EU Approves $1.7 Billion Defense Fund
The European Parliament has given the green light to a €1.5 billion ($1.7 billion) plan to boost defense investments across the EU and provide support to Ukraine, according to an announcement made Tuesday, November 25th. This effort, called the European Defense Industrial Program (EDIP), is designed to strengthen Europe’s defense capabilities and industrial base in light of security challenges following Russia’s 2022 invasion of Ukraine.
Of the €1.5 billion allocated to EDIP, €300 million will be dedicated to the Ukraine Support Instrument. Additionally, co-legislators have agreed to introduce the Fund to Accelerate Defense Supply Chain Transformation (the FAST instrument), with a provisional budget of at least €150 million sourced from supplementary financial contributions.
During negotiations, Members of the European Parliament (MEPs) advocated for increasing the program’s budget via additional support from the Security Action for Europe instrument (SAFE). The program also enables member states to maximize the use of the Recovery and Resilience Facility (RRF) by reallocating unspent RRF-backed funds to support EDIP projects.
MEPs promoted the “buy European” principle; to qualify for funding, defense products must ensure that components from non-associated third countries constitute no more than 35% of their total estimated cost. A legal framework for European defense projects of common interest will be established, requiring participation from at least four member states, with Ukraine eligible to take part. The legislation further provides for a Ukraine Support Instrument (USI), designed to modernize Ukraine’s defense sector and facilitate its integration with the European industry.
Marie-Agnes Strack-Zimmermann (Renew Europe, Germany), Chair of the Security and Defense Committee, commented, “The European Defense Industry Programme (EDIP) signifies a major advancement towards a more efficient and comprehensive approach to defense procurement and capability enhancement. It is set to shape future initiatives and define cooperative defense production beyond 2027.”
The legislation was adopted with 457 votes in favor, 148 against, and 33 abstentions. Formal endorsement by member states is required prior to publication in the Official Journal.
The Commission proposed the EDIP regulation on 5 March 2024, seeking to achieve industrial readiness through a balanced approach that bridges immediate emergency measures, such as the Act in Support of Ammunition Production (ASAP) and the European Defense Industry Reinforcement through Common Procurement Act (EDIRPA), with long-term structural strategies.
Europe’s defense industrial base comprises multinational corporations, mid-sized firms, and over 2,000 small and medium-sized enterprises, collectively generating an estimated annual turnover of €70 billion.