Year XXXIX, Number 1, July 2026

Umberto Nizza

Adjunct professor at the University of Bologna. Research affiliate at Stanford University and University of Turin.

The European Common Foreign and Security Policy (CFSP) presents a structural aporia and the gap between declared ambitions and inadequate financial instruments reflects deliberate political choice privileging member state residual sovereignty over collective efficiency.¹ Liberal intergovernmentalism explains why financing mechanisms remain anchored to voluntary contribution and unanimous consent: EU Member States did not transfer resources to a common level reducing individual policy-shaping capacity, generating sub-optimal collective results.²

The consequence of such inactions is the creation of an architecture oriented toward the lowest common denominator. The Union remains present in international politics as market and aid donor, yet gravely under-resourced when crisis management requires coordinated financial capacities.³

CFSP financing is articulated around three pillars: civilian missions budget, Athena mechanism for military operations, and European Defence Fund (EDF) for research and development. Common to these pillars is the absence of automaticity: resources mobilize through ad hoc negotiations reproducing the same political fractures mentioned above. The CFSP budget – 0.22% of the total – is structurally insufficient for commitments proportionate to Europe's economic weight. Furthermore, annual budgeting precludes multi-annual strategic planning, while parliament's role is reduced to mere consultation.⁴ Athena also embodies framework contradictions, given that the "costs lie where they fall" principle generates perverse incentives:⁵ deploying States bear costs while absent members contribute nothing yet benefit from the program.⁶ This institutionalizes free-riding as rational, with CSDP missions chronically under-resourced depending on few willing states. The European Defence Fund (€9.453 billion 2021-2027) and PESCO introduce supranational dimensions, yet the "juste retour" principle reproduces industrial fragmentation.⁸

Overall, the system proves quantitatively and qualitatively deficient, with absent automatic solidarity, slow activation mechanisms, inadequate democratic governance, structures unable to respond to crises except with delay and inferior resources.⁹

Current geopolitical circumstances impose a permanent crisis incompatible with existing mechanisms. Russia's Ukraine aggression demonstrated European security depends on autonomous deterrence capacity, not uncertain external guarantees. European response, despite short-term coherence, remains contingent, revealing absence of common defense financing structured for crises of this magnitude.¹⁰ Union capacity as global actor requires stable, adequate, rapidly mobilizable resources independent of contingent political will. Simultaneity of crises – from Sahel to Indo-Pacific – exceeds single member capacities, demanding supranational response and perpetuating unanimous-consent financing represents deliberate strategic sub-optimality.¹¹ In this light, national defense investment fragmentation produced disaggregated European industrial base with costly overlaps and extra-European dependencies.¹²

Correction requires commonly allocated resources through shared binding strategic planning creating globally competitive European defense industry.

A federalist approach to financing European foreign and defense policy might offer the Union an interpretive framework wherein financing choices express collective security governance grounded in principles ontologically incompatible with dominant intergovernmentalism.¹³ The spillover dynamic generates pressures for defense integration that current systems cannot satisfy, creating growing tensions between European aspirations and available institutional structures. For strategic planning, defense research financing, crisis management, and deterrence credibility, the European level offers unequivocal comparative advantages: economies of scale in weapons procurement, capability redundancy elimination, greater multilateral critical mass, and reduced dependence on individual external suppliers. Failure to realize these advantages would reflect domestic political resistances privileging symbolic visibility of national sovereignty over substantive effectiveness of collective security. Existing systems prove democratically opaque, with unanimity decisions in European Council lacking direct democratic mandates and Parliament limited to consultation functions.¹⁴ A logic of differentiated integration – in which "Pioneer States" assume deeper commitments – would strengthen Union cohesion through vanguard dynamics progressively attracting laggards toward advanced integration levels,¹⁵ with potential benefits also on the current complex foreign policy matters.¹⁶

A federally inspired reform should redesign financial incentive architecture making solidarity institutional norm and free-riding costly exceptions. As a first axis, the Union should remove CFSP budget from annual negotiation, anchoring to binding multi-annual strategic objectives through automatic strategic reserves activated by pre-defined crisis urgency criteria. The boundary between internal and external security demands structural coordination between CFSP budget and internal security instruments.¹⁷

Athena mechanism reform constitutes immediate priority. Increasing commonly financed costs to 50% total operational expenditure for each mission, for example, with mandatory minimum contributions from all Member States regardless participation, might remove principal free-riding incentives and redistribute collective security burdens equitably.¹⁸ CSDP missions illustrate this dysfunction: net contributors bearing disproportionate shares discourages ambition, producing chronic mandate-means gaps. The most ambitious element would be to issue common European bonds for defense-foreign policy investment. NextGenerationEU demonstrated the political feasibility of common debt for collective emergencies. A European Security Defence Fund capitalized through common bonds – with Member State joint guarantees and parliamentary governance – might finance long-term defensive capabilities and rapid-response crisis instruments.¹⁹ Parliament's role strengthening in common defense financing is political condition for security integration sustainability. Current asymmetry – i.e., resources from taxpayers, decisions in intergovernmental settings – proves democratically untenable.²⁰

The CFSP financing is not a marginal technical question in European integration debate but a keystone determining gap between Europe as an enunciated political project and Europe as effectively operating power. This gap results from deliberately preserved resource fragmentation for national sovereignty conservation at enormous strategic cost: rendering Europe collectively less secure and influential than aggregate member resources would permit. The intergovernmental financing model has systematically sacrificed collective effectiveness for preservation of residual national autonomy in defense matters. European integration history demonstrates with consistency that qualitative leaps toward greater unity have been accomplished in response to crises that rendered maintenance of status quo untenable. The current geopolitical acceleration – characterized by simultaneous regional instability, technological disruption, and strategic uncertainty – possesses all characteristics of similar transformative impulse toward financial integration in foreign and defense policy. In this perspective, the institutional capacity to respond will depend not on rhetorical commitment but on concrete financial mechanisms enabling rapid, coordinated action.

Proposed components – the CFSP multi-annual programming, Athena solidarity reform, common European defense bonds, parliamentary expenditure co-decision – encompass organic reform design inspired by important federalist principles: subsidiarity, solidarity, democratic legitimacy. The federalist perspective proposes not nation state disappearance but rational multi-level system organization where competences allocated by effectiveness and resources managed by collective responsibility. Federally organized European foreign-defense policy creates governance systems wherein common institutions dispose of the necessary financial resources translating strategic ambitions into operational capacities under democratic oversight representing European citizens. The current geopolitical situation makes this model both necessary and more-than-ever urgent for continental security's future.

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