Spain punches ‘above its weight’ in European Defense Fund investments: Report

BELFAST — When it comes to contributing to the European Defence Fund (EDF), Spain “punches above its weight,” according to a new Spanish thinktank report, beating out even Germany, despite Berlin having a defense budget more than three times that of Madrid.

Spain contributed over €300 million ($325 million) to a total of 74 EDF projects across 2021 and 2022, outspending Germany by more than €10 million ($10.8 million) over the same time period, says the report published Monday by the Elcano Royal Institute. A country-by-country table shows France invested more than any other European Union (EU) member state in the time period, offering up over €360 million ($390 million), followed by Italy with approximately €320 million ($348 million).

The report, citing NATO data, says Germany, which was in the number four spot for EDF investments, has an annual defense budget of $68.1 billion to Spain’s $19.2 billion. France has a defense budget valued at $56.7 billion and Italy at $31.6 billion. (For comparison, the most recent US defense budget was $816.7 billion.)

Report author Daniel Fiott, a non-resident fellow at the institute, mentions that additional defense spending increases would allow Madrid “more room to fill capability gaps” and better develop major programs like the sixth generation Future Combat Air System (FCAS) effort, which also involves France and Germany.

Being involved in 74 EDF projects means that Spain participated in 73 percent of all possible initiatives during 2021 and 2022, the report said.

“This level of involvement in the EDF not only demonstrates Spain’s interest in the full range of defence industrial areas being supported by the EU, but it also shows that Spain’s defence and technological ecosystem is able to participate in a wide range of technology and innovation areas,” adds the document. “In effect, Spain is a vital partner in the EDF as its firms and institutes play an important role in developing defence projects and ensuring that they can make a real difference to European defence.”

The EDF is part of the EU’s security policy and promotes research and development of military technology between member states, while also concentrating on improving European production and supply chain issues. In June the EU announced the results of a second round of EDF proposals for 2022, resulting in funding worth €842 million ($920 million) allocated to 41 projects covering next generation fighter jets, tanks, ships and naval, ground, air combat, space-based early warning and cyber systems.

Sounding a note of caution however, Fiott questions if Spain can continue a “high level of performance and involvement” in EDF projects because of industry suppliers reaching a “saturation point” where they are potentially no longer able to take on additional activities due to “diminishing investment, technological resources and skills.”

The report goes on to say that “if Spain wants to play an outsized role in core defence capability areas such as naval combat technologies, then it needs to continue to invest in its national defence industrial base.”

At a more general level, the report says that since the unveiling of the EDF in 2021, the fund has invested €2 billion ($2.2 billion) in military projects covering a wide range of areas such as air, ground and naval combat, air and missile defense, cyber warfare, information superiority, digital transformation, disruptive technologies, energy and the environment and force protection.

Spanish suppliers are credited, by the report, for engaging “heavily” in air combat, digital transformation and space specifically during the last two years.

Of the 101 EDF projects overall, 19 are led by Spanish companies including Indra Sistemas, Navantia and Sener Aeroespacial. Those three manufacturers lead a total of seven projects from the 19 mentioned.

Elcano is a private foundation, though partly funded by the government and whose board of trustees includes a host of former senior government officials.