minerals such as lithium, cobalt, nickel, and graphite
• Prioritising and bolstering the production of baby formula in 2022
• Accelerating the domestic production of green energy technology, and introducing a two-year tariff exemption for the import of solar panels from Cambodia, Malaysia, Thailand, and Vietnam in 2022

Fast track  

Speed is a key element of power

Crises are fast paced, and speed is a key element of power. In the context of the Russian aggression against Ukraine, Germany adopted an ad hoc law suggestively called the LNG Acceleration Act, which provided for significant administrative short-cuts in order to accelerate the construction of LNG infrastructure. This effort recognised the need for legal and procedural acceleration – but this need is not limited to LNG or to Germany.

An EU DPA could be used, for example, to fund the accelerated production of defence equipment, such as gunpowder, artillery shells, or air-defence missiles, or medical equipment. But its use could extend beyond strictly defence-related initiatives. It could also be used to fast-track the construction of new infrastructure required in the context of major wars or crises, including modernising border crossings or airports, financing the reinforcement of bridges and roads for strategic purposes in EU member states, and building new electricity interconnectors and gas pipelines. Other plausible uses could include accelerating the transition to renewable power plants and electric cars, improving cyber security, or protecting and rebuilding digital infrastructure such as under-sea fibre cables. Europe’s core institutions – the EU, but also its development banks – can do most of the above. But not quickly enough. And especially not quickly enough in crisis contexts. The growing instability around the EU requires it to continue to adjust its toolkit because while resources matter during crises, so does the speed and the capacity to marshal them.