The European Union has taken a significant step toward strengthening its security self-sufficiency. All 27 member states have given preliminary approval to a defense fund worth €150 billion, which will support investments in key defense capabilities.
What Will the Fund Support?
The resources from this fund will be directed toward areas that Europe most needs to develop:
- Ammunition and projectiles
- Unmanned technologies and drones
- Protection of critical infrastructure
- Missile systems
- Ground military capabilities
- Anti-missile defense systems
How Will the Fund Work?
The European Commission will raise €150 billion in capital markets and subsequently provide it to member states in the form of loans to finance specific projects. The program is also open to non-EU countries, which can participate up to 35% of costs after paying a participation fee. This mechanism is inspired by a similar instrument introduced during the COVID-19 pandemic to support short-term work programs and similar measures in member states.
Response to Global Challenges
The program was proposed by the European Commission in March as a response to the changing security situation and the reduction of American security presence in Europe. European Commission President Ursula von der Leyen has described the current situation as a “once-in-a-generation opportunity” and previously stated that the EU faces defense investment needs of approximately €500 billion over the next decade.
European Defense Industry Before Transformation
The new fund represents a significant stimulus for the European defense industry, which has long suffered from fragmentation and insufficient investment. European arms companies can now expect increased demand, which should lead to greater production efficiency, innovation, and competitiveness in the global market. The fund should also help overcome traditional barriers in the form of national preferences in defense contracts and promote closer cooperation across member countries.
Strategic Autonomy as a Long-term Goal
The initiative is another step in the European effort for so-called strategic autonomy, the ability of the EU to act independently and protect its interests without excessive dependence on external partners. In the context of the changing geopolitical situation and growing regional tensions, strengthening European defense capabilities is considered a key priority. The fund should contribute to reducing critical deficiencies in military capabilities that European countries currently have.
What’s Next?
The fund is expected to receive formal approval as early as next week. European Defense Commissioner Andrius Kubilius announced that on June 17, the Commission will present a proposal aimed at simplifying procedures and removing regulatory barriers to support joint defense procurement and facilitate the transportation of defense products within the bloc. The aim is to expedite permits for the construction of new plants or the expansion of existing ones and address environmental constraints that the defense industry may face.
UK-European Cooperation
The United Kingdom and the EU reached a defense partnership on Monday, with the bloc committing to explore ways to allow London access to this program. This cooperation suggests that despite Brexit, both sides recognize the strategic value of a coordinated approach to security issues.
