At a time when, according to draft conclusions, the EU must “reduce its strategic dependence, increase its overall defence preparedness and capabilities and further strengthen its defence technological and industrial base accordingly”, European leaders are due to discuss “urgent, immediate and medium-term” defence requirements and European initiatives in this area at their European Council meeting on Thursday 27 and Friday 28 June.
They are due to hold an initial discussion on the possibilities of mobilising funds for European defence.
Thus, according to draft conclusions dated 25 June and obtained by Agence Europe, the European Council should invite the Commission and the EU High Representative to present the funding options developed to strengthen the defence technological and industrial base and fill critical capability gaps.
According to a source at the Elysée Palace, the options could include “new own resources, the possibility of a loan, recourse to and mobilisation of the EIB”.
Back in March, the European Council asked the Council of the EU and the Commission to study all possibilities for mobilising funds to facilitate the European defence industry’s access to public and private financing and to report back by June (see EUROPE 13375/5). This report to the EU27 should be made orally.
One European source felt that compliance with ESG (environmental, social and governance) rules should not be made a golden rule for defence. “Banks treat defence as if it were porn or tobacco”, the source complained.
While acknowledging that several delegations were pressing for increased investment, a European source pointed out that the question of funding was still controversial in the EU. According to one diplomat, if all states spent 2% of their GDP on defence, this would free up an additional €62 trillion for defence each year.
Leaders should also call for the rapid implementation of the Security and Defence Action Plan adopted by the European Investment Bank Group (see EUROPE 13407/7). They should ask the EIB to evaluate and further adapt its lending policy to the defence industry, while preserving its financing capacity.
The European Council should also invite the Council, the Member States, the Commission and the High Representative to take forward work, in particular on critical capability shortfalls, on the basis of the conclusions of the Coordinated Annual Review on Defence (CARD), the European Defence Industrial Strategy (EDIS) and the proposal for a European Defence Industrial Programme (EDIP), “with a view to its adoption by mid-2025”.
See the draft conclusions of the European Council https://aeur.eu/f/ctk (Original version in Crench by Camille-Cerise Gessant and editorial staff)