Estonia says its plan to eliminate Ukraine's ammunition shortfall is simple: Show weapons manufacturers the money and do it fast.
To be exact, Tallinn is asking Brussels to set aside €4 billion ($4.25 billion) of joint EU funding to secure 1 million rounds of ammunition which would be delivered within the next six months.
In a document circulated among EU governments, and seen by DW, Estonia argues a financial injection of this size could increase the capacity of the European manufacturing industry sevenfold. Not only that, it says it would enable the delivery of significant amounts of ammunition within half a year rather than the four years estimated under current conditions.
Staggering scale of ammunition use
The maximum combined production capabilities of European ammunition manufacturers currently sits at 230,000 rounds per year, according to the Estonian document. Ukraine, currently at war with Russia, uses almost that many every month.
Estonian Defense Minister Hanno Pevkur tells DW his government has received positive feedback on the proposal, which he believes is a win-win-win for Ukrainian and European militaries and industry, and, he hopes, a loss for Russia.
"One thing is [it's] 1 million rounds for Ukraine," Pevkur explained. "But the other thing is that there will be a sustainable project for the European countries, for the European militaries, to also acquire a lot more ammunition in the future. When industry [steps] up production capabilities, they can also [retain] these capabilities for a longer time.”
'Peace Facility' easiest way to buy weapons
Tapping into the bloc's general budget to fund the effort is not allowed, as EU funds are unable to be put toward military endeavors. However, this limitation has been circumvented already with the EU military aid fund, the "European Peace Facility" (EPF), an "off-budget" mechanism currently worth €5.5 billion and which all member states contribue to based on their gross national income. It has being used recently, for example, to reimburse governments for their military contributions to Ukraine. Estonia is suggesting the aid fund could be further used to bankroll their proposal.
Defense minister Pevkur says Estonia does not care how the spending spree is funded, or whether purchases made are for new or existing ammunition. "The important thing is that there will be a political decision that we will do it," he emphasized. "We don't have time."
Both NATO Secretary-General Jens Stoltenberg and, as of this week, EU foreign policy chief Josep Borrell, have encouraged governments within their organizations to send Ukraine everything they can, even allowing national supplies to temporarily dip below previously agreed NATO stockpile guidelines, with the understanding they will be shored up later when shortages ease. Allies' procurement chiefs have met multiple times at NATO headquarters in Brussels to discuss how to ramp up production processes which have been deliberately scaled back for decades.
Industry awaits orders
But even the effort to speed up the process seems inadequate to the task. Three days before the one-year mark of the start of the war, Stoltenberg, Borrell and Ukrainian Foreign Minister Dmytro Kuleba met together for the first time. Following talks, the group announced there would be a joint meeting of NATO, EU and Ukrainian procurement experts organized, as Stoltenberg said, "to see what more we can do together to ensure Ukraine has the weapons it needs." The alliance will also help Ukraine set up its own procurement system that is "effective, transparent and accountable."
But industry sources say despite all the talk, the number of contracts their companies are receiving has increased only slightly over the last year. Speaking at NATO headquarters Tuesday, Kuleba confirmed he had heard similar remarks.
"After speaking with representatives [from the] defense industries, this gap [between buyer and producer] became even more evident," he said. "But it doesn't mean that there is no political will on the side of the buyer, there is a lack of procedures and understanding of how it should all work, and this is why we're meeting with defense industries. This is why we're setting up the coordination mechanism to bring everyone together."
But until that happens, manufacturers say, there should be no expectation for them to self-fund speculative investments in capacity-building. "If governments want to see more production capacity, we need to see orders coming in," said one ammunition manufacturer representative who asked to remain anonymous due to political sensitivities. "I think there's a very real risk here for some of these companies to actually go bankrupt. If you massively scale up production, make massive investments, employ more people, buy raw materials, all that stuff, and then you start producing and in a year or two the whole demand just drops off a cliff again, what are you going to do then as a business?"
Commission considering advance purchases
If you think you have heard this somewhere before, you are not mistaken. The same arguments were raised by the pharmaceutical industry at the outbreak of the coronavirus pandemic when they were asked to dramatically boost their output of vaccinations. European Commission President Ursula von der Leyen believes she can apply some of the lessons learned to joint procurement of ammunition.
"At the European level, we have financed advance-purchase agreements [for vaccines]," she told DW on the sidelines of the Munich Security Conference last week. "We could do the same with the European defense industry so that they can build their production lines faster and wider and speed up production. We have the institutions in place. We should not create something new, but we should use the European Peace Facility, which has a coordination mechanism with Ukraine already in place."
French funding plan would support EU companies
There is also another plan making the rounds, this one modeled on an assistance program for Ukraine already being used in France. Nathalie Loiseau, chair of the European Parliament's Security and Defense subcommittee, and French lawmaker Benjamin Haddad, chair of the parliament's France-Ukraine friendship committee, recommend establishing a €1 billion pot with member states contributing based on their GDPs. Ukraine could use this money to buy whatever it needs from European manufacturers, putting the money back into EU industry.
Haddad thinks the comparison with the vaccine campaign is apt. "We realized in the last few years that when we put the resources, the capital and the political will into doing something, we can actually manufacture, produce and distribute much more quickly than we expected," he said, noting that initially it was anticipated it would take years to develop and distribute a vaccine, but it was done in less than one.
Haddad told DW he does not see the various plans as competing. "All these things are complementary," he says, "but I think it's time to step up. We can't delay and dither. Every day that we delay in supporting Ukraine's militarily to defend themselves is a day for Russia."
Estonia is hoping to see its proposal approved by the next EU summit scheduled for late March, if not earlier, says Defense Minister Pevkur. "My timeline is tomorrow," he says. "But for Ukraine, it was yesterday."
Edited by: J. Wingard
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