EU Commission clarifies what is meant by “defence spending”

Brussels – Military defence, civil defence, foreign military aid, defence-related research and development, sensors and support capabilities: here is the list of things that could be funded by the governments by relaxing budget rules, according to the European Commission’s proposal and detailed elaboration. The EU executive is meeting the demands of member states, particularly those most concerned about budget discipline, by providing a definition of “military spending.” A definition that responds to the internationally recognised one, according to the COFOG classification on government functions and areas of expenditure.

In the all-political debate over how to authorize new public spending to revitalise the defence industry, one of the knots was precisely “what” to fund. A request, that of definitions, on which the Netherlands in particular insisted, but on which other countries, including Germany, also wanted clarity. Now the answer comes through the mouth of Valdis Dombrovskis, commissioner for the Economy: “We chose the COFOG definition,” he explained at the end of the Eurogroup proceedings. “This also allows us to align with NATO objectives and move expeditiously.” According to the methodology, defence involves military defence, civil defence, foreign military aid, defence-related research and development, sensors and support capabilities.

The Classification of Functions of Government (COFOG) was developed in its current version in 1999 by the Organization for Economic Cooperation and Development (OECD) and published by the United Nations Statistics Division as a standard for classifying the purposes of government activities. It therefore has nothing to do with EU regulations, but the European Union has made it its own. A point on which Dombrovskis insists, “We are not using a new methodology, but the one that already exists.”

Based on these indications, states will be able to spend, and they will have to. The Economy Commissioner insists that, as much as private capital may come in handy, “we must remember that for the defence industry, demand is driven by public demand and public procurement.” Procurement is and remains governmental; therefore, it will be up to governments to trigger orders and purchases.