EU finally boosts defence investment into arms production as Ukraine runs out of ammo

EU finally boosts defence investment into arms production as Ukraine runs out of ammo
After dithering for two years, the EU member states are finally ramping up investment to expand their military production capacity just as Ukraine slides into an acute ammo shortage / bne IntelliNews
By bne IntelliNews March 18, 2024

European Nato countries are ramping up their defence investments, with plans to collectively spend almost $500bn this year. The European Commission (EC) has already allocated €500mn to increase ammunition production capacity, aimed at bolstering Ukraine's defences, and should be producing 2mn shells annually by 2026.

“Make no mistake about it, the European Union is now in the defence business,” reported Politico on March 15. NATO Secretary General Jens Stoltenberg highlighted the urgency of the situation, emphasising the need for NATO countries to arm themselves adequately, as well as provide support to Ukraine.

The promise of ramping up production comes not a minute too soon. Ukraine may be forced to try and down only one in five missiles targeting cities due to acute ammunition shortage, Ukraine officials admitted on March 17. Munitions for some of Ukraine's air defence systems may be nearly used up by the end of March, the Washington Post reported on March 15, citing unnamed Western officials.

After the initial country-wide bombardment in the early days of the war, Ukraine has successfully built up a comprehensive air defence system that effectively protected most of its major cities and power stations that down the bulk of inbound Russian missiles. This system has been largely supplied with Nato-made missile systems but as supplies of fresh ammo dry up one of the first victims will Ukrainian cities that will be once again vulnerable to long-range attacks by Russian missiles. 

While Ukraine’s military productive capacity has dwindled to next to nothing, Russia has put its entire economy on a war footing and increased its annual put of shells from two million rounds a year to three. Russia now massively out guns Ukraine allowing it to pound Armed Forces of Ukraine (AFU) troops on-the-ground with impunity.

Stoltenberg announced that this year, European NATO countries will invest a combined $470bn in defence, reaching the long-sought-after target of 2% of GDP for the first time. He called for expedited provision of ammunition to Ukraine, stressing the importance of enhancing its defensive capabilities. However, according to the Financial Times, NATO members in Europe still need to find an additional €56bn annually to meet their defence spending target.

The move comes amidst Russia's substantial defence spending, with Moscow allocating 10.7 trillion rubles (approximately $118bn) in its 2024 budget, equivalent to about 6% of its GDP. According to a report by CNN, Moscow is currently manufacturing 3mn artillery shells a year.

To address Ukraine's immediate needs, leaders of the Weimar Triangle - France, Germany, and Poland - have agreed to establish a coalition to provide Kyiv with long-range artillery. German Chancellor Olaf Scholz announced the decision following a meeting with French President Emmanuel Macron and Polish Prime Minister Donald Tusk in Berlin. The coalition will utilise proceeds from frozen Russian assets to finance the purchase of arms for Ukraine.

Additionally, within the Ramstein coalition, EU leaders will form another coalition to acquire long-range rocket artillery for Ukraine. Scholz reiterated that EU countries have committed to providing €5bn in military aid to Ukraine, with a focus on preserving Ukrainian independence rather than engaging in a direct conflict with Russia.

The moves come as Ukraine faces an increasingly bleak situation on the front lines: its army was already running out of ammo as early as January 2023 and the problem was only exacerbated when Europe was slow to sign long-term defence contracts. While planning to deliver 1mn artillery shells by March 2024, Europe ended up only hitting a figure of 170,000 after a failed Ukrainian counteroffensive. By February, Ukraine was outgunned 5-to-1 by Russia. Eventually Ukrainian President Volodymyr Zelensky announced a strategy of turning his country into a European military production hub.

Meanwhile, the US recently announced it had run out of money to help Ukraine until Congress passes a stalled $61bn aid package.