On Friday 12 April in Luxembourg, the European finance ministers will be briefed on the options envisaged by the European Investment Bank (EIB) to provide more funding for Europe’s security and defence industrial base.
During this discussion, which will take place over breakfast, EIB President Nadia Calviño will present work in progress on how the European Union bank can be further involved, despite the fact that its statutes prohibit it from directly funding the production of military equipment.
The EIB’s statute, which prohibits “the direct funding of ammunition”, must be respected, “but there is room for manoeuvre”, according to a source at the French Ministry of Finance (Bercy) on Thursday 11 April.
The very cautious bank is now invited to “slightly broaden” its definitions “without this meaning a change in the statue”, according to a European diplomatic source. In her view, the discussion will be a stepping stone before the annual meeting of the EIB’s Board of Governors in June. It is, however, separate from a potential debate on recapitalising the EU bank.
In Ghent, at the informal meeting of Europe’s finance ministers (see EUROPE 13357/9), Ms Calviño raised the possibility of looking at the concept of ‘dual-use equipment’, such as drones, which could be eligible for EIB support. The creation of a one-stop shop to facilitate and accelerate the mobilisation of the specific Strategic European Security Initiative (SESI) is also being examined.
At the end of March, the European Council invited the EIB to “adapt its policy for lending to the defence industry and its current definition of dual-use goods, while safeguarding its financing capacity” (see EUROPE 13376/3).
RRF. The ministers will discuss the implementation of the Recovery and Resilience Facility (RRF), the temporary budgetary instrument that finances the national post-Covid-19 recovery plans via a European loan. The facility is halfway through its lifetime between 2021 and 2026.
Overall, the Member States, which will be adopting specific conclusions on Friday, believe that the RRF, which innovates by making financial aid conditional on performance in terms of reforms and investments on the ground (see EUROPE 13356/17), is fulfilling its function adequately. Improvements seem possible to streamline procedures, but the Member States do not want to weaken the mechanisms for controlling public money and it is too early to assess the economic impact of the RRF when the European Court of Auditors has questioned the feasibility of such an exercise (see EUROPE 13278/26).
Unofficially raised by Italy, the question of extending the RRF beyond 2026 is not receiving sufficient support at this stage.
“We need to avoid reopening a debate on principles”, warned the Bercy source.
Ukraine. The Ecofin Council will also take stock of the launch of the Ukraine Facility, the EU instrument that will provide macro-financial assistance of €50 billion to Ukraine until 2027 (see EUROPE 13344/18).
The Ukrainian authorities have sent the European Commission their proposal for the reform and investment programme that they will implement in exchange for EU aid. The Commission is currently assessing the document and, following any amendments negotiated with Ukraine, will ultimately propose that the Council adopt it.
To see the Ukraine programme: https://aeur.eu/f/bq9
To bridge the gap with previous macrofinancial assistance, the EU provided €4.5 billion in bridge financing to Kyiv in March and will provide a further €1.5 billion in April.
On Friday, the ministers are not expected to discuss the proposal to mobilise the assets of the Central Bank of Russia frozen in the EU in order to primarily finance military aid to Ukraine (see EUROPE 13375/8). The Belgian Presidency of the EU Council hopes to reach a rapid agreement on this issue, perhaps as early as Monday 15 April, at the level of the Member States’ ambassadors to the EU (Coreper).
It should be noted that the United States is suggesting using the profits generated by Russian public assets which have been frozen since Russia’s military aggression against Ukraine as collateral to raise capital on the markets.
Egypt. The Ecofin Council is expected to approve without debate short-term macrofinancial assistance of €1 billion to Egypt. This aid is part of an overall strategic partnership of €7.4 billion, including €5 billion in macrofinancial assistance, which was signed by EU representatives and the Egyptian authorities in mid-March in Cairo (see EUROPE 13373/6).
Further information: https://aeur.eu/f/bqg
EBRD. European finance ministers are expected to approve without debate the EBRD’s capital increase and the extension of its mandate to sub-Saharan Africa and Iraq.
Further information: https://aeur.eu/f/bqi
The Ecofin Council will decide on the EU position to be defended by the Member States taking part in the G20 and with a view to the spring meetings of the international financial organisations (IMF, World Bank).
Finally, the European Public Prosecutor’s Office (EPPO) will present its work, particularly in the area of value added tax fraud (see EUROPE 13387/4). (Original version in French by Mathieu Bion with Anne Damiani)