From Cohesion to Capability: A European Strategic Coordination Agency for the EU's Outermost Regions

Introduction

The European Union faces a strategic paradox: it has increasingly ambitious defence funding mechanisms, yet its institutional architecture tends to reproduce existing asymmetries between member states. The EDA, PESCO, and the EDF are relevant instruments but, in practice, oriented toward large defence producers and established military economies. Smaller states and peripheral regions remain structurally excluded from strategic investment and decision-making circuits.

No existing mechanism was designed to systematically articulate the geopolitical potential of the EU’s Outermost Regions with the development of SMEs in the defence sector. This paper identifies that specific institutional gap and proposes ESCA as its solution. The central thesis is that the ORs are the right territorial context for this model, because they combine extra-European strategic positioning, existing allied military infrastructure, and conditions favourable to emerging companies, characteristics that no region in the European core simultaneously offers.

The Institutional Gap: What Existing Mechanisms Do Not Address

The EDA operates as a platform for intergovernmental cooperation on military capabilities. Its focus lies in harmonising requirements among large armies and promoting joint projects among states with established industrial capacity. It has no mechanisms to identify or support SMEs in peripheral regions, nor a territorial logic oriented toward the ORs.

PESCO, is a framework of voluntary commitments between member states to develop capabilities jointly. The EDF finances collaborative research and development but includes no geographic criteria that explicitly incentivise the establishment of capabilities in peripheral regions. Consortia accessing the EDF tend to be led by large companies headquartered in major European economies, perpetuating existing industrial concentration.

ESCA does not duplicate any of these mechanisms. Its added value lies precisely at the intersection of three dimensions that current instruments treat in isolation: the territorial dimension (ORs as geopolitical assets), the industrial dimension (SMEs as vectors of distributed innovation), and the capability dimension (priority technological areas for European defence).

Industrial Concentration as Strategic Vulnerability

The majority defence companies are American, with European presence concentrated in a small number of large economies (Defense News, 2025). The drone sector, which is central to modern conflict, is dominated by the United States, with a limited number of relevant European actors (TheDefensePost, 2025). However, European tank procurement persisted, despite the platform’s diminishing battlefield relevance (European Defence Agency, 2025).

The ongoing consolidation of the sector, with large European companies absorbing smaller competitors, aggravates this vulnerability. A smaller state that loses its only national defence company to a European conglomerate does not simply gain a more efficient supplier; it loses autonomous response capacity, influence over acquisition decisions, and the ability to develop solutions tailored to its specific needs. 

The Outermost Regions as Underutilised Strategic Assets

The EU’s Outermost Regions, constitute a set of territories with unique geopolitical characteristics. Located across different continents and oceans, they hold large exclusive economic zones and are in several cases proximate to strategic maritime routes or emerging economies with interest in deepening relations with the EU (Cravidão & Espínola, 2025).

The Azores represent perhaps the most compelling case. The archipelago already hosts the Lajes military airbase, a longstanding NATO and United States Air Force installation that anchors Allied presence in the central North Atlantic. More recently, the development of a commercial spaceport positions the Azores at the frontier of dual-use space technology, extending European reach from the maritime and aerial domains into Space (Azores Government, 2025). What remains absent is a dedicated military naval port, a gap whose significance is considerable. A fully developed Azores hub, integrating naval, aerial, and space infrastructure, would give the EU a genuine multi-domain forward presence beyond the European continent. 

Why Has the EU Not Already Developed This Capacity?

The European Commission defines strategic priorities for these territories almost exclusively in socioeconomic terms: poverty reduction, access to education and healthcare, digital transition, blue economy and the retention of young people who increasingly emigrate in search of opportunities (European Commission, 2022). In this context, it is understandable that EU policy was built around cohesion and development objectives rather than security ones.

The European Commission does acknowledge the ORs’ geopolitical dimension, noting that they represent outposts of the EU throughout the world with potential to enhance cooperation and relations with surrounding countries and territories, and that they constitute a geostrategic investment enhancing the EU’s role as a global player. However, this recognition remains rhetorical within the document itself: none of the proposed initiatives translate it into concrete defence or security instruments. Security and military dimensions are entirely absent from the agenda.

The ESCA Model: Design and Priorities

ESCA would be created as an advisory and coordination agency associated with the EU, distinct from the EDA in its mission and governance. While the EDA is an intergovernmental body that works to improve big countries’ military power, the ESCA would be responsible for a specific area and industry: coordinating or giving advice on defense investments in the ORs with a focus on attracting and growing small businesses.

In operational terms, ESCA would function as a talent-scouting and dialogue mechanism rather than a direct procurement body. Its primary mission would be to identify capability gaps in the EU’s most remote regions and act as a bridge between those territories and actors from other continents, facilitating the attraction of both foreign and European companies willing to invest in areas of strategic need. SMEs seeking a place to grow and invest would find in ESCA an institutional intermediary that matches their ambitions with territories where geographic positioning translates directly into relevance and visibility. A company developing maritime surveillance technology gains operational credibility by being present in a region where that technology is genuinely needed. Geography, in this model, is not a constraint but a competitive advantage.

The engagement with states from other continents is equally central to ESCA’s purpose. Proximity between ORs and emerging economies creates conditions for the development of joint projects, access to new resources, and the establishment of partnerships that would be difficult to build from the European core. This dialogue dimension is not secondary to the industrial mission, it is what gives ESCA its distinctive character as an institution, bridging the EU’s peripheral territories with the wider world and closing the geopolitical and military capability gaps that those regions, despite their strategic potential, have long carried.

Complementing its incubation function, ESCA would adopt a collective acquisition logic based on member state specialisation. Rather than each country independently acquiring the full spectrum of equipment, ESCA would facilitate complementarity agreements in which each state, including smaller ones, specialises in a specific capability. This model reduces redundant investment in obsolete equipment and ensures that all regions, including the outermost, have capabilities aligned with current strategic needs.

Conclusion

European defence cannot be built on isolated funding or dependence on the continent’s largest economies. The EDA, PESCO, and the EDF are necessary but insufficient, because they were not designed to articulate the geopolitical potential of the ORs with the industrial development of SMEs in critical capability areas. ESCA could represent a first concrete step toward integrating the EU’s outermost regions into its defence architecture, not as peripheral beneficiaries of social cohesion, but as strategically exposed territories requiring targeted military and industrial investment.

ESCA is a proposal for complementarity addressing a specific gap, the absence of a mechanism that simultaneously treats the peripheral territorial dimension, the emerging industrial dimension, and the strategic capability dimension. A more inclusive and dispersed industrial base increases competitiveness, innovation, and technological autonomy. The ORs, far from being peripheral in the strategic sense, are precisely the territories where the EU can project its presence and capacity beyond the limits of the European continent, from different domains.  This shift would require a change in perspective: the outermost regions can no longer be viewed primarily through a socio-economic lens but should be recognised as strategic platforms for military presence, innovation, and projection. 

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